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    « May 2006 | Main | July 2006 »

    June 30, 2006

    The Deep Dive

    For any company trying to develop a consultative business model or launching new products and services, I highly recomend you order and share with your team an ABC Nightline broadcast on "The Deep Dive".  The broadcast is an interview with Ideo arguably one of the most innovative design companies in the world.  ABC challenges them to develop a better shopping cart.  It is fascinating how this company works and what they do to understand the true customer requirements.  The term "deep dive" is not a new term.  Jack Welch, former CEO or General Electric, used this term to describe a process they went through to understand a problem or evaluate an opportunity.

    It is very difficault to understand a problem or an opportunity when you are sitting in your conference room.  A deep dive will help you uncover the real problems and real solutions.  If you don't do a deep dive you will often miss the mark.  If you don't believe this watch the video.  To wet your appetite, the Ideo team finds the real answer to a question you probably think you know the answer to. 

    Who steals shopping carts?  Why do they steal them?

    You'll be surprised!  Before you launch something new you may want to do a deep dive to make sure your assumptions are right.

    June 28, 2006

    Web 2.0 Disruptive Technologies

    For those of you have only heard in passing of Web 2.0, or never heard of it at all, keep your ears to the ground.  I believe it will affect all of us in one way or another.  Some of the technologies and paradigms are truly disruptive.  They are truly discontinuous innovations as described in "The Innovators Dilemma".

    To get a feel for this check out the web applications on www.zoho.com.  Here is an example of their spreadsheet program.  Do you think this is a threat to Microsoft?  Absolutely.  They don't have all of the features as Excel, but they have the ones that are used by most users.  It is free, and it allows collaboration and knowledge sharing in ways that Excel cannot.

    Think about your business.  Are there things that could be done to disrupt your business?  If you aren't the one who is disrupting, you will be disrupted.

    June 26, 2006

    Best-kept secrets of the world's best companies

    Here is a link to an Interesting article and a blog post on "25 secrets of some of the worlds most respected companies".  Read Verne's commentary and anything that he publishes for that matter.

    Verne is an interesting guy with lots of great ideas.  I'd highly recommend subscribing to his newsletter.  There are always some interesting nuggets.

    June 15, 2006

    Don't Listen to Your Customers!

    I read an interesting article last night with a quote from Henry Ford  He said ""If I had asked my customers what they wanted they'd have said a faster horse."  How profound!!  I believe this 1000%. 

    Please don't think I am promoting ignoring customers or not take their requests seriously.  I believe that a product isn't 100% complete until you have intense customer interaction.  Customer feedback is best to refine a well developed idea or to improve on an existing product or service.

    Then what does Henry Ford mean?  When you are making a break from the past and your traditional product or service offering, you can't exclusively depend on feedback from your customers. Don't expect them to have an active imagination on other things you can do for them.  Their response will be based on what you do today, and what they use you for today.

    This phenomenon has manifested itself in the branding survey performed by the IRgA.  The results are soon to be shared with all members.  When architects, engineers and contractors where asked what else they could get from their reprographers most said faster, cheaper, higher quality reprographics services.  There are many reprographers who are achieving success with value propositions other than a rock bottom price per square foot.  Their value proposition is much more strategic and compelling.  It revolves around managing information and outsourcing business processes.  Five or six years ago their customers would never have imagined they would be providing these services.

    To move your business into new areas requires innovation, faith, and courage.  Courage is not the absence of fear, but action in spite of fear.

    If you want to read an eye opening book, read national bestselling "The Innovators Dilemma".  The original tag line for the book was "When New Technologies Cause Great Firms to Fail."

    June 13, 2006

    Do Your Sales People Get Invited to Meetings?

    Seth Godin has an excellent post that hits the essence of consultative selling.  If your customers see your sales staff as an expert they will seek their expertise to solve difficult problems.  If your customer is already well educated on the problem and the available solutions then they will simply try to order products online - a transactional sale.

    Read Seth's article and think about it.  Do your customers call your sales people for advice?  Do you have sales people who are capable of being experts?

    We don't employ sales people at PLP.  We refer to them as consultants!

    June 06, 2006

    What is Web 2.0?

    If you haven't heard of Web 2.0 yet, you will!  If you have children 18 or under, just ask them.  They live in a world of Web 2.0.  MySpace.com is Web 2.0.  Hot or Not is Web 2.0.  eBay is Web 2.0.  This blog is Web 2.0.

    Web 2.0 is everything the Internet boom promised but failed to deliver.  A friend of mine, Ed Hearst, told me an adage bestowed on him from a Berkley professor of his.  "It is human nature to overestimate what can be accomplished in 2 years, but to underestimate what can be accomplished in 10 years."  I would call this BDD (or Business Deficit Disorder).  We were too quick to throw the baby out with the bath water after Pets.com, and all of the other dot-com companies went bust.

    All of the ubiquity, collaboration, and social networking that was promised by the dot-com era is now becoming a reality.  How will this affect you?

    All of the potential employees now entering the workforce are familiar with Web 2.0.  They will be comfortable with it and they will expect it.  This includes employees you will hire and more importantly employees your customers will hire!  Employees working for construction contractors will have space on myspace.

    Here is an interesting link from BusinessWeek to give you a brief overview.

    June 05, 2006

    The Dangers of Price per Copy Programs (Part 4)

    Price per copy programs (“PPC”) are not only dangerous to a company that has subscribed to them, but they can also be dangerous if your competitors subscribe to them.  Let me explain.  A PPC can be very tantalizing because the cost of entry is so low.  There is not a large up front fee.  Just subscribe and go.  This makes it easy for companies to build up overcapacity or for new companies to enter the market. 

    A company who gets in over their head and starts consistently falling below their minimum commitment on the PPC program moves into a “feed the machine” mentality.  They loose interest in maintaining a fair price for fair service.  They become focused on meeting their minimum commitment because they are paying for it anyway. 

    If your click charge on a PPC is $.02 (excluding paper), your minimum is 200,000 square feet a month, but you are only printing 100,000 square feet per month.  Your actual unit cost on the PPC is $.04 [($.02 x 200,000 sqft) / 100,000 sqft) = $.04].  When you add in paper, labor and overhead you will be around $.06 or $.07 a square foot.  If you are in a competitive market, there is very little (if any) profit left over.  That is not the root problem.

    Here is the real problem.  If you assume that rent, overhead and labor is relatively fixed then the best thing for this company to do is sell their printing below their cost.  If you assume that the variable cost (excluding PPC click charges but including paper) is $.01 then any work performed up to the minimum commitment will increase profit if it is priced more than $.01.  How can that increase profit?  Everything but the paper is already paid for.  You will spend that whether you do the printing or not.  Therefore any business you can get to fill the gap between the 100,000 square feet you have been doing and the 200,000 square foot commitment will add to your profit as long as it is priced over $.01.  Now $.01 may not be the number, but it is definitely less than $.03.  Think about that!!  Work done for $.03 will have a positive impact on this company’s bottom line.  Do you want competitors like this in your market?

    At this point the mentality is not to “make more” profit, but rather to “loose less”.  You may say, “That company can’t price like that forever.  Eventually they will go out of business.”  True, but they can do it long enough to hurt your business, and lower the expectations in the market.

    June 02, 2006

    The Dangers of Price per Copy Programs (Part 3)

    I was told recently "One of the reasons I am interested in a Price per Copy program is  it does not show up on my balance sheet.  A  bank won't see it as a liability when I go to them for financing."  This is a fallacy.  A five or six year contract with minimum commitments is a liability.  If you do not book it as a liability on your financial statements (it can be argued both ways), it should be disclosed in a footnote.  Before a bank will give you money, they want to understand all financial commitments you have whether they are on or off balance sheet.  The documentation you sign with the bank has you representing that you have disclosed your financial commitments.

    Furthermore if you decide to sell your business there is a chance an acquiring company is not interested in this type of long term commitment.  They are buying your business for your revenue stream, market share, and customer base.  An astute acquirer would subtract the remaining financial commitment on your contract from the purchase price.