Campaign Strategy (Part 2)
There are a number of reasons why campaigns either succeed or fail.  Over the next few days, we will look at these beginning with targets.  Perhaps the number one reason that campaigns fail or succeed is the definition of the target.  A target is not as simple as being a person, a demographic, or a type.  Those are all characteristics.  The target for a campaign must also be defined in terms of the actions you want to occur that will allow you to win. 
Take for example the current political campaigns which are certainly a business.  The target is defined as voters who will vote for the candidate and allow them to win the election.  Sounds good initially because there is an action required of the target but this is so general, it will inevitably cost much more than a targeted campaign.  If a political campaign were run like a business campaign, some of the parameters defined might be as follows.
1.      How many votes are needed?  If you are looking at the actual vote count the answer is an easy one more than all other candidates.  However the US uses an Electoral College system in which the popular vote in essence is a vote for the electors who will cast the vote in the vote of the electors on the second Wednesday in December.  That certainly changes the target.  But if it was based on raw votes and there was no plurality rule, your campaign needs to reach less than 62% of eligible voters – the ones who vote. 
2.      How do you find voters who will vote?  Of the approximately 207 million people in the US who are potentially eligible to vote in the next election, it is estimated that less than 150 million will vote.   Since voters must be registered to vote and their voting history is recorded and publically available.  In fact the US Census Bureau has great data, to do data mining in which you can begin to build a better target group.  You will also be able to find out how many newly eligible voters generally vote to help you define your target as well as voters who can no longer cast a vote.  With probable voters defined, you can now begin to think about how to reach them and get them to vote for your objective. 
3.      How do you find the ones you need to win?  With voters defined, there is more information than can tighten the work of your campaign.  Looking for consistencies as well as inconsistencies of actions will define your approach, methods and strategy to enhance the outcome of the vote.  For example - A certain percentage of the voters who vote, do so along party lines without fail.  This has averaged approximately 37%.  So the target voter is now making sure that the portion of the 37% that can be counted and the portion of the 63% that can be influenced are moved to your side of the vote.
As you can see in this example (used because it is a current issue and applies well to almost any business model) rather than needing to target potentially 207 million people the actual target is less than 60 million people who will potentially cast a vote.  It is those votes that will determine the election.  It is still a large number but through the use of data mined, targeted strategies can be employed which always produces a better outcome with greater efficiency and less cost than a general campaign. 
If we were looking at this as a business rather than as politics, we would have to question spending.  Perhaps spending very little in general campaigns and the bulk of the money on targeted voters would be a better use of funds. 

In this example, spending attempts to reach everyone in the general population in hopes of reaching voters.  Spending a small amount on general campaign costs for example 5 - 10% of the dollars per vote on general efforts and 90 - 95% per targeted voter, the same proportionate dollars that were needed to win votes targeted might reduce the cost of the campaign by over fifty percent.  While that number is extrapolated and might be high, any number over 10% when you are talking the quantity of dollars spent in these campaigns would most likely get the attention of every person in a “C-level” role of a company.
The bottom line – in campaign strategy, no matter what type of campaign – business, political, military or any other – an undefined target will always be costly and reduce the chance of winning.


Campaign Strategy

Campaign Strategy (Part 1)

Campaigns are all about a methodology that produces a win.  It does not matter whether it is a marketing campaign, military, political, fund raising, branding, customer loyalty or a big sale: the bottom line is the same did you win or lose?   How you get to the win is where the strategy comes in. 

The series of steps, interwoven activities, milestones and planning are a kind of a puzzle.  Unlike a simple sale where there is little that leads to the exchange of dollars, campaigns often begin with a battle for the mind of those involved in the objective.  Campaigns are process driven machines that not only consume energy but create energy and drive results.

Within each campaign, there may be multiple sub campaigns that are occurring sequentially or simultaneously.  There are many moving parts at any given time all tied together with the central objective and focus on the win.

Right now, we are witnessing political campaigns for the presidency of the United States.  If these were dissected, we would find that they are a lot like any business campaign.  Like most business and military campaigns even once the prime objective is accomplished the campaign has a long tail of after effects that are set in motion during the campaign.  Effects may be either good or not so good. 

Great campaigns bring long term value and results because the machine and all of the energy does not cease when the objective has been won.

This month, our series “Campaign Strategy” will explore the components of campaign strategy – what works and what does not and how to make campaigns work for your business.


Buy, Sell, Share, Trade & Leverage

Enterprise by Design (Part 11)

This month we have explored many facets of enterprises.  Whether built by design, formed by need or the result of an accident, the components of an enterprise are assets to be bought, sold, traded, shared and/or leveraged as a method of creating value and money. 

A great example can be found in professional sports teams that need players with skills, talent and experience.  These are a type of an enterprise.  Each player added to the team is not only a player in the game but also part of a commercial machine that has the capability of generating money and driving value.  That money comes from the winning power of the game, ability to draw fans and the sales of items fans will buy because the player is on the team.  Building the best team is not restricted to winning games, it is all about winning dollars.  These are an enterprise by design.

Enterprises that can quantify the value of all components have the advantage over companies where valuation and revenue generation are tangled and not able to be isolated.  Like the sports player, there are absolute costs that can be tied to the player as well as revenue streams that are generated as a result of the player being a part of the team.  There is an isolated value as well as the value that the team derives as a result of the assembled players. 

The next factor of valuation is performance.  An asset such as a player has value even if the team does not have a winning season but if the performance factor is added and the team has a great winning season, the team’s value escalates.  If the player is an outstanding individual performer in addition to being on a winning team, the player asset has value that may be greatly increased by leverage.  The leverage may be to bring value to the team or it may be for what the team gets in return in a trade.

An intangible part of the value that drives real value is loyalty.  Does a consumer spend more money in the enterprise because of loyalty to the enterprise through brand, quality or convenience?  In our sports analogy that equates to fan base where the rational consumer changes to the consumer who embraces and owns a relationship with a team or a player. 

Leverage is not restricted to the enterprise but often adds to the value of the enterprise and businesses who can leverage the assets of the enterprise.  If you do not think that is possible, consider the amount of television time devoted to sports and money generated to the enterprise and vendors who license the team images and branding.  The trail of the money is long and complicated.

The bottom line is that in the analogy and the best enterprises any component has valuation and potentially the opportunity to increase the value of the enterprise whether bought, sold, shared, traded or leveraged.  Enterprises built by design, recognize that any component is an asset and the greatest value may not be in holding the asset.

Thank you for following the Enterprise by Design series.  We hope that you have found the content valuable and insightful.  Comments are always welcome.  The September 2012 series will be Campaign Strategies.


The Cost of Impulse

Enterprise by Design (Part 10)

It is not unusual for an enterprise owner to be approached by an ambitious person with an idea that will expand the enterprise to a new business or location.  More often than not, these are not an idea for the enterprise but a partnering or other relationship in which the person seeks ownership and participation.  These can be great or tear apart the enterprise, with costly consequences, if they are not set up correctly in the beginning.  Last week, I had a call from a lady desperately hoping that I could help her out of the mess she was in.

She had approached the owner of the enterprise with an offer to help him expand into a lucrative market where she was established.  She would manage and build the location.  The business would be a hand in glove fit with the existing enterprise expanding the base of business to transact with businesses already under the enterprise umbrella.  He knew her and her background and knew that she was the type he would hire if he were going to expand into that market.  He had also been trying to put an exit strategy in place but did not have any candidate successors.  She was also to invest some cash to get this started so it was definitely worth considering.

Once the two decided that it was worthy venture many components were initiated.  They found a location to lease, agreed to use the operational infrastructure in place for other locations in the same genre of business under the enterprise and begin to submit requests for approval to the various government entities as well as the franchisor.  Things were moving along quickly and people were being recruited to work there.  Everyone was very busy.

The relationship of the parties and percentage of ownership were verbally defined and agreed with a handshake.  The enterprise owner would have the majority stake in the venture which is not unusual.  Everyone made promises to put everything in writing and some documents were drawn but none fully executed or filed.  The use of the funds and consideration of costs including working without pay during an initial building period as a part of the investment were in many cases assumed or not discussed.

A few years have passed and no one is happy.  Communications are primarily stiff, awkward and non-productive.  There is a desire to dissolve the business relationship but no mechanics in place to do it in a business-like fashion.   No matter how this is done, there will be hurt, resentment and financial loss.

All of this could have been averted with a few preliminary structures and knowing that the investment of time in setting up any business relationship correctly usually mitigates risk and establishes the boundaries where everyone can win.
  1. You do not have an agreement that will stand unless it is in writing and signed by all shareholders and stakeholders.
  2. Engage legal and financial help at the beginning, it is less costly than if you have to undo things later.
  3. Make sure that you have a strong Buy – Sell Agreement that address what happens if:
    • You want to change the percentage of ownership;
    • A partner is no longer able to take care of the business responsibilities and/or financial commitments to the business; 
    • The business segment is to be dissolved.
    • A partner wants to be bought out.
  4. Make sure that you have set up the valuation methodology and criteria that will be used for any change in ownership or investment. 
  5. Make sure that the agreement addresses what happens if more capital is required beyond the initial investment and how continuing financial obligations such as leases, mortgages and loans will be handled.
  6. Have all working arrangements, roles and responsibilities detailed and agreed in writing with specific review dates, accountability measurements and achievement criteria.
  7. Write and agree to a business plan for the business segment that is more than a spreadsheet.  The how is often times more important than the projected results.
  8. Determine, as a part of the agreement, non-compete criteria should the business be dissolved or a partner leave the business.
  9. If the business is such that there is potentially an impact on people where factor such as loyalty to a person or relationships may impact the ongoing business, these should be considered in the initial agreement so that there are no questions later.
  10. If the severance of the business was to occur, what happens with other business relationships within the enterprise?  Will the severed entity still be able to transact business as a customer?
  11. Consider payouts and valuation for remainder or follow-on business as a result of the business segment or partners efforts.
  12. Consider how will data, databases, customer relationships, proprietary methods and or processes be treated if there is a separation of interests or parties.
  13. Consider ownership of all branding and identities.  Define who owns what and what will happen post severance?  This includes web sites and social media.
  14. Make sure that use of space, names, and information procured as a result of the partnership is defined if there is dissolution or severance.  Define whether or not setting up email forwarding or other methods of sustaining data, information and internal or customer communications is allowed or prohibited post separation.
  15. Define references that may be made to the past relationship in future marketing as in “formerly known as” or “formerly affiliated with”.  This is follow-on marketing using the association.  Such practices may or may not be in the best interests of the remaining entity if the severed entity is engaged in the same or a similar business.
In some ways partnering regardless of the percentage, even if it is an employee, is like getting married.  Writing the agreements and making the decisions up front is similar to a prenuptial and can save a lot of time, aggravation and money in the end.  

No matter how exciting the opportunity may appear or the external factors that suggest short cutting it never is worth it in the end.  If you must take advantage of a situation and do not have time to do it right, at minimum put a written agreement in place that outlines the initial structure with a definitive date for the detailed agreement to be written and agreed by all parties with a “what if” clause if it does not occur.

An enterprise built by design is always documented and reduces the risk that impulsive decisions and actions bring. 


The "Doers"

Enterprise by Design (Part 9)
Yesterday we talked about the dreamers who can put ideas together, tell others about them with a lot of detail but in many cases never execute the dream.  The next group is the “doers.”  Thinking about doers, the person who instantly comes to mind is my uncle Roland.

Roland loved to tell stories that began with walking a mile in the snow to go to school through the calluses earned through hard physical work ending with his success as the Vice President for a major regional bank.   He was a proud man who worked his way up the ladder and earned his status.  Status, wealth and tangible possessions were important to him.  He sacrificed just about anything legal to meet his objectives including relationships. 

Roland was an extreme example of a doer.  He never built anything.  He did his job very well and was very focused on exceling.  He had trouble engaging others in processes, tasks and especially when it came to sharing the spotlight.  He was a great guy to have in an company as he could be counted on getting the job done and done right.

There were moments where we thought that Roland might step out of his comfort zone and take initiative that had not been in a task that he had been given.  Some of these times came after he had conversations with my Dad who was a dreamer.  Dad would paint his dream showing the opportunity and the path.  Roland would listen intently with ears that really picked up with my Dad’s statements such as “If I had your money I would…”  or “Can you imagine how much money you could make if you did …”

Each time when it looked like he was going to reach, he drew back into a task orientation that was highly risk adverse.  The mold and path were set, to him deviation was first calculated in cost which caused a blindness to the opportunity.

Most doers will take some chances and some actually can take a well outlined idea or dream and make it a reality.  Few if any of these have any size and rarely are usually vertical businesses not enterprises.  The challenge to growth for the doers is in most cases, ability to trust someone else to do the job as well as they do.  They have difficulty considering initiatives that they are not tangible where they can get their “hands dirty”. 

Just like the dreamer, the doer is a contributor to the organization and important in achieving objectives.  To build an enterprise, it takes an entrepreneur.  


Enterprise Dreams

Enterprise by Design (Part 8)

We all have dreams and visions of the rewards we will gain if our goals are achieved.  Achievement is not always what is important if you are a dreamer.  My Dad was a classic dreamer.  He always had a dream and could tell you how it would work in detail as he spun the future in his imagination.  His smile was a mile wide and his chuckle throaty as he considered options and benefits. 

Like many dreamers, Dad never had extra money and when he did, he was likely to give it away if he met someone who needed it more or if it would bring joy to someone.  He was never a status seeker and wealth was not something he worked to accumulate.  That was a part of the problem in converting his dreams to reality.    He was good at telling us that it took money to make money, but it was not from experience, it was because he knew it in theory.

His enterprise dreams were the most elaborate of all.  In his mind and scratched designs on paper, he built companies under a benevolent umbrella that would employ every family member and friend.  He thought of the products and services that would be created and sold to both internal and external consumers.  He understood the woven fabric that creates the most successful enterprises.

Dreamers inspire others with their ideas but often never really start anything.  Beyond money or resources, dreamers are not doers and do not want to be harnessed to the work it takes to make their dreams a reality.  Dreamers like my Dad have a very pleasant world in which their imagination lives and grows.  They work through day to day tasks to make a living while they look forward to the time they can dream of great things they will probably never touch.

Being a dreamer and enjoying your dreams is not wrong or bad as long as there are no contingencies or dependencies that will suffer.  Dad’s dreams of his business enterprises probably inspired many others who were doers to build businesses.  They might not have had the original dream but could use the ideas and concepts of a dreamer.  Someone else using his ideas and enjoying success was always a source of pride for Dad.  There was never any remorse. He did not look back or get into the ruts of shoulda, coulda, woulda.  He was genuinely happy and loved the freedom of his dreams that could be enjoyed without encumbrance or work.

When you encounter a dreamer, do not dismiss them as worthless.  Listen to the ideas they share when you can.  They often have time to think of things that are great ideas just waiting for a doer to put to work.  They are contributors, just not in the traditional sense.

When I was a child outside with my Dad, whenever we saw great puffy clouds in the sky, Dad would say that they were the ideas generated in brain storms traveling to destinations unknown.  Today, he would have been 83 and I am sure that he is happily puffing out dreams and ideas to float past the doers who will put them to work.  

Happy Birthday Dad!


An Enterprise of One

Enterprise by Design (Part 7)

Can a single person with a small and closely held business be an enterprise?  Yes, it is about the way in which the person makes money, often through disconnected business interests where there is little interactive relationship of customers.

Many independent contractors are an enterprise of one.  An example may be helpful.  A real estate agent in most cases is an independent contractor.  Whether they are also an independent one person brokerage or affiliated with another brokerage, they are still independent with few if any restrictions on being involved in other businesses.  Many have several businesses that they are involved in simultaneously and do not necessarily share a common customer base.  They might sell a line of retail products, write and sell books, create and deliver training and or seminars.  Some additionally offer property management services and broker price opinions for companies such as relocation companies.  You will find these people also invest passively and actively in other companies.

This example shows that the person is a single individual with many lines of making money, there are no common employers, they may not employ anyone else and customers may not even be aware of their other business activities. 

People who operate as an enterprise of one have to be highly organized to be successful.  No matter how many skills, talents, or business interests they may have.  They have one universal and limiting factor – Time.
Time forces the growing enterprise of one to engage in both active and passive businesses to generate money.  In the example above, selling books they have written can be contracted to a third party requiring the management of the vendor rather than significant investment of time.

Perhaps what I find most interesting about people who fall in this category is that they are also the ones who often take leadership roles in the community, give their time, money and expertise to help others.  They have learned to utilize their resources, energy and time on a level that brings envy and admiration. 

An enterprise of one person does not necessarily lack focus at all.  In fact due to their personal organization skills and use of time and resources, they are a highly desired contributor, vendor and service provider.  These people do not do well in companies that limit business activities or require that they own all work product created during employment tenure.  Consequently, most are independent. 

Imagine the power a company could have if it engaged and utilized people who are an enterprise of one.  Perhaps more exciting would be if the education and training people receive from early years through business activities opened the thinking and style of work to embrace the skills found in the people we call an enterprise of one.


Webs, Atoms & Enterprises

Enterprise by Design (Part 6)
Webs, atoms and enterprises actually have a lot in common.  All are connected.  Through those connections and interactions that create a continuum of energy.  From that energy; new dollars, relationships, transactions, and “stuff” may be created, transformed and or vaporized.

Enterprises utilizing the connections and energy grow with less investment and structure.  The challenge is that many enterprises do not use the power and scope of the business to attract and engage customers and prospects.  The Internet (web) is the perfect partner to empower the enterprise.

Take for example General Electric.  Their site www.ge.com has integrated all of the websites in several easy to navigate formats including an A – Z listing with links.  Each company under the GE umbrella has a stand-alone website with similarities in style and navigation that helps promote the feeling that you are doing business with the same company.  There is not much about the parent company in any of these sites except that you can get to the company site by clicking on the link at the bottom.  While some of these would never share the same customers, there is the opportunity to port a positive customer experience throughout the GE branded sites. 

It was not long ago when many NBC shows such as the Today show co-branded NBC with GE as a parent company.  Today under NBC Universal, GE still has a 49% ownership share however there is little if any utilization of this major ownership stake from either the media companies or GE.  The question that has to come to mind is with that large of an ownership state, it would seem like an opportunity for continued cross branding and customer experience.

 Berkshire Hathaway, Inc. is highly diversified in its portfolio.  What is interesting is that the featured product on its website http://www.berkshirehathaway.com/ is GEICO Insurance.  You have some digging to do for other companies but you can buy Berkshire Hathaway Activewear on the homepage.

Prudential www.prudential.com leverages brand name across its business interests.  No matter where you click on the site, you will be aware of the expanse of the enterprise.  However, once you are transacting business or viewing a company related site separate from the corporate site, the enterprise is lost to the business you are viewing or working with.  Customer experience and leverage are immediately limited.  These become like electrons orbiting the nucleus of an atom, each on its own path but not necessarily interfacing with any other electron, orbit or even directly with the atom. 

These are all examples of fairly large and diverse enterprises used as examples that will apply to even the smallest enterprise.  One customer who buys two things through the same enterprise is worth double a single customer with a single purchase.  A customer who buys from many companies within the enterprise is a lot more valuable especially if some of the products or services will create a repetitive purchase (annual renewals, upgrades, add-ons). 

If the enterprise can leverage trust, consumer experience, value, quality and integrated needs, marketing and sales are less costly and more profitable.  If we were to look at you enterprise, would the customer find many paths or find themselves in a dead end wherever the first point of engagement with your company occurred?  


1099's in the House

Enterprise by Design (Part 5)

It’s a vendor, it’s a customer – no, it is an independent contractor.  Independent contractors, 1099’s, are a significant part of the American workforce.  There are certainly 1099 vendor only contractors but these are easier to work with and defined.  The 1099’s that impact operations and relationships in an enterprise are those that blur the definition with activities and characteristics as both a customer and a vendor. 

The opportunity and challenge is in knowing which hat each party is wearing at the point where money is a part of the conversation.  This is particularly true in companies that use independent contractors as their primary staffing of projects and sales organizations where the sales are not necessarily company driven.

Consulting companies, particularly IT services companies, frequently employ 1099’s to bring specific expertise to client projects.  This use makes sense as hiring a permanent employee for a limited time project would not be a good decision. It allows the company to meet demand without having high overhead.  It also means that resources are not necessarily instantly available when you need them.

Real estate companies, due to licensing laws have a special arrangement with independent contractors that aligns the 1099 with the company closer and for longer terms than the 1099 who is basically a freelancer. A real estate agent, associate broker who affiliates with a broker is differentiated from staff first by compensation.

Particularly in situations similar to the consulting 1099’s and real estate licensee 1099’s, the enterprise needs to see them and provide interaction to meet the needs of both customer and vendor relationships.

They are a customer in that they need tools, services, expertise, management and resources of the company and purchase these with either a fee or a portion of earnings.   They are a vendor in that they have tools, services, expertise and in some cases, either relationships or inventory that the company will leverage and profile as its own through the affiliation buying these at a negotiated rate, contingent fee, or fee for service.

So where do the challenges occur?  Recruiting is a great example in both consulting companies and US real estate companies.

It seems that the pursuit of the independent contractor due to either need or competitive pressures often seems to have what the company is offering of value fade to the background.  The independent contractor feels the power that is driven by the passion of the company’s pursuit and the balance that should be the value received by both vendor and customer, in the negotiation is lost.  It is almost as if these companies come in with wallet open saying what do you want and what will it take to get you? 

Most recruiters in the pursuit not only abdicate negotiating position but also set in motion an expectation that will continue throughout the tenure of the relationship and into any subsequent negotiation.  It is often the beginning of a management nightmare.   A lot of this occurs because the recruiter is compensated on immediate recruiting results rather than good judgment, quality or alignment with the long term needs of the company.

The impact to an enterprise is even more significant than a company that has only one core business.   The value and opportunities that could be leveraged across the enterprise have not been a part of the value proposition in the beginning and will be difficult to engage without significant work, probable negotiation and competition of outside relationships that the 1099 may have had prior to affiliation or contracting to a project.

It is both a customer and a vendor relationship that should be defined by value given and received.  The 1099 strategy for staffing is a great option but one that needs a business focus from the beginning. 

Perhaps in negotiations some of the lyrics from either the Black Eyed Peas song called “House” or LMAO, Steve Aoki song – “I’m in the House” should resonate in the owner and recruiter’s heads.


The Cross Marketing Challenge

Enterprise by Design (Part 4)
In an ideal world cross marketing products, services and value would occur in an enterprise like dominoes creating a ripple effect through the company resulting in additional sales each time a lead, customer or transaction occurred anywhere in the enterprise.

That concept is the dream and objective of the enterprise but rarely has a real chance to occur.  The reason is that there are no systematic pathways of processes in most companies to facilitate the process and few rewards for additional effort.

Most companies initiated from a core business.  The ownership saw opportunity to sell products and services under the company to the same set of customers which created an added value of convenience for the customer and company alike.  However since it was very important to keep the core business machine producing it created a silo effect.

The silo effect was the result of each business component growing with relative independence to all others.  Each had different leadership, different sales teams, and different incentive/compensation systems.  Right from the beginning, a new hire from orientation through training and recognition received for achievement was on a path to contribute to the silo they had been hired into.  The information and introduction to other components of the business were there and the opportunity was there but it was not on the path, most often it was on branches that required taking a bit of detour from their primary path.  When it occurred, it was seldom by plan.

Marketing personnel also tended to be focused on the silo where they had been assigned responsibility with little training in thinking of integrated marketing that potential would have multiple touch points and potential results.

The sales teams did not have real cross market understanding of how to integrate opportunities into sales and in most cases see little if any compensation for their efforts if they do try.  In some industries this has led to business being referred to a friend who at least appreciates the effort or a company who will exchange something of value directly to the sales person with no benefit to the company.

Management teams viewed cross selling as an additional responsibility bringing more problems and challenges for them to deal with in transactions.  Since most managers also need the respect, loyalty and like of the people they manage, there were few reasons to invite the challenge, especially if there was no compensation to be earned.

KPI (Key Performance Indicator) reports to the leadership gave great information on the state of the silos and the overall state of the enterprise but little information regarding the efforts or results of internal cross marketing.  As a result, the challenge was invisible until it reared its ugly head from time to time when a competitor directly benefited because someone in the company gave a reference to an outside resource.

The fix is not simple and it is multi-dimensional, touching nearly every component structurally and strategically for businesses who want to cross market.  There are both passive and active options to be considered for efforts.  It also requires a change in culture to incorporate enterprise thinking and a machine with well-meshed cogs to produce optimum results.  No contact should be forced to find resources internal or external to the company if they exist in the enterprise.  Nothing is impossible if it is incorporated in the mission and processes which support the mission, it is enterpriseby design.

For additional information on operational machines and KPI’s, you may want to read the Operations and Opportunities series.


Value, Transactions & Customers

Enterprise by Design (Part 3)

Designing an enterprise requires an understanding of all of the components.  Today, we will do a little open mind surgery to expand thinking and definition.  Expanded thinking always creates opportunity.

In all customer and vendor relationships there must be an exchange of value.  Without an exchange of value, there is no transaction and without transactions, there is no business.

So does the transaction define the customer or does the customer define the transaction?  In truth it is value that defines the transaction and the customer.  Since value is the center component, what defines value?

Value is not always products, services and or money.  Value can be ideas, concepts, methodologies, relationships and of course exchange.  It can be transacted in many ways from direct sale to barter.  Value fulfills, gratifies, builds, enables and achieves.
  • Fulfills – wants, needs, dreams and desire
  • Gratifies – brings good feelings, positive energy or position
  • Builds – resources, capital, structure, esteem and power
  • Enables – progress, other transactions, and relationships
  • Achieves – goals, direction, and mission objectives

Transactions as stated are an exchange of value.  Transactions without value given and received should be considered either charity or marketing.

Customers – The most common customer considered in business discussions is the external customer.  However in enterprise design, there are two other types of customers to be considered.  These are the Internal Customer and the Shared Customer.

External customers are not related to your company, business or enterprise except by a transaction in which the company, business or enterprise is the vendor
  • Example – You go to the store and buy groceries.
Internal customers are those under the company or enterprise umbrella where the transaction facilitates a critical process, another transaction, or are required in the value chain for the external customer to transact business with multiple components of the enterprise as a shared relationship.
  • Example – You go to the hospital and while there you see doctors, have tests and or procedures.  Each doctor or service linked to the hospital is an internal customer to the hospital.  You may receive an aggregated bill or separate bills but everything was linked to your hospital experience.

Shared customers are those that have stand-alone transactions with companies within the enterprise, partners or related services and are linked by shared relationships.
  • Example – You buy a property through a real estate company and need a mortgage, title insurance, inspections, an appraisal, moving companies, utility services and more.  Some of these may exist under the enterprise, some will be partners and others simply related services where is often coordination and dependent conditions.  All are related by the relationship to the customer.

Value, transactions and customers are required for all businesses but enterprise design requires open mind surgery to consider vision and concepts that expand and define the enterprise and relationships it will enjoy.  


Follow the Money

Enterprise by Design (Part 2)

How are enterprises created?  It begins when someone catches the scent of opportunity.  They begin to check to see if whether what they sense is a part of a path worthy of following.  As they travel the path, they are likely to be greeted with other scents as the path branches.  Some of the branches will lead to deadends and false starts, others will promise options worthy of pursuit.

The decisions on the paths worthy of commitment have another feature.  Money.  Money that is tangible, trackable and obtainable.  As a lady with the initials of LK would say, nearly as a mantra: Follow the Money.”

Although her instruction was more from an audit perspective, it works when you are in pursuit of opportunty too.  In the post, What is an Enterprise?, we gave a number of examples and kinds of enterprises.  All were initiated when someone caught the scent and followed the money.

Questions that will help you find and pursue the paths that will become the linkages of your enterprise include:

  1. Do I share customers with a company offering different products and services than I offer?
  2. Do these customers buy from companies offering those products:
    • At the same time they have a transaction with my company?
    • Before the transaction with my company?
    • Following the transaction with my company?
    • How often does this occur?
    • Would the customer buy these products and services  from my company if they were offered?
  3. Would this increase customer “stickiness”?
  4. Does it result in dollars or discounts due to the relationship of companies under my business umbrella?
  5. Will the additional products or services be ancillary, stand alone or become the core?
  6. Will brand extension be an asset or a hinderance?
  7. Who will be the customer?
    • Internal
    • External
    • Affiliated
  8. If it is a stand alone with no relationship to the core business or other businesses under the umbrella, why do you want to pursue this?
    • Interest
    • Passion
    • Influencer
    • Opportunity
These questions will not be the end of the questions but will get you started.  In each case, as the follow the money question – Can we make money?   Each question will help you develop a series of linkages that may be important in your consideration.

An example that may be helpful, there are obvious linkages in a real estate transaction of products and services that are necessary to complete the sale.  However the number of home buyers that buy a new or different car within 90 – 180 days is very high.  

Does that mean that the brokerage should own a car company or an interest in one?  Probably not as there is no guarantee that the customer will select the brand or type offered.  

The preferred arrangement that has money and relationship is to create relationship with car vendors who are in the car business to create an affiliate relationship.  These help provide stickiness and extend the customer relationship with very little cost but benefit in customer satisfaction, retention and referrals.

Catching a scent trail does not mean that you will find the meat but if your nose is not to the ground and checking the air, it is unlikely you will find the scent.  In addition to scent, follow the money.    

·        The dog pictured is Blue, a Bluetick Coonhound owned by our daughter.  He has a passport and follows scents all over the US and in many countries.  A working dog, he carries his own pack.


What is an Enterprise?

Enterprise By Design (Part 1)

Enterprise by Design is the theme this month.  Many businesses have features or functions that would be found in an enterprise but do not capture dollars that are available because they are not thinking like an enterprise.
So what is an enterprise?  Most definitions offered in dictionaries make the term synonymous with business, firm or company.  But then how do you differentiate the company that owns multiple companies and business interests under one umbrella?  For the purpose of this series, we will look at the enterprise as a business that is complex and may have multiple businesses, interests, transactions and customers that may or may not be shared with the core business, if there is one.
A few examples may be helpful.

There are many kinds of enterprises including:
  • Related customers
  • Related products
  • Related products and services
  • Related transactions
  • No Relationship – all stand-alone but common ownership
  • Affiliated services and relationships
  • Core business with ancillary services
  • Core business and tangential products or services
  • Sales to internal and external customers
  • Brand related
  • Related product lines

In essence, the business becomes an enterprise when it expands its sources of revenue.  This creates complexity and opportunity and in some cases “happened” rather than resulting from a plan.  

This series will explore types of enterprises, enterprise thinking, methods to expand your business into an enterprise and or expand an existing enterprise, case studies and more.  We hope you will enjoy following this series.


‘Twas Five Months ‘til Christmas

Christmas In July (Part 13)

‘Twas five months ‘til Christmas and all through the company house
Everything was stirring, opportunity beckoning like a march from Strauss.
Business plans and strategy reviewed with care
Dollars promised through December would be there.

The producers digging for business widespread
While visions of dollars danc’d in their heads.
The CFO is counting and sees no cap
It will not be the usual fourth quarter nap.

Out in the market we have caused such a clatter
What they think really does not matter.
The impact grew like fire in a flash
The momentum will be more than a splash.

The glint of rewards beginning to show,
The work is not over I truly know.
I am in wonder at what is beginning to appear
The best in our people with awe I revere.

Even the most senior of our staff are lively and quick
They too are energized by the business uptick.
Faster than ever deals begin to frame
The teams called out each mentioned by name.

Now Leaders, Now Managers, Now Staff and Producers
On market, On leads, On partners and consumers
To the top of the market and over the brawl
Now close the deals, close the deals, close the deals all.

As anticipation mounts when the wins begin to fly
Every obstacle is met making challenges nigh.
So to the top of business the producers flew
More dollars for each and bonuses too.

Then in the market I heard the poof, poof
Competition backing down under our hoof.
I knew it was not the market turning around
100% market share is aways available I’ve found.

Reasons for failure were given the boot
Winning for all is such a hoot.
The dollars and rewards of the attack
Are building and not one is looking back.

Their eyes, how they twinkle and attitudes merry
Changes in culture forward we carry.
Armed and ready we draw our bow
New targets in sight, hit with results to show.

We have dug in our feet and shown our teeth
Our integrity, mission and vision we keep.
We’ve cut a broad swath with fire in the belly
The market has opened up like a deli.

I feel the passion and energy of my old self
Leading, laughing, thinking, it’s all top shelf.
Looking back now fear was all in my head
Being proactive means nothing to dread.

It is easy and exciting each day as I go to work
The hum and pace are more than a perk.
Tensions, concern and anxiety no longer pose
A threat to prosperity on the path I chose.

Awakened from my thoughts as if by a shot from a pistol
The newest numbers make everyone whistle.
All indicators suggest a December that will be off the charts
A very merry Christmas bringing dollars and joy in our hearts.

An adaptation by Pat Soltys of the poem “Twas The Night Before Christmas” written by Clement Clark Moore.

This post concludes the Christmas in July Brings Dollars in December series.  Our next series is Enterprise by Design.