The Real Scoop on “Authenticity” and What It Means to Your Customers

By Red Slice on May 4, 2011 – Reprinted here by express permission of Red SliceType “authentic branding” into Bing and you’ll pull up 581,000 results. The advice to “be authentic” hits business owners and entrepreneurs more than gray skies hit Seattle from October to May. And, yes, I give this advice to my clients. But what does being “authentic” really mean? This term has been bastardized a bit in the intersection between entrepreneurship and personal development. Many coaches and consultants are advising people to “live their passion” and “live an authentic life” and to find careers and businesses that “authentically” play to their strengths. This is all great advice. But some business owners confuse “authenticity” with “only the stuff I care about.” And that’s not really what we’re talking about from a branding perspective. Having an authentic brand means that you deliver what you promise. Period. You do what you say, You walk your talk. When I go to Walmart, I don’t expect great service or quality fashion. I expect what they promise: low prices. That is authenticity. It has more to do with company values, service quality, product line and image. It means that if you advertise your brand as hip, sexy and cool, then your products, your company – heck, maybe even your people – need to walk that talk. It means if you are going to tout “Customer Service is our #1 Priority” that you authentically take care of your customers, go above and beyond, and empower your call center employees to do whatever it takes to solve their problems quickly and painlessly. It means that if you claim to be cheap and disposable, that you ARE cheap and disposable, because that what people want from you if you are promising that.

Business Blog Primer

BLOG ME

If you’re a business these days, you’re supposed to have a blog to go along with your company website. The reasons why?

Well, it can keep your customers informed, for one. It can provide a great platform for your customers to interact with the company, for two. Third, it’s a great way to keep talking about the company in a positive way. Fourth, it’s a good way for the company viewpoint on issues to be delineated, if that is important to the business. Fifth, people may actually come to your site just to read your blog, or, some other site may find something interesting on your blog and link to it, thereby driving potential customers to your site. Sixth, each new blog post (and each new comment, if you allow comments) is yet another reason for the search engine bots to crawl your site, thereby moving you up in the search engine rankings, which is always good for business.

Okay, so a lot of good reasons to have a company blog. The problem is, of course, just as with other things, the execution. Apropos of that execution, how do you get a blog, how do you get good, relevant content for the blog, and how do you keep it going?

Things Have Changed

Yes, I am quoting a Bob Dylan song title on a business blog.

But things have changed with the passage of the 2010 Tax Relief Act two weeks ago, and I thought it would be a good idea to highlight some of the provisions that might hold the greatest interest for small and medium-sized businesses.

So, here we go:

Small Business Investment: Section 760 of the Tax Relief Act amends section 1202 of the Internal Revenue Code (the Code), with the intent of increasing incentives to invest in small businesses. The Code now states that if an investment is made in 2011 in stock of a qualified small business and the stock is held for a minimum of five (5) years the gain is tax free. Prior to passage two weeks ago, the Code section 1202 incentive was a 50% gain. Some details: The investment must be in qualified small business stock. That means the investment must be in new shares of a “C” corporation. The investment must be made as an original issue of stock and can be granted for money, property or services performed, except for service of underwriting. To qualify, a company must be a domestic corporation with a cap of aggregate gross assets of $50,000,000 USD before AND after the issuance of the new shares. And, a minimum of 80% of the total assets must be used in an active trade or business. An active trade or business is defined by the IRS as a trade or business other than a personal service business like law, medicine, engineering, consulting, athletics, financial services, and includes other trades or businesses where the business is dependent on the reputation or skill of 1 or more of its employees.

Small Business Expensing: Businesses will be able to write off 100 percent of their equipment and machinery purchases, up to $500,000, that were placed in service after Sept. 8, 2010 but before Jan. 1, 2012. The cost of the equipment (up to $500,000) reduces the total taxable income of the business.

Estate Tax: The revised estate tax level was set at a $5 million exemption and 35 percent top rate through 2012.

Payroll Tax: Employees will receive a 2 percent reduction in their Social Security (FICA) payroll tax in 2011. The rate for employees will drop from 6.2 percent to 4.2 percent. It is important to note here that employers (no matter what size) will continue to pay the 6.2 percent rate. Self-employed individuals will pay 10.4 percent instead of 12.4 percent. The FICA tax rates for everyone will return to 2010 levels in 2012.

Research Tax Credit: The research tax credit had originally expired as of December 31, 2009. The Tax Relief Act has now extended this for 2010 and 2011.

That wraps it up on this end, and I hope this provides a quick overview of some of the changes in the recent tax legislation. We are not tax accountants (not even close), so if you have questions, it is in your best interests to contact a certified tax accountant, not us.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://cedarpointconsulting.com.

The Four-Funnel Approach — Strategic Planning for Small Businesses

According to Confucius, “An unpointed arrow never reaches its target.” Yet, how many small business owners don’t do any strategic planning, hoping that floating in the wind will bring them a bulls-eye and success?

Arguably, strategic planning is even more important to many small businesses, including start-ups, technology companies and those in highly-competitive markets, so it’s critical that small business owners create and follow strategic plans. Plus, it’s New Years Day. What better time to start strategic planning for your small business?

Sure, finding a simple way to quickly build a strategic plan is much of the problem. While the Balanced Scorecard is, in many ways, a better strategic planning system, it takes quite a while to develop a strategic plan using Balanced Scorecard and requires training in the methodology to carry out effectively. As a result, the Balanced Scorecard is rarely available to small businesses, who can not afford to hire an expert facilitator for a multi-week endeavor.

Should small business owners simply give up, assuming good strategic planning is out of reach? Of course not. There is an effective way for small businesses to create and executed strategic plans – the Four-Funnel model. While not as good as the Balanced Scorecard, in my opinion, the Four-Funnel approach is simpler, faster and can be done by a business as small as one or two individuals.

In this article, I outline the Four-Funnel model, describe how it can help small businesses to create solid strategic plans.

A Little Four-Funnel Background

I originally encountered the makings of the four-funnel strategic planning approach in business school at RH Smith at the University of Maryland, where Dr. Brad Wheeler (now at Indiana) described a four-funnel approach to problem-solving. In his approach, he drew four funnels on a white board and labeled them, “Identify Problems”, “Prioritize Problems”, “Identify Solutions” and “Select Solutions”. The diagram looked something like this:

As you can see, the four funnels represent the increase and decrease of information as you complete each step in the problem-solving process. First, identifying problems gives you a list possible problems; prioritizing those problems reduces the list to only those problems that are most important; identifying solutions gives you a range of solutions for each problem; while selecting solutions again reduces your list to only the best solutions for the most critical problems. In short, there’s really nothing radical about four-funnel problem-solving, but it’s simple and it works.

Fast-forward to our strategic management course (also at RH Smith), where we were expected to use business cases to develop strategic plans in a matter of hours. Certainly, we learned the strategic planning process in depth during the class, but our challenge was to deliver a good plan in a very short period of time, particularly for case competitions. In response, my team and I applied the four-funnel approach, this time to strategic planning:

Since then, I’ve used four-funnel with my own small business more than a half-dozen times, while coaching other small businesses through the process. It only takes a half-day or so to do, so it’s not too much time and effort, considering the big payoff.

Four-Funnel Strategic Planning Steps

Ready to start? Here’s each step:

1. Identify strategic needs. Using SWOT analysis or a similar technique, write down the strengths, weaknesses, opportunities and threats relevant to your company and your industry. Many of these are easy to identify — a competitor just moved in down the street (Threat), only one staff member knows how to operate a particular machine (Weakness), you just received recognition as the best in your region at what you do (Strength); or, one of your vendors just created a new product and offered you exclusive distribution rights in your area (Opportunity).
2. Prioritize Strategic Needs. Along with your co-workers you’re bound to come up with some very solid strategic needs, especially if you do a little homework about industry trends before you meet. But, if you stop there and try to achieve all of them, you’ll almost certainly fail. Before you move forward, you need to prioritize your strategic needs, eliminating the ones that are least likely to be successful and produce the least value. I suggest narrowing down your list to four or five strategic needs for your entire business if you have fewer than ten people, and no more than three needs per department (e.g, marketing) if you’re larger.
3. Identify Strategic Actions. For each high-priority strategic need, brainstorm ways to meet that need or take advantage of that opportunity. Your possible actions don’t need to be long or detailed — a one sentence explanation is enough. And, be sure to give everyone an opportunity to suggest actions — you’ll be surprised when you find that the most innovative marketing ideas don’t necessarily come from your marketing manager or the best technology initiatives don’t come from IT.
4. Select Strategic Actions. Just as you prioritized strategic needs, you need to do the same for your actions. For each high-priority strategic need, pick one or two of the best actions for you and your business to take during the coming year. Make sure their achievable and affordable – no point in risking your current business on a long shot.
5. Assign and Act. As a team, assign someone in your business to complete each strategic action. As you do, make certain the person assigned has the authority, knowledge and resources — including funding — to complete the action. If they don’t, you’re merely setting them — and you — up for failure. In addition, be sure to stagger out the deadlines for each strategic action throughout the course of the year. Otherwise, you and your team will spend December rushing around to complete them, learning to hate the strategic planning process rather than appreciate its value.

Does it Work?

It’s not a miracle cure-all, but the four-funnel approach does work. In my experience, businesses who adopted four-funnel strategic planning grew around 20-30% per year, while those same businesses grew at 0-10% before hand.  (My own business grew triple-digits every year but one, so of course I’m a big believer in four-funnel).  As a lawyer would say, that’s not a guarantee of future success, but past results have been good.

When you try the process yourself, you’ll find it takes between four and eight hours for a group of three or four to complete the four-funnel approach, depending upon the size of your business. That’s not much of a time commitment, considering it’s going to benefit your organization for the next year, and beyond.

Give it a try. And, if you like some assistance, contact Cedar Point Consulting and we can help.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy.  Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Some Important Things to Know About SEO

By Brendan Moore

Discussions with Cedar Point Consulting clients about SEO (search engine optimization) almost always involve some sense of urgency, that is, “We have to get organized around this search engine stuff so that customers can find our business online,” combined with befuddlement as to just how that happens.

To those companies that hire another company (or many times, someone’s “computer whiz” friend or nephew – no, I’m not kidding), their lack of knowledge about SEO and how it works is often replaced with misinformation about SEO. This is either because whomever they hired doesn’t know what they’re doing, or, more likely, gives the client company only the briefest of explanations about what they’re going to do and why. Because the client doesn’t know enough about SEO and the internet to begin with, they are unable to “fill in the blanks” and process the answer from an informed point of view.

With that in mind, here is a primer of things you may wish to remember about SEO that are wrong:

We’re No.1: Having the #1 ranking in a search engine is not the achievement that many make it out to be. There are a few reasons I say this; the first one being that having a No. 1 ranking is only effective as long as you’re not spending too much to get there. Like any other sort of marketing, if the money you have to spend on keywords or contextual advertising or, anything else, drives your account acquisition cost to a level higher than what makes sense, then you have achieved a phyrric victory. Second, it is a fact that searchers on the internet look at groupings of three to four search results, not just the top result. It is quite possible you could spend merely half the effort and money needed in order to get the top ranking, and get the No. 3 ranking instead, and have a much better cost-per-acquisition, and, still have more customers than you know what to do with. Third, a great header and description goes a long way towards generating a click-through if your company is fourth on the list as opposed to first. Lastly, even rankings and click-throughs together can be deceptive. If searchers are getting to your site and staying only 15 seconds before abandoning their visit, then something is very wrong. Your search-to-sale numbers are going to be extremely poor. Either you have paid for the wrong search words or your site needs a serious revamp in order to accurately reflect what you sell or what you do for a living (shameless plug – Cedar Point Consulting can definitely help you with either of these problems).

Page Rank is important: Well, sorta, but not really. Before Google had a lot of money and internal talent, this was the rudimentary way they ranked sites. The Google search engine is much more discerning now and uses highly advanced algorithms when operating, so it’s now all about relevance when search words are typed into the Google search bar. The current level of discernment will pull up a lower ranked page first if the relevance of the search word is deemed to be greater with that lower ranked page.

Trading links with other sites is valuable: No, it isn’t. It has no effect. And, furthermore, if you do it enough to trigger the internal checking mechanisms for link-trading that exist within all the major search engines, it could get your site blacklisted on those search engines. This means your business site will not ever show up in any search results. So, then you have a case in which trading links produced negative value to your business.

Repeating keywords as often as possible on the site is important: There are a lot of terms I’ve heard SEO “experts” use for this; phrases like “keyword shock and awe”, “keyword stuffing”, “keyword blitz”, “keyword density”, “keyword jamming”, etc. Some of these people reported to me, so I’ve heard these terms a great many times. The premise is pretty simple; if you’re in the plumbing business in Cleveland, then you make “plumbing” and “Cleveland” show up thirty times on your homepage. But, this doesn’t work. Again, as in the example I gave concerning rank of your page, the search engines are much more precise and selective than this, and all this loading up on a keyword (or two) is going to do for your site is make it seem disjointed and awkward and like it was written by an obsessive 10 year-old. Write good copy (or hire someone to write good copy) and you will be rewarded. The search engines use the same criteria most human beings use to pick a page, and you’re much better off being descriptive about your business and its capabilities.

Unless you’re Wal-Mart or The New York Times, SEO is all just a crapshoot, anyway: Nope, simply not true. There are things that even small companies can do from an SEO perspective to increase visits to their sites, and increase the time spent on the site. There are also things every company can do around the design of their site to increase contact rates or sales. Lastly, there are ways to increase the useful content that resides on your site, whether that is through frequent updates, writing a blog, buying or getting relevant content for free and reprinting on your site, etc. The beauty of SEO is that it is self-fulfilling: the money and time you spend on driving more traffic to your site pays off in that you get more site traffic, and it also pays off in the future as more site traffic pushes your site higher up in the search results, which means that more people will get your site in the search results, which means that more people will visit your site, which means that more people will get your site in the search results, which means… well, you get the idea here.

Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Are You Planning to Crash?

Nearly every experienced project manager has been through it. You inherit a project with a difficult or near-impossible schedule and the order comes down to deliver on time.  When you mention how far the project is behind, you’re simply told to “crash the schedule”, or “make it happen.”

As a long time project manager who now advises others on how best to manage projects and project portfolios, the term “schedule crashing” still makes me bristle. I picture a train wreck, not a well-designed product or service that’s delivered on time, and for good reason. While schedule crashing sounds so easy in theory, in practice schedule crashing is a very risky undertaking that requires some serious evaluation to determine whether crashing will actually help or hurt.

In this article, I’ll explain the underlying premise behind schedule crashing and describe some of the typical risks involved in a schedule crashing effort.  Then, I’ll provide seven questions that can help you assess whether schedule crashing will really help your project.  Combined, the schedule crashing assessment and the risks can be brought to executive management when you advise them about how best to proceed with your project.

Schedule Crashing Defined

As defined by BusinessDictionary.com, schedule crashing is “Reducing the completion time of a project by sharply increasing manpower and/or other expenses,” while the Quality Council of Indiana‘s Certified Six Sigma Black Belt Primer defines it as “…to apply more resources to complete an activity in a shorter time.” (p.V-46). The Project Management Body of Knowledge (PMBOK), fourth edition describes schedule crashing as a type of schedule compression, including overtime and paying for expedited delivery of goods or services as schedule crashing techniques (PMBOK, p. 156), though I generally think of overtime as another type of schedule compression – not crashing.

From a scheduling perspective, schedule crashing assumes that a straight mathematical formula exists between the number of laborers, the number of hours required to complete the task, and the calendar time required to complete the task. Said simply, if a 40-hour task takes one person five days to complete (40 hours/one person * 8 hours/day=5 days), then according to schedule crashing, assigning five resources would take one day (40 hours/5 people*8 hours/day=1day).

The Risks of Crashing

Frederick Brooks had much to say about the problems with schedule crashing in, “The Mythical Man-Month“. In this ground-breaking work about software engineering, Brooks explains that there are many factors that might make schedule crashing impractical, including the dependency of many work activities on their preceding activities and the increased cost of communication. This phenomena is now referred to as Brook’s Law–adding resources to a late project actually slows the project down. I personally saw Brook’s Law in action on a large program led by a prestigious consulting firm where the client requested that extra resources be added in the final two months of the program; because the current resources were forced to train new staff instead of complete work, the program delivered in four more months instead of two.

Additional risks of crashing include increased project cost if they crashing attempt fails, delayed delivery if the crash adversely impacts team performance, additional conflict as new team members are folded into the current team to share responsibility, risks to product quality from uneven or poorly coordinated work, and safety risks from the addition of inexperienced resources.

In short, schedule crashing at its most extreme can be fraught with risks. Managers at all levels should be very cautious before recommending or pursuing a crashing strategy.

Making the Call to Crash

So, how can a project manager decide if crashing will help? Here are seven questions I ask myself when deciding if crashing is likely to succeed:

1. Is the task (or group of tasks) in the critical path? Tasks in the critical path are affecting the overall duration and the delivery date of your project, while tasks outside of the critical path are not affecting your delivery date. Unless the task your considering crashing is in the critical path or will become a critical task activity if it substantially slips, crashing the activity is a waste of resources.
2. Is the task (or group of tasks) long? If the task is short and does not repeat over the course of the project, then it’s unlikely you’ll gain any benefit from crashing the activity. A long task or task group, however, is far more likely to benefit from the addition of a new resource, as can tasks that require similar skills.
3. Are appropriate resources available? Crashing is rarely useful when qualified resources are not available. Is there a qualified person on the bench who can be added to the project team to perform the work? If not, can someone be brought in quickly who has the needed skills? Recruiting skilled resources is a costly and time-consuming activity, so by the time the resource(s) are added to your team, the task may be complete and your recruiting efforts wasted.
4. Is ramp-up time short? Some types of projects require a great deal of project-specific or industry-specific knowledge and it takes time to transfer that knowledge from the project team to the new team members. If the ramp-up time is too long, then it may not make sense to crash the schedule.
5. Is the project far from completion? Often, people consider crashing when they’re near the end of a project and its become clear that the team will not meet it’s delivery date. Yet, this may be the worst time to crash the schedule. Frederick Brooks told the story about his schedule crashing attempt in “The Mythical Man-Month” where he added resources to one of his projects at the tail end, which further delayed delivery. In most cases, schedule crashing is only a viable option when a project is less than half complete.
6. Is the work modular? On many projects, the work being delivered is modular in nature. For example, in automotive engineering, it’s possible for one part of the team to design the wiring for a new vehicle model while another part of the team designs the audio system that relies upon electricity, as long as points of integration and dependencies are defined early. Through fast-tracking, or completing these tasks in parallel, it becomes beneficial to also add resources, crashing the schedule.
7. Will another pair of hands really help? All of us have heard that “too many cooks can spoil the broth,” but this also applies to engineering, software development and construction. Consider where the new resources would sit, how would they integrate with the current team, would their introduction cause an unnatural sharing of roles?

If you’ve answered these questions and responded “yes” to at least five of the seven questions, then you have a reasonably good project-crashing opportunity; a “yes” to three or four is of marginal benefit, while a “yes” to only one or two is almost certain to end for the worse.

Alternatives to the Crash

Fortunately, there are alternatives to schedule crashing that may be more appropriate than the crash itself.

1. Increase hours of current resources. For a limited time period and within reason, asking current team members to work overtime can help you reach your delivery date more quickly than schedule crashing. When considering overtime, it’s important to remember the caveats, “a limited time period” and “within reason”. Asking resources to work 50-60 hours a week for six months is unreasonable, as is asking resources to work 70 hours per week for a month for all but the most critical projects.
2. Increase efficiency of the current team. Though it’s surprisingly rare on projects, examining current work processes and adding new time-saving tools can improve the productivity of a team by 10% to 50% or more if a project is long. I once led a team that increased it’s productivity by roughly 30% simply by re-sequencing work activities and adding a single team member to speed up cycle time at a single step in the process.
3. Accept the schedule. In some cases, it’s better to offset the downside effects of late delivery rather than attempt to crash the schedule. In some cases, this amounts to using a beta or prototype for training rather than a production-ready product.

A Final Caution About Crashing

Because it’s rarely well understand by anyone other than project managers, schedule crashing is often recommended by co-workers who really don’t understand the implications of the decision.  While they see an opportunity to buy time, they almost never see the inherent risks.

As a result, it’s critical that project managers not only assess the likelihood of success when considering crashing as an option, they also educate their stakeholders, their sponsor and other decision-makers about the risks of a schedule-crashing approach.  Doing anything less perpetuates the myth that crashing is a panacea that cures all that ails a late project, potentially creating much bigger problems for everyone down the road.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

For Successful Business Leaders, Sometimes it’s Right to be Wrong

One dreary October day in the late 90′s, I sat in my local Fidelity office waiting to shift funds from one account to another, a common practice in an era before online banking and financial services. That fifteen minutes sitting would have remained forever unmemorable, were it not for the fact that I picked up a business magazine sitting on the coffee table next to me and read a brief article on CEO’s and decision-making.

According to the article, researchers studied the decision-making of CEO’s at both successful and unsuccessful businesses, categorizing their strategic decisions along two dimensions — correct/incorrect and fast/slow, as shown in the table below:

CEO Decision-Making Success	Fast	Slow
Correct
Incorrect

As you might surmise from the labels on the table, “correct” was defined as making decisions that accurately gauged the market, adapted to changes in the business environment, and made new expenditures or trimmed costs in ways that helped their businesses to out-perform competitors; “incorrect” decisions were the opposite.  Along the other dimension, “fast” decision-makers were among the first to make a decision–right or wrong–and then act on the decision, while slow decision-makers took their time, often deciding and acting well after the counterparts in their industry.

Not surprisingly, the CEO’s who made fast, correct decisions led the most successful businesses, while the CEO’s who made slow, incorrect decisions were the least successful. However, the second most successful group of CEO’s came as quite a surprise to me, ultimately affecting how I lead and make decisions to this day. It turns out that the second-most successful CEO’s made fast-but-wrong decisions — not the CEO’s who made slow-but-correct ones. The completed table below summarizes this:

CEO Decision-Making Success	Fast	Slow
Correct	1stMost successful CEO’s	3rdThird-most successful CEO’s
Incorrect	2ndNext most successful CEO’s	4thLeast successful CEO’s

Why were fast-but-incorrect CEO’s the second most successful group? It turns out the slow-moving-yet-correct CEO’s were simply too slow to take advantage of changing business landscape. They waited too long, letting good opportunities slip by and causing their businesses to under-perform. However, the fast-yet-incorrect CEO’s did something that was really not very difficult–they monitored the results of their decisions and, when they determined they were wrong, they corrected their mistakes.

All of this makes thorough, complete analysis and extreme caution – even in the worst of business climates — look like a pretty bad decision-making model.  Sure, we should base our decisions on facts, research and data, weighing the options along with our trusted advisers. But, we shouldn’t wait until the last piece of information finally makes its way to our desk, assuming that having a complete picture is the only way to certain success.  Because if we do, we’ll probably be too late.

(If you’ve read my previous articles, you’ll notice that I’m pretty thorough about citing material appropriately. The article to which I refer needs an appropriate reference, but while I’ve looked and looked, I simply can’t find the original article, published in either Fast Company or Inc Magazine between 1996 and 1998.  Certainly, the publisher and the researchers deserve the credit, so if you know of this article, send me an e-mail and I’ll give credit where it’s due).

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Watch that Basket-Seven Ways to Identify Troubled Projects

Though the traditional advice is “don’t put all of your eggs in one basket,” the celebrated author Mark Twain is famous for saying, “…put all of your eggs in one basket and — WATCH THAT BASKET.”

Whether you’re a an entrepreneur leading a small business , a C-Level executive (CEO/CFO/CIO/CTO) at a mid-sized business, the head of the Project Management Office (PMO), or a business manager watching out for your department, you are often stuck in the position of having to “watch that basket” with your most critical projects.

Even worse, many times you’re never truly sure if one of your key projects is in trouble until it’s too late.

Fortunately, there are some signs that can help you identify a troubled project early, so that you can intervene and put it back on track. I polled our project recovery services specialists at Cedar Point Consulting, and we thought of seven effective ways to identify a troubled project:

1. Perpetual Green Lights, Little Activity. Many of us are familiar with the approach of labeling projects green when they are on schedule and budget; yellow when the project is falling behind; and red when the project is far behind and/or over-budget. Perhaps your key project has been reporting green for the last three months, but oddly there’s been very little activity related to the project. This is probably a good signal that the project is actually in trouble.
2. Lot’s of TBD’s. Effective risk and issue management are critical to the success of most projects, yet they are often ignored. If your key project is well past the early stages, but is reporting back a lot of TBD’s (to be determined) in the “resolution” column for risks and issues, then it’s probably a troubled project, even when the schedule doesn’t show it.
3. Avoiders. The leader in charge of your key project may be a formal project manager or a manager of a business line, but regardless of who they are, you are getting the unsettling feeling that they are avoiding you. Perhaps they are missing at meetings, they’re head the other way down the hall when they see you, they’re not returning phone calls, or they’re not providing status reports. Unless you have a problem bathing, the project leader is likely avoiding you because the project is in trouble.
4. Troubling Trends. Experienced project managers are familiar in using techniques like earned value management (EVM) to identify project progress by comparing actual to planned results for work completed, costs incurred and time spent. Though you may not be using EVM on your projects, you can watch for dramatic increases or drops in spending, dramatic changes to the work being delivered or sudden changes to schedule with no new schedule dates. In many cases, your key project is in a free-fall.
5. Non-Progress Reports. You’re wise, so you have asked your project manager to provide status reports on a weekly basis. However, they’re more like “Non-Progress” reports than progress reports because no progress has been made. In particular, if you have received two weekly status reports where no progress has been made, you’re well on your way to having a troubled project on your hands, if you don’t already.
6. Inability to Show Tangible Results. Well in to your project timeline and knowing that interim reviews are a good idea, you ask for a review or demonstration of work completed thus far. However, your review meeting is repeatedly delayed and rescheduled, sometimes by a few days and sometimes by weeks. Even worse, you’ve tried a quick visit by the desk of the project leader and it resulted in the person shoving documents in their desk instead of sitting with you to review tangible results. If so, this is likely a troubled project.
7. Spidey Senses Tingling. Like Peter Parker in the Spiderman comic book series, you know which projects are highest risk and every time the subject of your key project comes up, it sets your spidey senses tingling, though you’re not certain why. While I’m a big believer in science over emotion, there is surely something very scientific that you’re reading so trust your instincts. Your likely to find something amazingly like trouble in your key project.

Of course, identifying a troubled project is one thing, but recovering that project is a completely different challenge. I provided some tips to recover troubled projects in a previous article that may be of help.

However, particularly if you don’t have experience recovering troubled projects and the stakes are high, it might be time to consider getting some help.  Our firm provides project recovery services and we’re proud of our success rate, but other competent firms do, as well.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Product Pricing: Avoiding the Dead Zone

I was talking to an entrepreneur-friend recently about product pricing for business products, and the fact that there’s a dead zone between the $1000 and $5000 price range that most successful products avoid. That dead zone exists for a reason and it’s important to avoid it, as I will explain here.

For most businesses – even large ones – a purchase under a $1000 can typically be made by a first-level manager and even by a staffer. In some cases, they put it on a corporate credit card and in others they use a discretionary budget, but when the user wants your product, the sale is usually pretty quick and simple.

In contrast, a sale of $1000 or more often requires a mid-to-senior level manager’s approval, a signature from purchasing and even a formal purchase order and invoice. In some cases, I’ve even seen $1000 plus sales rise to the VP level for approval, so this can become heck of a hurdle to clear to close a sale.

As a result of these restrictions, it makes sense to stay below $1000 if possible. But, why might your product need to be priced at $5000-plus instead of, say, $1500? The answer is the sales person. Over the $1000 price range, you not only have more hurdles to clear before closing a sale, you often have to use a one-on-one selling approach to close the deal, which requires a sales person. This sales person earns a small salary, makes commissions, generates expenses and only closes a portion of their leads, so suddenly a $1000 sale becomes very unprofitable.

It turns out that, in most cases, a sale through a salesperson is not profitable until the price reaches over $5000. Hence, the dead zone between $1000 and $5000.

So, if your business product or service is priced in the dead zone, there are things you can do about it.

1. If possible, move your product below the dead zone. Find a way to lower the price just below the $1000 threshold, break the purchase up in to multiple payments across multiple months, or sell a service-based subscription that generates monthly revenue.
2. If going lower is not possible, rise above it. Consider ways to bundle your product with others so that you can charge more and justify a salesperson, sell maintenance or support along with the product, or sell your product to someone else who can bundle it.
3. Stay in the zone. While this is the least appealing option, this option can work. Instead of using an outside salesperson, consider online ad campaigns with inside sales representatives at lower costs. Or, consider a multi-tiered marketing approach that allows for slack labor (college students, work-at-homes) to sell your product. Or, a viable option for a small business may be to sell the product yourself.  (Hey, I already said it wasn’t very appealing).

Interestingly, a dead zone exists to some degree for consumer products and services just as it does for business products, though the zone for consumer products is a good deal lower and it doesn’t appear to be quite so “dead” – it’s probably between $100 and ending at $500. It may be coincidental, but $100 is about the point at which I start running purchases by my wife and she runs purchases by me. Hmmhh.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in project management, process improvement, and small business strategy.  Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

New Decade, New Venture

There’s an old saying that the happiest days in a boat owner’s life are the day they buy the boat and they day they sell it. Never having owned a boat larger than a canoe, I’ve always chuckled when I’ve heard this truism, particularly as I watched my nautical neighbors in Annapolis clean, paint and other-wise maintain their boats.

One would think the same truism would apply to running a business, particularly when building a business from the ground up. As many entrepreneurs and small business owners know, it’s not uncommon to work 60 or more hours a week when starting a business; customers and clients will come calling at all hours of the day and night; and, sometimes you have to stretch more value out of a few bucks than a third-world soup kitchen. Even when the business is stable, vacations are never truly vacations – there’s nearly always a crisis that requires your input, which prevents even three-day weekends from being work-free.

So it may surprise some of my friends and business associates that, after running a business for a little over five years in the first decade of the 21^st century, followed by roughly five years working for others, I’ve decided to start another business again in 2010. There are a few reasons I’ve decided to do this, but here are the most significant:

• Running a business enables me to pursue my passions. As with any consulting business, your client is your first priority. However, after all of the client’s work is done, there is still time to improve your own business, to research new innovations in your industry, and to help your co-workers to learn and grow, too. Along the way, if you identify a new market or business opportunity, it’s yours to pursue – no approvals necessary.
• Running a business enables me to consult in multiple areas, preventing me from being typecast as solely a “strategist”, a “technology expert” or a “project management guru”. If you are both a voracious reader and an experienced practitioner, it’s amazing how effective you can be in many disciplines, not to mention the synergistic benefits of being knowledgeable in many areas. As an entrepreneur, you aren’t bound by the practice area or job title that someone else gave you – you are bound by the knowledge and experience that you truly hold.
• Running a business enables me to live according to my own values. A number of years ago, a former PR Manager for an energy company told me why he’d moved out of PR and in to HR by saying, “There was an incident at one of our plants where an employee of our company had made a mistake. I was head of Public Relations, so I wanted to say to the public, ‘We screwed up, we’re sorry, but here’s what we’re doing to make sure it won’t happen again.’ Instead, I was told to deny that the incident ever took place, which was a flat out lie. I did what was asked, but I couldn’t bear the thought of the next time an incident occurred and I’d have to cover for our mistake.”
  While few events in business pose moral challenges as great as what he faced, there are day-to-day decisions that may help your business but harm your soul. As a business owner and a Christian, I can say how nice it is to be able to do the right thing should the need arise, yet not have to worry about whether I’ll land in the unemployment line.
• Running a business adds weight to my advice. It’s one thing to say something because you’ve seen it work for others, and an entirely different thing to speak from firsthand experience. As a consultant, so much advice is based on observation, but as a business owner, you not only speak your advice you live it and breathe it. Your clients know this, so they respect your advice even more.
• Running a business enables me to balance work, family and charity. There are many myths about running a small business versus working for someone else that I’ve uncovered during the past ten years, but the most important factor is this: Never was I more able to meet my clients needs, to arrange my schedule around family activities, and to put in time to perform charitable work than when I ran my own business.

I can safely say that I have met many wonderful people while working for other businesses, I have served a number of clients that were well worth the time and effort expended, and I have worked with some very talented leadership along the way. In addition, I have served more than a few Fortune 500 companies and managed more than a few multi-million dollar endeavors in the process.

However, I’m looking forward to living the life of a small business owner once again. I know it’s considered by many to be one of the hardest jobs to hold. But it’s also a very fulfilling life, one that holds the most promise for me to positively impact others – and it’s nothing, apparently, like owning a boat.

Donald Patti is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in strategy, process improvement and project management.  Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.