Blogging for Business (BusinessWeek Online)
Topic: 4) A Random Walk
Well I thought that I would try to memorialize my place in history as one of 20,000 early adopter bloggers in the business community. Below I reference an August 2004 article from BusinessWeek Online, entitled "Blogging for Business".


http://www.businessweek.com/technology/content/aug2004/tc2004089_3601_tc024.htm


Although there are a lot of well-known business personalities cited in the BW article, as a person with both engineering and business backgrounds, I think that the world is yet to see blog authoring and management software that will truly revolutionize the potential of blogging. Revolution will be apparent by accelerating adoption rates and catalyst technologies that make end user design easier, functionality robust, and integration rich. Software vendors and companies that use vendor technologies that view content management, customer relationship management, and marketing systems in traditional ways better beware of getting blindsided. The blogging area is fertile ground for innovative and disruptive technologies.


Steve Shu
Managing Director
S4 Management Group
Email: sshu@s4management.com
Web: http://www.s4management.com

Overestimating Equity
Topic: 3) Ventures
In a number of different discussions I have been having regarding bringing technologies to market, hiring new executives in early-stage ventures, and determining the proper capital structure for a business, I run into situations that remind me of a classical finding in the organizational behavior field of study that I learned while attending the University of Chicago business school. For example, when a husband and wife are asked individually "what percentage of the housework do you perform in your family?" a general finding is that the two numbers significantly sum to more than 100% (e.g., husband says he does 70%, wife says she does 80%).


I find the same type of overestimation tendencies occur in start-ups and with new inventions, where quantifiable value in dollars may be very hard to pin down to a single number or even a narrow range. This value discrepancy can occur throughout all assets in the business between insiders, outsiders, classes of investors, functional roles, etc. People tend to overestimate themselves and underestimate others. While there are external ways to mitigate the counterproductive aspects of overestimating oneself (e.g., use of Board processes, benchmarking), one should be cognizant of complex costs imposed on early-stage ventures to resolve these differences. Sometimes external controls may not be the only thing to look at.


Steve Shu
Managing Director
S4 Management Group
Email: sshu@s4management.com
Web: http://www.s4management.com

Calibrating the Value of Management Consultants
Topic: 2) The Consulting Trade
The topic of tracking the value of management consultants is fertile ground for many jokes. Ever hear the joke about the consultant using the client's watch to tell the client the time? On a serious note though, management consultants need to provide value that exceeds their "costs" (although the same standard could also be applied to employees within a firm). Outlined below are just a few perspectives for looking at the problem of setting and calibrating the value of consultants.


1) The Consultant "Rule of 10x" - In goal setting, good consultants are trained to aim for problems where solutions will yield value exceeding ten times their cost in professional fees (e.g., cost reduction, revenue growth, market capitalization). This provides a way of ensuring that the consultant and the client are aligned at the start of the engagement (and ongoing communication and updating should occur throughout the engagement). If after execution the client achieves a return of 10x or more, this is fabulous. If 5x, this is still great. Even 3x, 2x, etc. are also acceptable returns. That said, those that apply the Rule of 10x are thinking along the right lines.


2) Strategic Need - Sometimes the value of using management consultants can be viewed as a one-time cost to achieving a strategic goal. For example, executive management may say that it is worthwhile to incur $1M in consulting costs to integrate two businesses at an operational level. As another example, management may say that it is worthwhile to spend $500K to project manage the rollout of a new line of business and avoid extinction in the marketplace.


3) Running Versus Changing a Business - There are many circumstances where change management is needed. It is sometimes very difficult for those running a business to have sufficient bandwidth to both change a business and create all of the necessary tools, processes, organization, and infrastructure at the same time. The value of consultants can sometimes be looked at as a means to get over these hurdles, and good managers will recognize the potential costs of getting over a hurdle.


4) Assessment and Inventory - Sometimes third-party perspectives are simply needed to provide a fresh look at the business and to provide assessments of where things are at. Management consultants can be used to inventory, diagnose, and analyze where a company is at. The value of these types of services can be estimated by looking at comparable costs of other firms.


Steve Shu
Managing Director
S4 Management Group
Email: sshu@s4management.com
Web: http://www.s4management.com

Management Consulting Humor
Topic: 4) A Random Walk
Had to reprint this one (by Bernie Ramsbottom of the Financial Times on April 11, 1981):


"Of all the businesses, by far
Consultancy's the most bizarre.
For the penetrating eye,
There's no apparent reason why,
With no more assets than a pen,
This group of personable men
Can sell to clients more than twice
The same ridiculous advice,
Or find, in such a rich profusion,
Problems to fit their own solution."


Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com
http://www.s4management.com

Notetaking: Bread and Butter for Managers and Consultants
Topic: 1) General Management
Note taking is a topic that I wanted to write about for a long time because it is not only a highly underrated task but also a bread and butter skill of mine. I have received many positive comments on my note taking skills from colleagues, lawyers, investors, customers, and other professionals. Many have even commented that I well earn my pay just on note taking. Note taking is very applicable to general management, consulting, sales, due diligence, interpersonal communications, and facilitation. Here are a few, overlooked golden benefits of note taking:


1) Taking good notes provides a foundation for making better decisions. Why? There is less possibility for selective filtering and recall of information. Managers have a tendency to remember what they want to hear about what's going on in their business. Same mistakes can be made by consultants too, but a good consultant should be trained to be unbiased and to listen to facts (while documenting the rest too).


2) Taking good notes enables a manager or consultant to engage all types of people in an organization. In a popular personality test known as Myers-Briggs (M-B) typing, one of the dimensions of evaluation is whether a person is an (E)xtrovert or (I)ntrovert type. A common misunderstanding of the term of "extrovert" is that it refers to social butterfly types, people that are outgoing and talkative. Similarly a common misunderstanding of the term "introvert" is that it refers to those that have tendencies to crawl into holes when people come around. While this may be true in common English, roughly speaking, the E and I designations for M-B refer to whether a person is energized by actively thinking about information in the open (Extroverts) or process information internally as their normal mode of operation (Introverts). Bringing it back to note taking, written notes help to engage introverts in the company while providing a script for engaging the extroverts (who actually tend to think out loud). If you engage a person using the wrong channel, you may not get the message across at all.


3) Taking good notes can be dovetailed with editorial comments that drive action and change. There is a fine line between being a secretary (accurately documenting what has happened) and being a change agent. Managers and consultants need to be able to do both. Accurate documentation is required for one to be ethical and to drive unbiased decision-making. However, there is also an important power of the pen. How things are framed, played back, portraryed against business value, etc. can influence what actions come next by an organization.




Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com
http://www.s4management.com

Applying "Regret" Concepts for Better Decisions
Topic: 1) General Management
Ever wonder how you can leverage the pessimist in you to make better decisions? As a practicing management consultant, I'm focused on facts, quantitative information, benchmarks, leadership, and results. I generally say "pooh-pooh" to everything else. However, there is an important soft side of me that relies on gut feel a bit and sanity checking.

This soft side of me instinctively uses a concept of regret to help ensure broad possibilities are considered, especially when one is at a crossroads. For example, suppose one has converged on making one of two choices that are diametrically opposed and that once the path is chosen, there is a point of no return (e.g., selling off intellectual property of the company or choosing a penetration pricing strategy). Before one commits to the choice, one should ask, "Am I going to regret this decision?" Hopefully, what will be triggered in one's mind will be a process that makes sure that one is looking at the decision from many different angles. For example, one may decide that additional experiments are needed to validate original thinking ("am I going to regret not running additional experiments or will I be able to sleep at night if I commit now?").

In any case, forcing oneself to look at all alternatives by posing key questions of regret can be used in a positive way as a means to strengthen commitment and resolve as opposed to killing momentum. After having considered regret, one should feel better after making a decision, neither worse nor more confused. At least this is one method that helps keep me on track and able to sleep well at night when making tough decisions.

Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com

Applying Operations Theory to Early-Stage Ventures (Part I)
Topic: 3) Ventures
Early-stage ventures frequently have dynamic and demanding environments. Aside from the technical aspects of corporate governance and executive management, a key question for operating managers in a venture is who is going to do what by when (the 3Ws).

While this goal-driven perspective is important, I also find it useful to draw analogies and apply operations concepts such as those illustrated in the popular business novel by Eliyahu M. Goldratt and Jeff Cox, "The Goal". In that book, the reader is essentially introduced to having to increase the output of a manufacturing plant, a foreign environment to most readers. One concept introduced in the book to solve the problem is to try to figure out where the bottleneck is and to alleviate the bottleneck, e.g., by increasing processing capacity at the point of the bottleneck, to increase throughput.

I find the bottleneck concept to very important for early-stage ventures, especially since there may be little margin for error in the venture and since response times are so critical. Sometimes the bottleneck is sales prospecting or lead generation. Other times, it has to do with insufficient marketing collateral or capital. Managers in early-stage companies need to look at problems using multiple frameworks and methods so that they can not only remove bottlenecks but also recognize them. I suggest that using principles of operations can also help as even experienced managers in early-stage ventures will find themselves in new, foreign environments like the main character in "The Goal".

Unfortunately, removing a bottleneck can create a bottleneck in another area (shifting bottlenecks). If companies didn't have enough things to worry about! Well, we'll save that for Part II.


Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com

Interim Management and Auditioning
Topic: 2) The Consulting Trade
The term "interim management" connotes different things to people. Some view it as a niche separate from consulting where the interim manager takes responsibility for a particular aspect of the business for a short period of time. Others view interim management positions as turnaround-type positions for a firm.

Rather than define the term, I think its useful to view interim management in terms of fitting a role to the need at hand and minimizing side effects. On the one hand, a good purpose of interim management could be to bring in world-class resources immediately. One the other hand, a tendency may develop to make the company overly dependent on an interim manager like a crutch.

I have been involved in cases where an interim manager is used in conjunction with the immediate process of placing a permanent manager. If designed properly, such a structure can yield excellent results including faster time-to-market, creative tension, and a coaching and supportive environment for the prospective permanent hire. If the prospective permanent hire in mind does not work out, senior management can use the auditioning period as a means to determine what to do next, e.g., move the team players around a bit, let the evaluation period for the permanent hire go longer, or work with the interim manager more actively to get the permanent hire on track.

Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com

On the Air
Mood:  a-ok
Topic: 1) General Management
This blog complements the S4 Manangement Group website at http://www.s4management.com. The blog will serve as a dynamic place to capture perspectives from S4 Management Group consultants and invited partners.

Initial topics will center around aspects and tricks of the trade that I've found few people make accessible for more general consumption. The initial topics are:

i) General Manangement
ii) Consulting Trade
iii) Early-Stage Ventures
iv) Business Templates

Please feel free to post your feedback or send the authors comments. Thanks for tuning in!

Best,
Steve Shu, Managing Director, S4 Management Group
sshu@s4management.com