thinking: relating- celebrating :-)

Many years ago I studied law and even completed my law degree, however my view then and now is that commercial business law is far too important to be left to lawyers.

In short the legal considerations of law in business need to be very pragmatic and practical as part of an overall solution.

My observations since then show that the very best legal advisers are those who understand the wider business context and can help with that.

Since 1993 I have had the pleasure to watch a master at work and now some of that hard won wisdom is available to all of us. Noric Dilanchian has completed a 18 page manifesto on the practical legal considerations of deal making.  Let’s Make a Deal - the full version is freely available for download and it contains a template of 7 essential deal making principles.

As Noric outlines in the beginning of his manifesto.

“Deal making should be led by process, as well as practical and commercial considerations, not purely legal considerations. It is helpful to think of deals as blueprints for living outcomes, not just glue to bind relationships.

The seven principles in this document help minimize risk and maximize returns from deal making activity. The principles are guidelines and simplifications.

They are relevant to all legal regimes. In this document they are grounded on business law in legal jurisdictions derived from the law of England, often called “common law jurisdictions” (these include Australia, Canada, England, India, Malaysia, India and the United States).”

The area I like the best is at the very end. In many respects the most important part of any deal is often the exit clause/s. While everyone has the best of intentions at the outset there needs to be much better ways to recalibrate as key variables change and a smart deal allows you to do this wisely.

In my book that relates to performance issues. Noric has devoted Principle 7 to that area.

PRINCIPLE 7: SET PERFORMANCE CONTROLS
“This final step in deal making process improvement involves effective implementation of deals. Unlike the previous principles, its practical implications apply to all the six previous principles.

Our era is characterized by major shifts in business practices, models and circumstances caused by a tide of technological and business ingenuity. In most contemporary markets there is what we might call a “performance challenge.”

This challenge includes constant market demands for enhanced customer relationship management, more sophisticated products and services, and innovation at many levels. A solution is quality performance control.”

Noric is one of our featured blog links as his entire site offers many other valuable snips of legal and commercial information. His site is also one of the top law sites in Australia.

If you are unfamiliar with ChangeThis you should also check out the other 200+ manifestos there all freely available under Creative Commons licence to anyone who is interested.

“ChangeThis is a vehicle, not a publisher.
We make it easy for big ideas to spread.

While the authors we work with are responsible for their own work, they don’t necessarily agree with everything available in ChangeThis format…..”

“The copyright of this work belongs to the author, who is solely responsible for the content. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs License.”

And by the way I have found having a legal background very helpful in business since all roads lead to a deal of some kind or another.

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There was an extraordinary news item a few months ago in Sydney. An accounting firm there decided to cull some of the less profitable clients and came badly unstuck. When they sent out communications to those ‘unwanted’ clients some of their more valuable customers got caught in the crossfire.

This may relate to a poor understanding of the concept of customer lifetimes. In any business it would be useful to know which customers were the most profitable and then how to manage the client mix so that PR disasters like the example don’t happen.

For the record the firm was WHK Horwath and the full story is available under the title - “Quick Flick Reflects Badly” by Neil Shoebridge on page 49 of the Australian Financial Review on 13th of August 2007. Customer lifetime has been defined as:

“The net present value of the profit an organization expects to realize from a customer for the duration of their relationship. Customer lifetime value focuses on customers as assets rather than sources of revenue. The volume of purchases made, customer retention rates, and profit margins are factors taken into account…” from Bnet

In other words once you win a customer you should look closely at how that customers activities can be enhanced by your services over a longer period of time - and how they are looked after.

For many large projects the cost of winning new business is high and it is not until the 2nd or 3rd project that you might start making a profit out of the relationship.

Business life cycles are all different - however there is a general rule of thumb that it is 9 times easier to win business off an existing customer than to land a new customer. Regardless of the multiple - the point is look after your customers and they will look after you.

I suspect that the accounting firm looked at a short time period of time and not at a 5 or 10 year cycle which might be more valid. I wonder how many companies know where their business really comes from.

For example do some clients refer customers to their preferred suppliers? Sometimes this does happen - but it is unlikely to show up in a cashflow. If the business owner sees customers as an asset though - the results will show up on a balance sheet over the longer period.

For example many professional services firms work on sensitive projects for their clients. Sometimes they don’t want their competitors to know what they are up to and so a standard referral programme probably wouldn’t work.

However - If I am a potential client and I’m looking for a supplier - it would be helpful and indeed confidence building to know at least some of the names of customers who have been helped by that particular supplier.

Being able to supply a customer list adds credibility but it is hard to value in the context of simple financials.

In the case of the Sydney firm they accidentally sent an “unwanted client” letter to a valued client of 20 years standing. There had been a mix-up between the two lists. I suspect the admin person was not aware of the marketing implications - and in my experience this happens fairly often especially if ther task is seen as admin when it requires some sales insight.

Unfortunately for the Sydney firm their mistake was to send the wrong letter to Neil Shoebridge who is a high profile Marketing columnist at the AFR.

Here are some questions we should be asking Business Managers

1. What is a customer lifetime in our industry?
2. What is does the customer lifecycle look like?
3. Are their times in that lifecycle when profitability is impacted and does that improve later?
4. Do we have a way to value customers? (including referrals)
5. How do we measure customer profitability?
6. Can we increase our “share of wallet” - that is can we sell them more products and increase our revenue and / or profitability?
7. Can we service them is a different way - that improves profitability?

Perhaps you have some other questions - let us know?

Sales research is a regular part of my role in helping to develop better results for my customers and their projects. Increasingly the first contact most of us have with a new business contact is via their website and that may be all the contact we have.

The question is- are we making it easy for strangers and prospects to do business with us. From a recent project where I looked at some 300 sites in NZ (+ Australia & elsewhere) - the answer is not very.

In fact there were still quite a number of companies without websites at all which makes it much harder to guess how they might be useful. There just isn’t enough time to call everyone any more and chances they’ll answer the call are also slim.

Usually I’m looking for a clear indication of what is most important to that business and some reason to explore further and maybe call them. Like many prospects I want to save time and get a clearer idea of specific areas where that company might be able to assist.

As I work on multiple projects in NZ and Australia there is a very wide range of sites and industries. Your future customers may be offshore and they too will likely check your website first.

Here are three of the better examples of sales positioning from the U.S, Australia and NZ.

Customer advocacy works!
This summary from a real estate agent got my attention. Hat tip to Andy who mentioned her in passing. There is almost too much information there including a video intro which I think we’ll be seeing more of. (Scroll to the bottom of the linked Mary Pope-Handy page. )

The style of the overall site is not to my taste but the real key in this is to make a meaningful connection with prospective customers.

Conveying credibility, honesty, respect and trust in a few paragraphs is not always easy but here is a paragraph that would have convinced me if I was I was looking for this particular service.

“Folks who are buying and selling homes in Silicon Valley are highly sophisticated. They don’t need a “sales job” but an advocate who provides them with good data and a way to make sense of it so they can make intelligent decisions that will have long-term benefits.

I work to help them, every step of the way, to analyze all the facts and stay current on everything affecting the buying and selling of homes: new laws, contractual changes and implications, trends, environmental issues and, or course, market conditions.

I use a lot of high-tech tools but keep an equally high-touch approach and am excellent at staying in constant communication. I am fortunate to always work with clients who are nice, honest, and committed to buying and selling - but also clients who refer me enthusiastically.

They tell me that they appreciate my knowledge, skills, dedication and determination, but above all else they recognize that I put their best interests first.”

Recognising that your customers are smart and that you need to add real value to the engagement process is critical. Understanding how to be professional and personal at the same time can win first chance at a new sale.

Law and legal services is a complex area and many prospects are wary of the expense and time commitments. Here is a great example of sharp positioning from Dilanchian who are intellectual property and innovation specialists based in Sydney. The site has almost too much information which is exactly opposite many of the larger law firms. One post in particular caught my eye - as sales positioning it has street appeal.

10 conversations about business models

“Listed in this post are 10 topics for telephone conversations we would happily have free-of-charge. If you want to discuss the topics call us whether you are a client, collaborator or a stranger. We’re proposing an open conversation to exchange thoughts, play cards and see where that might lead.”

1. What is affordable for you to do to increase the value of your business or go to the next stage?
2. How can you improve and secure revenues from intellectual property and fee for services?
3. Which branding and trade mark registration strategies help in an age of product proliferation?

Go there to check the other seven reasons and let me know what you think?

Collaboration Excellence
Also in the complex services space is the business of Michael Sampson who is focused on effective collaboration strategies and practice for a range of local and international clients.

“Michael Sampson helps people, teams and organizations improve performance through effective collaboration practices and technology.”

This site is is also information rich and engaging and but right there on the front page there is a single positioning sentence and a eye catching which cuts to the chase quite nicely. See speech graphic below.

So - does your website generate sales leads and support your business well? If so let us know what your top examples are. If not perhaps we can help. Ironically my services page needs an update now.

At last, we seem to have a Cabinet Minister that fully listens to advisers and the public. Full kudos to David Cunliffe who is one of the key government ministers to really understand the most significant issues in his portfolios.

Even better, he “gets” the shape of realistic outcomes for a knowledge based future as well as driving the Telecom broadband shake-out for example.  The broadband smackdown quite possibly has the single largest impact for future business on our “small rock in the Pacific (Thanks Rod).

Cunliffe is a future NZ Prime Minister in my opinion; and you read it here first. His portfolios are listed below.

• Communications - Minister,
• Economic Development - Associate Minister,
• Immigration - Minister,
• Information Technology - Minister

The reason for the excitment is the appointment of David Sheppard to this realpolitik position; (although hard to tell from this yawn PR piece quoted just below.) 

“The Industry Capability Network has appointed industry veteran David Sheppard its first full-time ICT advisor. ICN, a business unit of Trade and Enterprise, was established to help companies realise their potential through access to local opportunities that grow their scale and capability, providing a foundation to move into global markets.”

I was fortunate to be at an informal group meeting with David Sheppard last week when he revealed himself to be a straight shooter with clear and pragmatic objectives for the new role.

Having personally worked on most of the egovernment bids and many other tender processes in this sector, it was refreshing to get some useful feedback.  Many of my clients have written off the government tender process as a waste of effort and that looks set to change for the better.

Sheppard offered some tips and pointers on how to improve our chances of shortlisting and gaining mindshare from the various stakeholders. These are my brief meeting notes and not direct quotes, however I trust they give an indication of the flavour and direction for this new ICN role.

Among the list were items like:

1.  Many government bodies loathe the Tender process as much as we do
2.  It is OK to trust the MNC (Multi National companies.) A real partnership with such vendors improves both our and their chances of winning; and they need local content and innovation as well.
3.  If your response doesn’t comply - don’t expect to be considered. Put that extra content in the appendix - but don’t disqualify yourself. Bidding for government work is a slow and expensive process - make sure you don’t penalise your own team. 
4.  Innovation and creativity is respected and prescriptive formats are more for reasons of safety than policy. Be innovative - but partner with a big buddy to cover the potential risks.
5.  Talk to solution architects where you can about policies and preferences  as the CIO’s are more business oriented and rely on analysis from senior solution advisors.
6.  If there is a problem - can you/we afford to fix it - which is why MNC’s are part of the answer.
7.  Remember that THE key question is ‘will this project embarass the (relevant) Minister?’ - risk management is always part of the background capability assessment.
8.  Check the criteria weighting on each tender. For example a positive sustainability angle may win you the deal. Sustainability as an issue is getting more important than ever.
9.  Help with facilitating partnerships with Tier 1 company’s for larger deals and improved partnering practise generally.
10.   Govt CIO’s meet in Forums twice a year to talk about their plans for the coming year - so that annual plan type objective are known in advance. (Thanks Ray)

There were also some other important policy improvements mentioned, which still require Cabinet approval and the direction of those changes is extremely significant.  The informal response from our meeting was - that we can expect much better results going forward if these new policies get the traction they deserve.

N.B - If Sheppard phones you for some of your valuable insight - take the call. This is a positive step forward for government procurement policy and Sheppard is empowered to get results.

The Industry Capability Network website is the place for updates on this policy change.

Also keep some free time for this upcoming event.

“The Digital Future Summit 2.0 on 28-29 November will explore how this country can maximise “being digital” to address the challenges of becoming a high-tech, high-value, creative economy and society.

Chief executives, and senior business and community leaders are urged to engage with this ‘call to action,’ which will result in a refreshed Digital Strategy for 2008 and beyond. ”  

At last there seems to be a winner in the race for the Wall St Journal.  The Bancroft family went for a deal that valued the group at ($5b) double the previous cap before the bid.

It has been a long and convoluted story* but should get even more interesting now and is still one to watch. I agree with Jon Fine on this one

“Since there is weeping and wailing and gnashing of teeth everywhere, let me say this outright: Rupert Murdoch buying Dow Jones is the best possible available scenario.”

I think this could be the best convergence play in media futures so far and Murdoch seems to have all the planets lined up in a new and exciting way.

As the NY Times suggests in Murdoch Wanted Dow Jones More

owning a pivot point in financial news will create some tidy synergies — content for a new Fox business channel to compete with CNBC on cable television, a global foothold for financial data, coverage of all of his competitors in The Journal.

(Note to other media moguls keeping track at home: Mr. Murdoch just bought the scorecard.)

His ownership of The New York Post (twice) is an artistic success, but suggests that his love of American print is just that — irrational, driven by an attraction for the kind of power print conveys, and only made possible through his success on other platforms.

*The story last week from CJR What the Bancrofts Owe Dow Jones

“If this were a movie, only the Marx Brothers could do it justice. Margaret Dumont would play one of the Bancrofts. Groucho would play Michael Elefante, Bancroft family lawyer/Bancroft trustee/Dow Jones director, or, as I like to call him, Dow Jones’s everything bagel. Harpo would play Dow Jones CEO Rich Zannino.”

This open letter / story from Business week offers a good summary of what comes next

Dear Rupert:

You’ve just won one of the best-known brands in journalism. Congratulations. But as you know, it’s a company that needs work. I mean, what a mess, where does one start?

Circulation at the flagship Wall Street Journal has been slipping for ages, and is off by 3% so far this year. Ads are also in the dumps, down 4.2% from a year ago. But the company’s online properties are going gangbusters, with both WSJ.com and Barron’s Online usage up in double digits…..continues

For latest news updates go here 

Could regulation stop the deal? FCC Commissioner Michael J. Copps seems to think so as reported in Ad Age.

“It’s interesting to hear the ‘experts’ claim the transaction faces no regulatory hurdles,” FCC Commissioner Michael J. Copps said in a statement. “Not so fast!”

“media futures” Rupert Murdoch