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In this issue:
The basic question the authors suggest you ask about your organization: What do you do well that your best (i.e. most profitable) customers value?
The authors do practice what they preach. There's a 3-minute "Reader's Questionnaire" at the end of the book. The first question: "This book (check one) Exceeded my expectations ___; Met my expectations ___; Did not meet my expectations ___."
"Customers are not always buying what you think you are selling."
Once you know what customers want and what is important to them, you need to link what they actually buy with your own internal metrics that show how well you're doing in each of these areas. The authors give different examples from companies that have mapped out what their customers value and the internal measurement techniques that both track success *and* communicate that information internally. This is called "hardwiring" the voice of the customer to your employees.
As with the last book we reviewed, these authors also note that the "bottom line" financial measurements are usually *after the fact* and do not take strategic measures into account. Unfortunately, the typical drastic financial measures of slashing R&D budgets and headcounts generally do next to nothing in terms of addressing the cause of the problems. And finally, these financial measures tell you where you are, but not how you got there. The solution? Dynamic Business Scorecards. These are company-specific business models that predict bottom line results -- future, rather than past, results, using goals and measures.
Now, what should you do when your best customers value something you don't do well? . . . Partner with those who do. An important issue, especially for consultants. (See the last section of this newsletter for more). Partnering to the extreme, the authors observe, is outsourcing.
Of the Top 10 reasons why companies outsource:
1. Improve company focus
2. Gain access to world-class capabilities
3. Accelerate the benefits of reengineering
9. Resources not available internally
I suspect that the organizational practice of "right-sizing" to focus on core competencies will continue to offer consultants and clients abundant "High Value, High Impact" opportunities for partnership and outsource relationships.
The last 60 pages of this 300-page book consists of a 15-tool "Toolkit for Customer-Centered Growth."
I’ll condense and report on your replies in our next newsletter. Later we’ll open an area on our Web site for this purpose.
Your client is a small manufacturer, the smallest of three players in a niche market. The other two companies are much larger than your client, and this niche produces just a small portion of each of their total revenues. For your client, on the other hand, this niche is a major source of revenue, even though its total revenues from this niche is smaller than that derived by the two bigger players.
You’ve worked with this client over the years, and now they’ve asked you to assist them in expanding their business. You’re doing a market analysis, helping them re-define the segments, understand their competitors’ positions, and assess whether and how the technology might be applied to other, untapped markets.
A third or so into this current assignment, you are approached by the largest of the three players. Apparently they have also realized that the technology used to serve the current niche has great potential in a couple of new applications. They want you to do for them essentially what you are doing for your much smaller client, i.e. assess the market potential. The larger company has far deeper pockets, both for a much more thorough market assessment than your own client can afford, and for the marketing and sales program necessary to open up this new market successfully.
What do you do? (A) You could tell the larger company "no thanks," thereby tipping it off that you are already working with one of their competitors (your policy on not taking competitive clients is clear). (B) You could hedge to buy some time to get back to your own client to let them know what their competitor is thinking (the larger company gave you this information in confidence). (C) You could plead "too busy" to the larger firm and continue with your current client as though nothing had occurred. (D) You could take both their checks and run. (E) You could act as a broker between the two companies, trying to persuade the smaller one to sell out to the bigger one. Or...?
Consultants? What would you do? What other options would you consider?
Managers, Executives? If you are in the position of either the smaller or the larger company, what would you expect consultants to do? What would you want them to do? What do you think is the best (most honorable?) solution?
The Web is an ideal medium for the "mass customization" of information, i.e. producing individualized responses at a per-unit cost equivalent to that of a cookie-cutter, one-size-fits-all "electronic brochure." You provide the raw ingredients (the "content") and your visitors customize their visit to their own particular needs or interests.
What are some of the ways you can mass customize your site?
More nifty ideas next time.
Andersen Consulting and Dow Chemical Co., both world-class firms, announced last February (‘96) that they were forming a strategic partnership to enable Dow to optimize its investments in information technology (IT) and realize large productivity gains. It’s a win-win situation. Through Dow /Andersen Consulting Alliance Centers, Dow gains leading-edge IT solutions for itself and Andersen Consulting is able to market those solutions to other companies. Each partner realizes measurable returns on its investment and gains substantial competitive advantage through the synergy of this relationship. A Dow executive reports "Our intent is that this will be a forever relationship...Andersen Consulting will become part of the Dow IT organization." (Information Week; Feb. 19, ‘96).
Smaller firms are unlikely to see "forever," even on a clear day, regardless of whether the partners are other consulting firms or if it is a consultant-client relationship. Sometimes partnerships are formed to achieve a specific objective, i.e. to put together a dynamite proposal team or to achieve a foothold in an overseas market and then disband once the objectives have been met.
A lot has been said -- and it’s frequently all too true -- about the high risk of business (not to mention personal) partnerships: anticipated synergies never materialize, trust breaks down, imbalances in rights and responsibilities arise, conflicts over decision-making escalate. All too soon, what looked like the best combination since bread and butter begins to crumble.
Since so many of us are involved in partnership relationships ranging from formal contracts that spell everything out to a handshake agreement to "work together," I’ve compiled some caveats taken from my own observations and a bunch of different articles:
I hope you found something of value here that you can put to use directly or that might have stimulated some new ideas. Our Web site's always open, the fax machine is always on, and we check our e-mail frequently. Of course your phone calls, snail mail and visits are welcome as well. We'd be delighted to hear from you...anytime.
Technology Management Associates, Inc.
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