Thursday, March 28, 2013

Code Name Circle

There is an old saying that two can keep a secret if one of them is dead. Regardless of how hard you try, the circle of those who know continues to expand until it becomes public knowledge. Nevertheless, the reality is that there are times when premature communications would be damaging or would jeopardize an important event. When management attempts to manage disclosure to prevent premature communications, they must exercise great care to protect their integrity. To achieve excellence, management must engage in constant communications but that communication must be honest and sincere. A lack of communication, a lack of integrity, or a management viewed as keeping secrets leads to destructive alternative communication systems—the grapevine, rumor mill, and boss interpreters who explain what the boss really meant, etc.

Excellent managers can manage secrets but only for the purpose of disclosure at the latest possible time. To put it differently, while they cannot keep secrets they can manage disclosure for the purpose of avoiding premature disclosure. Acquisitions, new product development or releases, major reorganizations, significant price restructuring, opening or closing a facility are examples that might warrant steps to avoid premature communications especially during periods of preliminary consideration or planning.

Any secret involves an expanding circle of people. As time passes more and more people become part of the circle—they learn the secrets and assume a duty to protect it until the appropriate time for the information to become public knowledge. Code words are used by excellent managers when disclosure has to be managed. The existence of a code name is a constant reminder of the sensitive nature of the event. Code names allow reference to an event or activity without disclosure of its nature. As more people enter the expanding circle, the existence of the code word helps in the integrity department because it coveys to those new people a sense of importance of preventing premature disclosure. As people enter the expanding circle, they may be brought into the fringes of knowledge by receiving only partial disclosure. To maintain integrity they must know that they are receiving only limited facts—they are not being given the whole story or the final story. The code name helps in that regard. It implies an obligation on their part to accept the incomplete disclosure without attempting to uncover other details, and it conveys their obligation to protect the confidential information from others—those outside of the circle.

When public disclosure is about to occur, every effort should be made to first communicate it fully to the whole organization—make every employee a member of the code name circle. The team members who are becoming part of the expanding circle for the first time also need to know why the information was not divulged earlier. Excellent managers do the following:

  1. Refer to the event by its code name. 
  2. Explain the reason for avoiding premature disclosure.
  3. Go over the timeline leading up to the current disclosure.

These three steps are important to maintain the integrity of management’s ongoing communication. Rather that exclude employees, the steps are a way of bringing everyone into the circle as soon as management can do so.

If it is not possible to disclose to the team before a public announcement, the same three steps should be carried out in a team-wide event that is held separately but simultaneously with public disclosure. It is also valuable for the team to understand, as a part of management’s communication, that while the organization is not in the business of keeping secrets there are times when premature disclosure must be avoided, and the Code Name Circle is how we manage those situations.

As part of management’s communication, it is valuable for the team to understand that while the organization is not in the business of keeping secrets there are times when premature disclosure must be avoided, and the Code Name Circle is how those situations are managed.

Two 2013 events, April 9th  and June 7th, for you to consider:

Thursday, March 21, 2013

Razor Strategy

The excellent manager is a restless one. He uses transformative strategies to move from one life cycle to another and strategies like the Long Tail, Blue Ocean, and the Razor for a competitive advantage and/or increased results. The Razor Strategy is three-step classic road map that has been used by many entrepreneurs to transform a moderately successful service business into a significant financial success. A similar approach can be used to transform a product company.

For the service company:

  1. In step one, you figure out how to package the business’s services in order to market and price them like a product (the razor).
  2. In step two, you figure out how to add a service component (the razor blade) to the packaged service product.
  3. In step three, add amenities around the product and services to create a unique, high-value experience for the customer. 

Product companies can be transformed by adding a service component (razor blade) to provide a continuing revenue stream and forge a lasting relationship with the customer. Make it easier for the customer to acquire the product (the razor) in order to secure the ongoing service revenues. Then amenities can be added to create a unique, high-value experience for the customer.

Why is it important to create the “blade” component for your business? Product companies have to resell their product every year to produce revenues. In effect, the top line on the income statement of the product business starts at zero on the first of every year. The top line of the “blade”-orientated company is cumulative from year to year. Each year’s new sales are added to the revenue line. It does not go back to zero.

Coffee companies transformed their business by selling coffee systems and coffee clubs where existing customers reorder coffee for the product (the system). They added exclusivity, deluxe packaging, and exotic blends to provide a unique customer experience. Printer companies dramatically reduced the cost of printers in favor of recurring ink/toner sales.

In a law firm example, an estate practice bundles its services in several different packages where each targets to different segments of the population: the up-and-coming professional, the young married couple, and the mature high-net-worth couple. The packages are sold for a fixed price, and promotional materials use the same look and feel as the brochure for a car. They add an optional monthly fee to its service package. This “razor blade” service includes updating the documents for changes in laws and keeping the client informed of any changes or expected changes in taxes, laws, court decisions, and regulations that might affect their estate or estate plan. The estate practice adds an addition to its office along with an upscale hospitality staff, all specifically designed to cater to their more affluent clients. Everything about their high-worth-focused facility and services reinforces the special VIP status of the firm’s opulent clientele. The experience provided for the clients’ benefit raises the firm to an entirely new level, attracting more targeted clients.

Mysteries by Tom Collins include Mark Rollins’ New CareerMark Rollins and the RainmakerMark Rollins and the Puppeteer and the newest, The Claret Murders. For signed copies go to Print and ebook editions are available from Amazon, Barnes & Noble and other online bookstores. The ebook edition for the iPad is available through Apple iTunes' iBookstore.

Wednesday, March 13, 2013

The Other Side of Moore’s Law

The conventional concept of Moore’s Law is that the power of technology doubles about every two years, but the impact of the mirrored, or reverse, side of Moore’s Law has greater consequence. Promised advantages of Moore’s Law are options to take advantage of increased benefits. There is nothing optional, however, about the mirrored impact—it’s an uncontrollable rate of decay in value.

Technology is so embedded in products and services today that the reach of Moore’s Law extends deep into our economic system shortening the lifecycle of any given product or service. The consequence is that the long-term value of a given “thing” (product, process, or service) is near zero. The enduring value of a “thing” is in the ongoing capacity to evolve it—moving from one lifecycle to another. Without the capacity to continually innovate, update, redesign, and replace the “thing” will have a short life and quickly wind up in the graveyard of outdated companies, products, and ideas.

I have admittedly stretched the application of Moore’s Law, shown below, to convey its more general influence now that technology has become a direct, or indirect, component of most goods and services:

The observation made in 1965 by Gordon Moore, co-founder of Intel, that the number of transistors per square inch on integrated circuits had doubled every year since the integrated circuit was invented. Moore predicted that this trend would continue for the foreseeable future. In subsequent years, the pace slowed down a bit, but data density has doubled approximately every 18 months, and this is the current definition of Moore's Law, which Moore himself has blessed.
A beautiful Nashville lawyer, an inheritance at risk, a devastating storm and wine to kill for—The Claret Murders, a new Mark Rollins adventure.

Saturday, March 2, 2013

Recession Opportunity

Recessions are periods of opportunity for the prepared company.  The sound strategy is a contrarian onegoing against the herd.  Increase spending during recessions. Build dry powder during booms.

The majority of businesses, including your competitors, react to an economic downturn in the same way.  First, they are usually unprepared.  They immediately look for discretionary expenses that can be curtailed immediately.  Investments in plant and equipment go first.  Employee travel goes next including sales-related traveladvertising follows quickly, as does exhibit events.  In other words, they hunker down.

Excellent companies aren't surprised by a recession.  They understand that business cycles are a fact of life.  They don't suffer from a lack of corporate memory because they have built into their strategic plans several tactics to prepare for, and respond to, economic recessions.  While others curtail marketing activities, they increase them, including advertising expenses.  Rather than shrink their sales force, they snap up quality personnel laid off by others.  Rather than cancel exhibit events, they increase their footprint on exhibit floors.

For the prepared companies, recessions are bargain periods when companies can get the best deals for expanding facilities, adding or upgrading equipment and systems, and provide one of the best climates for hiring top-notch people.  However, it is a company's increased investment in marketing that pays off the most.  Companies that do, come out of recessions with increased market share and financial strength.

It is the recovery and boom periods that are best suited for consolidating your gains and strengthening your financial health and operating performance.  During these periods, you prepare for the next downturn by developing "dry powder"emphasizing improved planning, workflow efficiency, and the overall performance metrics.  This is when you want to invest in dry powder and equipment, systems, and facilities that will improve workflow efficiency and performance.  But you do not want to fall into the trap most companies will construct for themselves.  Most companies, including your competition, respond to boom periods by overreaching and overextending.  They increase financial leverage, deplete cash reserves, exhaust lines of credit, and max out borrowing power.  When the next recession hits, they will have no choice but to conserve cashand that means hunkering down, including drastically reducing marketing expenditures.

A beautiful Nashville lawyer, an inheritance at risk, a devastating storm and wine to kill for—The Claret Murders, a new Mark Rollins adventure.