Category Archives: Blogologue

Think!

Atlantic Business recently ran an awesome article that got my attention on the first word and reeled me in with the first sentence. Entitled “Think!”, the author starts off by noting that he

worries [that] we seem to have forgotten or dismissed the value of careful and considered thought. Common sense seems to be in very short supply. Examples of this are everywhere. We send an email, one which is important (at least to the sender) and we expect a reply virtually instantly. Indeed, if one is not forthcoming within 15 minutes we begin to wonder if the recipient has died.

But more importantly, you have to:

think about this: assume that the question being asked is important. We must therefore want a careful and considered response, a response which has had the complete attention of the recipient. Is it reasonable to assume this could possibly have occurred within 15 minutes?

I have to agree. There’s no way you can construct a deep and thoughtful response to an important question in 15 minutes. Even if you have been thinking about the question for days, it still won’t be possible to create a well crafted response in a few minutes — especially if something else is on your mind. But yet, if the call isn’t returned promptly, you fear that the caller is unable to focus on anything else.

Similarly, it seems that if a journalist, or blogger, doesn’t cover a “breaking” story the minute it happens, he feels that he’ll miss the boat. It used to be a company would make a big announcement and the next day it would be a headline. Now, the release goes up on the website, and 5 minutes later there are half a dozen stories about the latest funding round, merger, or acquisition followed by additional thoughts a few hours later — all based on the release or some cookie cutter responses from PR people in an advance call.

How much “analysis” can one truly come up with in in a few minutes? What can you possibly say that goes beyond a seat-of-the-pants reaction or a gut feeling? If you’re a true expert in the space, then the chances that your seat-of-the-pants reaction or gut feeling will be accurate will be (much) greater than 50%, but it’s still just a gut feeling. True analysis takes time and thought. And even if it doesn’t change your viewpoint, I know I’d much rather read a viewpoint knowing that deep thought (over a sufficient time period) was put it into rather than an impromptu piece where there’s a chance that the author might change his mind in a day or two. If most of don’t have the time to read a story on the same announcement twice, we definitely don’t have the time to be confused — and that’s what will happen if we read a differing opinion from the same source a few days apart.

And while I really couldn’t put it in a word before, that, in a nutshell, is why SI doesn’t cover “breaking announcements” as they happen. Not only is an average press release packed full of PR BS, and not only does it generally not contain enough information to truly analyze what the announcement means from a product/service perspective (which is what this blog really cares about and why the Editor insists on demos as a goal of SI is to help you in your quest to be a better Supply Management professional), but there’s no way you’re going to get a decent analysis and a reasonable opinion on a press release with insufficient information in a few minutes (or even a few hours).

You can be sure that if something’s important, SI will cover it when we’ve gotten to the heart of the matter. But we’re not going to ask “how fast” just because some PR person decides its time for the media to run with a story. The Editor wants deep thought put into what he takes the time to read, and it would be unfair to expect that you would be satisfied with anything less.

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Who’s Going to Upset the Market in 2011?

The best predictor of a paradigm shift’s success long-term is how upset it makes people.
Stephen Wolfram, Interview with Christopher Meyer

I just realized something. A whole year has gone by and there has been nothing upsetting in the space. It’s been (well) over a year since I’ve seen anything that made me say “this is going to change things”. Sure, a lot of platforms have gotten better this year. For example, a number of e-Procurement and Supplier Relationship Management platforms have improved greatly in term of features, usability, or both, but there’s nothing fundamentally new on the market. And while a couple of platforms have embraced mobile computing, the functionality offered is minimal and not much beyond the information that can be sent in e-mail alerts (or approvals).

I shouldn’t be surprised, because many companies cranked back on R&D, or put it on hold, when the recession hit full swing. As a result, many companies haven’t been doing much R&D. However, some companies were smart enough to realize that a recession is an opportunity to be great, and kept going full steam ahead, but when you look at what they did, they just improved upon what they had. I really haven’t seen any new ideas in almost two years. As a result, there’s not much for me to be excited about, or much for the market to get upset about.

Now that the recovery, albeit a jobless one, is in full swing, hopefully things will turn around. But we also have to contend with the reality that some companies released great products and platforms in 2008/2009 that still haven’t reached their potential because many companies just stopped buying. In fact, in a few cases, at the current rate of market adoption, these companies are still about five years ahead. While I know a few of them will keep improving and keep innovating, what incentive do they have to release something entirely new if the market still hasn’t understood and adopted the powerful solutions they still have? One area where this is the case is decision optimization. Many companies still have not even tried this technology, even though it’s one of only two technologies repeatedly found to deliver double-digit percentage returns (with the other being spend analysis). And many companies who have are still not using it at its full potential. This is probably why, of the six true providers of strategic-sourcing decision optimization, only three appear to be moving forward with the technology, and, in my view, only two appear to be making real progress. What’s the incentive to move forward if the market won’t keep up with you?

But if 2011 doesn’t bring some new offerings that upset the market, I fear that the market will start to languish. And considering only half of CPOs have a seat at the table, we can’t afford this. So who’s going to upset the market in 2011?

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Should You Provoke Your Customers?

A recent Harvard Business Review article states that “in a downturn, (you should) provoke your customers”. I have to say that even after reading the article to understand where they are coming from, this scares me a bit. It’s one thing to provoke a sleeping bunny, but what if you provoke a sleeping bear? While the first might spring into action, the latter might take a chunk (of business) out of you (by deciding that you’re too pushy to do business with and simply ban you from future opportunities).

While a smart seller will help their customers see their competitive challenges in a new light, they’ll do it in a manner that illuminates the opportunity and inspires the customer to take cost saving actions, not in a way that provokes the customer into an unpredictable frenzy that could cause the customer to make a quick decision that isn’t necessarily right for them. And while it’s true that this could result in a short term gain, in the form of a sale, for a seller, it could also lead to a long term liability if the customer isn’t willing to follow through in the operational execution required to make the solution a success. If the solution ends up tanking, either because the customer failed to redesign their processes and execute accordingly or because the solution wasn’t right for them, and does nothing but cost the customer time and money, the customer could get irate, go public, and start a fiasco that will lead to long term revenue loss.

Maybe it’s just me, but I’d prefer a level-headed customer who saw the advantages, that were clearly laid out in the new competitive landscape the solution created, the solution had to offer to one that was provoked into buying the solution. I just see too many opportunities where “provoking” a customer could go wrong. What do you think?

Are Your Best Practices Really Best Practices?

Best practices are important because, as per Wikipedia, they can deliver desired outcomes with fewer problems and without unforeseen complications and do so more productively and at lower costs. Many organizations claim to employ them, and chances are that your organization falls into this group. But do you really employ best practices?

Calling a procedure a best practice does not make it a best practice. And even if it was a best practice five years ago, that doesn’t mean that it’s a best practice today … even if it’s the best practice you know of. As Carlos Alvarenga points out in “When Is a Best Practice Not a Best Practice?”, “best practices” is often a misleading term used by some consultants and software vendors, a term misappropriated to refer to what are in fact just “rules” of daily operation.

As Carlos notes, by the time a “best practice” gets incorporated into a piece of software or a PowerPoint presentation at a big consultancy, it is usually no longer “best” but simply “good”. Most companies that devise truly innovative practices try very hard to keep them trade secrets for as long as possible. Chances are, by the time they are proclaiming the greatness of their best practices to the rest of the world, they’ve already moved on to a new suite of best practices, or improved the effectiveness well beyond the pasturized pablum they are milking for all the attention they can get from the media.

Furthermore, a best practice is not a best practice if your organization cannot, or will not, adopt it and implement it to its full extent. (For example, monitoring a supply chain visibility daily for unexpected demand fluctuations and actively taking action on that information, which would be a demand-driven best practice, are two completely different things.) A best practice is the best possible solution that your organization will implement, follow methodically, and try to improve on a regular basis.

Constant evaluation, and improvement, is key. New technologies, methodologies, and organizational structures crop up all the time … and you never know when one or more of these new innovations might provide the foundation for a two times productivity improvement, and a four times ROI, in one of your best practices. If you haven’t reviewed a best-practice methodology in a year or two, it’s time to review it now … with an open mind. You never know what opportunities you might find.

Dead Company VI: New SI Offerings

As my fellow blogger astutely pointed out last week in what is by far the best rant he’s ever penned title “Friday Rant Spending and Buying Polarization” on Spend Matters, supply and spend management companies are approaching the recession in one of two ways. The minority camp is taking the correct approach and aggressively ramping their marketing, human capital acquisition, and new product development efforts — seizing the unprecedented opportunity the recession provides to a company that can actually save its customers money and deliver rapid ROI. However, the majority camp is taking the exact-opposite dead-wrong approach and bunkering down until the downturn is over. They’re razing marketing to the ground, aggressively slashing headcount starting with the highest paid (and, often, the best performing) employees, and killing all new product development. As I explained in Part II why you’re not going to last if you’re hoarding cash, they’re digging their own graves.

When you cut marketing, you cut visibility. As a result, the pipeline starts to shrink and before you know it, your sales people are wasting 90% of their time doing cold-calls, desperately trying to find the smart minority who are salivating for the type of product you are offering. Even worse, by the time they’ve identified a customer, there’s a good chance the customer, anxious to see savings and ROI in this economy, has selected a competitor’s solution, because that was the only one they were aware of.

When you cut talent, you cut capability. In a technology-based offering, your biggest asset, and most valuable offering, is your people. Technology advances rapidly, and anything you build can usually be copied AND improved upon by a new start-up rather quickly. Customers look for providers who can help them. Customers look for providers who have done this before. Customers look for providers who understand where the market is going and who are actively working on solution enhancements that will meet their future needs. Those capabilities lie in your people, not your platform. Furthermore, when your competitors are shedding talent, this is the best opportunity to acquire talent, because it won’t cost you thousands of dollars in recruiter fees, signing bonuses, and raises to acquire them. Top performers want to perform. They want to work. All you have to do to attract them is to match their most recent salary and give them a challenge, and they’ll start tomorrow. (Alternatively, you can wait until the next upswing and then try to lure them from a competitor … but it will cost you a lot more to do so, even if you’re successful).

When you cut new product development, you give away your edge. Smart customers — precisely the customers who are buying in this market — know that it usually takes at least a year to bring a new kick-ass product to market, by the time you get through design, market need verification, initial development, alpha testing, tweaking, beta testing, and release. They know that any company not actively developing the next version or next solution now will not have what they need next year when the market moves forward. And smart competitors won’t want to be left behind. As a result, even a weaker competitor who is actively working on solution improvement will look much better to them than you. And you’ll lose more sales.

But if you’ve been paying attention, you know all this. And the reason you’re not spending is because, as my fellow blogger pointed out in his rant, and as I have come to understand, your venture capitalists have lumped you together with the rest of their underperforming portfolio because they don’t understand that downturns are precisely when sourcing and procurement firms shine. They see the rest of their Web 2.0 portfolio flailing (as it should, because, unlike B2B 3.0, Web 2.0 offers no value in the B2B marketplace) and therefore they assume that you will start flailing, too. They cannot differentiate value-add technology from valueless technology.

So, to help you convince your VCs otherwise, I’ve decided to offer three new services.

VC-ED Service #1: Why <Your Company Here> is The Future

I’ll spend one day reviewing your product and solution offerings, one day on a marketplace competitive analysis, and one to two days putting together a customized 1-2 hour presentation explaining why your VC firms need to invest in you now, backed up with a full report on your uniqueness and market opportunity, and I’ll deliver the report in person at your (North American or Western European) Headquarters.

VC-ED Service #2: The Time for Procurement/Sourcing/Supply Management is Now

I’ll join you in a one hour conference call as an independent market expert while you attempt to explain that your opportunity is now and that, if you miss it, you may not be around long enough to experience another. (And if you like, I’ll explain why I think anyone who doesn’t invest in the opportunity now is missing the boat. As you’ve probably figured out by now, I have no problem being passionate on this point.)

VC-ED Service #3: Pre-paid Corporate Obituaries

OK, so this is my little joke. Nevertheless, if marketing, consulting, and headcount has been slashed across the board, you probably don’t have enough cash left for VCED Service #1 (really just a light-weight version of my Total Solution Assessment, as described in What Does the doctor Do … For You). There’s also a good chance that your board is not interested in hearing any viewpoints that contradict their own views, so while you might be able to raise the $500 for option 2, you probably won’t get any commitment of their time. Thus, I am offering a pre-paid corporate obituary, because there’s a good chance that the VC’s “cash saving initiative” won’t allow you to hold out long enough for revenue to start flowing again*. However, you deserve to be remembered in style — hence, my pre-paid corporate obituary service. I will do an in-depth post on SI (and archive it on the resource site) covering your solution offerings, their value, and why you will be sorely missed if your doors close forever. You are free to use this material when you try to fire-sale your company, and maybe, just maybe, there’ll be one last lifeline from a smart VC firm who’ll see the value you have to offer.

*It will be at least a year from the time the VCs allow cash to flow again before sales pipelines, new product development, and new hires get on track. Since the recession will last at least a year, if not two; since it will be six months after that before the ultra-conservatives in the VC firms let cash flow again; and since most VC-backed companies in this space don’t have much more than a year or two of cash in the bank, there’s a strong chance that many companies just won’t make it.