In Pursuit of a Pursuit

Title  : In Pursuit of a Pursuit

Dears,

I’m fond of fiction; I read a lot of books and watch a lot of movies. I think that a large part of the appeal of fiction comes from the single-minded focus of the principal characters in the plot. When the hero of the book or movie is trying to track down a secret or elude his pursuers or find the murderer, he is solely focused on the task at hand. You seldom see the hero stop to pay his bills or clean up the house or even go to the bathroom. No, our hero has only one goal for the duration of the book or movie, and he is totally absorbed by the effort of achieving that one goal.

This single-minded focus sometimes occurs in real life. I’ve been involved in a number of projects over the years that made me feel like I was part of something bigger — the kind of thing that they make movies about. You get a wonderful feeling when you’re part of something like that. You start each day at work knowing your purpose and knowing what you’re supposed to do that day. You see the goal in the distance and you see your team getting closer and closer to the goal as time goes by. You feel the excitement as the goal approaches. You don’t stop the everyday stuff — caring for the kids, indulge in your hobbies — but you go through those things on autopilot because your thoughts and attention are focused on the goal.

A Pursuit gives you Productivity
Whether it’s putting a man on the moon or something much more ordinary like delivering a new software product, the focus of a Pursuit seems to boost your concentration and fuel your productivity. Petty issues get resolved quickly and smoothly when everyone understands the real purpose of your mission. When your entire team is heading in the same direction there is far less disagreement over mundane trivia. With a Pursuit comes a new perspective, a different frame of reference. Everything is defined in terms of whether it takes us closer to our goal or further away from it. Life is simple — at least for the duration of the project — and decisions are easy when the objective is clear.

A Pursuit gives you “Flow”
In one of the book I read the author describes an altered sense of time where we get so caught up in what we’re doing that we don’t notice time passing. We start working on something and then “wake up” hours later, wondering why it’s so dark outside. Flow comes from focus, total involvement, and deep concentration on something that completely absorbs us. Flow is part of the reason that a Pursuit is so appealing. We go into a flow mode when we’re working on something associated with a Pursuit. Flow is enjoyable; it feels good to be so focused.This focus also lets us use both our conscious and subconscious mind to deal with challenges we encounter during the Pursuit. We work on a problem during the day, and finding the solution to the problem becomes so important to us that we devote our subconscious to the task as well. We have ideas while we’re sleeping, while taking a shower, or when we’re doing something that has nothing to do with the Pursuit itself. Thus the Pursuit helps us devote some of our subconscious energy to the achievement of our objective.

How to Lead a Pursuit
It’s really pretty simple to lead Pursuits of your own. Here’s how:

1. Define an extremely clear objective, one that can’t possibly be misunderstood or misinterpreted. The objective has to be significant but it also has to be simple: something that can be communicated in a single phrase. Examples: “before this decade is out … landing a man on the moon and returning him safely to the Earth,” “reduce the amount of labor required for the xyz process by 50%,” “sell our products over the Internet by the end of the year,” “be the first company to ship a product that does xyz.”

2. Frame the objective in a way that makes the achievement of the objective an emotional experience for the participant. This can be tricky. You have to tie the objective to a basic human emotion — preferably a positive emotion.Pride is often a good choice. Maybe the objective is something that no one else has done, or that no one else has done using your approach. Pride can be a powerful motivator if you can fuel that emotion in Pursuit participants.

Competition is also a good way to make an objective emotional. “We’re going to beat our leading competitor in introducing this type of product.”Survival is also possible as an emotional motivator, although with survival you’re using a negative emotion: avoidance of a catastrophe.Often there’s a mix of emotions. “Getting this product on the street before the competition is absolutely required for our company’s survival. There’s no second place — only winners and losers.”

3. Include a time component in the objective, even if it’s arbitrary. Make sure the deadline is aggressive but achievable. If the deadline is too easy to achieve or too far out in the future then it will be difficult to motivate day-to-day effort. If the deadline is impossible to achieve then everyone will give up before they start.

4. Define the project steps for the achievement of the objective in a way that clearly delineates the work that each sub-team or person needs to accomplish. You don’t want a free-for-all; you want a concerted effort by each member of a team. You’ll only get that concerted effort by clearly defining the way in which each team member will contribute to the achievement of the objective.

All Four of these Requirements are Critical
If any one of them is omitted then you won’t have a Pursuit. Leave out the clear objective and people will constantly argue about what you’re trying to accomplish, and eventually they’ll lose interest. Leave out the emotion and no one will care about the project — it will be just another stupid objective that management gives them. Leave out the time component and there will be no urgency, no need to prioritize the project ahead of others. Leave out the delineation of effort and everyone will argue about who’s doing what. All four requirements have to be included for your Pursuit to be successful.

People Can’t Participate in Multiple Pursuits Simultaneously
You can have multiple Pursuits going on in your company at the same time, but each individual employee can only be a part of a single Pursuit. If you give an employee a role in two Pursuits then he or she won’t be able to emotionally commit to either of them. You might be able to get away with two simultaneous Pursuits if you clearly prioritize one Pursuit over the other. But the second Pursuit distracts the employee, and it doesn’t allow the employee to devote subconscious time to solving the challenges that are encountered in the first Pursuit.. Each major IT objective becomes a Pursuit, and through a series of Pursuits your IT organization will be able to make significant progress by focusing your employees on one thing at a time. You’ll be successful, and your employees will get the motivation they need and deserve.

The Pursuit approach is used by many great companies. Look at the history of Apple, for example, and you’ll see that all of its major products were built using a Pursuit approach. You’ll see the same thing at Pixar, at Sun, at GE and at IBM. The best products were built using a Pursuit approach, and the best employee experiences came from participating in those Pursuits.If you have a really big objective — something that’s important to a significant number of people — then I highly recommend the Pursuit approach. But while it’s extremely valuable, the Pursuit approach can also be misused if you violate the rules I’ve defined in this article. Make sure you include a clear objective, an emotional tie, a time component and a clear delineation of work. And make absolutely sure that employees only participate in one Pursuit at a time. Otherwise you’ll just discourage your employees, and you’ll hurt your reputation as a leader and as a motivator.Life can be a series of Pursuits, just like in books and in the movies. It can be fun to focus if we’re truly allowed to focus on one thing. We’ve still got a life to lead, and we’ll still have to do all of those mundane day-to-day things in our non-work time. But participating in a Pursuit gives us something to be proud of, and it contributes to the meaning in our lives.

Loving P&C

DC*

Insight on Trade Promotion Management for Consumer Goods Industry

Dears,

Today, CPG manufacturers must deal with continuing increases in retail channel power, new regulatory requirements and a realization that “second place” is not good enough. By developing Customer Management capabilities that combine strategy, technology and process, CPG companies can create more efficient — and more profitable — customer interactions. Strategies that increase customer intelligence enable CPG companies to manage investments in consumer segments and channel partners for optimal financial performance throughout the CPG Lifecycle.

THE TRADE PROMOTIONS CHALLENGE

Spending on trade promotions by CPG manufacturers and retailers has grown steadily over the last 50 years, becoming the second largest P&L item after cost of goods sold across the industry (average trade promotion expenditures account for 13% of gross sales). Industry spend is greater than $120 Billion

per year, with annual growth rates of 5-8%.Just cutting spending on promotions is tempting…a 5% reduction in promotional spending across the board potentially improves net earnings 10% or more. However, the core issue that needs to be addressed is promotions effectiveness. Effective promotion management can reduce cost while increasing revenue. The ongoing “mad scramble” for shelf space will continue to reinforce the need for trade promotion spending. Yet, research study data has shown that only 30% of CPG manufacturers manage promotion profitability; only 15% of all promotions are truly profitable. More broadly, research suggests that up to 90% of trade promotions in the industry fail to deliver positive ROI. Further, two thirds of companies believe value from promotion spending is “fair” to “poor,” with 85% of these believing in efficient promotion is a “very important” issue.At the same time, new accounting and compliance regulations,including Financial Accounting Standards Board (FASB) rules

changes and the Sarbanes-Oxley Act, are elevating the importance of trade promotions/funds management IT initiatives in the CPG industry.

MAXIMIZING TRADE PROMOTIONS EFFECTIVENESS THROUGH INTEGRATED, COLLABORATIVE SOLUTIONS

There is a high potential for savings in trade promotions, based on costs, extreme variances in

effectiveness and an exponential effect on the bottom line. There are two kinds of trade promotions—corporate promotions and account promotions.

Corporate promotions are company-wide promotions of a product or a brand. Accounts can participate in corporate promotions which are run for a specific time period and contain the objective of the promotion, suggested tactics, and other information. For example, a beverage company decides to promote a new product by running a corporate promotion with the recommended tactics of a temporary price reduction (TPR) and in-store displays.

Account promotions are more specific promotions and can be based on a corporate promotion. A plan

is a group of account promotions that depicts the results of account promotions, such as spending and volume.

This scenario is an example of a process performed by brand managers and key account managers.

A large beverage manufacturer has just developed a new brand of fruit-flavored beverage. The brand manager for the new brand decides that a corporate promotion to promote the new brand will be launched for the following year. The corporate promotion recommends a temporary price reduction (TPR) and a themed in-store display as tactics during Week 10 of that year. The key account manager for a large chain of grocery stores is responsible for creating account promotions to generate incremental volume and brand awareness. After creating an account plan, she can add to the plan the corporate promotion and other account promotions that she creates. She uses the promotion simulation feature to evaluate how a given promotion will perform at her account. After deciding to run a promotion at her account, she adds the promotion to the account plan. Then, she selects the promoted categories to include in the promotion. The selected promoted categories contain the products that the key account manager includes in the promotion. These products are designated as promoted products. For each promoted product, she creates a deal to indicate how much the grocery chain is paid and the source of funding. When the key account manager completes these steps, she submits the account promotion to her manager for approval by changing the status of the account promotion. Her manager has several

options in evaluating the account promotion, ranging from rejecting to approving the account

promotion, pending review and acceptance by the customer. After the account promotion is approved internally, the key account manager seeks acceptance from the account.

Integrated, collaborative Promotions Management solutions offer a range of benefits from legal compliance to exponential bottom line improvements. These benefits are inherent to the specific topic of Promotions Planning & Management, but they also improve capabilities in other closely related areas of Customer Intelligence solutions for CPG companies.

FIRST STEP TOWARDS EFFECTIVE TRADE PROMOTIONS

The first step in establishing an effective Trade Promotions Management capability is an assessment of a firm’s strategies, processes and technology supporting TPM. This assessment enables consulting companies  to determine where an organization currently sits on a capability/maturity scale and partner with it to address critical opportunities across these areas. Leveraging our experience with CPG companies we work with  clients to define a set of actionable next steps, constructed within a well-defined program of work, for an organization to improve from its initial maturity positioning. The reason for failure is due to Loosely Managed Trade promotions.

Loosely Managed Trade Promotion

• Trade promotion data is captured manually or not at all.

• Few persons deployed to evaluate market impact of major trade promotions.

• Account sales managers free to construct their own promotion levels and dates.

• Sales plans are driven from retailer requests rather than brand/marketing strategies.

• Few new products survive at retail after six months.

• Highest order weeks are at end of company fiscal quarters.

• Operational shipment forecasts rarely accurate.

• Finished goods inventory exceeds industry norms.

• AR trade deductions increasing.

• Trade deductions increasingly written off as not able to be collected

How to build a Tightly Integrated & Managed Trade Promotion

• Trade promotion five to 10 percent of gross sales.

• Trade promotion data is captured automatically and shared with other company systems.

• Promotion performance actively evaluated and included in sales managers “performance” reviews.

• Much of trade spending is in the form of pay for performance.

• Senior management dictates narrow range of promotion levels and specific dates.

• Sales managers must get specific approval for promotions that are “off strategy.”

• Sales plans are strictly a function of expressed marketing strategies.

• Sales force measured on account profitability.

• Customer order patterns consistent with consumption patterns.

• Shipment forecasts reasonably accurate and improving.

• Finished goods inventory below industry norms and decreasing.

Organizations must plan promotions collaboratively across product/brand management, marketing, sales, various external partners and supply chain operations to ensure that true promotion ROI can be predicted and measured.Promotions that appear effective by influencing large lift for specific product/account pairings may look attractive to account managers focused on volume quotas. However, often these short-term results are enjoyed at the expense of longer-term brand/corporate strategies. The lift may come at the expense of other product volume (cannibalization), or hidden supply chain costs may be incurred to enable the promotion lift.To maximize Trade Promotions Effectiveness at the enterprise level, CPG companies need to implement solutions supporting the involvement of multiple departments and disciplines, allowing for collaborative consideration of how promotions activities impact their overall business.

Loving P&C

DC*

Getting Ahead in the SaaS Curve

Getting Ahead in the SaaS Curve

Dears,

There are many types of cloud computing, and each is progressing at a different rate. Software as a service (SaaS) refers to applications delivered as cloud services, and is in many ways the most mature of the cloud types. While this maturity varies by type of application, it is rare to find companies that are not using some type of SaaS. SaaS is likely to penetrate every company at one level or another. We often see SaaS coming into an organization through departmental business purchases. In instances like these, the IT department is the last to find out, and begins to fall behind the SaaS adoption "curve." This frequently means that IT has to clean up poor contracts, bad technology choices that prohibit good application integration, or, worse yet, SaaS services plagued with operational issues such as inadequate security. Therefore, it is important that companies get in front or quickly catch up to the SaaS adoption curve. There are four basic steps a company needs to take for SaaS:

Step 1: Determine the value of SaaS. As with any technology or delivery model, there are pros and cons to consider. A thoughtful analysis will identify SaaS implementation drivers and inhibitors.

Step 2: Develop a SaaS policy and governance document. This document should be neutral in regard to any particular application domain, but should be a collaborative effort between the business and IT. A corporate SaaS implementation and governance policy will ensure consistency of SaaS deployments across your organization.

Step 3: Evaluate vendors based on the specific needs of the company. If you did your homework in Step 2, you should have a reputable process that can be applied to each new vendor selection process you undertake.

Step 4: Engage in a continuous process of developing an integration road map on how SaaS applications will integrate with on-premises applications and other SaaS solutions deployed. Clear approaches should be identified (e.g., real-time, batch, etc.), including potential integration providers that could be used.

Step 1: Determine the Value of SaaS

SaaS has emerged as an alternative to traditional IT models for three primary reasons:

·         SaaS enables companies to fund software deployment from an operating budget.

·         SaaS helps companies with limited IT resources deploy software capabilities for which they otherwise could not budget.

·         SaaS helps companies deploy functionality quicker.

However, SaaS is not perfect, and has downsides and complications. Among these are the fact that SaaS applications cannot be counted as assets on a balance sheet (many enterprise requirements will be too simplistic and crude). Furthermore, sourcing IT from a SaaS provider will never absolve IT management of its responsibility, but will simply change the nature of the responsibility. Finally, factors such as security and integration will continue to be major challenges for all involved.

Step 2: Develop SaaS Governance and Policy

One key value proposition of SaaS is that the business organization has more control of the application, including procuring, configuring and paying for it. This enables the business organization to be more agile and responsive to end-user needs; however, it also has the potential to create inconsistency of SaaS deployments across the enterprise. For example, SLAs for different vendors will be separately negotiated across the enterprise, with inconsistent provisions for key issues such as uptime reliability, disaster recovery and/or data ownership, release management validation and application integration. If the company has a standard SaaS policy that includes contract requirements, SLAs, RFP templates, and roles and responsibilities for deploying a SaaS deployment, then the company will have a level of consistency across the enterprise that should help ensure that the company is protected from a reliability, security and disaster recovery perspective.

Step 3: Creating a SaaS Vendor Evaluation Framework

As the scope of business applications delivered via SaaS increases, more vendors will claim to have SaaS offerings. User organizations that want to leverage this deployment option must assess a potential vendor's SaaS strategy. Vendors vary in their commitment to SaaS, from offering it as a check box item for a RFI to basing their sole offering on it. Applying traditional on-premises evaluation techniques does not translate into the SaaS world. Understanding the viability of a SaaS vendor's operational infrastructure is one criterion that is not considered when companies are buying and installing on-premises software. Some of the leading Sis like Hitachi Consulting created a number of frameworks to aid in the development of a standard SaaS evaluation framework.

Step 4: Develop a SaaS Integration Strategy

Any large enterprise deploying a SaaS solution will do so in the context of already-deployed, on-premises applications. No large organization will completely remove its on-premises applications and replace them with a complete SaaS delivery model during the next five years. Therefore, the importance of having a strategy of weaving SaaS into a much broader application deployment strategy is critical. Although many SaaS solutions begin as isolated islands of functionality, requirements ultimately expand because of emerging business processes and/or business strategies (for example, acquiring a new company) that require the SaaS solution to be more integrated into the fabric of established on-premises applications. By 2012, 75% of large-enterprise SaaS deployments will have at least five integration or interoperable points to on-premises applications.

SaaS has some great advantages as well as unforeseen challenges. The challenges should not be a showstopper for adopting SaaS program. You may need to evaluate which is best operation that could go on to the cloud and learn the ropes while you get this on to the board

Your Loving P&C

DC*