Tuesday, 17 June 2014

"ABSTRACT FROM “THE BUSINESS PARADOX"

Why do so many business ventures fail? Don’t they all begin with great promise, each initiated on the basis of a very good idea? Wasn’t the market appealing, the product amazing and the management sufficiently experienced? This question puzzled me for a long time and became even more pressing during the dark days of the Venture Capital industry. For those unfamiliar with this mystical actor, venture capitalists make their living placing large bets on their ability to find promising solutions to emerging market gaps. Typically, this entails creating businesses, often at great expense, with the
primary goal of generating greater investment return than those of the traditional capital market.

This class of assets is not for the faint of heart as the casualties are numerous. In the Venture Capital (VC) industry, business closures equate to losing large sums of money, but it is simply part of the game. At the great expense of the VCs, we all discovered that any investment model could only be sustainable when overall gains exceed overall losses. Perhaps this may seem a simple principle but it is far from trivial, judging by the empirical evidence when we look back at the past decade of VC activities.

This systematic inability to create value is certainly not caused by a lack of knowledge. In fact, the industry is comprised of very experienced individuals, namely scientists and businesses advisors. Despite all this knowledge, the industry has constantly failed to meet its goal of beating the capital market performance. Some observers are even alluding to the end of an era. There began my quest for wisdom—to understand what has gone wrong not only for the investment community but for the sake of all businesses—perhaps even for the survival of the race. Or simply to assess whether the current venture capital business model can survive in this challenging and ever changing global market! Looking back at 30 years of interaction with some 1,000+ companies, some successes and many failures, it became
evident to me that the current value creation process is flawed. The process is not only defective for start-ups, but gets even worse as some of those businesses reach later stages. Apparently we get so busy doing the stuff we do that no one seems to remember why we began doing it in the first place. Clearly, this shortcoming hides the many challenges of creating value through business ventures and inevitably impedes our ability to become successful.

Naturally, I started questioning the relevancy of our processes, wondering if we were paying too much attention to those things that don’t matter very much. Do we recognize that value is at the core of all things? Have we forgotten that only consistent value creation can sustain prosperity? Have we become like the Romans, so complacent and self-consumed that we don’t see our own folly? Furthermore, are we destined to arrive at the same outcome?

Traditionally, we have justified business opportunities by benchmarking the visible and asking ourselves this question: “Is it good enough to justify the investment?” Once we reach the comfort zone, we quickly assemble the business, usually with minimal capital, and so the chase begins. Generally, the identification of basic favorable features (i.e., growth rate, market size, presence of pains and the lack of a suitable solution) is sufficient to raise the minimum start-up capital from angel investors or early stage investment funds. Angel investors are usually less knowledgeable about the start-up specifics and tend to rely on their general business acumen. Angels will act on instinct. They are quick to make decisions, often  underestimating the challenges of value creation. As a result, angels will often get diluted as the business seeks additional capital, leaving a bitter taste behind. We can still find some early stage investors, but this category has diminished, as many of the investors have either folded or moved to later stage investing.

The start-up is fuelled by early enthusiasm and optimism. The first miles of the journey are full of promise and the team is generally very busy building the first product. Then the business invariably runs out of steam when it faces some kind of difficulty before any indication of success appears on the horizon.  Although favorable factors (growing market, competitive advantages, early clients, great product, experienced management, etc.) are essential in achieving any form of success, it is not sufficient to prevent the business from going under. Cemeteries are filled with businesses that provided superior products to fast growing markets, but failed to convert market opportunities into value. Conversely, many businesses have progressed very well with second-grade products or ventured into markets that most of us would not even consider. I remember the Kaufman brothers operating in the recycling business and closing their first year of operation with $1M profit, simply by recycling windshield wipers. Imagine picking up what we consider garbage! What about the “Dollar Store” case? It was a billion-dollar buy-out
deal for a company selling generic products for a dollar at a time.

The fact is that while great products and a fruitful market environment make for a strong probability of success, this alone does not ensure value creation. In light of this situation, why is it that so many businesses with superior products fail to take their rightful position in the market or provide adequate return to their stakeholders? What are those things that they should have considered before taking the journey? Where have they gone wrong? The attention given to the world’s giants, including Google or Apple, and even the paradigm shift suggested by the overwhelming success of web-based and social networking ventures such as Twitter, Facebook and LinkedIn, have somehow created a wrong expectation of easy success. In reality, the vast majority of start-ups won’t make it. Once the lifestyle businesses are removed from the equation, less than 10% of the so-called early stage businesses will show some form of success. Approximately 30-40% will provide some kind of capital preservation and the others will become a total loss for the stakeholders.

Through the years, I have witnessed the rise and fall of many businesses and have puzzled over the fatality rate in the business environment. The idea for the Business Paradox came from witnessing and working with very busy and dedicated entrepreneurs who were systematically failing to create value. Those experiences shaped my perception that, perhaps, success was not influenced by the positive things we traditionally benchmark, but by those negative elements that are too often simply swept under the corporate carpet.  I realized that most of us end up spending a significant amount of time on things that have nothing to do with value creation. Does this sound familiar? If so, why is that? This is the paradox in business planning, as most business plans cover only the justification and not the things that count the most, namely those relating to the risk of failure. A simple analogy is found in the design of video games: a few simple goals, but mostly lots of traps to prevent the player from reaching them.

As a result, many businesses that initially appeared to have the ability to run the race failed simply because they misunderstood the inherent risks of cited opportunities. Challenges are numerous in business and, if not properly managed, can severely harm and even paralyse the business process. Once the business rationale is checked, attention must be focused on the risk issues—understanding those things that can go wrong. We must constantly re-examine the business objectives and their relevance, and consider alternative paths. We tend to concentrate on those things we are good at such as the strong links in the chain. If those links are strong enough, perhaps it is time to pay attention to the links that may break.

In this book, I will provide you with basic principles to avoid the traps in what I believe to be the primary sources of business failure: management, governance and time. The first concern is management, simply because the sooner you accept that individuals are fallible, the greater your chance of achieving success. The second concern is governance, because you need to know where you must go in order to assess whether you are getting any closer. The third concern is time, which is required for the business to grow to its full potential and maximize the value creation.

Over the years, I have advised many business leaders to carve out some time to observe their ecosystems, give special consideration to market shifts, and deploy corrective actions when required. It is as if the world has stopped thinking. Perhaps the managers of today’s reality have filled their agendas with too
many things that have nothing to do with value creation. No wonder the economy is in such a mess. Managing a business nowadays is just too complex to be informal. Decision-makers must go the distance in planning, be systematic in order to imagine possibilities, assess their likelihood, and act rapidly if
value is to be created.

I hope this book will motivate you to consider a different perspective—one that not only gives you justification to start your business but one that helps you to understand the obstacles you need to avoid in order to “Get a good kick at the can.”



Sunday, 13 April 2014

When is the last time you looked past your immediate footsteps?

Most entrepreneurs I meet are busy bees.  While the best of them will spend tremendous amount of time interacting with their clients, ensuring the products are at par with the expectation or even reviewing the details of the delivery processes from production to deployment, if only that part of the business is reviewed, the effort might actually be for nothing!
In reality, the stuff that keeps us busy today is often irrelevant to our future success as it is primarily the result of our past decisions.  In other words, the actions we perform today are the direct result of the strategic and tactical decisions made some time ago that are now impacting the day-to-day activities and agendas of our team.  But are those actions still relevant for tomorrow?
The advantage of start-ups and probably what ultimately makes them innovative and therefore high value creator, is the absence of baggage.  Start-ups are not bound by any limitation as most of the work is ahead of them, not behind; leaving to their imagination the responsibility of setting the limits of what will eventually become the business.  This is the time of disruptive innovation, where creation is the prime directive, seeking to make everyone else irrelevant. 
Once the business is established and clients are acquired, altars are erected; those areas of the business that become landmarks, point of reference from where future progress will be benchmarked.  In most cases, from that point, innovation shifts from disruptive to incremental.  Improvements are still being made, but typically as revisions of what already exist.  The willingness to tear down the walls and rebuilt anew, that innocence of the youth, that absolute opposition to conformity and what made the business what it became seems long gone. 
Innovation doesn’t stop because some businesses stop being innovative; new entrepreneurs around the world continue to introduce disruptive solution to emerging market pains.  Established businesses must find ways to reach the balance between delivering today’s priorities while planning for tomorrow’s or face the end of them.  Failing to strike the right balance will boot-out the business from the parade or even worse to be tripled by its participants.  But not all is lost, as long as we are willing to get out of our comfort zone and follow these simple principles.
Zooming-out is the practice of stepping-back from our day-to-day reality not only to look at our business but primarily to observe what is happening within our extended ecosystem.  Make the habit of monitoring who’s talking to your clients; not only your current competitors, but also the other suppliers, service providers, standard setters and any other relevant parties that might influence the market dynamics within the ecosystem and that will shape your competition of tomorrow. 
Mapping the Ecosystem by physically charting the landscape around the business.  Become student of the various players in the ecosystem; their role, business models and strategic directions.  Some players will act as facilitators, providing those they support with an easier access to market (regulators, channel partners, integrators, etc.) while others will represent your competition; tagging them properly will help you in setting the right tone of future negotiations.  Studying their business model will give you some insights in setting the right approach to the market or even highlight aspects of your plan that require adjustment.  Finally, monitor strategic directions such as those created by “merger and acquisition” transactions as it often creates significant changes in the competitive landscape, particularly when larger players enter the market by acquiring small competitors.  Keep updating your views on market dynamics and its key players.
Completing mosaic analysis to recognize emerging trends; stitching the various pieces of information collected to project the future of the industry.  The objective is to reduce to a minimum the blind spots; the more we recognize what is happening around our business the more obvious the emerging trend will become.  Then go on identifying future pain points and market gaps; areas you believe your business can thrive either by re-using some of your existing core capabilities or that can be captured through the addition of complementary expertise and products.
Creating an autonomous innovation nucleus as seldom execution and innovation can co-exist.  Well managed companies are all about processes; optimizing every action of the delivery process in order to maximize return on capital.  Keep in mind that innovation and processes are at the opposite end of the business spectrum, which explains why so many well managed businesses are often displaced by emerging and innovative ones.  Thus, implement a small team dedicated to “out-of-the-box” thinking, exploring the ecosystem, identifying and preparing for future opportunities.
Spin in spin out solution development by surrounding the business with outside innovative groups.  Not all development programs should be carried within the walls of the business.  Actually, as the business grows, its ability to innovate will shrink and developing an external innovation network could provide significant improvement on the business overall innovative performance.  Partnering with external research centers to carry the early development of a prototype is an efficient practice to access innovation while mitigating financial risk.  Sponsoring in part the development of the prototype is often sufficient to secure its future ownership and eventual repatriation within the business. Mitigating future uncertainties does not equate to unlimited budget and development teams but rather to the adoption of innovative strategies serving the investigation and acquisition of solution that bears the potential to significantly affect the future value of the business.

We are to expect that emerging trends will impact our business and bear the potential to significantly affect our ability to create value.  When identified early, these same events can also become the seed of transformation that will maintain innovation at the core of the value creation process.  The adoption of these simple practices will provide you with greater visibility on your ecosystem and ultimately, the ability to focus on the great opportunities that lay ahead. 

Thursday, 21 November 2013

Changing your perspective from product to ecosystem

It was a beautiful crisp morning in Quebec City this morning.  While enjoying breakfast with good friends I couldn’t miss the opportunity to talk about value creation and we all start sharing our respective experiences with global companies in the matter of innovation and sustainable value creation.
 
The challenge for large corporation to remain innovative is well documented and the subject of many books including Clayton Christensen’s The Innovators’ dilemma.   Companies that are considered well managed often – not to say always – end up missing the next “big thing”. 

One of the issues is that well managed companies tend to become process expert.  Initially, the process is well intended, that is to improve efficiencies, discipline and adherence to the business culture and strategy; but if not well managed, that same focus on process can become quite destructive.  Every business needs to find the right balance between revenue expansion and operational efficiency.  Management often revert to prioritize efficiency since it is usually the comfort zone, the place we find quick return on efforts and generally more controlled / less threatening environment.  But failing to see efficiency as simple maintenance and not as "the end game" is a certain recipe for corporate downfall and ultimately total capital erosion.  In today’s reality, no business can remain on top of their game by simply running an efficient operation; revenue most grow for value to be sustainable and that should be the constant priority of the business while driving process efficiency, not the reverse.

An adjacent issue is the belief that value lies in products. And as such, M&A transactions are primarily driven by product integration.  All people around the breakfast table quickly shared experiences where the acquirer’s focus on product rather than team integration led to quick dismantling of successful team and even in many cases to the abandonment of the technology/product acquired a great expense.  People create value and nothing else, thus value creation must begin by creating environment where successful teams can be assembled and leverage repeatedly to create value.   

Despite this reality, M&A transaction remains the primarily source of liquidity for investors; but does anybody win at the end?  Many transactions are made at value that provide little recuperation for the last player on the food chain – the investors – and often leave little for the entrepreneurs that even remain attached through non-compete agreements.  The transaction is often also not that great for the acquirer judging by the low success rate of success of M&A transaction – I actually witnessed more businesses being brought down by M&A transaction than top graded.  If we push the assessment to an even higher level: does the Nation wins?  Obviously not since the value created is often blearily sufficient for the investors to generate an overall positive return so how can the Nation win if its financial support to the creation of the business cannot even be recuperated (billions are invested in tax credit and subsidies of all types every year).

Isn't time that we bring innovation to the value creation process?  After all, we ask our entrepreneurs to be innovative! We need to stop uprooting the fruit bearing trees and learn the business of selling fruits while cultivating and attending to the garden for greater and more fruitful future harvests.  We need to become accountable and committed as a Nation to create vibrant ecosystems that will favor the emergence not only of “cool” products, but mostly of driven entrepreneurs, independent of any given product, committed to participate to the creation of prosper economy.
 

The emergence of such entrepreneurs is a collective effort and such commitment is the only way to sustainable value creation and the development of fruitful garden and plentiful harvest.

Friday, 23 November 2012

Is HP trouble that uncommon?


In the Wall Street Journal this week:  The technology giant said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which H-P acquired for $11.1 billion in October 2011.

There are many schools of thought on the topic of value creation.   Obviously, value could be derived from a combination of many things: the right product, a strong market, adequate manufacturing practices, a strong trade secret or a well-guarded know-how just to name a few.  Above all, most of us would agree that great management is the ultimate enabler of value; but what exactly does that mean?   A management team is the magical glue for the business and it is what connects the dream to the value.  Certainly, this is not a great revelation, but despite countless articles, papers and books on the topic, most of our interpretations concerning great management relate more to fairytale than reality.

Perhaps the notion of management itself is not yet well understood.   After a decade of disappointing performances and deep losses, perhaps now is the time to re-think the essence of management. More precisely, we should seek to better understand how to define management and even more importantly the environment most relevant for management actually to do what it is intended for: create value. The past has clearly demonstrated that failing to grasp the essence of this notion can only lead to dysfunctional governance and ultimately jeopardize the chance to implement sustainable value creation processes.

Interestingly, Webster’s dictionary defines “management” as “the collective body of those who manage—with a degree of skills—or direct an enterprise”.  Collective body implies that managing is not only the responsibility of those individuals on payroll, but also of those other parties with an influence on the business direction (i.e. major shareholders, advisors, Board Members, etc.).  I like to refer to this collective body as the “Extended Management”.  When management becomes a group effort  rather  than  an  independent  entity,  the  managing  dynamics become  one  of  value-added  rather  than  one  of  confrontation. This result is a   substantial improvement of execution through better communication and enhanced participation.   However, for the Extended Management to work, all parties will need to synchronize their perceptions of the business reality and align themselves on consequent actions, all in a timely fashion.  Naturally, this is easier said than done and requires the business agenda to become the priority of all parties.
  
Unfortunately, the relationship dynamics amongst different groups of influence surrounding a company are often one of supervision; executives are expected to provide the answers and where the Directors/Stakeholders do the validation.  When paired with highly experienced and autonomous management, these types of relations can be less damaging.  However, when combined with a relatively inexperienced management team, this dynamic is disastrous.  In fact, this type of relation, characterized by limited contribution from the Directors/Stakeholders, becomes a source of frustration for the management team and the primary cause of governance break down.   It rapidly leads to breach of communication and, more importantly, destroys any hope for trust between the parties.  Did I say trust in a business environment? How do you expect to be told what you must know if trust is not part of the equation?
  
Ultimately, most businesses will fail to create value as the leaders reject the importance of setting a trusting environment.  Trust is the ultimate ingredient that enables risk factors to be exposed and openly discussed. Considering the risks will bring rapid alignment on the priorities, instigate the necessary actions and create the momentum essential to value creation.

Firing CEOs is the easiest but not always the real solution to governance issues.

Wednesday, 14 November 2012

Apprendre de nos erreurs, ou la Religion au service de l’Éducation


Le Conseil des Relations Internationales de Montréal recevait une centaine de courageux délégués – bravant les démonstrateurs – au Palais des Congrès pour entendre une superbe brochette de panélistes (Guy Breton – Université de Montréal, Jacynthe Côté – Rio Tinto Alcan, Sylvie Beauchamp – Université du Québec et Guy Lachapelle – AISP) qui nous entretenaient sur le thème: Le Savoir à l’échelle mondiale: Entre la compétition et coopération.

La chute libre de la productivité manufacturière canadienne (10 années de baisse causée par l'absence d’innovation), la dévalorisation de l’éducation (nombre de gradués en baisse), la réticence de nos étudiants à s’ouvrir au Monde (3% de nos étudiants vont à l’internationale contre 30% en Allemagne) et une culture qui se rapproche plus de La Cage aux Sports qu’au Café Einstein de Princeton, furent quelque thèmes abordés qui suggèrent un grand besoin de passer à l’action. 

Comme le mentionnait si bien Mme Côté, la richesse nationale doit absolument passer par une démographie avantageuse et une augmentation de la productivité de nos entreprises.  Mais au Québec, notre population est vieillissante et nous l’avons précisé, la productivité ne se porte pas bien.

Est-ce que l’éducation est en chute libre au Québec?  Pourquoi l’excellent savoir développé au sein de nos universités ne passe pas naturellement à l’accroissement de la productivité de nos entreprises? Ce n’est certes pas par un manque de fonds et n’y de capacité! Alors qu’elle en est la cause?

Je ne peux m’empêcher de faire le parallèle à l’histoire religieuse au Québec qui forte au tournant du 19ième fut pourtant décimée avec le tournant du 20ième siècle.  L’église qui était d’abord basée sur une mission fondamentale – la propagation de la parole Divine – a éventuellement commencé à se centrer sur elle-même (faire des prêtres pour des prêtres) plutôt que de conserver le cap sur la mission.   Au fil des ans, les églises se sont naturellement vidées faute d’y trouver une source d’épanouissement.

L’éducation Québécoise qui avait à ses débuts la mission de relever la Nations s’est progressivement égarée de cette mission pour éventuellement produire le savoir pour le savoir.  Aujourd’hui, nous pouvons facilement discuter d’enjeu académique sans même faire allusion à la réalité économique! Est-ce normal? Assistons-nous actuellement à un effet de silos grandissant ou les communautés, académique et économique, sont de plus en plus détachées sans prendre conscience de la symbiose vitale, ce cordon de vie qui les uni, qui s’assèche progressivement seulement pour leur couper le souffle de vie.  Est-ce que nos jeunes décrochent justement parce qu’ils ne peuvent pas comprendre comment l’éducation leur permettra de performer dans le milieu du travail?

Nous devons passer à l’action pour remettre la vie dans ce lien essentiel à notre prospérité, abattre les préjugés qui nous opposent pour apprendre à travailler collectivement à bâtir le Québec dont nos générations futures profiteront.  

Malheureusement, la foi en à pris pour son rhume au Québec, tentons cependant d'y préserver le savoir.       
        

Why do so many Business Ventures fail?


Why do so many business ventures fail?  Don’t they all begin with great promise, each initiated on the basis of a very good idea? Wasn’t the market appealing, the product amazing and the management sufficiently experienced?


This question puzzled me for the longest time and became even more pressing when  witnessing  the  dark  days  of  the  venture  capital  industry.  For those unfamiliar with this mystical actor, venture capitalists make their living placing large bets on their ability to find promising solutions to emerging market gaps. Typically, this entails creating businesses, often at a great expense, with the primary goal of generating greater investment return than those of the traditional capital market.


This class of assets is not for the faint of heart as the casualties are numerous. In the Venture Capital (“VC”) industry, business closures equate to losing large sums of money, but it is simply part of the game. At the great expense of the VCs, we all discovered that any investment model can only be sustainable when overall gains exceed overall losses. Perhaps this may seem a simple principle, but far from trivial, judging by the empirical evidence when we look back at the past decade of VC activities.


This systematic inability to create value is certainly not caused by a lack of knowledge; the industry is comprised of very experienced individuals, namely scientists and businesses advisors. Despite all this knowledge, the industry has constantly failed to meet its goal of beating the capital market performance.  Some are even alluding to the end of an era.

There began my quest for wisdom—to truly understand what has gone wrong not only for the investment community, but for the sake of all businesses—perhaps even for the survival of the race.  Or simply to assess if the current venture capital business model can survive in this challenging and ever changing global market! Looking back at 30 years of interaction with some 1,000+ companies, some successes and many failures, it became evident that the current value creation process is flawed.


The process is not only defective for start-ups, but gets even worse as some of those businesses reach later stages. Seemingly, we get so busy doing the stuff we do that no one seems to remember why we began doing it in first place. Clearly, this shortcoming hides the many challenges of creating value through business ventures and inevitably impedes our ability to become successful.

Naturally, I started questioning the relevancy of our processes, wondering if we were paying too much attention to those things that don’t matter very much.  Do we really recognize that value is at the core of all things?  Have we forgotten that only consistent value creation can sustain prosperity? Have  we  become  like  the Romans,  so  complacent  and  self-consumed  that  we  don’t  see  our  own folly?  Furthermore, are we destined to arrive at the same outcome?


Traditionally, we have justified business opportunities by benchmarking the visible and asking ourselves this question: is it good enough to justify the investment? Once we reach the comfort zone, we quickly assemble the business, usually with minimum capital, and so the chase begins.

Initially, the start-up is fuelled by early enthusiasm and optimism.  The first miles of the journey are full of promise and the team is generally very busy building the first product.   However, typically the business soon runs out of steam as it always faces some kind of difficulty before any indication of potential success appears on the horizon.

Although favorable competitive advantages (market, competition, clients, products, management, etc.) are essential to achieve any form of success, it is not sufficient to prevent the business from going under.  Cemeteries are filled with businesses that provided superior products to fast growing markets, but ultimately failed to capture key market opportunities.  Conversely, many businesses have progressed very well with second grade products or ventured into markets that most of us would not even consider.  I always remember the Kaufman brothers operating in the recycling business and closing their first year of operation with $1M profit, simply by recycling windshield wipers.  Imagine picking up what we consider garbage!  What about the “Dollar Store” case? A billion-dollar buy-out deal for a company selling generic products a dollar at a time.  The fact is that while great products and a fruitful market environment do make for a strong probability of success, this alone does not ensure value creation.

In light of this, why is it that so many businesses with superior products fail to take their rightful position in the market and provide adequate return to their stakeholders? What are those things that they should have considered before taking the journey? Where have they gone wrong? The overwhelming attention given to the world’s giants including Googles or Apples, and even the paradigm shift suggested by the overwhelming success of web-based ventures such as Facebook, have somehow created a wrong expectation of easy success.


In  reality,  the  vast  majority  of  start-ups  won’t  make  it.  Once the lifestyle businesses are removed from the equation, less than 10% of the so called early stage businesses will show some form of success. Approximately 30-40% will provide some kind of capital preservation and the others will become a total loss for the stakeholders.


Through the years, I have witnessed the rise and fall of many businesses and for the longest time, puzzled by the significant fatality rate in today’s business environment.   The idea of the Business Paradox came about from witnessing and working with very busy and dedicated entrepreneurs who were systematically failing to create value.  Those experiences shaped my perception that, perhaps, success was not so influenced by the positive things we traditionally benchmarked, but much more by those negative elements that are too often simply tossed under the corporate carpet.


I realized that most of us end up spending a significant amount of time on things having nothing to do with value creation.  Does this sound familiar? And if so, why is that?  This is the paradox in business planning, as most Business Plans cover only the justification and not the things that count the most, namely those relating to the risk of failure.   A simple analogy is found in the design of video games: a few simple goals, but mostly lots of traps to prevent the player from reaching them.


As a result, many businesses that initially appeared to have the ability to run the race failed simply because they misunderstood the inherent risks of cited opportunities. Challenges are numerous in business and, if not properly managed, can severely harm and even paralyze the business process.  Once the business rationale is checked, the attention must be focused on the risk issues: understanding those things that can go wrong.   We must constantly re-visit the business objectives, their relevancies and always consider alternative paths.  We all tend to focus on those things at which we are good, on those strong links of the chain. However, if those links are strong enough, perhaps, it is time to pay attention to those links that may break.

Wednesday, 17 October 2012

Thinking in terms of execution


Yesterday I had the privilege of judging the performance of three B.Comm students as part of a dry-run in preparation for the Jeux du Commerce; a fierce competition among business faculties on the topic of business strategy.  I thought the students did relatively well but at the same they reminded me of the typical impulsive nature of the entrepreneur.

The three individuals needed to derive the right business strategy for the case study – the renowned retailer Le Chateau.  They did indeed identify significant opportunities, but I felt they had failed short on their execution plan recommendation.

Entrepreneurs, relies on some kind sixth sense when it comes to opportunity identification, but too often are hasty on the matters relating to execution.  I had lunch today with certainly one of the greatest CFO I had the pleasure to work with; Rene Vachon of Miranda Technology and we both agreed that the “IDEA” preceeding the business initiative has really little contribution to success.  In fact, most successes/failures outcome have nothing to do with the discovery per se, but rather everything to do with the means to get to it, that is the Plan of Record or the relevancy of the execution plan the entrepreneur will put together in order to benefit from the opportunity.

Beware of not simply falling in the trap of justifying the process you would preferably pick rather than that which is best for the business.  Be discipline by benchmarking the various execution alternatives with fundamental principles.  Typically, the following items I will consider when elaborating the execution plan:

Principle #1: Recognizing our Risk Tolerance

Principle #2: keeping some level of Familiarity

Principle #3: Recognizing Product Life Cycle & Time to market requirements

Principle #4:  The ability to go the distance 

Principle #5:  The possibility of sharing the burden with partners

Principle #6:  Sticking to what we do best – don’t need to do it all!

Always revert to basic common sense.  If you feel your swimming against current, you are probably going in the wrong direction (unless you are a salmon).  Mostly, take the time to think things through.  Ask yourself the “What if” question.  Identify what can go wrong, derive the mitigation plan and only then you will start to get a sense of a sustainable, attainable and valuable opportunity and its corresponding execution plan.