By Carol Thompson

I live in Austin, Texas, a city with more than its fair share of entrepreneurs.

And while entrepreneurs are most often known as innovators, I think they share another important quality: PASSION.

Some are passionate about creating a breakthrough product or service that solves a problem for businesses or the planet. Others are passionate about building a unique corporate culture.

It takes more than passion to create a great company, of course. But passion is what drives these entrepreneurs to start a company in the first place, and it’s what keeps them going through the inevitable rough stretches startups experience.

The very best entrepreneurial CEOs know how to use their own passion to create a sense of mission. They know how to communicate their passion to employees and to hire people who share that passion with their customers.

Steve Jobs, regarded as the greatest CEO of our time, was notoriously passionate about absolute perfection in Apple’s products.  He challenged employees to create “insanely great” products. (How’s that for a terrific mission statement?)

Jobs drove employees nuts because he got involved in every detail of product development. He would sometimes make major changes at the last minute, because he had concluded that something wasn’t perfect enough.

Jobs was a genius, so he could get away with that obsessiveness. I’m not recommending anyone copy his leadership style.

But would Apple be the company it is today, worth almost $600 billion, if its CEO had not been so fiercely passionate about perfection?

A lot of business leaders today seem to have lost their zeal for innovation and motivational leadership. So it’s always great when to find new examples of people whose passion hasn’t lost any heat.

I ran into a lot of them recently at a week-long event called RISE Austin. RISE features free sessions for entrepreneurs taught by some of the city’s best entrepreneurs.

Keynote speaker and film director Robert Rodriguez, who lives in Austin, is the creator of the “Spy Kids” movies as well as adult fare such as “Sin City” and “Machete.” He has been making movies since he was 12 – more than 30 years.

His latest project is El Rey, an English-language cable network aimed at second and third generation Hispanics. The network will debut in 2014 on Comcast.

Rodriguez says passion for making movies his own way has helped him follow his own path in an industry where a lot of work is sheer imitation. It’s no surprise Rodriguez’ production company is called Troublemaker Studios.

When skeptics ask him whether he has any clue about running a cable network, he replies, “No, but I didn’t know how to make movies either.”

One thing that struck me about Rodriguez was his passion about helping other people succeed.

There are some other great examples of that in Austin.

One is Bob Metcalfe, who also spoke at the RISE event. Metcalfe co-invented the Ethernet, founded 3Com, and was a general partner at the Polaris venture capital firm, where he’s still involved.

At 66, Metcalfe has probably made enough money to retire and buy an island.

But about a year ago, Metcalfe moved from Boston to Austin to become Professor of Innovation (a title he made up) at the University of Texas’ Cockrell School of Engineering.  He and a younger protégé, Josh Baer of Capital Factory, co-teach One Semester Startup. This class is made up of enterprising students with dreams and innovative plans for companies of their own. Future plans include connecting with all of the schools within UT to encourage innovation in a collaborative setting.

For Metcalfe, this is not a short-term gig – when he started, Metcalfe said he planned to be in this position for a decade.

He doesn’t just teach classes. Chances are good, if there’s an event involving entrepreneurs in Austin, Metcalfe has walked or biked there. From the MIT Club, and UT’s Office of Commercialization to the podium at a South by Southwest Media Event, Bob has been there.

He’s never lost his sense of delight, his passion, for innovation. It sustains him and it’s contagious. As Metcalfe communicated via his Twitter account last year, “Grasshopper, focus actions on passions.”

Have you checked on your PASSION as a CEO these days?

Carol Thompson is an economic development consultant and champion of young CEOs. Thompson served as CEO of Computerland, was seated for six years on the San Antonio branch of the Dallas Federal Reserve Board, and has chaired the board of the Greater Austin Chamber of Commerce. She founded The Thompson Group to work with companies and organizations as a high-level, strategic marketing partner. www.thompson-group.com

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In his Addison office, Sheldon I. “Shelly” Stein, the CEO of Glazer’s Distributors, says his current company has to operate differently from those he’s been associated with in the past.

“Under the law there are three aspects of our business,” he says. “The people who make it, the people who distribute it, and the people who retail it. You can only be in one of the three tiers, and since we’re in distribution, we cannot own any manufacturing.”

He’s talking about alcoholic beverages. Glazer’s is one of the nation’s largest distributors of alcoholic beverages. The privately-held company has about 40 warehouses in 14 different states. Its annual sales are around $3.5 billion.

Shelly Stein, CEO, Glazer's Distributors

The Brooklyn-born Stein attended Brandeis University after being recruited to play basketball. Later, he went to Harvard Law. A law career that started in Beverly Hills took him to Dallas nearly 35 years ago, where he went to work for the firm that later became Hughes & Luce. From law he moved into investment banking – first at Bear Stearns, then at Merrill Lynch, where he was a vice-chairman. One of his clients was Glazer’s, and when Stein mentioned to them he was considering a move to a different investment banking firm, they persuaded him to run the liquor distributor. He’s been doing that for just under two years.

“I’ve had a very traditional career,” says Stein. “Law, investment banking, selling booze.”

Supply Chain Strategy

Being in a business as heavily regulated as liquor has its challenges. For example, Glazer’s has two warehouses in the Kansas City area – one on the Missouri side, and one on the Kansas side. Alcoholic products are not allowed to cross state lines. Even within a company, such as Wal-Mart, regulations differ. In some states, Wal-Mart stores are allowed to carry beer. In others, they aren’t.

“From a supply chain standpoint, we have to get the right product to the right place at the right time,” Stein said. “We have to manage our inventory because it’s very costly. You don’t want to walk into your favorite store and ask for a bottle of your favorite champagne and it’s not there – brands are things people are very attached to. When people want a specific brand of whisky, that’s what they want – not a substitute.”

Tastes in Texas might be different than tastes elsewhere. Spirits are underweighted here. “Texans prefer beer,” Stein said. “Every state is different in taste, consumption, volume and what they like – it’s a very unique business.”

Because of the complexity of laws and regulations, the high number of suppliers and products, plus local tastes, Glazer’s adopted a supply chain strategy they call: meeting local demand with centralized fulfillment.

The local nature of the liquor business poses challenges in the supply chain. Product must be moved to the right place at the right time. Having too much of one brand is just as bad as having too little. So Stein and his crew have to forecast demand. Forty percent of the nation’s liquor is sold in October, November and December. “We don’t want to be sitting in January with products that won’t move until the end of the year,” noted Stein.

One area constantly getting attention is where the process slows down – the bottlenecks in the system. Michael Adams, Glazer’s Senior VP for Information Technologies and Supply Chain, said forecast accuracy can be a major slowdown point. “If you don’t have the forecast right and accurate,” Adams said, “you buy bad inventory – too much of one thing, and not enough of another. If you get it right, you can effectively manage your inventory.”

In order to do that, Glazer’s takes a “holistic” view of its business. That’s a departure from the “old” way of doing things, when the company was focused on sales and marketing.

“We had no dialogue with our biggest supplier on our inventory,” said Stein. “They just shipped products. Now we have meetings where our whole team, both key sales and marketing people, and administrators, meet to manage inventory and delivery. Before, there was no dialogue and now we have a continual dialogue with our suppliers.”

As a result of collaborative planning, forecasting and replenishment with one key supplier, Glazer’s was able to reduce inventory levels by 21 percent compared to the previous year. That holistic approach and a willingness to ask, “Why do we do things this way?” contributed to new efficiencies in Glazer’s that saved the company tens of millions of dollars, says Adams.

Risk

The greatest area of risk in the supply chain is getting the forecasting right, agree Stein and Adams.

Glazer’s maintains between $350-$450 million of inventory on any given day, said Stein. So even a small miss can be very costly. Stein said the “bad inventory” – what does not sell well – is down to less than one percent of their stock. But that still amounts to about $3.5 million.

The other area of risk comes with the new products suppliers hope will be big winners. The risk is in figuring out which new and innovative products will click. Right now, flavored vodkas are big. Stein says independent manufacturers who are not existing suppliers are continually bringing out new products. Every two weeks there is a room at Glazer’s filled with new products, and for every vodka Glazer’s takes on, they turn down dozens.

Suppliers push Glazer’s to stock those products, but Stein says the company expects the supplier to spend some money on marketing. Otherwise, there’s a good risk the consumer won’t know about the product.

“They will walk into the store and think, ‘I’ve never heard of that brand,’” Stein said. “If the supplier doesn’t work with us and do the right product advertising, there is a problem. That’s not necessarily a supply chain problem, but it’s a discussion about doing a good job. Sometimes we have to educate them on what doing a good job means.”

On the flip side, sometimes Glazer’s can’t get its hands on hot products. “It’s rarely a case where we haven’t ordered enough, but rather the demand outstrips the supply,” Stein said. “In that case there’s not much we can do.”

Procurement and Sourcing

One mark Stein has made on Glazer’s since coming aboard is to hold his sales team responsible for inventory management.

“For each of our major suppliers,” he says, “we have one person who is responsible for that relationship across all of states. If there’s a problem, good or bad, one person is responsible.”

“The replenishment team has always had a one-to-one relationship with a supplier,” said Adams. “When Shelly came on board, he aligned one point of contact from the sales and marketing standpoint to that organization, as well. That’s absolutely critical – supply chain to supply chain works very well, but only when it’s at the highest level.”

That relationship with suppliers can help temper unrealistic expectations, said Adams. If the supplier and the distributor don’t see demand for a product the same way, there will be an inventory miss. For example, a supplier might expect to sell 1,000 cases. If Glazer’s thinks 50 is a more realistic target, it could lead to a bad inventory miss.

“It’s very easy to buy a lot of stuff nobody wants,” Stein said. “If it’s spirits it will sit there. It doesn’t go bad, but nobody wants it. We have to be careful with our buying and truly understand demand.”

Sometimes, Glazer’s can get caught in a supply-and-demand squeeze over which it has little control. Stein cited China’s growing influence in the champagne business.

“There is so much demand in China and Asia for ultra-high champagnes,” he said, “we’re now on allocation for products we want because so much is going to Asia. We can sell more than we can get our hands on. If you’re a supplier and you can get a much higher price in China, you’re going to send it to China. That’s where relationships come in, if we didn’t have a close relationship, we would not get product at all. We get a pretty good allocation because of our long-term history.”

Sales, Operations, Logistics

Today, Glazer’s is in the middle of a $60-million conversion to an SAP software system. The goal is to get real-time data so the company can respond instantly.

“I’ve determined we need real-time inventory – we did not have the ability to do that – and most people in this industry do not,” Stein said. “If you have a product and a restaurant stops ordering it, I want to know it that day, not three months later. If they change from this wine to that wine, once the menu is printed, we’re out of luck. We have to have real time information about what’s happening all across the system.

“For performance criteria and responsibility, we’re smoothing things out instead of having fire drills at the end of the quarter when we’re trying to move 20,000 cases in three days and putting pressure on retailers. It was a crazy system and most of the suppliers love the fact that we’re trying to have a smoother cycle than what we’ve had before. Then they can better forecast, too.”

Having good warehouse managers is key to distribution, Stein said. For one brand of whisky, a single warehouse shipped 55,000 cases in one day. “At 12 bottles per case, that’s 600,000 bottles in one day,” he added. “Think of the logistics of that. Not only do we deliver cases, but we even pick bottles for a delivery. In some instances, restaurants don’t have the storage space, so they want four bottles of this and six bottles of that.” In their Dallas warehouse facility Glazer’s can move 10,000 cases an hour and have them packed and into the truck.

Glazer’s has its eyes on further expansion, especially overseas. They’re looking at Brazil, Argentina, and China. The international expansion is because all of Glazer’s suppliers are international companies. But Stein says he’s not in a rush. “We have to figure it out, and you just don’t do it in a day,” he said. “We’ll get there, but not until I’m comfortable.”

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By Jim Brazell

Sociologist Marshall McLuhan once said, “Each major period in history takes its character from the medium of communication used most widely at the time.” The emerging communications medium of the 21st century is robotics. Rather than walking, talking robots as we usually imagine, these robots are embedded into the infrastructure and machines of the 21st century.

Mainstream robotic systems today include the iPhone 4’s integrated gyroscope, the automatic brakes and drive-by-wire features such as electronic throttle control in automobiles, and the network of control valves enabling water to flow from the faucet when we brush our teeth in the morning. The motors and machines in our lives – the physical systems – have mated with the cyber systems (software, computer and network) creating a fourth generation of computers.

Fourth Generation Computing – Cyber-Physical Systems 

In 1965 Gordon Moore of Intel famously proclaimed the number of transistors on a chip would double approximately every two years. Intel progressed from 1971 with 2,300 transistors on the Intel 4004 processor, to 2.6 billion transistors on the x86 Intel 10 Core Xeon chip today. This time pacing of the market has become known as Moore’s Law.

Quietly over the past two decades, computerized motors known as intelligent actuators have experienced similar performance improvements. Tesar’s Law asserts the same thing that happened with Moore’s Law in computer performance is also happening in tightly coupled computers and motors.

Del Tesar, Chair and Director of the Robotics Research Group at the University of Texas at Austin explains, “The eight orders of magnitude increase in computer performance over the past two decades reflected by Moore’s Law is accompanied by an eight order of magnitude performance increase in tightly coupled computers and motors.”

The mainframe, mini and PC are the first three generations of computers typically discussed in the modern history of computing. Cyber-physical computing is the fourth generation of computing. Cyber-physical systems use computers, software and/or networks (or their logic) to monitor and/or direct the operation of physical processes and/or biological systems (or vice versa).

Cyber-physical systems are ushering in a new economic era representing a shift from the dominance of F.W. Taylor’s “Principles of Scientific Management” that are the basis of industrial business practice to new business processes based on non-linear systems and complexity science. The promise of this new economic era includes new kinds of products and services, new methods of customer service, greater productivity, new forms of human-to-machine interaction and, even human-machine integration (as exemplified by the pace maker, cochlear ear implant, and similar systems).

The Future is Here: Internet 2.0

Cyber-physical computing expands the networks reach to include new business processes and domains of influence. Ushering in a new era of commerce, cyber-physical systems expand and widen the network to include physical systems and processes. Examples include:

• Snapshot: Progressive’s black box for the car links driving behavior to a usage-based insurance policy, monitoring every acceleration and braking motion. The technology holds the promise to redefine risk-management and the economics of actuarial science in the insurance industry.
• Nike+FuelBand: Nike’s new sports bracelet interfaces with a cell phone and tracks physical activity, monitors progress toward goals, and provides incentives. The band ultimately represents the emergence of game-based advertising connecting cyberspace and one’s physiological data through a score measured as “NikeFUEL” taking branding to a whole new level.
• Chevy Volt app: Volt owners can remotely start their vehicles as well as control and monitor physical processes such as electrical charge modes creating a new relationship between consumer and product.
• Kickebee: This computerized, stretchable band is worn by pregnant mothers enabling a prenatal baby to send a Twitter Tweet with a kick from within mom’s abdomen, extending the reach of the Internet to the most private domains of life.
• Toughbot: A ruggedized robot, approximately the size of a laptop, delivers surveillance and reconnaissance for applications including law enforcement, engineering and building inspection for less than $5,000.

In these examples, physical and virtual worlds are integrated, delivering a new kind of space – robotspace.

In the cloud, Audax Health Solutions is a hub for distributed gadgets and apps for health, privacy, and human performance. And, ThingSpeak from ioBridge is an open source project enabling devices such as thermostats, security systems, cell phones, cars, toys and home appliances to send tweet-sized messages over the Internet – a Facebook for robots.

Conclusion: A New Economic Era

The net effect of Tesar’s Law over the next decade will be the transformation of virtually all industries by increasing the footprint of automation from the traditional information appliances of PC’s, phones and tablets, to virtually all machines and physical processes subject to computer control and the network’s reach.

In the end, we may finally discover what post-industrialization is – a new economic era based on monitoring and control of economic processes at a scale that has been unimaginable until now. This new era will be marked by a widening of the network to encompass physical and biological processes, new forms of advertising, commerce and business, new threats and opportunities in cyber security (and privacy) and integration of products and services so the two become indistinguishable. Watch for the emergence of subscription pay services connected to physical products such as toys and other mechanical devices as well as subscriptions for new services tied to physiological processes such as driving, exercise, and health.

Cyber-physical systems are available today – including applications in exercise, health care, business, security and inter-personal communication – illustrating an age of robotics has emerged to displace the “Information Age.” Rather than walking, talking robots, cyber-physical systems represent the evolution of robotics from the bottom of the evolutionary scale, up. Today, the mainstream robots in our lives range from cars to toasters; however, soon, cyber-physical systems will redefine civil life, commerce and even our concept of communication in the 21st century.

Jim Brazell is a technology forecaster, strategist and public speaker who has led research and development projects in technology for business, education and the military. http://www.jimbrazell.com/

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By Michael J. Penney

The McKinsey & Company study, “Big data: The next frontier for Innovation, Competition, and Productivity,” reaches two conclusions business leaders will quickly realize. First, there are huge opportunities available for improving marketing in organizations with the use of data analytics; and second, it will be really challenging to realize those opportunities.

The Opportunity

Data and its use will become a key basis of competition and growth for individual firms. One of the most visible areas is in marketing, where there are two types of benefits available.

The first benefit is improving targeting, which most importantly begins by determining who to target. Data has always provided the ability to help predict who a company should want to target based on historical data. The incremental opportunity is to predict who that person is based on what they’re doing right now. For example, what did they just search for on their mobile device? What product information did they just view on-line?

Once the person is identified, the next challenge is to determine what to offer them and via what mix of communication vehicles. For many companies, there are somewhere between 20-50 different touchpoints, so determining how to communicate involves balancing between understanding what is the best mix and what a company can actually manage through to execution.

Next is to determine how to say it. Digital touchpoints enable personalization and versioning to maximize the value of each communication; as with managing many touchpoints this involves managing complexity.

The second benefit is improving decision making, notably in product development and resource allocation. Information about competitive products and marketing activities is so transparent today, it is essential to understand what is occurring and to be nimble enough to change marketing elements to retain and shape a product or service’s value proposition.

The Challenge

To use data to its fullest requires four categories of capabilities: 1) capturing and measuring what’s occurring; 2) identifying patterns and opportunities; 3) segmenting/organizing information for action, and 4) predicting the outcome of planned actions.  These capabilities require underlying skills in large scale and real-time capturing and managing of data, cleaning up and enhancing data, and statistics and visualization tools.

Why is this challenging? Each step requires specialized technology to capture the information and people and tools with special capabilities to analyze and use it. McKinsey predicts by 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.

The cost and complexity of managing the information and tools can be daunting. Many organizations are amassing data and tools to meet the challenges and are at risk of either spending on technologies, data, and capabilities they won’t be able to use, or they’re becoming dependent on a labor force they won’t be able to attract, develop, and retain.

McKinsey estimated BILLIONS of potential benefits in a number of industries. Suffice it to say that in almost every industry, there will be significant competitive differentiation between companies based on their ability to harness data with advanced analytics.

The Approach

Tom Friedman, the celebrated author and columnist, believes what is needed are managers within companies with the skills to manage resources wherever they are in the world, while recognizing it is unlikely those resources are in the same building, in the same company, and/or even in the same country.

Friedman’s point is: the most valuable skills a company can have (and the most valuable people within a company can have) is to be able to determine exactly what needs to be done and then manage the increasingly networked resources to get them done.

This is particularly true with the opportunities and challenges for big data.

The Plan

First and foremost, make sure the leaders are on staff to ask the right questions. These are the rare breed of leaders who can sort through a wide range of opportunities and challenges and clearly set a direction for the use of data based on the value to the organization. These people are hard to find and retain, but are key to ensure the organization is properly focused and doesn’t get mired in details and challenges.

In contrast to someone who would say, “Let’s capture a bunch of data and see what we can learn and how we might use it,” find the person who can articulate and quantify the specific benefits being sought and can create the plan for getting there. That leader would say, “These are the customer experiences we need to deliver to our current and prospective customers; here is how we are going to execute, and this is what they will be worth to us.”

This person may not always be right since needs and capabilities are rapidly evolving, but they need to follow a structured approach and be able to adapt when necessary.

Find a partner organization (this may be an internal group, but increasingly will be external agencies) that can help deal with the complexity of the work and the rapid evolution of the increasingly complex data environment. This should be a partner that has scale in order to offer efficiencies and breadth of experience – both with big data and with marketing challenges. This is not a core competence of many companies and in many cases will involve a work force that is distributed around the world to bring to bear the right talent at affordable costs.

Finally, create a sustainable business model with partner organizations to ensure continuous improvement of the marketing efforts. This will typically include agreements with performance metrics for: 1) marketing program development; 2) availability of skilled talent and, 3) predictable costs. The last two points are worth emphasizing since the scarcity and demand for talent is already driving up costs to acquire and retain. This will not be an area where reducing costs will be an option, but rather will be more of a challenge to find the appropriate resources.

The demands and opportunities of big data are upon us. Focus on finding those few individuals to lead the company’s efforts to capture the opportunities. Direct those individuals to develop and leverage partnerships to provide the skills, scale, and flexibility.

Michael Penney is the Executive Vice President for Strategic Consulting and Advanced Analytics at Dallas-based Epsilon, a multi-channel marketing services company. He can be reached at mpenney@epsilon.com.

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By Theresa Schwab

Recently a manufacturing company came to me wanting assistance with their network. Apparently, the company who sold the network equipment was only good at installation, but not as good with supporting the equipment. Installing security equipment without properly configuring it is like driving a car with seatbelts but not actually wearing them.

A firewall is the first and most important level of protection for any network. This company’s firewall was not logging events such as successful connections, failed connection attempts and more. As a direct result, we saw a seemingly persistent attempt from suspicious individuals in foreign countries attempting to hack into the company’s network. Without event logging, no one would know that their network was at risk until they had a breach and there would be little that could be done to reverse the damage caused or trace the origination point.

In today’s world, CEOs have little choice but to address security issues both proactively and aggressively like this manufacturing company. The Austin-based intelligence company Stratfor waited until they experienced a severe breach of client information to actually address their network security, which is significantly more costly in terms of dollars, professional reputation and related downtime fixing the issue and then instituting the preventive measures to stop any future attempts on the network.

We live in a society where technology is constantly changing and the hackers are continuously adapting to those changes. In these uncertain and difficult times, prudence demands an extremely conservative and proactive approach to security issues both from a maintenance plan as well as a replacement budget for outdated equipment. Most of today’s users demand to use technology in new ways that leaves the IT professionals playing “catch up” – most of the time without success – which results in further stress points within the company’s organization in terms of communications between various departments, rollouts to accommodate the newly needed equipment and training to keep up to speed on the new technologies. Unfortunately, it takes a Stratfor-like breach to wake up a CEO and force the implementation of security policies and then hold an emergency meeting with the CFO to allocate budget for IT security tools and training. By that time, the CIO and the rest of the IT team are in reactionary mode, frustrated and stressed, and more often than not more mistakes are made. Fortunately, there is a solution, or at least the beginnings of one: Conduct a simple SWOT analysis that addresses threats and trends noted in reports; further explained in CRN’s 10 Security Predictions for 2012 or Kroll’s 2012 Cyber Security Forecast. Of those noted, these worry me the most:

Small and Medium Businesses (SMBs) Are Easy Targets

Unlike their enterprise counterparts, SMBs lack huge budgets and staff to address all the threats and vulnerabilities on the horizon in a timely manner. Targeted attacks like the Stratfor incident garner lots of attention, but the majority of hackers and cyber thieves are only looking for the path of least resistance which frequently leads to SMBs and that doesn’t make headlines. For example, one company had no idea their web server was breached and used to host a phishing scheme aimed at obtaining credit card information. Until they received a certified cease and desist letter from the spoofed Fortune 500 company’s law firm, they never knew the breach occurred because all of their applications still worked as they always had. This breach could have been prevented by routine maintenance and patching of the affected server or simply reviewing the firewall logs and addressing issues. If this work isn’t done in house, management must hire a company to do it for them and verify, verify, verify.

Mobile Computing

According to CNN Money, the number of wireless devices in the United States now exceeds the number of people actually living here. Calays, an IT research firm, estimates that smart phones outsold PCs in 2011. Each device connected to the business network becomes the business’ problem. Managing threats and vulnerabilities on a seemingly endless list of devices with countless software revisions can be overwhelming to most IT departments. Any one of these devices could introduce malware on the business network resulting in breaches of credit card data, banking information, consumer health records, or proprietary information. By far Android devices pose the greatest mobile device risk on the business network. Juniper Networks reports Android malware quadrupling late last year. Thankfully, Reuters reported last week that Google has been monitoring its app store for malware. Only time will tell if Android continues to pose a significant risk in the business network. In the meantime, businesses can enact mobile device standards and IT departments can use Mobile Device Management software to manage, monitor and secure devices accessing their network.

Cloud Computing

Not long ago most people were confused and had little knowledge of cloud computing. In fact, for a long time the industry couldn’t agree on a definition, let alone agree to any standards. As cloud computing becomes more understood and socially accepted, security concerns only become more amplified. Without industry standards, the onus is on the business to conduct thorough due diligence before adopting cloud computing. For businesses lacking the knowledge and skills to thoroughly conduct due diligence, a cloud consultant is crucial to helping executives to make the best business decision. In many cases, cloud computing is a more secure way of accessing and storing data. Reputable cloud providers typically have large budgets for physical security and very well trained technical teams.

My job as a consultant is to educate CEOs to make conscious decisions when it comes to securing their business.  They have the choice to either address security concerns now through policies, procedures, and hardware/software controls, or address them at some later date, hopefully before a Stratfor-like incident.

With more than twenty years of IT experience, Theresa Schwab frees executives from worrying about their technology. Theresa is President of Austin-base CMIT Solutions, and can be contacted at: tjones@cmitsolutions.com

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By Mark Frein

Every decade seems to bring with it a new term for employee satisfaction. The term of the last 10 years is “engagement,” usually defined as an emotional commitment by an employee to put in extra effort. We don’t want employees to simply be satisfied – we want them to go over and above what is required.

A 2011 report by Blessing White Research rocked the human resources world when it uncovered the bad news about the state of employee engagement worldwide: 31 percent of employees are engaged, and 17 percent of employees are actively disengaged. Only actively engaged workers, according to the study, are both satisfied in their jobs and contribute highly to organizational performance. As the study remarks, “Engaged employees plan to stay for what they give, the disengaged stay for what they get.”

While an optimist may regard one out of three as a relatively decent percentage of engagement, the lesser quantity of actively disengaged employees probably offsets the engaged. It does not take many disgruntled employees to sour an entire workplace. Research by Hewitt, Gallup, McKinsey and others further demonstrates that highly engaged workforces outperform those that are not. Such research only validates common sense.

Our job as leaders in our organizations is twofold: How can we attract engaged workers, and how can we keep them engaged?

Hiring Full Tanks, Avoiding Empty Ones

Winning the hearts and minds of workers begins before they even enter the door as a new employee. A company with a clear and well-articulated mission and strategy tends to attract mission-driven employees, the sort of people who probably start with a big tank of “readiness” for engagement. A company with a strong culture, defined and supported by well-conceived values, further differentiates between potential employees that seek engagement from their work and those that do not.

If a recruitment strategy rests solely on what employees get, an organization will probably “get” new ranks crowded with employees that are not likely to commit beyond immediate incentives.  Highly engaged people – particularly those from younger generations – want to be part of something meaningful. We need to offer more than a paycheck. We need to offer a chance to be part of something important. Simple step #1: bring in engagement-ready workers by focusing recruitment efforts on the opportunities to contribute, to learn, and to make a difference.

Keeping the Tank Full

If we have recruited well, every new employee we bring into our company starts with a full tank of engagement potential. The tough job is keeping the tank from draining. Every employee will go through ups and downs of engagement. If we are lucky, 80 percent of employees will be engaged 80 percent of the time. Engaged employees know they have to work hard, and are willing to do it and make sacrifices. That is what makes them so valuable and so important to retain.

There are well-researched “engagement busters,” organizational mistakes that rapidly drain engagement tanks. A short list includes:

• Poor leadership and supervision
• A lack of a performance culture – i.e., a culture of mediocrity
• Inequitable rewards practices
• Unnecessary bureaucracy
• Management by fear

In common with all engagement-busters is they are a product of a poorly led organization. Good workers will stay committed to an organization, even through difficult times, when that organization is well led. Countless leaders through history have demonstrated this, and countless more will continue to do so. Poor leadership begets a culture of dysfunction and disengagement.

Many organizations try to refill the engagement “tanks” of workers through patchwork solutions; e.g., employee picnics, minor monetary gestures, or other seeming boosts to morale. In my career, I have both heard of and witnessed first-hand more disengagement stemming from Band-Aid engagement solutions applied to fix deeper cultural and leadership problems. There is nothing more disengaging than watching a leader everyone knows is ineffectual address the assembled masses and talk about morale.

We must accept that one of the most important roles of leaders is to create, foster, and sustain a culture of engagement. Leaders set strategy, manage resources, and execute plans. They also provide the “glue” that holds employees together and to the organization at large. They provide purpose, meaning, and vision – things that must be present for employees to be highly engaged.

Courageous organizations promote and reward leaders that really lead, and help them in their development. Courageous organizations also do not tolerate poor leadership and weed it out or address it. Simple step #2: Equip leaders with the skills, attitudes, and will to truly lead, not simply manage. Prioritize leadership across the organization, reward good leadership, address poor leadership and engagement will follow.

I chose the title of this article carefully. It is not “easy steps toward an engaged workforce” – there is no easy way to foster commitment, participation, pride, and satisfaction in an organization. To engage a workforce and keep it engaged, leaders within the organization must care about providing an environment in which people can take pride in their work, feel a sense of shared accomplishment and be continuously challenged to perform.

Dr. Mark Frein is a partner in The Refinery Leadership Partners, a company providing leadership and management development that makes a positive, strategic difference in organizations. Refinery Leadership Partners opened their North American office in Austin, in January 2012. www.refineryleadership.com

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By Lois Melbourne

Changes within any company – office relocation or a C-level change – create natural uncertainty among employers and employees alike. That’s a given.

But a long-time private company that becomes public is filled with entirely new challenges and repercussions. A company that makes the transition well is typically one that has had a successful track record communicating to all levels of the organization. A company that executes the move poorly often has missed a number of early warning signs and failed to chart a correction course.

In an effort to ensure a smooth transition to the public markets, companies should be aware of the challenges that come with the move and implement a number of workplace best practices to create a focused and cohesive company.

Challenges Abound

Without a doubt, there is an inherent reluctance among many companies to even consider filing for an initial public offering today. According to Renaissance Capital, there were 125 U.S.-based IPOs in 2011, down 19 percent from 2010. The lingering recession – coupled with companies’ concerns about raising money in an uneven economy – clearly has had an impact.

But those companies that do decide to go public need to recognize that all eyes are squarely on them. One of the biggest adjustments private companies make when becoming public is adapting to the mandatory quarterly filings public companies need to take to report their performance. The days of being accountable to only your internal benchmarks are over. Not only are shareholders looking closely at the earnings report but employees, family members and friends are also closely watching activities. That can create a new level of tension previously unseen. Even social media darling Facebook, which announced its plans for an IPO in February, will face newfound scrutiny from all corners as it navigates new regulated waters.

But those companies that pay attention to the details can weather the storm. Here are a few strategies to help companies manage the transition.

Assume a Public Mindset

A wise mentor once provided this pearl of wisdom: “Begin like you intend to continue.” It’s a message private companies should embrace as they prepare to become public. With this in mind, companies should start reporting internal numbers to employees and stakeholders before a public filing. In that way, they’re managing to a quarterly rhythm that becomes familiar once the actual filing takes place. Additionally, companies need to start thinking of succession planning while still in private mode, knowing that they could lose some personnel who do not want to stay under the restructured company.

Maintain a Dialogue With Employees

Once a company has gone public, there is more scrutiny involved with virtually every move a company makes. And all it takes is one poor quarterly earnings report for employees, stakeholders and friends and family to sound the alarm bells. Knowing this, companies must not only communicate financial dealings with investor relations officials, they must share a plan with employees describing how they are managing the situation. Workers need to be reassured that steps are being taken to handle any given situation and company leaders need to explain the move in a swift and meaningful way.

Be True to Your Culture

Private companies need to pay close attention their hiring. If an organization is known for burning the candle at both ends, then they should hire workers who exude that mentality. If they take a more laid back and traditional approach, then they should be on the lookout for those candidates. When the company ultimately goes public, the award will come to those employees that fit the organizational structure and likely experience less turnover. In other words, there are no surprises when companies hire workers to fit the culture, not hiring those who they think might fit a future set of rules.

Review Social Media Practices

Private companies that are freewheeling in the social media sphere need to rethink their approach once they become a public entity. Although companies may have once discussed product upgrades and issues via Twitter, Facebook and other arenas, they now need to be aware of what they’re disclosing on those public channels. At worst there could be an insider trading charge, at best a big headache that needs to be fixed by the corporate communications team. To allay those concerns, companies should bring in outside consultants to help workers understand rules and regulations they will be living under in the age of social media.

While there are a number of other considerations that newly-minted public companies need to understand, they will perform well during the initial phases provided they prepare themselves for the public markets and steadily communicate with all stakeholders.

After all, their future depends on it.

Lois Melbourne, GPHR, is co-founder and CEO of Aquire, a provider of workforce planning and analytics solutions based in Irving, Texas. Visit www.aquire.com.

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By David J. Lineman

One of the challenges to managing a business today is the growing list of regulations. With the dramatic rise in identity-theft and cybercrime in general, data protection laws have been popping up at the Federal level and in all 50 states. Because many of these laws are new, few businesses are aware of their compliance requirements.  Here is a short description of key regulations that Texas businesses should be concerned about.

Texas Identity Theft Law

The Identity Theft Enforcement and Protection Act is a Texas state law designed to protect individuals from identity theft. The law requires businesses to have a written information security program to protect personal information of Texas residents. For example, provisions of Chapter 35 of the Business and Commerce Code require businesses to develop retention and disposal procedures for their clients’ personal information.

Penalties against businesses that violate Texas’ identity theft provisions are substantial. The law provides for fines of up to $500 for each record that could potentially land in the wrong hands. Additionally, businesses that give consumers specific assurances about how patient privacy is protected could face penalties up to $20,000 per violation if they fail to implement these programs. The Texas Attorney General has brought enforcement actions against numerous businesses for improperly disposing of customer records, including a major suit against Radio Shack.

HIPAA/HiTECH

Some of the most significant data breaches of the last few years have involved electronic health records. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is the federal law that requires businesses to protect personal medical information. The law requires a written information security and data privacy program. Hospitals and insurance companies could be fined as much as $25,000 per record for breaches of patient data.

While HIPAA was passed in 1996, it didn’t get much enforcement from the Feds. In 2010, a major update to HIPAA (called HiTECH) was passed as part of the Stimulus Bill. In short, this extended HIPAA requirements to ANY business that handles personal health information.  While this is a Federal law, states have started taking action. In January 2012, in the wake of the theft of an unencrypted laptop computer containing approximately 23,500 patients’ records, the Minnesota attorney general brought the first formal enforcement action against a business associate, Accretive Health, Inc., for an alleged violation of HIPAA.

Texas Health Privacy Law

In 2011 the State of Texas also adopted a new law specifically targeting patient data privacy. The law, which will become effective on September 1, 2012, incorporates the expanded definition of the term “covered entity” in Texas’ existing health privacy law and could have a broad impact on many non-HIPAA covered entities. Among other provisions, the law requires all employees of covered businesses to undergo training on HIPAA and Texas’ health privacy law within 60 days of hiring (and at least once every two years.

The law also authorizes the Texas Attorney General, Texas Health Services Authority or Texas Department of Insurance to conduct compliance audits of covered entities that have consistently violated the Texas law.

PCI-DSS (Payment Card Industry Data Security Standard)

For businesses accepting or processing credit card data, they are subject to the requirements of PCI-DSS. PCI requires that business take definitive measures to protect credit card information. Unlike state or Federal law, PCI is instead an industry-specific standard imposed by a consortium of the major credit card companies. The good news about PCI-DSS is that the requirements vary depending on the size and scope of a business.

Massachusetts State Data Protection Law

What? Why do we care about some Yankee, East Coast data protection law? According to this state statute, ANY business that handles personal information about Massachusetts residents (“of The Commonwealth”) must take specific measures to protect the data – no matter where it resides. So if a company is based in Texas, but collects personal information from residents in other states, it is likely subject to the state laws of each citizen.

CA SB-1386 (California Senate Bill)

Yes, the other Coast is out to get us as well. California doesn’t have enough to do, so they created the first “data breach” law, requiring companies to notify California residents in the event of a data breach that may impact the personal information of California residents. In all fairness, at least 35 other states have enacted similar laws. Common wisdom is that some day there will be a Federal-level law that takes the place of these individual mandates.

What is required?

If there is any good news for business it is this:  All of the various data protection laws require the same set of data protection principles. At the highest level, a business must be able to identify sensitive customer data and then protect it. This involves several key areas including protecting access (both logical and physical), educating and training personnel, and being prepared when and if controls fail. The key is documenting these in written information security policies and then backing these up with business processes.

Summary

The dramatic rise in identity theft and legislative backlash is here to stay. Businesses must not only be aware of state and federal laws, but also laws that protect customers in other states. The good news is most of the provisions in these laws are very similar. At the minimum, however, businesses must implement a written information security program, including information security policies.

David Lineman is President of Information Shield, based in Houston. Information Shield provides information security policies, training and consulting to help organizations reduce risk and comply with regulations. Visit www.informationsheild.com for more information on complying with these regulations.

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By Liz Alexander, Ph.D.

In some industries, facing a crisis is an everyday risk of doing business, which is why we might have expected more from the CEOs of British Petroleum (BP), Carnival Corporation, and Toyota Motor Corporation with respect to crisis management.

Yet gaffe-prone Tony Hayward (now the former CEO) of BP admitted the company was not adequately prepared for the 2010 Gulf oil spill. His media performance during the crisis was, to put it mildly, cringe-worthy.

Toyota’s president Akio Toyoda apologized to the U.S. Congress and car owners after recalling over two million vehicles because of faulty accelerators that same year. A communications expert quoted in Newsweek called it “the worst-handled auto recall in history…”

And Carnival CEO Micky Arison? The Wall Street Journal reported him as lying low after one of their luxury liners hit rocks and ran aground off the Italian coast in January this year, killing at least a dozen people.

Certainly these are extreme examples that attracted huge media attention because of the public safety issues involved. But none of us, in any kind of business, can afford to be complacent. Certainly not now that, in this digital era, ill-founded rumors and well-deserved criticism can ruin reputations and revenues in microseconds.

As the ancient Greek philosopher, Epictetus espoused, “It’s not what happens to you but how you react to it that matters.” Sadly, it seems that most of us aren’t prepared to react to business crises effectively, if at all.

In their 2011 Crisis Preparedness Study, global public relations and communications firm, Burson-Marsteller, found only a minority of companies polled (20 percent) were “Boy Scouts” and well prepared for crisis situations. Forty five percent were “Tightrope Walkers,” who had done some planning, but not nearly enough. The “Ostriches” were the second biggest group at 35 percent. Guess what their approach is?

Five considerations will help companies join the “Boy Scouts,” as far as crisis planning is concerned. In reading through this list, is there anyone who can honestly say they have all of these issues 100 percent covered?

1.      Don’t Think This Can’t Happen to You

Did Patrick Doyle, president of Domino’s USA, ever imagine that a prank YouTube video uploaded by two employees would get over a million hits? Unfortunately, it showed the two doing “disgusting” things to the food they were preparing to deliver, causing major damage to the brand’s reputation. Remember, in this digital age, this kind of exposure never ever goes away. Pizza anyone?

2.      Don’t Fail to Take Digital Seriously

Facebook and Twitter are reputed to have radically influenced recent events in the Middle East, and customers are using the same tools to overthrow businesses. Last year, outraged moms launched the Facebook page, “Shame on you, KV Pharmaceutical and CEO Greg Divis,” in reaction to what they considered to be “price gouging” by the company. The resulting 1,517 Facebook page “likes” might seem small beer, except is it really a coincidence that KV is now listed as one of the New York Stock Exchanges’ biggest losers?

3.      Do Be Prepared to Act Quickly In Cyberspace

When a Red Cross employee mistakenly used the organization’s Twitter account to tweet a personal comment (referencing #gettngslizzerd – which apparently means snorting cocaine while drinking), things could have quickly gone downhill. Yet within an hour the organization had responded with an official (this time) message that read: “We’ve deleted the rogue tweet but rest assured the Red Cross is sober and we’ve confiscated the keys.” Thanks to humor, humility, and their rapid response, the Red Cross not only defused the potential for a lot of bad publicity, they also got a bump in blood donations.

4.      Do Get Media Training – Soon!

Mike Lazaridis, founder and co-CEO of Research in Motion, the company behind the Blackberry, offered way too many generalities in his video apology to customers inconvenienced by recent service outages. His measured speech and darting eyes also suggested he was reading off cue cards. Even the words “I apologize” aren’t as natural as saying, “I’m sorry,” and sounded scripted. Coming off as sorrowful, sympathetic, or confident after a crisis event depends on the situation. But at the very least, when letting down customers, learn how to look and sound sincere.

5.      Do Use “Social Media Experts” Who Know What They’re Doing

Whoever handled Ragu’s social media campaign last fall must have thought they were smart by targeting key influencers on Twitter to help boost their brand. Except, these digital dads reported feeling more spammed and offended than related to. Ragú had offered the online equivalent of sending a sales-obsessed executive to join an informal chat group. Twitter (at least currently) is a social tool, not a sales avenue. That the company largely failed to respond to the “Ragú Hates Dads” online kickback made it all the more apparent that they had focused on “media,” while not fully understanding how putting the word “social” in front of it changes everything.

Some years ago, Commercial Union Insurance in the UK ran a series of advertisements with the tagline: We won’t make a drama out of a crisis. That always seemed to be an eminently sensible approach to take. With the best will in the world, we can’t hope to anticipate and avoid every single crisis event that businesses may face, online or off. But with some forethought and planning the outcomes don’t need to be as reputation ruining or revenue crippling as Tony Hayward, Akio Toyoda, and Micky Arison discovered them to be.

Liz Alexander, Ph.D., offers strategic communications expertise to executives in the US, UK, and India. In addition to instructing on this topic at UT Austin, her consultancy leverages 25 years of publishing experience, to transform subject matter experts into best-selling thought leaders.  

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By Raja Pabba and Rakesh Singh

The difficulty in managing IT costs for large enterprises has increased in the past 15 to 20 years because of the complexity inherent in managing IT Systems, which includes proliferation of sourcing IT services from multiple vendors, and delivering IT solutions. Typically, IT projects are the largest capital expenditures in most organizations – almost 50 percent – and operational IT expenditures have increased in most industries every year. Today’s chief executive officers are unable to manage IT costs effectively because they do not fully understand the costs and value of IT.

Since the 2008 recession, many CEOs have decreased expenditures while trying to find ways to drive efficiencies and reduce the bottom line. The increased scrutiny of expenditures has placed immense pressure on the IT organization; many IT managers have difficulty communicating the value of IT and explaining why IT expenses keep increasing. In addition, the absence of accountability concerning IT expenditures is due to organizations’ lack of financial management skills, processes and tools. Without clear and transparent understanding of IT value and IT expenses, CEOs are unable to make optimal investing decisions.

Thankfully, a new capability – IT Financial Management – is emerging. It encompasses a set of processes, tools and skills to manage, communicate, and evaluate IT expenditures.

Rules for Effectively Managing IT Costs

It seems straightforward for a CEO to manage IT costs similar to marketing costs. However, the complicated nature of IT functions doesn’t fit this approach. There are three main reasons: 1) IT is a new management function and it has impact on the entire company; 2) there is a lack of general management skills within the IT function, although this is changing; and 3) there is a lack of management processes.

In this context, we recommend CEOs take a fresh approach to managing IT costs. Our research and combined experience has led us to suggest four rules to help CEOs implement effective IT cost management solutions.

Rule 1: Know thy costs. Before one embarks on the journey of managing costs, it is imperative for one to know the costs. This seemingly simple rule is difficult to implement because not all IT costs are tracked completely by IT management and many times the costs are buried in other departmental expenditures. For example, an increase in power consumption or space could be driven by IT consuming more power and space for its servers; these costs, however, typically are borne by the facilities department. IT expense information oftentimes is distributed to different departments, making it a challenge to consolidate the data. For example, a leading state university had one accounting system, but it was configured to manage IT into disparate accounts that weren’t linked. More than 50 departments used this system and executives never had an idea of any of the IT costs. With this example in mind, managing IT includes evaluating the different types of costs that affect the department.

Rule 2: Know thy activities. After you have solved Rule No. 1, it is imperative to learn why these costs are incurred. In our experience, this can be quite challenging because of a lack of segregation of duties, roles, and responsibilities. In addition, a detailed discussion about getting this right is simply not in anyone’s agenda. Correlating IT costs to different activities performed provides critical and powerful insights into how IT costs are distributed so that they can be analyzed for optimization. Our analysis of one leading Fortune 500 client revealed that the IT staff was spending almost 90 percent on operational-related work and the rest on new projects. This was quite opposite to what management had been thinking. Many decisions and plans resulted as part of this analysis, which not only led to better utilization of resources, but also enabled the company to look at outsourcing some of the non-value added activities.

Rule 3: Know why. Knowing why IT costs are occurring only provides the consumption side of the equation. The more important question(s) to ask is “why” the IT costs and the resulting activities are the way they are? What is the demand that is getting fulfilled by IT? An organization is about an internal balance between supply and demand for resources, so it is critical to understand “what” is driving the demand for IT services. This could lead to identifying inefficiencies that are not contributing to creating value. As an example, a large chemical manufacturer was spending the majority of its IT resources on reworking the system. We found that there was no prioritization of demand for IT services by different business units, leading to inefficient allocation of IT resources.

Rule 4: Know thy value. The responsibility of creating value in the organization must be on everyone’s agenda, including IT. Based on Rule No. 3, knowing why someone is doing something in an IT organization is one thing, but tagging a specific value to the activity is completely different. This knowledge enables executives responsible for managing IT costs to move the conversation from cost to value. Migrating to value-based evaluation of IT expenses could become one of the key changes a CEO can bring to a company.

Benefits of Managing IT Costs

By implementing these simple rules, an organization can derive many lasting benefits, which may include reducing the operational costs that impact SG&A and improving profitability. Specifically, the following represents the major benefits inherent in managing IT costs.

• Better alignment of technology costs with business objectives. Promoting value-based discussion and visibility into IT costs would help align resource allocation decisions with business objectives;

• Reduction in auditing and compliance costs. IT costs managed in a holistic manner helps tremendously during audits; and

• Reduction of working capital. Given the prevalence of IT costs in most corporate projects, better management would result in a drastic impact to working capital.

In the current economic climate, managing IT costs is critical. A CEO needs to work closely with the technology executive to set the agenda for managing IT costs. Executives need to invest in sustaining their financial management capability when implementing processes to drive fiscally responsible decisions that deliver shareholder value effectively.

Raja Pabba is the Founder & CEO, and Rakesh Singh is the co-founder & COO, of Fort Worth-based Claritia. Claritia is an IT financial management solutions company focused on helping CEOs, CFOs, and CIOs maximize the value of their IT investments. http://www.claritia.com/

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By Bob Barker

In this new wave of technology, you can’t do it all yourself; you have to form alliances.
-Carlos Slim Helu

“Partnerships are a waste of time.” It’s hard to find a CEO who doesn’t regret having pulled the trigger on at least one failed partnership. While strategic relationships hold the promise of growth, they are potentially dangerous. At the least, a failed partnership derails resources that could drive organic growth; at its worst, it delays entry into new markets and wreaks havoc with revenue plans.

On the other hand, many companies have leveraged well-executed partnerships that accelerate growth, leading to levels of success otherwise impossible. The best are what I term “self-fueling”:  A self-fueling partnership is structured so that positive results for the first party drives it to act in ways that increase positive results for the second party, and vice versa.       

What are the drivers of such a partnership? What circumstances dictate pursuing one? And what are the characteristics of fruitful and long-lasting partnerships? To create a self-fueling partnership, four areas have to align: positioning, circumstances, motivation, and attitude.

The Right Positioning

Driving without a map may be an adventure, but reaching the target destination is unlikely. To achieve positive results, technology partnerships must fit into the context of a clear mapping of the company’s current positioning and future direction. Clarity about the markets the company addresses, the uniqueness of its offerings, and its strengths and weaknesses must be established first to gain leverage through partnering. Without a handle on positioning, partnering will fail.

The Right Circumstances

Partnerships are like other business endeavors: timing is everything. The potential impact of market opportunities and threats, together with the company’s ability to respond to them, are circumstances that dictate the appropriateness of partnering. The chart below depicts the four permutations of these circumstances and the proper actions dictated by them:

1. high impact /weak ability to respond,
2. high impact /strong ability to respond,
3. low impact /weak ability to respond, and
4. low impact /strong ability to respond.

When the impact of a threat or opportunity is high and the company’s current ability to respond is weak, it’s time to pursue a partnership or an acquisition. While it may be tempting to wait until a year from now when the company is better equipped to respond, markets don’t wait. Recognize when it’s better to partner rather than attempting an organic response.

The Right Motivation

Years ago a wise mentor told me to ask three questions from the point of view of potential partners:

(1)   What’s in it for me? (2) what’s in it for me? And finally, (3) what’s in it for me?

The most challenging and important step in partnering is grasping the motivations of target partners. Identify key objectives the potential partner hopes to achieve. Self-fueling partnerships depend on finding complementary answers to the “what’s in it for me” question for both parties, and they are typically driven by the desire to achieve one or more of the following objectives:

1. Add products and technology to address evolving customer needs with new and enhanced products.
2. Accelerate revenue growth by expanding the customer base to include underpenetrated areas where the partner has a presence.
3. Enter a new market or industry by leveraging a partner’s existing presence in specific domains or geographies.
4. Service more customers faster than organic growth allows by augmenting implementation resources with the partner’s services staff.
5. Enhance and grow brand recognition through association with a high-profile market leader.

Early in my career, Novell and IBM created a partnership. Their market needs were clearly complementary: Novell had the leading LAN software and wanted to penetrate the IT department of Fortune 1000 companies; IBM had deep relationships with CIOs of Fortune 1000 enterprises and no LAN software to sell them. In a highly successful partnership, IBM rebranded Novell’s software, then sold it into their base and generated hundreds of millions in incremental revenue for both companies. The partnership enabled IBM to address objective 1, while Novell accomplished objectives 2, 4, and 5.

The Right Attitude

Linking positive outcomes for each company creates an upward spiral that encourages increasing levels of participation:

(1)   Clearly identify each potential partner’s interests. Ask representatives of each party to define the other’s interests. The ensuing discussion will uncover the points of partnership.

(2)   Test the initial structure of the partnership. Discuss potential market scenarios and assess the impact on each company and the associated impact on the partnership.

(3)   Build the partnership by focusing on the other party’s ability to achieve their goals. Without focusing on the other company needs in advance, the partnership won’t last.

(4)   Arrange mutual monetary and other forms of compensation so that both parties want to participate more. Ensuring positive outcomes for both parties enhances the likelihood of success.

Benefits of Self-Fueling Partnerships

Some obvious and some not so obvious benefits derive from self-fueling partnerships. Paramount is that they not only work, they last. The life of a partnership should be limited only by the duration of the market opportunity. Without a well-crafted partnership, a joint initiative will die before the market opportunity is exhausted, and it may die shortly after the launch.

While a self-fueling partnership requires dedicated resources to manage it, the total time required is minimized. The reinforcing nature of the relationship promotes cooperation, and as the partnership advances, trust grows and additional growth opportunities may arise.

The fruits of a self-fueling partnership multiply. As long-term trust builds, the potential for an M&A event often emerges. A strong partnership can be the catalyst to accelerated valuation. Isn’t growing valuation a primary focus of every CEO?

For 30 years, Bob Barker was a software industry senior executive who created partnerships, formulated product strategy, and executed acquisitions for billion-dollar companies and startups. As a trusted CEO advisor with 20/20 Outlook LLC, he creates breakout strategies for visionary CEOs. 

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By Joel Trammell

I’m lazy and I am not ashamed to admit it. I think it makes me a better CEO. How can someone who has built successful organizations from the ground up be lazy? Aren’t startups famous for their around the clock work hours and frenetic pace? While hard work is valuable in any business the job of the CEO often calls for a more measured and thoughtful approach. I believe that there are many cases where the CEO should not “grab a shovel and start digging” just because a problem presents itself. I have often observed CEOs who are so busy digging every day they cause more problems than they solve.

To understand how these problems develop let’s first discuss the role of the CEO. I would say that a primary role of a CEO is to maximize the economic productivity of the organization. That statement encompasses many different things but almost all CEOs agree that it starts with getting the right talent on board. I have been very fortunate in my career to work with some incredibly talented individuals. It hasn’t been all luck though as I have spent much of my time interviewing applicants searching for the right fit. I had a simple bar; everyone I hired had to be better at their job than I was. One year as CEO of NetQoS I personally conducted over 250 interviews while hiring around 100 people. When you do this many interviews you get pretty good at spotting real talent. You also hear a lot of stories about why people were not happy in their previous jobs. Over time I begin to notice a pattern in why people left jobs. For the less talented applicants the answer would sound something like this, “While I accomplished all these great things in the job, they (company, manager, CEO, etc.) were too messed up to appreciate it.” When you asked the top performers why they left a job they would say something different, “I left because they wouldn’t let me do great things.” Top talent wants to do great things and they know when they are not doing it. Mediocre talent doesn’t know that their work wasn’t great or they are not willing to admit that the problem was them and not the company.

So to maximize economic productivity I need to get top talent. But not only do I need to get top talent, I need to retain top talent. In my mind retaining top talent comes down to the simple mission of allowing them to do great things. The engagement and productivity that comes when an employee is allowed to take ownership of problems and solve them is what creates a great and productive work environment. The problem for too many CEOs is that aren’t comfortable allowing that kind of freedom. They are scared if they don’t get involved in every issue something might go wrong. I never felt that way. Since I hired people who were better at their job than I was, I knew their decision was more likely to be right than mine. This doesn’t mean that the CEO just sits back and is not engaged. Only the CEO can provide the proper context for making decisions by communicating the vision, allocating resources and committing the organization. At the end of the day the CEO is responsible for whatever happens in the business so they do have veto rights on any decision but that should only be used on rare occasions.

The value of being a little lazy and not jumping in with solutions often has applications even outside the work arena. The other day I came home after a long run. I was sweaty and tired when I went looking for my wife to tell her I was home. I found her in the exercise room rearranging equipment and trying to organize the power cords. She seemed to be having some difficulty so I immediately went off to grab a high quality power strip. When I returned she was gone but I managed to arrange all the equipment and cords in an organized manner. While I was moving the treadmill I noticed the handle on the treadmill was loose so I ran off to the garage to grab some tools and work on the repair. As I came back in the house I called for her to come help me hold the treadmill while I completed the repairs. When she came in she made some comment about how I was interrupting her chores. I, of course, was offended. Here I was sweaty and tired but instead of taking a shower I had dropped everything to solve her problems in the exercise room. After a couple of comments back and forth she hit me with the real zinger as she said, “Just like a man to come in and assume there is a problem that only he can fix!” Boy did I feel stupid. Next time I come in and I think my wife needs help I’m going to take my own advice and head right for the sofa. I’m sure that will solve all my problems!

Joel Trammell is CEO of Cache IQ and chairman of the Austin Technology Council. Every summer he teaches a course for CEOs called “CEO Summer Camp,” sponsored by ATC and the Rice Alliance. 

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