Japanese VS. American Style Management

I just received an email today with this little parable. Usually I don't read these as they're mostly spam but this one seemed like it was worth the read, and it was. I think if you don't learn anything new, at least you'd get a good chuckle out of it.

A MODERN PARABLE . .

A Japanese company ( Toyota ) and an American company (Ford) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.

Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.

They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India .

The End.

Here's something else to think about:

Ford has spent the last thirty years moving all its factories out of the US , because they can't make money paying American union wages.

TOYOTA has spent the last thirty years building more than a dozen plants inside the US using non-union labor. The last quarter's results:

TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.

Technical Marketing: "How to make sure your product will sell" by Mike Holt of Get2Volume

So actually I'm currently attending an Entrepreneurship Workshop test run that's being done here at SMU. Since this is a first run, they are offering this for free to the Technopreneurship students to also get feedback. Today is session number 4, I'll start here and maybe touch back on the other 3 in the next few entries.

Today's session is presented by Mike Holt of Get2Volume, a company that specializes in helping companies scale their business and get from the startup phase to a larger market and grow. The main focus of the session is on Technical Marketing, but that's probably unclear about that it's actually about so I'd say that the layman term is "How to make sure that your product will sell in the market."

I found this session very important and I'll summarize the main points for the benefits of those who can't attend today.

Market Assessment: Is there a demand?

The first step is to figure out whether there's a demand for your product or service that you are thinking of offering. Here Mike Holt gave a table that would allow entrepreneurs to evaluate their ideas which involves evaluating a few points detailed below:

1. Market Need: Is the product market driven? Does it have a recurring revenue niche? Or is it unfocused and non-recurring?
2. Customers: Are they reachable or are they already loyal to other offerings and are uncreachable?
3. User Benefit: Is the payback time for the customers short (less than a year) or long (more than 3 years)?
4. Pain Solved: Does your product address the customer's main pain point? Does it solve it to a large extent or does not really solve it?
5. Product Life: Does your product have the sticking power that allows it to stay in the market for a long time or will it lose attractiveness in the short term and fade out?
6. Market Structure: Is the market being addressed fragmented, emerging, or imperfect? This will allow you to find a niche that is currently not effectively served by competitors. Or is it highly concentrated, matured, or declining? In which case it will be much more difficult for you to break in.
7. Market Size: Is it too big (more than $1Billion)? This means you haven't narrowed down your market enough and you will not be able to meet the needs of this market. Or is it too small (less than a few Million) which will make the market very unattractive. Try to find a market with a size that is in between those two points.
8. Growth Rate: Is the market growing rappidly (CAGR > 30%)? This will present good opportunities for new entrants to grow with the market. Or is the market stagnant or in decline (CAGR <>
9. Market Capacity: Is there more demand in the market than supply (full capacity)? Or is the market supply larger than the demand (under capacity)?
10. Market Share Attainability: Can you attain a leadership position (20% or more)?
11. Cost Structure: Do you have a cost advantage?

Now you have to understand that no company or idea will rate high on all of these points but it is important to understand where you stand on each of these metric so that in the future you can plan to address the problem points and show the investors that you are presenting to that you do have a plan to overcome these pitfalls.

Needs Identification

The first (and most important) step of coming up with a successful business idea is to identify the need in the market that is not being adressed or is not adequetely being addressed. In order to identify the need in the market there are 4 guiding questions that can be used:

• What is the critical problem to be solved in the market?
• Why is this a critical problem?
• Who will pay a premium price if this is solved?
• What is the underlying value creation proposition?

Customer "Care Abouts"

Then you would move on to identifying the few things that the customers care about, basically their KPI. For example, if your idea is to come up with a better way to conduct mobile marketing and you believe that the current problem for this market is that there's no cost-effective way to reach mobile users. The customer care abouts in this case could be:

• How many people can you reach?
• How much will it cost to reach those people?
• Are these people targeted?
• Is it possible to target specific people?
• What's the speed to roll out a marketing campaign?
• How easy to use is the system?
• Etc.
  

Then for each "Care About" you should think about what is your ability to meet these needs. What's your value proposition, and what about your top 3 competitors' abilities to meet these needs? In the end, are you able to compete where the customers find most important?

Market Segmentation

When you're segmenting the market you need to find out what the attributes of the market are and how important that attribute is to the market and whether that attribute is measurable. The market attribute should be connected to the "Care Abouts" in some way so that you have a way to measure and address it.

Continuing the with the previous example of the marketing application, the market attributes of the segment may be:

• Companies target tech savvy consumers
• Target client companies are in the F&B industry
• Price sensitivity
• Etc.
  

Proposed Value Proposition

Next you should conduct a SWOT analysis to determine your Strengths, Weaknesses, Opportunities, and Threats and come up with a value proposition based on the analysis that you have done previously through each steps.

Locking in Customers

Now here's one of the important steps. In order to secure funding many times you are much better off if you have secured in clients or interested customers. Other than that it is also important if you can distinguish dedicated and committed clients who are willing to work with you to make sure the product is good and adresses their needs. Most of the time it is very hard to tell whether the client is serious or not, well here are a few suggestions which I found very useful:

• Client willing to commit the time, human resources, or capital to work with your company on the product and give you proper feedback. This level of involvement shows commitment in ways that is most important for your company. You get valuable feedback and also information about what you're doing right and wrong. Paying customer's comments are much more reliable and valuable than those of non-paying ones if not on the quality then at least you know that they prioritizes their needs better.
• Get a letter of intent from customers that they are willing to pay X amounts if you deliver the product as specified. This way they are putting money where their mouth is. This contract is non-binding but is in black and white. It should be signed by an influential person in the client company such as the VP.
• Ask if they will allow you to release a press release about your collaboration. If they are willing to let you do it, they are committing themselves to this relationship.
• Ask to use their company's name as a reference on your website as current customers or users of your product.

If the client agree to any of the above, they are sufficiently committed and can be used as a reference when pitching to potential investors. They will provide a lot of credibility and backing to your business ideas as well as gives you a more solid foundation to start your business.

Of course what I wrote out here is not nearly as much as the things that you would have gotten if you attended the session. SMU's Institute of Innovation and Entrepreneurship should be running this program very soon but will definitely charge a bit for the 5-day workshop. I advise anybody who's serious about starting up a business to seriously consider attending the talks for more information that could potentially increase your chances of success.