Start with the customer

The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here.

In my role as a business consultant I have the opportunity to review numerous business plans. What I enjoy is getting an in-depth look into a wide variety of businesses and meeting some fantastic people in the process. A common denominator is that most owners are extremely passionate about their ideas, they are often technical experts in their field and they are developing a new product or service that they claim is better than all or most of the competition. As part of the plan they often describe how their product or service is better, how they will promote and sell it, how they will price it and what level of market share they will achieve over the first few years on the market. Many plans then dig deeply into specific tactics such as which publications to advertise in, how often ads will be run, when the sales force or outside contractors will be hired to sell their product, how will they be trained, and how much everyone will be paid. They do a good job in describing the marketing mix of product, place, price and promotion but they miss a critical piece.

Many never answer the question who is the target customer and why will they buy your product or service?

“If you build it, he will come” a line from Field of Dreams is often misquoted as “If you build it, they will come.” In real life if you want to develop a product and/or start a business you cannot assume the customer will come. Your customer must be placed in the center of your plan and everything must be built around them.

The GREAT business plans I have reviewed talk about the target customer FIRST!
Who is the customer?
How do you define the customer (age, sex, demographic, income level, likes/dislikes, family status etc)?
What are their needs?
What is a particularly painful need that they need to solve now? Why?
What are they currently using to solve it? Is it working? Why or why not?
Are they willing to pay for something new to solve their problem?
Is the end customer the decision maker or are there other players that make the ultimate “buy” decision. (I.e. if Medicaid (or other third party payer) does not cover your product will the customer buy it?)
How many of them are there? (I.e. how big is the market?)
Where are they located? (I.e. how concentrated is the market?)

Only after a need is established is a solution offered.
What is your product?
What benefit(s) does your product or service deliver that will fulfill your customer’s need(s)?
How do you know it will work?
How do you know your customer will buy or use it? (I.e. have you asked them?)
Who else is critical to the purchase decision? (I.e. your customer may trust their stockbroker to recommend a particular mutual fund to purchase)
How do you inform and influence all customers that are critical to the purchase decision?

Now learn how your customer acquires information, thinks and acts.
How does your customer or customers get their information to support a buying decision?
(I.e. Newspaper, mail, magazines, TV, radio, conversation with a representative of the company, Internet, word of mouth from friends/family)
How does your customer rank the various sources?
How does your customer use the various sources?
(I.e. does your customer use search engines on the Internet to find information or do they go directly to a website? Do they perform their own searches or are searches done by others?)
How much information does a customer need to make a buying decision?
Does your customer want to communicate with you before or after the sale? If yes how will they like to communicate? (Phone, email, online chat etc)
Is your customer willing to tell others about a product/service they find meets their needs? Will they become advocates for your product?
How do they do that? Where will they do that?

Now construct the “story.”
What critical customer needs does your product/service solve?
Why should the customer care?
What is your brand “promise” to the customer?
What things are keeping you from delivering on your brand promise?
How will you overcome these obstacles?

Now write the plan!
Tie the marketing mix (product, place, price and promotion) into what you know about the customer.
What is your message?
How will you deliver your message to the customer?
What tools will you use?
How do you define success?
What metrics other than sales will tell you that you are on target?
What obstacles are you most concerned about? What is your plan for overcoming the obstacles?
What resources do you need to insure success?
What is your plan for acquiring these resources?

Make your plan a great one by starting with the customer. If you don’t know how your customer will respond then take the time and ask. In many cases a small amount of qualitative research should give you the ammunition to justify or modify your assumptions. A solid story will attract the resources and set the stage you need to be successful.

Until next time – all the best!

RolandB

Your CMO and CFO need to talk the same language

The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here.

The CFO (Chief Financial Officer) has a difficult but rather straightforward job. In most cases they need to recommend to their senior management how to best allocate resources across the business. Unless you can print money these resources are limited. The highest priority projects/tactics get funded, the rest are left on the table for another day when business conditions improve. The difficult and in many cases political process is how to prioritize one project over another.

The CMO (Chief Marketing Officer) is in charge of building the brands that will generate awareness, interest and sales of the company’s products and/or services. The CMO and marketing team put a plan together and then go through the process of convincing the CFO, the CEO and others in management to fund it.

The rest of management put together similar plans for the components they are responsible for. The CFO often asks that each requestor compute an ROI (return on investment) for each tactic. This analysis of dollars returned for each dollar invested provides a scale in which one project can be compared to another. A business development project with a 400% rate of return may be rated higher than a capital improvement project with a 200% ROI. There are many other factors that need to be considered such as the projected level of risk involved with each project and the time horizon to get to a payback however this is a way for dissimilar projects for be compared in a similar language.

A problem is that this method of evaluation works well for an “exact” science. If a company is considering a capital expansion the construction cost is known, the expected savings are estimated and an ROI can be calculated. If the company is considering developing a new product the research and development costs, development timing and the projected sales are estimated and an ROI computed. The same can be said for increasing the number of sales representatives, replacing a fleet of cars with newer ones, or lease vs. buy decisions on equipment or property. But how do you determine the value of a brand? How does increasing advertising spend or increasing the size of a sponsorship compare with the tactics mentioned above?

What many marketers will argue is that marketing is an “inexact” science. A quote often used “Half the money I spend on advertising is wasted, and the problem is I do not know which half” (Lord Leverhulme, British founder of Unilever and philanthropist). We all know that marketing is needed but many marketers are unable to compute the return on their marketing spend and communicate it to the decision makers in the company in a simple way. As a result others in the company may look at marketing spend as a cost of doing business rather than an investment in the growth of the company. When budgets need to be cut marketing initiatives may be at a disadvantage because the CMO has no way to document effect on sales.

I hear leaders of marketing organizations complain the CFO just doesn’t get it. It is not that simple. How do you quantify a relationship? We need to build our brand. They just need to trust me.

I hear CFOs complaining about marketing. What do we get for all the dollars we are spending? How do I know their programs are working? I’m supposed to believe that most of the sales will come in the last 25% of the sales cycle, how do I know it will happen? Are we on target? Why should I increase the budget?

It is like Mars and Venus. We need the CMO and the CFO to speak a common language.

So where do we start? Lewis Carroll wrote “If you don’t know where you are going any road will get you there.”

My suggestion is before you look at next year take a good look at the sales that you currently have. Ask yourself where are these sales coming from? Reorders from existing customers, referrals to others from existing customers (without you having to ask for them), direct sales from your sales force, calls into your customer service group, advertising campaigns (TV/radio/Internet), email, your website, trade shows and others? In many cases it could be a combination as leads may come in as a result of a one tactic, the lead is processed and nurtured by others, which after a period of time results in a sale.

Put a value on everything you do. If a sale was made for $50,000 that resulted in a $25,000 profit after the cost of manufacturing how much was spent by sales and marketing to get that sale. Where did the lead come from, how was it processed, how long did it take?

There will be a number of assumptions that need to be made. Marketing is not an exact science. The result will be all of your sales broken out by tactics used to acquire, nurture, close and service the business. My hunch is that you will see that some of the tactics are extremely profitable. A relationship with an existing client while relatively low in cost to service may result in huge gains in sales. On the flip side cold calling by sales representatives can be extremely expensive while sales uptake is slow.

Make a list top to bottom of all of your sales and marketing tactics and rank by return on investment. What tactics are working for you? What tactics are not? If you can shift some funds from the less effective tactics to the more effective ones how will that effect sales?
A quote attributed to Lord Kelvin is “If you can’t measure it, you can’t improve it.” Measure everything you do. Your method of measurement will improve as members of your team realize the new rules under which projects are evaluated and approved.

A story comes to mind of a man that asks a woman for a dollar. The woman hands the man a dollar and man gives the woman two dollars back. The man asks the woman for another dollar and the process continues for a while the women making a 200% return on her investment each time. Finally the woman says how much money can you make for me and the man replies how many dollars do you have? It is obviously not that easy but the man (in this case the CMO) did not have a hard time getting money from the woman (the CFO) as long as they both knew, understood and were comfortable with the expectation.

The man and the woman were talking the same language.

Now how does all the effect your business going forward? I’ll discuss this in a future post. I’ll leave you with two points:

1) The advance in technology including Web 2.0 tools allows you the freedom to track in real time how successful your marketing tactics are, where your leads are coming from and how they are nurtured. Lord Leverhulme’s comment that half your advertising dollars are wasted is no longer the case! This means that throughout a campaign you have the tools to measure and take actions to expand what is working and change what is not. I will discuss what some are doing and how they are using it for their advantage.
2) Steven Covey says “Begin with the end in mind.” Once you know where your sales are coming from now plan for them by tactic in the future. How many leads will you need at the front end of the sales funnel to guarantee an outcome? How many leads will each tactic be expected to generate? That allows you to manage your sales at every part of the sales funnel rather than just at the end when you see the revenue. Another data point the CMO can use to help the CFO understand what he or she is doing.

More later.

Until next time – all the best!

RolandB

The World Changed!

The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here.

I had lunch with a friend from my “Spinning” class recently. He had worked as an engineer for RCA Records in the late 60’s / early 70’s. RCA paid for him to go to law school at night. He received a law degree from Indiana University in 1974 and went to work as a patent counsel for RCA & GE Consumer Electronics. In 1987 GE sold the consumer electronics division and the RCA brand to Thomson Consumer Electronics. He eventually rose to become the General Counsel at Thomson and had the opportunity to live and work at their Paris headquarters for 4 years. He left Thomson in 1997 and worked for a private law firm for 10 years retiring in 1998.

What a career and story. At one point in his career my friend was in charge of managing and licensing to others hundreds of RCA patents. I remember as a child there were few companies that could hold a candle to the innovative power of RCA. I can still remember the picture of Nipper the dog staring at the gramophone with the inscription “His Master’s Voice.”

As many of us know RCA is now a shell of what it once was. Under Thomson the brand faltered, quality suffered, and competition increased.

I asked my friend, “What happened. How could a brand and a company that defined innovation fall from grace?” He explained that during the late 80’s and throughout the 90’s the company invested heavily in videodisk technology that did not pan out. It also built a lot of me-too products. Sony, Panasonic and others were developing better products at a lower price point. Brand loyalty decreased. Market share decreased. The brand (and the consumer electronics department) entered a death spiral that it could not recover. A few years ago Thomson sold the brand and products to a Chinese company.

My friend said the world changed and RCA could not keep up.

A quote that is one of my favorites is “The only thing that is constant is change.” About the only thing we can guarantee is that the world will be a different place in 5 years. In some markets it may be totally different next year or next month. It is a given the world will change and we need to keep up or we’ll found ourselves on the outside looking in like RCA.

So what should we do? What can you do now to keep your company competitive?

My advice to many clients and potential clients is to ask how do you compete? Are you (or your company) known for innovation and innovative products and services or are you a fast follower competing on price? If your company is known for innovation you need to be constantly thinking of how you can improve your products and services. You need to ask what will happen if your competition can sell their product for 50% of your price and/or the key technology that you are using to differentiate our products becomes worthless. What would happen if your customers were able to buy from you (or your competition) in a totally different way (think shopping on-line vs. going to brick and mortar stores, or think automatic downloading of movies instead of going to a video store to rent them)? How would this affect your business? How would you compete? You need to brainstorm solutions. You need to plan for change.

Sometimes the more successful we are today that harder it is to plan for change. A common argument is why spend valuable resources to improve or replace something that is working? How can you fault an executive team that is growing sales and profit?

In many cases the best time to plan for change is when things are going well.

I can guarantee that the world will change. I also guarantee that innovators in your marketplace are planning for that change. How you respond is up to you. If you are or want to be known for innovation how much of your time and budget are you spending on defining and leading your market?

Will someone say in a few years that the world changed and you could not keep up?

Until next time - all the best!

RolandB

Look at it from a different perspective

The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here

I did something last night I had never done before. My wife and I participated in the NITE Ride, a 20 mile ride through Indianapolis that began at 11:00 PM at night. Wew were joined by about 3000 others many of whom have been participating in the ride, conducted annually by CIBA (Central Indiana Biking Association), for years. I rode through streets and through places that were very familiar to me and that I had ridden around and through for years. What was amazing was I did it at night, with the assist of a small headlamp (until it broke half way through the ride) and a blinking tail light. The surroundings were the same but everything was different. There were policemen on every corner holding up traffic allowing us to pass. Volunteers pointed out potholes and other obstructions and where to turn. Looking ahead was a ribbon of a hundred or so blinking red lights. Looking back, well you didn’t want to look back too often, you may run into a pothole. I came away with a new appreciation for the city of Indianapolis, our police department, and the volunteers that made the event possible. I learned that something very familiar can become even more exciting when looked at from a different perspective.

In a scene from Dead Poets Society John Keating (played by Robin Williams) has his students eat with their non dominant hand. He asks what is different? What challenges does this create. How do you see the world differently?

So what can we learn? What was reinforced to me last night is to look at obstacles, opportunities, and basic responsibilities from a different perspective. You may come up with insights and ideas that you never thought possible.

Until next time – all the best!

RolandB

Prepare for the Unknown

The original posting of this article is here
Be sure to check on the current issue of Explode Your Paradigm here

What would you do if you knew there would be a major earthquake in China sometime during 2012? Before you say “I would not travel to China in 2012” let me tell you that you are currently in charge of operations of a global trading company that has a large distribution hub in Beijing.

What would you do today or in the next 6 months if you knew that this earthquake could cripple your Asian business? That was the question Dr. Mahender Singh from MIT asked a number of us attending a supply chain conference recently.

After we got through the “how do you know?” questions Dr. Singh asked us to push the I believe button and move on with the exercise. The group decided to get all of our experts together, analyze the problem, suggest alternatives and recommend a solution. We built another distribution center in Australia to handle the load in case the China facility was knocked out.

Well January 1, 2013 came and the predicted earthquake had not happened. You get a call from your CEO stating that your efforts cost the company millions of dollars without a return. Never again would you be trusted. Not a good day ……………

6 months later in July 2013 H1N1 flu pandemic hits China. The entire county is quarantined shutting down trade in and out of the area. Your facility in Beijing is shut down. The distribution center in Australia is not affected however and is able to handle the increased volume. Your company survives and in fact grows by selling to your competitor’s customers that cannot get shipments from China.

Your CEO takes you out to dinner and you get a promotion. If you had not planned for the expected earthquake that never happened you would have not been ready for the unexpected pandemic that did.

Dr. Singh said we need to plan for the known and prepare for the unknown. We are reasonably good at planning for the known. The issue is in many cases we don’t spend the time and the energy to prepare honestly for the unknown. Who would have known that an oil well would explode in the Gulf of Mexico and the resulting spill would foul hundreds of miles of beach and thousand of square miles of fishing grounds. How do you get yourself ready for the future?

The secret according to Dr. Singh is to start with the future, such as the earthquake in China, and bring it back to today. If we know the future what will we do about it today to help get our business ready? As part of your strategic planning exercise create a number of catastrophic scenarios and seriously figure out what you would do.

This was standard practice when I was in the Navy as an officer on a submarine. We would start with the “what ifs” and work backwards to determine the “what do you do”? It took a lot of time and we had many things to do that we thought were much more important. Not doing the exercise was not an option. First we were in the military and we had to do what we were ordered to do. Second we were driving a US warship that was powered with a nuclear reactor. If something happened we had to be perfect. The exercise was successful. We made mistakes, we learned from each other, we were prepared and if any of those unexpected scenarios happened we were ready.

So what can you do to get ready for the future? First, block out time for the exercise. Get away from the hectic day-to-day (i.e. turn off the cell phone) and get your leadership team off site. Dr. Singh asked three questions to help get the discussion started:

1. What are your forks in the road (major decisions that need to be made, short, medium and long term)
2. What are your hidden assumptions? (what are the sacred cows that no one discusses but should in order to fairly evaluate the future?)
3. What are your sensors in the ground? (Facts & trends that may be favorable or unfavorable to your business model)

One last thing. Have fun. Use your innovation and creativity skills. Get to know how your leadership team thinks. Participate fully – it is OK to make mistakes. Think differently – stretch your imagination. Celebrate success.

When the unexpected happens, and it will, you and your team will be ready!

Until next time – all the best!

RolandB

A new website - the blog is moving!!

Over the past few days I finally have had time to get out the textbooks, arrange my thoughts and publish the website for EYP Advisors LLC. Now the blog, my biography and the story about what I and my team of networked professionals are trying to do is all in one place at http://www.eypadvisors.com/!!

This blog has been copied and renamed Explode Your Paradigm. All future posts can be found at http://eypadvisors.com/?page_id=12

I would very much like to thank my good friend and website guru Carol van Almelo for helping me upload my database and pictures and create my logo. Her willingness to help me is greatly appreciated. More information about Carol can be found on her website at http://www.rock-away.com/

Please check out the new site and let me know your thoughts. I look forward to your comments.

Until next time - all the best!

RolandB

Believe what they do, not what they say. Is Eli Lilly really committed to innovation?

I had lunch with Bernard Munoz recently. Bernard has worked at Eli Lilly for over 29 years. Over his career he helped run Lilly affiliates in Portugal, Austria and France while with the Elanco Animal Health group. More recently he is working as an advisor in the corporate strategy area at Lilly Corporate Center in Indianapolis.

We met at a business function a couple of weeks ago. Bernard introduced himself as a consultant in “disruptive innovation.” I worked at Lilly for over 10 years. I learned a lot about pharmaceuticals, about marketing, about how to build a business in places like Japan and Eastern Europe and about the value of a robust process. What I also learned from Lilly was that change happens slowly in a large company. The fact that Lilly now had an internal consultant tasked with to bringing change to the organization was invigorating. We agreed to meet again to discuss.

Over a plate of Greek food I learned a ton about the current happenings in the pharmaceutical industry.

Bernard has been intrigued with innovation his whole life. His passion is beginning to be noticed by others. In December 2009 he published a paper in Nature Review titled “Lessons from 60 years of pharmaceutical innovation.” He followed the number of new molecular entities (NMEs) that have been approved since 1950 and looked at the changes year to year both in the number of new entities approved and the expense to make it happen. From 1950 to 2008 the FDA has approved 1,222 new drugs. On average the number of new drugs approved each year over this period is roughly the same. In 2008 21 NMEs were approved.

He documents that over the same period the cost of developing new drugs is rising at the exponential rate of 13.5% per year. Same number of products out each year, costs rising exponentially. If nothing changes this is an unsustainable situation.

Many large pharmaceutical companies estimate they need to produce an average of 2–3 NMEs per year to meet their growth objectives. The paper states that none of them has ever approached this level of output. The historical level is close to 1 per year. Bernard’s research points out that statistically the chance to getting to this level with the current pharmaceutical industry’s business model is very low.

There have been a few spikes and troughs over the years. Bernard’s conclusion is that this may have been more a function with the number of companies with applications outstanding. The more companies, the more applications, the more approved NMEs. His paper goes on to demonstrate that M&A activity in the pharmaceutical industry actually negatively affected the number of NMEs approved. In his words 1+1=1.

Bernard argues that we need to increase the number of companies developing NMEs. A larger number of companies accelerate the acquisition of knowledge creating what economists call a spillover – an industry wide benefit that enables all companies to be more effective. He also argues that the pharmaceutical industry needs to fundamentally change the way they develop new products.

Bernard and William Chin, formerly a colleague at Lilly and now at Harvard Medical School published a paper in Science Translational Medicine also in December 2009 titled “A Call for Sharing: Adapting Pharmaceutical Research to New Realities” that points out that today’s innovation increasingly stems from the aggregation of numerous small contributions. The authors argue that companies should compete in areas that offer a viable return on investment, and share where pre-competitive collaboration helps all of us discover new therapies more efficiently and effectively. The authors issue a call for the pharmaceutical industry and governmental agencies to “join hands and intensify sharing in order to help repower pharmaceutical innovation.”

To summarize the pharmaceutical business model is broken and it needs to be fixed. This is something many of us in the industry have been discussing for years. Costs are increasing, pricing pressure is increasing causing sales revenue per NME to decline and the number of new products being developed is not keeping pace with what is required. How much longer will investors continue to support pharmaceutical research? How can we keep the engine that is driving a large section of the economy alive and well?

Bernard told me he has been getting calls from groups in industry and in government requesting information about his ideas. Momentum is growing for change.

Great news - don't you think? Well here is the rest of the story

A senior executive at Lilly told Bernard Munoz this week that his job was being eliminated as of September 7, 2010!!

It is no secret that Lilly is facing patent expirations on a number of their most popular products. The company is cutting jobs. I have friends who have left the company and others who are looking over their shoulder not knowing if their job will be there tomorrow. What concerns me is that it appears Lilly has eliminated the position of a successful executive that has made and is making a name for himself discussing how to move the pharmaceutical industry forward. Lilly could have a voice at the table and they are choosing to turn it down.

Why? I think it is much better to participate in the discussion and be a part of potential solutions rather than wonder what will happen.

John Lechleiter, the CEO of Eli Lilly and Company, in an editorial published in the Wall St. Journal on May 14, 2009 wrote “U.S.-based private industry is the heart and soul of this innovation drama, investing $58 billion in research and development for new medicines in 2007 alone…. Biomedical innovation is not incompatible with the health-care reform goals of universal access, quality improvement and cost control. On the contrary, without new, more effective medicines -- along with new devices and diagnostic tools, and better treatments and surgical techniques -- it will be impossible for larger numbers of Americans to obtain better health care at a manageable cost.”

I think Lechleiter gets the message that Munoz and Chin are preaching that industry, universities and government need to come up with creative solutions to get better medical solutions to the marketplace. I don't know if the message is flowing down to his staff. I wonder if the bureaucracy at Lilly will wise up and get it before more innovators like Bernard Munoz are forced to do their work outside of the company.

Is Lilly committed to innovation?? The proof is in what they do - not what they say.

If you would like to read either of the papers referenced above please follow the links or send me an email at rjbydlon@earthlink.net.

I am interested in your thoughts. Please comment below.

Until next time – all the best!

RolandB

Game changing innovation needs a risk-taking environment

In the April 26th Indianapolis Star Michael Goldsby the executive director of the Entrepreneurship Center at Ball State University wrote a very good My View column titled “The game has changed for entrepreneurship.” Dr. Goldsby, an expert on the field, makes the argument that currently policy makers and companies view entrepreneurship as primarily composed of small business startups and that this is a mistake. By only looking at small business we are missing a large segment of the economy since continuous improvement coupled with continuous innovation is the magic formula for a company’s success. He states that companies of all sizes need entrepreneurial thinking to compete successfully in the 21st Century and suggests that schools must craft curricula to teach creative problem solving and innovation that can and will be used to drive innovation in small and large companies.

I agree with everything he is saying. Problem solving, how to effectively manage risk, and more importantly how to think creatively are critical skills that should be taught in every management school in the country. I also add that we won’t succeed in converting our medium to large companies into entrepreneurial powerhouses until we seed and grow a culture with current company management that promotes rapid experimentation and accepts short term failures as a learning event to prepare for long term success.

So why is entrepreneurship composed of mainly small business start-ups? I think a small company is an ideal climate for entrepreneurial thought. The stakeholders are usually willing to bet the farm and risk their jobs and financial wealth on an idea. Successful entrepreneurs have passion and are able and willing to focus on the key success factors for getting a product or service to their customers. The management team is a critical piece of the puzzle. Successful management team members are judged not on what they have done in the past but what they can contribute in the future. Each member must be willing to roll up their sleeves and participate in multiple tasks for the venture to succeed. It is OK to fail as long as information is learned. Timelines are short. Milestones are measured in weeks or months. Who knows where anyone will be in 5 years. The key is to enjoy the moment. If the basics are done right success will follow.

So how does a large company foster an entrepreneurial culture? Many years ago I started my post MBA career at a large company here in Indianapolis. At the time one of the selling points to join the company was that it was managed by consensus. I got an excellent education in business and worked with some of the best individuals I know but one thing I learned very early on was that consensus did not promote or reward risk taking. If 100% of the decision makers had to agree that an innovative idea was worthy of a risk before it was approved there was usually one member willing to kill or postpone it until one of our competitors tried it first. Decision makers were worried about failure. Some found it was much easier to go along with the status quo than try something different and find him or her knocked off their career track.

That is not to say that entrepreneurship in large companies will never happen. 3M is known for spinning off numerous companies based on internally developed technology. Apple over its lifetime has continuously reinvented its product line to lead the field.

I agree with Dr. Goldsby that if large companies in Indiana embrace the role they play in an entrepreneurial society the entire state will thrive. The challenge is how can we encourage them to do so.

1. The first thing is that the company must make a long term strategic decision from the top down that in order to promote game changing innovation they need to accept diversity of thought in their organization and also provide a safety net for entrepreneurs that try but fall short of a goal.
   
2. Second they need to cross pollinate by hiring or contracting with individuals from businesses outside of their traditional environment to provide input to product and/or business development teams. A pharmaceutical company could benefit by hiring someone with a consumer goods background, an airline could hire an individual with an expertise in promoting widgets who also flies a lot, a company wanting to compete using social media should add a few 20-something employees that text their friends rather than call them. These new members should encourage companies to think outside the status quo and consider non-traditional change.
   
3. Finally companies should not expect to change overnight. Mount Everest is not climbed in a day or even a week. The process takes months and involves conquering numerous milestones to get to the top. The road to game changing innovation is littered with hazards. Successful companies are the ones that do their homework, provide a supportive environment, take calculated risks and allow their employees to spread their wings and enjoy the process.

Until next time - all the best!

RolandB

BizTown – the entrepreneurs of the future!

I had the opportunity recently to be a mentor at the Junior Achievement BizTown. For about a day I watched as 100 entrepreneurs created and ran a “town”. They came from a wide variety of backgrounds. Some came from families rich in financial wealth, others qualified for school lunch programs. Some were taking many of their classes in Spanish or French, others were Hispanic where English was their second language. What the students (the citizens) discovered was the joy of learning how business worked and how one business depended on others. They got along. They had fun. What I learned was that I can learn a lot about life from a group of 5th graders.

For those of you not familiar with BizTown it is a simulation where about 80-120 students run a town and all of the businesses that make the economy run. There are businesses that make and sell interesting things, there are banks that loan money to the businesses and collect interest on the loans, there is a power company that sells utilities, there is a newspaper company and sells advertisements and produces and sells an actual paper, there is a radio station with DJs that sells air time to businesses in the town for commercials, there is a post office (FedEx), a Steak and Shake restaurant where students can buy popcorn and soda, the Peyton Manning Wellness Center where students go for medical checkups and learn how to eat healthy, and a city hall where the mayor and police keep the peace. Each company has a payroll. Each company pays taxes. The employees are paid with checks, they pay income taxes, they cash their checks at the bank where they receive a small amount of cash and deposit the rest into their checking account. They use the checking account to pay for the interesting things sold at the retail stores.

This all happens between 9:30 AM and 2:00 PM. Each day a different group of students enjoy the opportunity at the facility. A group of five JA staff make sure the town “runs” correctly. Adult mentor volunteers assist in each business to answer questions. The student citizens make the decisions, do the legwork, sweat a bit and have a lot of fun.

The day I was there we had students from the International School, Saint Phillip Neri and Saint Anthony. Most of the citizens were in 5th grade. Over the previous few weeks each student had filled out a resume and had interviewed for the job they wanted. Each business had a Chief Executive Officer (CEO) and a Chief Financial Officer (CFO) along with 4-6 supporting roles. Each student had a job description so they knew what was expected of them before arriving.

Our citizens came from much different backgrounds. The International School of Indiana is a private school in Indianapolis. According to their website http://www.isind.org/ the yearly tuition is $13,050 per year. Students pick a language track in either Spanish or French and learn most of their coursework in that language. Saint Anthony is an inner city school supported by the Archdiocese of Indianapolis. The average family income is $14,000 per year. Approximately 90% of the student body is Hispanic and most of the students qualify for free school lunches. Very few of the students pay tuition. What I found fascinating and encouraging was that all of the student/citizens regardless of what school they were from participated as equal members. They all worked hard, they communicated, and the system worked.

I’m sure many of the students learned a lot about business, about teamwork, about leadership and a few life skills like how to balance a checkbook. What I experienced as a mentor was how well the students got along, how well the students were prepared by their teachers for the day’s activities, how well they performed in their roles, how hard they worked, and in many ways how once they understood the rules they policed themselves. I learned that our youth when given the opportunity rise to the occasion.

As a marketer I am often the champion for the voice of the customer. The following are the top 10 reasons for BizTown as recorded in JA BizTown Newspaper by the citizen staff.
1. It is fun.
2. You learn how to be an adult.
3. You learn how to do jobs.
4. You learn how to control money.
5. You learn how to write checks.
6. You learn how to balance a checkbook.
7. You learn how to handle breaks.
8. You learn different jobs.
9. You get to spend money and shop.

….. and the final reason

10. You get two paychecks!

What is the value to this adult volunteer of experiencing entrepreneurial spirit in a group of 5th grade students – Priceless!

If you have an interest please consider making an investment in the future by giving some of your time and/or your financial treasure to support a good cause like JA BizTown. It is worth the effort.

Until next time - All the best!

RolandB

Ducks Quack - Eagles Soar.

A friend of mine sent me this message today. I cannot vouch for the authenticity. I do know that Harvey Mackay is a very successful businessman, motivational speaker and author from Minneapolis. He is very active with my alma mater the University of Minnesota. The message is a great one though. Thought I would pass it on.

"Life isn't about waiting for the storm to pass. It's about learning to dance in the rain." Have a great day.

Until next time - all the best!

RolandB

Photo credit

_____________________________________________________

No one can make you serve customers well.....that's because great service is a choice.

Harvey Mackay, tells a wonderful story about a cab driver that proved this point.

He was waiting in line for a ride at the airport. When a cab pulled up, the first thing Harvey noticed was that the taxi was polished to a bright shine. Smartly dressed in a white shirt, black tie, and freshly pressed black slacks, the cab driver jumped out and rounded the car to open the back passenger door for Harvey. He handed my friend a laminated card and said:"I'm Wally, your driver. While I'm loading your bags in the trunk I'd like you to read my mission statement." Taken aback, Harvey read the card. It said: Wally's Mission Statement: To get my customers to their destination in the quickest, safest and cheapest way possible in a friendly environment.

This blew Harvey away. Especially when he noticed that the inside of the cab matched the outside. Spotlessly clean! As he slid behind the wheel, Wally said, "Would you like a cup of coffee? I have a thermos of regular and one of decaf." My friend said jokingly, "No, I'd prefer a soft drink." Wally smiled and said, 'No problem. I have a cooler up front with regular and Diet Coke, water and orange juice. Almost stuttering, Harvey said, "I'll take a Diet Coke." Handing him his drink, Wally said, "If you'd like something to read, I have The Wall Street Journal, Time, Sports Illustrated and USA Today."

As they were pulling away, Wally handed my friend another laminated card,"These are the stations I get and the music they play, if you'd like to listen to the radio." And as if that weren't enough, Wally told Harvey that he had the air conditioning on and asked if the temperature was comfortable for him. Then he advised Harvey of the best route to his destination for that time of day. He also let him know that he'd be happy to chat and tell him about some of the sights or, if Harvey preferred, to leave him with his own thoughts.

"Tell me, Wally," my amazed friend asked the driver, "have you always served customers like this?" Wally smiled into the rear view mirror. "No, not always. In fact, it's only been in the last two years. My first five years driving, I spent most of my time complaining like all the rest of the cabbies do. Then I heard the personal growth guru, Wayne Dyer, on the radio one day. He had just written a book called You'll See It When You Believe It. Dyer said that if you get up in the morning expecting to have a bad day, you'll rarely disappoint yourself. He said, "Stop complaining! Differentiate yourself from your competition. Don't be a duck. Be an eagle. Ducks quack and complain. Eagles soar above the crowd". "That hit me right between the eyes," said Wally. "Dyer was really talking about me. I was always quacking and complaining, so I decided to change my attitude and become an eagle. I looked around at the other cabs and their drivers. The cabs were dirty, the drivers were unfriendly, and the customers were unhappy. So I decided to make some changes. I put in a few at a time. When my customers responded well, I did more."

"I take it that has paid off for you," Harvey said. "It sure has," Wally replied. "My first year as an eagle, I doubled my income from the previous year. This year I'll probably quadruple it. You were lucky to get me today. I don't sit at cabstands anymore. My customers call me for appointments on my cell phone or leave a message on my answering machine. If I can't pick them up myself, I get a reliable cabbie friend to do it and I take a piece of the action." Wally was phenomenal. He was running a limo service out of a Yellow Cab. I've probably told that story to more than fifty cab drivers over the years, and only two took the idea and ran with it. Whenever I go to their cities, I give them a call. The rest of the drivers quacked like ducks and told me all the reasons they couldn't do any of what I was suggesting.

Wally the Cab Driver made a different choice. He decided to stop quacking like ducks and start soaring like eagles. How about us? Smile, and the whole world smiles with you... The ball is in our hands! A man reaps what he sows. Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up... let us do good to all people. Ducks Quack, Eagles Soar.

Have a nice day, unless you already have other plans. SORROW looks back, WORRY looks around, and FAITH looks UP. "Life isn't about waiting for the storm to pass. It's about learning to dance in the rain." And while in the storm, give it to God and let Him handle it.

Selling with a System

This article was originally posted on the Indianapolis chapter of the AMA's website on 3/15/10. Click here to access the article.

One of the advantages of joining the Indianapolis chapter of the American Marketing Association (AMA) is an invitation to free members only meetings. I attended one recently titled “Selling With a System.” The presenter was Aaron Prickel from Lushin & Associates, a sales training and consulting firm.

As the economy has slowed the rules of the game have changed. Everyone at your company is a salesman and we are all required to climb higher on the tree to get to the “low hanging fruit.”

As Aaron put it, our parents have taught us since we were children it is not polite to talk to strangers and also don’t about money. A successful salesperson needs to talk to strangers confidently and also needs to talk about money early in a conversation in a positive way. Without conscious effort we will fall back into old habits.

The sales process is relatively simple; ask, present, quote, close. The successful salesperson needs to understand the type of person they are talking to, what the buyer is consciously or unconsciously trying to do and finally creating a win/win agreement that both parties will feel comfortable about the day after the sale.

People buy from people who are like them. You need to understand your customer and communicate with them in the way they are communicating with you. Aaron breaks most individuals into three categories:

1. Dominant – this type of individual knows what they want and is results driven. A successful salesperson will ask a few questions then ask for the sale.


2. Influencer – a happy go lucky person, talks a lot about themselves and what is going on in their life. A successful salesperson will ask questions about the person, listen, then after a period of time ask for permission to move on


3. Steady Relater – a cautious thinker, detail and process orientated. A successful salesperson will need to be very patient and move the individual forward slowly in small increments.

Understand the 4 step traditional buyer’s process. Buyers will

1. Lie – they don’t want to lose control. How many times have you entered a store to buy something but told the attendant you were “just looking?”


2. Steal – information and time. The salesperson usually knows more than the prospect. When the prospect asks questions the salesperson will think the prospect is interested and will usually answer question after question requesting nothing in return.


3. Lie again – this time in a positive way. How often have you told a salesperson that you think the product they are trying to sell you is great but you need to go home and think about it?


4. Hide – Many prospects want to say “no” but don’t want to hurt the salespersons feelings. They will give the salesperson unlimited access to their voicemail and will never call him or her back. The result is that the salesperson will keep the prospect on their active list and invest an increasing amount of time trying to contact and sell them. This is time that should be spent cultivating other prospects.

Successful salespersons will implement a personalized form of the following system

1. Ask – pain is the #1 compelling reason why people make changes. You build credibility by the questions you ask rather than the statements you make. Get your prospect to share their pain. Then tailor your presentation to helping them remove the pain.


2. Present – but first set expectations up front with the prospect. Outline a mutually beneficial agreement of what is going to happen.
   i. Don’t be afraid to talk about money up front to qualify the prospect. A fair question is how much money do you have? How much are you willing & able to spend on this project?
   ii. Start talking about the decision you will be asking them to make before you give them all of the information. (Remember they want to steal time and information)
   iii. Don’t tell them everything you know. Your expertise is worth something. If your product/service is a commodity all you can compete on is price.


3. Quote – Price is never the real issue. Don’t be embarrassed about giving them a fair price. Don’t feel that you need to come down in order to get the business.


4. Close – Ask for the business. Remember your prospects have a need for approval. Make it easy for them to say “no.” This is counter intuitive since you want the business. If they are going to say “no” you want/need to hear it sooner rather than later. According to Aaron one of the biggest problems in the sales world is delayed closings, those customers that will tell you tomorrow that becomes tomorrow etc.

Talk to your prospects the way they are talking to you.

1. They are visual thinkers if they describe a picture, look up with their eyes (more on eye movement a bit later), and speak quickly. You may want to respond by saying “ I see what you mean.”


2. They are auditory thinkers if they describe sounds, look straight and have a slower rate of speech. You may want to respond by saying “I hear what you are saying.”


3. They are kinesthetic thinkers if they describe feelings such as “I can’t put my arms around it” and look down with their eyes. You may want to respond, “Tell me how it make you feel.”

Looking at the eyes can also tell you a bit more. If a person looks to their left after you ask them a question they are most likely thinking logically and if they look to the right they are thinking creatively. Ask someone (preferably a friend) about where they were last night. If they look to the left they are trying to place where they were. If they look to the right they may be trying to create an answer (i.e. they are lying)

A commercial for Lushin & Associates. They help energize or reenergize individuals or groups of salespersons to get more sales in less hours. If you or your company is in need give Aaron a call. I’m sure he would like to help you.

A commercial for the AMA. This outstanding seminar lasted about 90 minutes and had about 40 attendees. Lots of great information was presented that helped me do my job better immediately and lots of great folks were there to network with. What a benefit!!

Until next time – all the best!

RolandB

Photo credit - I was looking for an "agreement" photo. Thought this was a great one.

The Time to Invest is NOW!

This article was originally published at Inside Indiana Business and can be accessed at http://www.insideindianabusiness.com/contributors.asp?id=1643

I was at the monthly meeting of the Venture Club of Indiana recently. The organizers had invited respected entrepreneurs, angel invertors and venture capitalists from around the country to comment on the Top Trends Impacting Midwest & Indiana Business in the Upcoming Year. The panelists accepted questions from the audience and seemed very open and passionate in their responses.

One topic that came up repeatedly was that a recession is a great time for buying companies. The reason is that there are lots of good ideas to pick from and valuations of many companies are relatively low when compared to a booming economy. To prove a point one of the members of the panel asked the audience how many individuals in the audience were looking for money? About 75 hands went up from the group of about 400 individuals. When asked how many people were ready to invest today only about 10 volunteers raised their hands.

I think it is human nature that when times are bad many of us hide in our “box” where it is safe until we are convinced it is safe to come out. However if you look at history a lot of winners did just the opposite and invested in times of turmoil. I read an article recently that stated 16 of the 30 companies that make up the Dow Jones Industrial Average were started during a recession or down economy. These include Procter & Gamble, Disney, Alcoa, McDonald's, General Electric and Johnson & Johnson. Some other companies that made their start when many were pulling back are Hyatt Corporation, Burger King, IHOP, FedEx, LexisNexis, CNN, and Microsoft. Why did these companies succeed? The founders knew their customers, understood their needs, understood the changing environment they were operating in, and created new products and services to meet the needs. They identified a solution and were not afraid to move forward.

In a recession the reservoir of business is drained to critical levels exposing the rocks on the bottom. Companies set in their ways with aging policies/mindsets are like ships that were able to succeed in good times but are now too bulky and crash into the rocks. This creates opportunities for nimble, flexible companies (visualize a speedboat) to take advantage of the situation and change.

In the climate today here are a few investments to consider to achieve a sustainable competitive advantage.

1. Market your existing products aggressively. As others decrease marketing and promotional spending keeping your level of spending the same or even increasing it will help you build share of voice in the marketplace. This increased share will give you an incredible advantage over your competition now and once the economy begins to grow again.


2. Innovate your product line. Has your market changed? Can you come up with a better mousetrap that will allow you to meet your customer’s needs at a lower price point.


3. Improve your production process. Can you produce more for less allowing you to lower your price and buy market share?


4. Fill a new market vacuum. How are your competitors responding to the recession? Are they pulling back creating a vacuum that you can fill?


5. Talk to your existing customers? Are they happy? What are their needs? Identify things your company can do to increase sales to them. A satisfied customer is much easier to sell than a new one.

Entrepreneurs willing to take risks with their time and/or financial resources understand that this is a time to invest rather than pull back. It is what makes them entrepreneurs. This is what separates them from all others.

In summary don’t be afraid to invest now. When the economy improves and your competition climbs out of their box you will be several steps ahead.

Until next time - all the best!

RolandB

Photo credit

Walk a mile in your customer’s shoes

A large article appeared yesterday in the business section of the Indianapolis Star. The piece titled "Lilly changes course as it shrinks its sales force" discussed how the pharmaceutical giant was cutting over 4000 sales positions and how the changes were effecting selected representatives.

The article can be accessed here.

The fact that the pharmaceutical sales model is broken and needs to be revised is not a surprise. Experts in the industry have seen it coming for years. A few years ago pharmaceutical companies in an effort to increase share of voice in the doctors’ office dramatically increased the number of sales representatives calling on doctors. In many cases 3 or 4 individuals from the same company would call on a single doctor. Each representative would give the doctor essentially the same message adding little new information that would help the doctor prescribe the product. The representatives were rewarded on number of calls they made and volume of samples distributed rather than valuable information provided. Information was pushed down to the doctor. Listening to the doctors concerns was discouraged. As a result the doctors quickly became frustrated. They were not learning any new information. In fact the visits were taking time from their fee-paying patients. An increasing number of institutions or physician practices now ban pharmaceutical reps from calling on their doctors or make it mandatory that the rep has an appointment to see a doctor. Doctors view a representative as a distraction rather than an allay.

Times change. There was a time not too long ago when a sales representative visit (most were a registered pharmacists) was appreciated and valued. What happened?

My opinion is that in many pharmaceutical companies the short term goal of selling product at all costs overshadowed and in many cases destroyed the relationship between the company and key customers that had taken years to build. In the past a doctor and an educated representative spent time building a strong trusting relationship by engaging in effective conversation. This meant questions and answers on both sides regarding disease and available treatments. The representative learned about patients the doctor was seeing, outcomes she experienced and concerns he about particular therapies. The doctor learned how a particular treatment worked, details of clinical trials and why a drug should be considered for certain patients and why it should not for others. Quality information was passed. Time was well spent and valued by doctor and rep.

Today doctors are seeing more patients and receiving less income for each patient. The number of products to treat disease has exponentially increased. The time doctors spend to research new therapy is less. In theory the doctors’ need for quality information is at least as high today as it was in the past.

So what can be done? There is a solution but it is not easy and will take time and commitment to implement. Success will be measured over years but disaster can happen in weeks if management loses direction. Pharmaceutical companies need to build back trust with their key customers. They need to understand the patients that use their products and the doctors that recommend them. A doctor will need to see a pharmaceutical company not as a company that demands profit but as a trusted resource that will help him or her get the best possible outcome for their patient.

So how do you start? I think the winners will be pharmaceutical companies that make a commitment to walk in the shoes of their patients and doctors. The company must recruit and train a representative to really listen to and understand the doctors they support. How many patients does he see a day? How prevalent is a particular disease state? How dedicated are her patients to treating their disease? Where are his frustrations? What questions does she have? What information can be provided to make his life a bit easier? How can the rep win the doctors trust? Remember trust will and should be built on the exchange of quality information. Gone are the days when trust was bought by sponsorships, lunches, trips, trinkets and/or grants.

This is how you build a relationship. This is how you rebuild your brand, your company, and your business. It will happen one doctor at a time, one rep at a time. It will mean that representatives will be placed in an area for an extended time to build and grow relationships. It will mean that representatives are trusted to develop relationships and not just to deliver a scripted message.

In the successful pharmaceutical company of the future representatives will decline in number but increase in knowledge and value. Many of today’s reps will find new employment in other areas. A few will rise to the challenge and be rewarded both monetarily and professionally.

Can it happen? I think so but I am an eternal optimist. Let me know your thoughts.

Until next time – all the best!

RolandB

Image: By Jennifer König http://www.gettyimages.com/detail/85155202/flickr?esource=en-us_flickr_photo

Movin' On

Yesterday 12/31/09 was my last official day as Director of Marketing for ParaPRO. Next week I start a new chapter with EYP Advisors. That story is for a future post. Today I’d like to say thanks to a few people that have helped me in 2009.

1. Social media expertise. One of my goals for 2009 was to increase my understanding how social media can be used to initiate and grow relationships with key customers. James Burnes, Don Schlinder, Shayna Martin and the team at MediaSauce did a great job helping us understand how our customers were using social media and what we could do to make a real impact. Together we created a living lab and had the opportunity to experiment and figure out what worked, what needed improvement, and how to maximize the opportunities we were seeing. Dr. Itchy and the disease awareness site at http://www.dritchy.com/ are properties other companies will be using as benchmarks for years to come.




2. A quality article. Another one of my goals was to publish an article on our clinical trial results in a peer-reviewed journal. Julie Aker, Leslie Schuh and the team at Concentrics did a tremendous job assisting Dr. Dow Stough to get the paper published in the journal Pediatrics.




3. Public relations. Ed West and Debbie Davis taught me a lot about how the media works and how to create win/win opportunities to get our message out.




4. The team at ParaPRO. No one can get big picture things done if the small things don’t get done. A big thanks to my admin team. I wrote about them in an earlier post.




5. The ownership of SePRO. In 2002 SePRO, the parent company of ParaPRO decided to take a gamble and invest to license the active Spinosad from Eli Lilly and Company for the treatment of human head lice. Since that time the company has invested considerable resources to complete clinical trials and bring a product to market that will change way head lice are treated. Without management willing to take considerable risk and think like an entrepreneur this opportunity never would have happened.
   
   May 2010 bring you much happiness and success.
   
   Until next time – all the best!
   
   RolandB