DIRECTIONS - Architecture for revenue growth

March 2014

NOTE FROM THE DIRECTOR

Richard (Dick) Van BelzenIn this second edition of Directions, I’d like to discuss a few points and reflections on consulting. My view is based on having hired consultants for half my career, and serving as one for the second half. What I really like about being a trusted advisor is the optimism, free thinking, and range of solutions we can provide. In the past, being inside a company I worked for often limited my exposure to available options and kept me in a heads down mode. So having someone else, like a third party I could rely on and who would look out for my best interests, would have greatly helped me to better serve my company. Plus their ability to provide objective suggestions would have been invaluable. Additionally, most corporate executives have to keep a lot of thoughts close to the vest, and internal to the company, so having an confidential 3rd party to bounce ideas off is invaluable.

Our expertise in top-line or growth consulting is to provide incremental and even exponential profits. We view ourselves as complementary to the internal team. One of our favorite challenges is for a client to say something like “our company is growing at 5% and we’ve identified 2% more of growth, can you help us find an additional 2-3% more?” This is just one start to addressing a common goal that can be actionable and measurable.

At Northpoint, we offer a Key Advisor Program (KAP) that provides advice to clients on a regular basis—usually on a monthly cadence. Like all our efforts, this program is designed to help the client(s), as they have really stuck their neck out to bring us on board. And we need to make sure this person/team looks good in the process, beyond the obvious requirement of achieving results. We’ll talk more about KAP later on.

As we head into spring, it’s a fresh start for the new growing season. What are some of the new plantings that can spice up your business and career success?

Sincerely,
Signature
Richard (Dick) Van Belzen
Managing Director

Phone: 585.233.6707
Email: dvanbelzen@northpointadvisors.com

CURRENT EVENTS

In the past week, the Target security breach is still in the news as the CIO, Beth Jacob, resigned. The breach has hurt the discounter’s brand image and greatly impacted its profit—which could be over $200 million in breach-related costs. Plus, the company says it will invest more than $100 million in cards equipped with chips and protected by pin entry, which are less prone to hacking than the traditional magnetic-stripe and signature cards.

NewspaperCowen & Co. analyst Faye Landes, who rates the stock to underperform, said any planned new hires to work the fix likely won’t come cheap. Per The Wall Street Journal, security experts have faulted Target for not taking simple steps to separate its payment system from the rest of its network, a mistake that made it easier for hackers to get in. The company, which has long been cited for under investing in IT, has since moved to isolate its different platforms and networks.

What we can learn from this is that even in top companies, people can take huge missteps. Therefore, each of us would do well to stress our set of assumptions and risk analysis for our enterprises. The same goes for assessing our strategic opportunities and risk.

INSIGHTS

Innovation / R&D

"You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new." — Steve Jobs

"The enterprise that does not innovate ages and declines. And in a period of rapid change such as the present, the decline will be fast." — Peter Drucker

Above are quotes from two highly recognized people, one from a visionary who spent his career driving many successful products and leading a dynamic company, and the other from an ageless management guru. Dr. Drucker speaks from a conceptual level of what could happen to enterprises that don’t innovate, Steve Jobs from decades of hands-on experience. Both views are meaningful and likely to be, at least in spirit, co-dependent upon each other. We need both the vision and the ability to sort out at an operational level what needs to get done and why.

We focus a lot of thought on approaching innovation in companies. Here’s an overview:

  • Innovation - the word is often related to technology and new product driven. But it can apply to non-physical product and services situations as well. We agree with Dr. Drucker’s view—innovation is imperative—and must apply to service companies, enterprise processes, and the customer experience. (For example, top retailers must constantly innovate the customer experience in order remain competitive). The successful companies we see are moving innovation to every member of their senior team as part of their MBOs. Each leader will look at how they can innovate in their core area. So we’re not asking CFOs to run R&D, but to look for ways to innovate in their area. Using an innovation orientation is a more upbeat way (vs. always talking about cost cutting) to frame the effort. And when done right, the impact on the external customer for every action is taken into account.

  • R&D - investment levels are continually being managed and carefully watched. There are various rules of thumb and methods that are used just to justify investments. It’s always good to look at R vs. D and isolate on each. What’s the spend level? What is the performance? You can look at them as being dependent on each other like sales and marketing. In S&M we often grade internally and more critically than R&D. There is a trend to engage or leverage universities and industry-related research centers to gain more efficient access to research vs. relying so heavily on internal sources. As with research, several external sources should be used to support development as well. We’re learning in software development that not everyone in that business needs to write code. Being an integrator in R&D is great, especially if you have access to solution sources and a group of vigilant technology scouts. Training R&D team members to scout may require training or aligning those that operate this way in that position. The end goal is to effectively innovate in ROI and increase the time to black of new and derivative developments.

  • CTO and Business Strategy - for technology companies, it’s critical to have CTOs that can operate effectively in the strategic planning and vision process. Having the CTO with the shortest and clearest line of sight to customer insights is important. Those CTOs and CMOs that are closely aligned enable this function the best. A challenge to all businesses is “garbage in—garbage out,” which also applies customer insights. Steve Jobs was very sensitive to engaging customers for insights. This need applies to B2B as well where gaining customer insights can be more complex as there are various decision-making processes and it’s often hard to tell what drives acceptance. Getting voice of the customer (VOC) is routinely driven in most companies. But poor VOC inputs are equivalent to none at all. The strategy for each company should reflect mega trends and impacts that need to be comprehended and tied back to how your plan to gain competitive advantage will play out with customers. The input distortion that’s often received is like listening to an old AM radio when being out of range. While information is never perfect, leaders need to be vigilant on quality and source of information as huge assumptions and decision-making often relies heavily on VOC and other internal inputs.

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PROGRAM OFFERING

Our Key Advisor Program (KAP)

Mentoring has changed greatly from years ago, as most logical internal mentors are too busy with higher spans of control and greater demands on time. The need for help is even more challenging and critical at the top.

We offer the Key Advisor Program (KAP) as a standalone program for both new and current clients. In fact, most of our clients have integrated the KAP into various projects and programs of their own. Our intent is less internal-agenda-driven, and offers clear-headed third party advice developed to make the KAP Member as effective as possible. These members make more money, have less stress and advance faster—and we’re happy to provide case studies that support these claims. Some people refer to the program as like having a “Dutch Uncle” but it’s more than that. We offer continuous linking and availability to handle business situations and personal strategies. So while the KAP Member is our focus, their increased effectiveness and results help improve company performance.

But it’s not a one-size-fits-all program. Most require 12-month commitments, but we offer flexibility and operate in a combination of ways—whatever makes the most sense for the member and their business. We can be a shadow in the office, or be known to others in the program. We can offer a combination of on-site and phone support. Please contact us to learn how the Key Advisor Program can work for you.

FOR YOUR CONSIDERATION

According to a new survey from Milwaukee-based ASQ, formerly known as the “American Society for Quality,” only 9 percent of respondents said engineers would make the best chief executives, behind people from other fields, including operations, finance, marketing, academia and sales.

“Despite the fact that some of the greatest business leaders in history, from Henry Ford to Lee Iacocca, have been engineers, many people don’t connect engineers with the boardroom,” said Cheryl Birdsong-Dyerv, a professional process engineer for telecommunications firm Sprint Corp. ASQ has more than 14,000 members who are engineers, out of a total membership of 80,000. In a separate survey, ASQ found that—not surprisingly—69 percent of the member engineers it polled said their skills provided a solid foundation for a successful CEO.

The reason why engineers make good CEO material is that the engineering discipline demands strong analytic skills. Engineers can be good leaders partly because they have a strong analytical background, said Michael Lovell, chancellor of University of Wisconsin-Milwaukee.

Source: ChiefExecutive.net

THE LAST WORD

For a great source of market and business aggregation information, we recommend Real Clear Markets, which serves as a one-stop shop for market-related news, analysis and commentary.

NEXT MONTH

For April, we’ll be writing about a concept we provide called the value stack.

Northpoint
19 Sylvan Glen, Suite 300, Fairport, NY 14450
Email: info@northpointadvisors.com | 585.233.6707
Visit us online at www.northpointadvisors.com

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