Posts Tagged ‘cost’

The Soul of a Project #16: Stand Your Ground

by Gary Monti on May 22, 2012

That phrase, “Stand your ground,” has been big in the news lately. Let’s take a look at it from a professional position. A little background first will help. Consulting can create a love-hate relationship with clients – both management and employees. In fact, that is the norm and it should be unless working with an abbey of Zen Buddhists.

One scenario goes something like this:

  • At first the employees are hesitant, wondering how long the engagement will last and if it will have any effect. They are skeptical, believing senior management comprises “breathe-holders” who will wait until I leave and then go back to their old ways;
  • As progress is being made delineating what is going well and what is going poorly the tone of the conversation in the gossip mill changes. Employees are seeing more clearly what their situation is and appreciate being able to succinctly state such. A hope beings to rise;
  • After a while, though, a skepticism surfaces (the roots of which we’ll look shortly) and the challenges begin, “When are you going to get senior management to change?” Increased pressure is placed on me, the consultant, to get THEM, senior managers, to conform to what is right in the situation. In other words, the employees want a short cut. What is going on is they want the change but are afraid to put skin in the game. Instead of the consultant being a conduit for their voice in the situation, they want the consultant to lead the charge in their battle for sanity.

“This is when confronting the employees is critical. They need to be pushed on an uncomfortable truth – they have to stand their ground regarding the reality of the situation.”

I will eventually be gone. They need to decide what they will do as a unit to help improve the situation in a sustainable manner.

So, what does this “stand your ground” mean? First, let me say, it is anything but aggressive. That goes nowhere. (Well, actually it does – downhill.) It is about standards and ethics. It is about what it takes to get the job done right the first time and respectfully serve the client and one’s company. What does that mean?

We all work to some set of principles with some choosing the light side and others choosing the dark side. Sticking with the “light side” approach, standing your ground means stating the real limits of the situation without emotionality. Each profession on a project has guidelines by which it works. These are anything but arbitrary. The guidelines were created because they work.

Let’s move away from the theory and look at an example, a very common example. As a question it can be stated as, “What does ‘done’ mean?” This can get very dicey. If a manager sees a quarterly bonus looming on the horizon how much will he push the team to declare the project “done” knowing that the team’s future is being mortgaged and the client will not be happy when they find out work performed is less than what the spirit of the situation (or the contract) call for?

When a project manager or team member stands their ground they bring up the shortsightedness of the approach in a business-like manner. In other words, stick with behaviors and consequences.

When the project starts working outside the principle sets important for success; disaster is sitting there licking its chops just waiting to munch on the project.

This confrontation process is anything but easy. It is essential, though. Employees are hired for some form of expertise. It has real limits since an employee is not a CEO.  So, my advice is speak your truth clearly, taking it to the point of putting it in writing, and do it respectfully rather than with your jaw sticking out daring the boss to take a swing. Leave out references to the senior manager’s bonus. That is speculation and gets to attacking character. Just state the truth of the situation. Answer the question:

If everything were okay I’d see _______________ .”

Do a variance analysis between what is and what should be based on the principles involved and run it up the chain of command.

Now, before you go off thinking organizational difficulties are only the responsibility of the employees and they should be falling on their swords every time a paper clip is misplaced, keep in mind next week we’ll look at this from senior management’s position and the real limits of what can be accomplished

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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Developing an understanding of the project terrain and all its complexities can be daunting. This is especially true as a consultant since value needs to be shown for each hour spent. There is a trade-off needed between understanding EVERYTHING, making decisions, and moving on in order to be efficient. What to do? The answer is, “Keep it simple.” So how does one go about doing that?

The way that works for me is determining what principles are at work and trusting they will guide me. So what does that mean? The 9 areas of project management as espoused by PMI® can help. I use them all the time for troubled projects. Just ask, “Is there clarity regarding:

  • Scope
  • Time
  • Budget
  • Communications
  • Human Resources
  • Procurement
  • Quality
  • Risk
  • Integration”

Simple “yes” or “no” answers suffice. Then ask, “Are these 9 components interlocked in an interdependent way?”

Where you see “no” for either question points to the path that needs to be followed in getting to the crux of the matter. For me, this is where meditation comes into play. By letting go and allowing the two above-mentioned questions dance before my minds eye the fulcrum question in the situation will show itself. This leads to another fulcrum question…and another…and another until a clear picture is generated of what is going on which leads to determining what is needed to improve the situation. By the way, “fulcrum question” refers to pivotal questions that show whether or not principles are at play, if they are the right ones, and if they are interlocked.

For example, whenever talking with a particular senior manager I’d leave his office with an unsettled feeling. (This is where faith comes into play.) I’d have the urge to dissect what he said but when I indulged that urge I only got more confused and frustrated. By letting go and asking, “What principles are relevant to his situation?” and trusting what my gut said the fulcrum question(s) surfaced. Sometimes it would feel like someone else was creating it because it arose from my gut rather than my brain.

It is very much like the old detective series, “Columbo,” in that repeated asking about the 9 areas of project management surfaced the dodginess he was using to manipulate situations.

This practice of having faith in the principles leads to another valuable behavior – becoming aware of whom to talk with next. With the questionable manager it might have been a peer or subordinate or even an outside customer.

The point of all this is to trust the principles you believe are relevant. If you are mistaken it will surface soon enough and a change in the principle set can be made. Practicing this simple faith while not necessarily knowing everything will guide you to the right questions, conclusions and options both as to determining what is going on and possible options for improving the situation.

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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Project fogs are maddening. They are:

  • Pervasive;
  • Sensed by all;
  • Capable of frustrating excellent plans;
  • Have broad impact on project performance;
  • Complex and, like all things complex, require reams and reams of reports to define thoroughly making it virtually impossible to understand on paper. Nothing specific jumps out;
  • Unable to be resolved with a quick fix;

What does a project manager do? The answer is simple and can be stated in a paradox, “Embrace the project fog.” To do this the fog must first be understood.

When a project starts “things happen” and the fog begins to roll in. It shows up at boundaries taking the form of technical problems along with the environment and key stakeholders being confused, undirected, uncooperative, unsupportive or even antagonistic. The project manager is faced with the challenge of getting the project moving again while staying within the triple constraint of scope, time, and budget.

Brittle Plans

Usually, no plan is perfect. The reason is the plan is an abstract and a distillate of the planning process. It contains what the team thinks will work based on certain assumptions and is drawn from a larger universe of possible solutions.

Within project constraints the wisdom of the team is forged into the knowledge-based plan.

There can be alternatives built in but no plan is omniscient. So, things happen and the plan can become brittle and break. This is why toy makers have children play with the final product. A two year old can quickly find limits and defects in a product developed by a room full of engineers.

The Solution: Embrace the Fog

To disperse project fogs the project manager and team must embrace it. Embracing the project fog means dealing with it on its own terms. It means finding something that is equally pervasive, can be felt by all, and has a broad, positive impact across the difficult boundary. The solution has some other characteristics. It is:

  • Readily implementable;
  • Truly simple, i.e., dispels most or all of the fog by resolving all the conflicts and uncertainties;
  • Ultimately easily documented, and;
  • Seen by all as being a realistic solution;

The solution is the fog’s equal in terms of appearance and a countermanding positive performance. It is the team’s wisdom focused into a new or modified deliverable and/or process commonly called the workaround.

Yes, the word that gets beaten and abused – viewed as something just about anyone can do so, hop to it and git ‘er done. The fact is a truly good workaround that satisfies everyone from conceptual engineer to maintenance technician could be quite sophisticated and frequently a work of art.

The workaround’s simplicity can be viewed by the uninitiated as simple-minded.

I doubt anything could be further from the truth. Why? There is no linear, detailed, step-by-step path to the solution. The successful workaround reflects a power arising from and distributed across the diverse team, not resident in any one person or thing. Changing the team members or distracting them with too much work can disrupt the dynamic and turn off the ability to embrace the project fog.

So, when confronted with project fog embrace it! Pull your nose out of the details, put the team in charge, turn them loose, buy the coffee, soda, and pizza. Let them create the simple, documentable, durable solution. Watch them work their magic!

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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Project managers (PMs) have to deliver; yet power to get the job done can be elusive. Is there a way PMs can take care of themselves and the team knowing they are lower on the food chain? Can they get some power? Yes. How so? Let’s explore.

Portfolios, Programs, and Projects

First some background. A simple, common hierarchy with a current situation in the transportation industry is:

Location Position Example
External Client EPA
Internal Portfolio Mgr internal combustion engine
Internal Program Mgrs gasoline diesel
Internal Project Mgrs 1000cc 3000cc 4000cc 5000cc

The “client” in this case is the external regulatory agency. The deliverable is a reduction in emissions for the various types of engines a manufacturer produces with standards varying based on the displacement and fuel consumed. We’ll look at the client after examining the internal organization.

Internally, working from the top-down, there is a progression from strategic (market position, profits, etc.) to the tactical/tangible (every engine coming off the assembly line has to meet stringent requirements within the next few years). Teams in the internal combustion industry are feeling the heat with pressure coming down from above. Deadlines and goals have been set.

To maintain a healthy balance in this situation PMs will do best understanding and communicating in the language used by those with more strategic positions and power. This language also needs to provide a portal through which the PMs can express project concerns. The language is risk management.

Now, shift focus to the client. It is through the client the PM can gain influence – better known as power. The connection between the PM and the client is quality. As the old saying goes, “The proof of the pudding is in the eating.” Again, each engine needs to perform per regulatory limitations.

So, in a way, the PM has a direct connection with the client through quality. It is important to avoid being Pollyannaish and think the PM has the power baton of the client. The situation is subtler. This is where risk management comes into play.

By understanding how the performance of the deliverable is impacted by quality the PM can gain leverage communicating through the business case. How? The PM uses a specific aspect of risk management – Expected Monetary Value (EMV). EMV can take quality, time, and money and combine them into one model – a model understandable to both the business unit and project team. A good EMV model tells how good or bad things can get in the current risk environment and points to areas where changes (time, money, resources) are needed.

This seems a bit roundabout if quality is the focus. So, why do this? Simple. There can be an intrinsic desire for quality in an organization. That desire, though, can vary in commitment from organization to organization as well as within an organization.

On the other hand, the focus on time and money is pretty much universal and that is the context in which quality sits – always the bridesmaid, never the bride. EMV flips the situation and addresses time and money squarely in the context of quality looking to see how stable and acceptable the deliverable will be in various risk environments.

Consequently, EMV models can help bridge client power to the team’s need to perform and cross over the obstacles of time, money, and resource constraints by showing how squeezing the team too tightly or working in the current risk environment could hammer profits and viability in the long run.

With the stage set, in the next blog some of the specifics of the EMV model and how it works will be addressed.

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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“Hangman” is a game having a lot in common with project management. The goals are identical, i.e., figure out what the stakeholder(s) in control wants/means without them telling the project manager (PM) directly. The noose of the triple constraint tightens as the PM and team try to decipher just what is needed and they miss the mark.

There IS a substantial difference between Hangman and managing a project. In Hangman determining the word or phrase (scope) the controlling player has in mind is all that is required. With a project there is a chance for triple jeopardy since the PM and team must not only get the scope correct, they must also make sure there are sufficient resources left in terms of time and money to actually implement the scope. There is a way to not only survive but also succeed in such situations.

Terminology – Constraints vs. Principles

The first thing needed is a distinction between what is desired and what actually works. The term itself, “triple constraint,” implies boundaries of some sort. There is value in taking this term apart.

Rather than say, “The triple constraint means scope, time, and budget” stakeholders would be better served by stating, “There is a scope constraint, a time constraint, and a budget constraint placed on the project.” Why? Simple. Scope, time and budget refer to three of the nine principle sets in project management with the other six being communications, human resources, procurement, quality, risk, and integration.

“Principles” means there is a balanced interplay among all the variables and stakeholders in the project. Constraint means an arbitrary limit being placed on the project. It is called arbitrary because it is made in isolation with the responsibility for integrating being passed along illegitimately to others usually down the power chain.

That sounds like a pretty strong use of “illegitimately.” However, it does apply since the responsibility for a constraint stays with the person who makes it especially if he is the power broker.

Wishes and Business Cases

A constraint, then, is essentially a wish to make something so. What works better is examining what is realistic based on the business case. That business case needs to be grounded in reality. For example, if the project is to open a low-risk savings account then having a “budget” constraint of 1-3% interest rate is reasonable. On the flip side, if I am demanding 12% return with the same low risk then I am working from a wish list. The demand will be illegitimate if a PM in charge of investing the money is punished for failing to find a secure 12% savings account. It gets even worse if the wish of having the high return investment includes being able to withdraw any time without penalty (schedule constraint).

Stated more positively:

When needs are derived from realistic business cases rather than wishes, a bridge can be built between the business case and associated project principles comprising scope, time, and budget.

Going back to the previous blog, Rainmaker, building that bridge requires incorporation of other principle sets. In the next blog we will explore those principles with the goal being generation of a balanced relationship with realistic boundaries between scope, time, and budget. It involves the creation of something far more elegant than a triple constraint.

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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Project Reality Check #2: Being a Rainmaker

by Gary Monti on December 28, 2010

“Rainmaker” is a title that fits with a lot of project managers. It sets the bar high requiring a great deal of skill and political savvy to bring about the deliverable as if almost by magic. The reality is quite different. In fact, there are several realities that must be juggled to be a successful rainmaker ranging from the very concrete to the intangible. This can be seen when looked at through the nine areas of project management: scope, time, budget, human resources, procurement, quality management, risk management, communications, and integration.

Nested Easter Eggs, Projects, and the Truth

Imagine a project as a nested Russian Easter egg. At the core is the candy, the measurable deliverable – the client’s main focus. Surrounding it is the smallest Easter egg – the triple constraint. The painting on this egg is an orthogonal latticework of scope, time, and budget with one axis just a little wavy. Time and money can be measured, as can portions of the scope. The scope, however, starts bringing in the intangible because it is driven by client needs, each one of which can be multilayered itself. This is why the one axis is a little wavy.

The language of the triple constraint reflects the deliverable but is different since it includes the time and money aspect. It also is more complicated because there are three dialects; one each for scope, time, and budget.  The language gets more complicated because there is a change in the truth system being used. That is how different languages develop, i.e., attempts to describe different realities.

In other words, when we talk “deliverable” one language is used which is different from when we talk “scope, time, and budget.” For example, imagine a soccer player who can put an amazing curve on a kick. Talking about the beauty of the kick is one thing. Talking about everything that went into that player to get to the point where the kick could be made is another. (Many a beer or other beverage has been drunk enjoying going back and forth between these two languages. It’s all very human and very much a part of any project.)

The next egg (layer) has a supply chain network drawn upon it. It comprises procurement and human resources. People, equipment, facilities, etc., are needed so the project can be completed. The intangibility increases. There are more, varied conversations occurring all of which need orchestrated and harmonized. The discussion around this orchestration and harmonization creates another language with two dialects.

This brings us to the next larger egg, which has a swirling pattern of two distinct colors representing quality- and risk management. Imagine it being drawn by a pointillist. Each dot represents a specific test of a component or system (quality) or a specific threat or opportunity (risk) that must be addressed. Holding the egg at a distance the swirls can be seen representing the interaction between quality and risk and how together they influence the inner components of project management and the creation of an acceptable deliverable. And, you may have guessed it, yet another language with two dialects is created.

And what about the conversation itself? This is where communications comes into play. This egg has a nervous system painted on it. Actually it is more like an LCD display where the flow of information through the nerves can be seen. This flow represents the even greater level of intangibility. Why? The message is in the flow between the various parts of the project.

Finally, the largest most intangible egg of them all – project integration. It is invisible. This egg can be felt but can’t be seen. Imagine a magnetic bottle. There is a very real force field present containing the other eight areas of the project along with the specific project components, stakeholders, and the energy that flows between them. This egg can be experienced, it can be discussed, it can be influenced but it remains invisible. Its language is one of connection and interdependence.  It reflects the achievement of acceptable balance among all stakeholders, components, and their performance. The integration exists in that balance rather than inside any one thing or person.

The deliverable only comes alive and is acceptable when integration has occurred and is sustainable.

What does this mean? An intuitive example of connection and interdependence is the relationship between an aircraft wing, the engine, and the payload. The engine must generate sufficient thrust to propel the wing forward and generate lift. However, if a large enough engine is too heavy then the design is pointless because there is insufficient lift left for the payload.

What makes a project manager a rainmaker is the ability to achieve that integration. It is reflected in commitments within the stakeholder community. Those commitments are then mapped into the design and creation of the deliverable through the project plan and execution of the schedule. Oh, did I mention there might be some magic involved?

Gary Monti PMI presentation croppedThrough his firm, Center for Managing Change, Gary Monti has over 30 years experience providing change- and project management services internationally. He works at the nexus between strategy, business case, project-, process-, and people management. Service modalities include consulting, teaching, mentoring, and speaking. Credentials include PMP number 14 (Project Management Institute®), Myers-Briggs Type Indicator certification, and accreditation in the Cynefin methodology. Gary can be reached at gwmonti@mac.com or through Twitter at @garymonti
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Portfolio Management – A Case Study

by Sanjai Marimadaiah on January 12, 2010

Portfolio management is a critical activity for any business leader, be it a General Manager or a Venture Capitalist.  This article offers a case study on portfolio management with a focus on value-net1 and the economic value of portfolio companies. The intent is to provide an analysis of the portfolio that can serve as the basis for growth strategy.

The Value-Net1:

The success of any business initiative depends on the value delivered to its customers. While immediate customers are important for near-term growth, the long-term viability of a company hinges on the value delivered to eventual customers, i.e. customer’s customer.  Hence a view of how you serve your eventual customers is important in portfolio management. Several business entities, called value-net1 partners, are involved in the process of delivering value to end customers.

The Portfolio:

Rajesh Setty is a successful CEO and now a venture capitalist with a growing portfolio of companies.

Following is a brief description of 3 of his portfolio companies:

An innovative approach to solving the content marketing challenges. Content such as white paper and ebooks are better managed to ensure that it is efficiently delivered to the target audience. Since the company is still in a stealth mode, a fictitious name, ContentKing, is used.

Jiffle brings efficiency and intelligence to event marketing activities.  It offers a simple and intuitive web portal for event managers to schedule and manage client engagements at events.  In addition, customers can generate various reports on the efficacy of their participation at various events by product line, region, etc.

iCharts business service allows one to easily build sophisticated, searchable online charts. iCharts makes it easy for customers, journalists and others to find, reuse and republish your data — helping proliferation of your data across the web.

Analysis of the above portfolio companies highlighted a common theme in their value proposition. There were opportunities for collaboration among portfolio companies and also opportunities to expand the value range of services.

A common theme among the 3 portfolio companies is that their immediate customers are demand generation teams.  Hence these 3 portfolio companies influence the adoption of product/service by the eventual customers. However they are at different stages of the AIDA – Marketing model5.

AIDA – Model 5:

There are 4 stages in the AIDA model – Awareness, Interest, Desire and Action.  A customer first has to be aware of the existence of the product then be interested in learning more about the product, then have the desire/need to buy the product and eventually be convinced that it is the right product in order to buy it. Support is added as the last stage by some marketing professionals. Different tools, tactics and activities are required to be effective at each of the stages.

The dynamics of each of the stages in the AIDA model are different. As you progress from Awareness to Action, the number leads decreases while the cost per lead increases. The following is an illustration of this dynamics. The numbers in figure 1 and 2 illustrate the relative scales. The actual value varies by product and industry.

Figure 1

Mapping the Portfolio on the AIDA Model:

The 3 portfolio companies are mapped on the AIDA model in figure 2. The immediate target customers are listed below the portfolio company. Finally, the Assets/Capabilities of the VC, Rajesh Setty, is also mapped to highlight the investor’s affinity to their domain expertise.

iCharts4 is at the cusp between Awareness and Interest. The interactive charts not only build awareness to a company’s offering but also generate interest in the offering by providing interactive charts that offer more details. ContentKing2 deals with whitepapers and eBooks, hence heavily in the interest phase. Jiffle3 is placed in the Decision stage but can play well into the action phase. The meetings at conferences and tradeshows influence the decision and at time deals are closed at these meetings.

Figure 2

The Conclusion:

The mapping in Figure 2 provides a bird’s eye view of the strategic position of the portfolio companies in the AIDA model. This can serve as the foundation to develop strategic growth initiatives for the individual companies as well as help VCs manage their portfolio companies.

Considering the price per lead at each stage of the AIDA model, one can get a sense of the valuation as well as revenue potential of the portfolio companies. The portfolio manger can evaluate collaboration opportunities among the portfolio companies and also opportunities to invest in new companies.

The individual portfolio companies can brainstorm whether it makes strategic sense to expand along the AIDA model. It also forces the portfolio companies to think beyond their immediate customers by engaging in initiatives and partnerships to help product/services companies in their pursuit to close sales.

Note:

  1. Value Net:
  2. ContentKing: http://www.rajeshsetty.com (watch the URL for announcements)
  3. Jiffle: http://www.jifflenow.com
  4. iCharts: http://www.ichartsbusiness.com
  5. AIDA Model:  http://en.wikipedia.org/wiki/AIDA_(marketing)

Sanjai MarimadaiahThis article was contributed by Sanjai Marimadaiah, a seasoned product marketing professional and author of an upcoming book ProductMarketingTweet. Sanjai works as the Global Offerings Manager for IBM Smart Business. You can follow Sanjai on Twitter at Sanjaim1
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How hurtful is your product or service offering?

by Himanshu Jhamb on October 5, 2009

hurtAs an entrepreneur, whatever product or service that you sell, it is critical to look at not only how it helps your customers; but also to look at how it might hurt your customers. Most of the offers that exist in the marketplace end up being ordinary and have little value associated with them, because they end up “hurting” customers at places which have serious consequences for them. The “hurt” can be of different types (and depending on what the level is, it hurts the marketability of the product or service) and you want to stay as far away as possible from the one that comes with the serious consequences for your customers.

Here’s a little personal story of mine: I recently bought a new bed frame from one of the discounted retail stores. It was a beautiful wooden (brownish) frame; both my wife and I loved it. While my wife strolled around to the other parts of the store, I walked around the bed inspecting it and marveled to myself how it’d look in the room we were thinking of putting it in. While I was mentally playing taking this beautiful piece of furniture home, I heard my wife call me from the other aisle. As I started walking towards her casually; I felt a sharp pain under my kneecap and immediately sat down. That’s when I noticed that the bed had a protruding part on the corners of it (the corners where the legs would go) which could easily go unnoticed (Hello?) and “hurt” people. Suddenly, the beauty, the wooden frame and the comfort vanished from my mind and all I could remember was the “hurt” that I felt from my little accident with the bed frame and how “dangerous” it could be for people in the house. The product (or service) called “The bed” immediately lost its marketability with me, its customer.

While you are designing your product or service for providing the fantastic help that it’ll provide your customer, be sure you give a thought to how it might “hurt” your customers. While one can argue that it’s impossible to come up with a product/service that is “Perfect” in all aspects and causes no “hurt”, one can surely design it in a way so that the “hurt” is kept to a minimum. Here are a couple of levels of hurt to consider while you think of the design of your offer:
1. Fundamental Hurt – This is what I call the “Deal Breaker”. This is the hurt that will instantly kill any marketability of your product or service. It wouldn’t matter how aesthetically tasteful your product is; it wouldn’t matter how practical it is or how valuable it is. If your product or service hurts a fundamental concern; it will, in all likelihood, not be very marketable. My example, above fits the bill for “fundamental hurt”. The bed, regardless of how comfortable and elegant it was, was dangerous to the fundamental concern of my body. The moment that dawned upon me; the offer was outta-the-door for me.

2. Derivative Hurt – This is something that the customer sees as not impacting his or her core concerns and thus, is open to a cost-benefit analysis of whatever product or service it is that he or she is considering buying. It’s like your offer gets a Second-chance-at-least kind of hurt. This is where most of the “good” products or services fall in. They all “Cost” something (which obviously hurts the customer in a way since it eats into his or her resources) but if the Return is good, the Cost is viewed as more of an investment and the conversation suddenly centralizes around the ROI, and not just the “Hurt”. As an example, offers such as entertainment magazines and Television fall in this category. They provide customers with a sensation called “Relaxation” and “Fun” in return for the money and time they cost the customers.

When you are designing your products and services; look closely for what kind of “Hurt” they might cause your customers… and stay away from the “Fundamental Hurt” as much as possible!

Himanshu JhambThis article was contributed by Himanshu Jhamb, co-founder of ActiveGarage and co-author of #PROJECT MANAGEMENT tweet. You can follow Himanshu on Twitter at himjhamb.
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It is the ROI, not the ROC, Stupid!

by Himanshu Jhamb on September 30, 2009

ROI ROCIn my earlier post on June 10, 2009 I shared an example of what ROI looks like. In this post, I am writing about if ROI is not seen as ROI, how your possibilities get killed even before you start to act on them. This happens when customers confuse the ROI (Return on Investment) with the ROC (Return on Cost).

ROI is a constitutive component of how we measure Value; so needless to say, it is a critical part of how we choose to transact (or not), in any situation. Then there is the Investment which is a critical part of the ROI. The biggest pitfall is how this shows up for your customers. Consider this example:

You are at the crossroads of your career. You work very hard at your job, day in day out… day in day out… day in day out… you get the picture. The more hard work you put in, the more of the same results are being produced (e.g. getting only a 2-5% raise year after year after year… ). There is no certainty of the promotion you’d hoped you’d get in your upcoming review. You met your goals, you fulfilled your promises and all that happens at the time of review cycle is you’re told the company did not meet its numbers so you’ll just get a 2% raise or worse, nothing at all.

At this point, you say “This is not working”. I need to go learn some new things. I need to look for where I can get more education… different education and with that you set out looking for it. Then you come across two choices; one education costs $20,000/year and the other $2,000/year. This is the crossroads at which you make a choice and the importance of this choice is huge because it will have an impact on perhaps your entire life.

The choice is made in how you think about this. Before I go further lets clearly distinguish that the “I=Investment” IS NOT “C=Cost”. Cost is usually thought of as something you have to pay in order to get something else RIGHT NOW. Investment is thought in the context of something you have to pay in order to get something bigger (than what you paid) in the future .

Most people look at the ROI as the ROC and that conversation closes the opportunity there and then. So, when you are talking to your customers about the value of what you are offering, make sure you CLEARLY bring forth that the price tag associated with your offer, is not a COST to them, it is, in fact an INVESTMENT, that they are making into a future possibility that will MORE THAN cover the investment they are making at that point.

If they still insist on looking at the “I” as the “C” ask them a simple question: “It is clear that you have considered the Cost of doing this. Have you considered the cost of NOT DOING IT!”

Try this in your next conversation. It works in bringing forth the ROI very clearly… and the results will show for themselves.

Himanshu JhambThis article was contributed by Himanshu Jhamb, co-founder of ActiveGarage and co-author of #PROJECT MANAGEMENT tweet. You can follow Himanshu on Twitter at himjhamb.
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Protect Your Business & Avoid a Disaster

by Robert Driscoll on September 3, 2009

Harley2-1_data_protect_dog

Your company’s data might be your most valuable asset, and with our ever-increasing dependence on IT systems and digital data, it is becoming even more important to protect it in the event of a disaster.

There are a number of reasons why companies haven’t initiated a disaster recovery plan.  It could be:

  • Lack of resources (both internal and external)
  • Limited budget
  • Don’t feel there is a need for one

According to a 2008 study done by KPMG, only 5-6% of a company’s IT budget was allocated to disaster recovery planning and preparation.  At the same time, according to another study done by Janco Associates, only 6% of companies who suffer a catastrophic data loss survived, 43% of these companies never re-open and 51% close within 2 years of the disaster.  In this same study, it was found that 93% of companies went out of business that didn’t have their data backed up at all in the event of a disaster.

Even an event that disrupts your business for a short period of time can have catastrophic consequences.  The chart below outlines the costs associated with computer downtime and lost data for businesses.

Industry Sector

Energy

Telecommunications

Manufacturing

Financial Institutions

Information Technology

Insurance

Retail

Pharmaceuticals

Banking

Lost Revenue Per Hour

$2.8 million

$2.0 million

$1.6 million

$1.4 million

$1.3 million

$1.2 million

$1.1 million

$1.0 million

$996,000

The primary threats to a company’s data are:

  • Hardware or system problems
  • Human error
  • Software Corruption or program problems
  • Computer viruses
  • Natural disasters

What they all have in common is that they are unpredictable and possibly unavoidable, but with a good disaster recovery plan in place, these threats can be minimized or completely eliminated.  If you don’t have a disaster recovery plan in place, there are several sites that you can go to that provide free templates to help get you started, but ultimately, you should contact a 3rd party who has expertise in designing and implementing a disaster recovery plan that meets your companies requirements.  As you start designing your disaster recovery plan, it is important to weigh the risk of financial loss vs. the cost of creating a contingency plan.

Whether you spend the money or accept the risk, it has to be an executive decision.  Not understanding your risks at all could be the biggest risk for your business.

robert_driscoll_color This article was contributed by Robert Driscoll, co-founder of Active Garage. You can follow Robert on Twitter at rsdriscoll.
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