Monthly Archives: February 2014

More Evidence That EACH Board Seat MATTERS

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Board Seats MatterWould you turn down an offer in excess of $19 Billion from Google CEO Larry Page to buy your startup business? According to the 02/21/14 article (Williams) in The Guardian, that’s exactly what WhatsApp, Inc. co-founders Brian Acton and Jan Koum did. Most people are guessing that Google wanted to keep WhatsApp away from Mark Zuckerberg and Facebook. So why did Acton and Koum turn down the larger offer? Koum wasn’t offered a seat on the Google Board. WhatsApp will now be added to Facebook’s portfolio and apparently Koum will serve on their Board.

You and I may not be co-founders of an innovative mobile messaging startup or CEOs of huge corporations, but we can learn from this transaction.

From the Viewpoint of the Buyer

  • Keeping a game changing technology out of the hands a primary competitor is worth a great deal of money, but compromising board effectiveness is a very high price to pay.
  • Just because a technology-focused person has developed one highly relevant product does not mean that he/she can ever repeat that accomplishment. Not every geek is a Thomas Edison, Albert Einstein, Benjamin Franklin or Leonardo da Vinci.
  • Just because a person can develop a product does not mean that he/she has the knowledge, analytical mind, experience, contacts and skills needed for successful board service.
  • The composition of a corporation’s board of directors involves an integrated process regarding strategic direction, recruitment of complementary skills, fiduciary responsibility, etc. An individual who assumes that he/she deserves to be a board member just because he/she developed one product is probably too self-serving to be an effective board member focused on building shareholder value.
  • The corporation may make decisions about the newly acquired product that the founder/previous owner might not like. The last thing the corporate CEO needs is an inappropriate, disruptive, divisive episode about a single product played out at the board level.

From the Viewpoint of the Seller

  • Above a certain amount of money (which differs from person to person) other factors are more important than more money.
  • Creative people believe that they have more than one innovation in them. They seek situations that encourage continued creativity and influence.
  • Access to the information shared within a powerful corporate board keeps a creative person relevant, excited and involved. That’s priceless.
  • So many corporations are dominated by their Chairman/CEO. Another board member wouldn’t represent any threat to the status quo.

My guess is that Jan Koum is bright and creative, but he lacks training and experience about the responsibilities of corporate board members. Perhaps he has served on the board of a small privately held company where board members were essentially viewed as advisors.

WBENC “Executive Leadership Luncheon” – Sharing My Story

2014 National Women’s History Month  theme is  ”Celebrating Women of Character, Courage, and Commitment”, and “honors the extraordinary and often unrecognized determination and tenacity of women.”

I am honored to be one of the panelists sharing “My Story” on Wednesday, March 5th at this year’s Executive Leadership Luncheon held by the Women’s Business Development Center (WBDC) and the Women’s Business Enterprise Council (WBEC).

The Executive Leadership Luncheon links women business enterprises with women business executives, supplier diversity and purchasing professionals to gain access to opportunities and to build social and power networks.

View Event Information

Do You Still Have a “Stay the Course” Board of Directors?

Visionary LeadershipWe can’t think of an industry that is facing more change… turmoil actually…than healthcare. The Affordable Care Act. A fragile economy. Dramatic advances in research and technology. Heightened patient expectations. The tenuous relationship between healthcare providers and insurance companies. Hospital profit margins have been skinny for a long time. Make one bad decision these days and you’re gone.

In the 1990s, the primary strategy for most hospitals was to “stay the course.” If your hospital had been a general community hospital, you kept your locally focused board of directors, upgraded wings and services based on donor patterns, and struggled with the burden of providing so much charity care. Remember? One of the first generally acknowledged system-wide breakdowns was that hospital emergency rooms were replacing family physicians.

In the 1990s, if your hospital had already declared a specialty, investment and growth was incremental. A few major institutions declared specializations or leadership positioning and invested. Many perceived those bold moves as cocky at the time. But the investments made during strong economies have an impact on what happens to an institution during weak economic times. Think about MAYO, the Cleveland Clinic, Sloan Kettering, Johns Hopkins, and Massachusetts General.

It is very difficult for the leadership of “stay the course” hospitals to now step up, make very difficult decisions, commit to specializations, and compete. And often it is particularly difficult for the leadership of those hospitals to change the composition of their boards of directors and/or their executive teams.

Visionary leadership is needed. What would you do if you were the Chairman of the Board of one of the few hospitals located in the poorest/most dangerous city in the United States? Could you have envisioned, negotiated, funded, built, and promoted the new MD Anderson Cancer Center at Cooper Hospital in Camden, New Jersey?

Is your board composed of visionary leaders with connections, skills, and determination? Or are they “stay the course” incremental fearful followers?

The Least Effective Positioning Strategy During Cynical Times

Building Trust with Millennials

We ALL share this challenge.

Whether your company’s product is an alcoholic beverage, an app for smart phones or an automobile, today’s potential buyers are more sophisticated and skeptical than ever. They know about the logic/psychology/manipulation behind advertising messages. Millennials,in particular KNOW they shouldn’t trust anyone…be it big business, big government or big media.

Recently, Havas Media published findings from their surveys about 700 brands that reached 134,000 consumers in 23 countries. In the majority of the countries, 73% of the respondents would not care if the major brands went away. In the USA and Europe, the detachment from brands was a huge 92%. Consumers in Asia and South America expressed a bit more brand attachment, but other research suggests that it is quickly diminishing on those continents as well.

In response to consumer cynicism, some companies have decided to convey leadership. Experts endorse their products. Research is cited to prove their claims. They choose authoritative titles that include words like FIRST, WORLDWIDE or PREMIERE. Maintaining industry leadership is expensive, and skepticism makes it even more difficult to achieve. The “who cares” factor impacts ROI.

Others have opted to become challengers. Their marketing emphasizes how specific features are superior to a competitor’s. This helps the companies be more nimble in their marketing and potentially seem more current, but the challenger position can dilute the message and can remind consumers of childhood “tattle tales” (snitches or bullies).

Niche positioning has become more popular during these cynical times because getting into the minds of a select group of potential buyers seems more possible than trying to appeal to everyone. Niche positioning often leads to multiple or micro brands, more complex organizations and increased expense.

Maybe the least expensive positioning during skeptical times is follower. After all, skeptical consumers can quickly compare features and prices online. Why not opt for lowest price? This positioning isn’t easy either because millennials are not just your/our potential customers; they are your/our employees. In general, millennials are not seeking careers in companies that don’t honor patents, cut corners, resist innovation and seem boring.

There are risks associated with each positioning. In my opinion, the least effective option is to jump around. Why should millennial employees and consumers trust a company that says it’s a leader one year, acts like a challenger the next and claims to be a focused specialist (niche) the next?

It Pays to Help Your Licensees Grow Their Businesses

Licensees Grow Their BusinessIn most licensee arrangements, companies pay for access to intellectual property. Plus, a percentage of licensee revenues is often paid to the corporation as client contracts are signed. Licensees are typically (but not always) assigned geographic territories, and long-time policies about territory infringement prevent conflicts.

Successful license-driven corporations don’t stop there.

Corporations that had accepted just about anyone in the early years become increasingly more selective about which companies will be added to their family of licensees as time goes by.

Policies about territorial infringement get established to ensure fairness, reduce confusion and prevent conflicts.

As independent businesses, licensees make their own decisions regarding how to operate their businesses (hiring, firing, compensation). Unlike franchisees, there is no corporate mandated business model. Licensees are not required to run their businesses using the corporation’s forms or budgets.

Recognizing the value of education, many successful corporations provide their licensees easy access to conferences, seminars, webinars, teleseminars and books. Just because a licensee owns a business doesn’t mean he/she can understand his/her own profit/loss statement, recruit and select the best job candidates, evaluate software, create a marketing plan, attract new customers or sell additional services to existing customers.

License-driven corporations may not have the responsibility and the legal risks associated with how their licensees run their businesses, but the successful ones have very effective marketing (especially a great online presence), keep investing in product development and provide business operation and sales training for their licensees.

Growth Strategy Tip

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When we engaged her for the strategic planning sessions, we discovered an added benefit. She had both run her own businesses and worked with very large businesses so in addition to the facilitator function we hired her for she also provided very important Business Consulting services.

Robert Waller, Jr., CAE
President and Chief Executive Officer of Association Headquarters

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