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the competitors™ products.

After reviewing publicly available data on competitors, prepare this de-
tailed assessment of the competition. This assessment will help identify
competitors™ strengths and weaknesses in products, quality, service, and
price.



Reality Check

Consider these questions about your completed worksheet:

• Can you counter each competitor™s weaknesses with strengths in
your product or service? How else can you turn their weaknesses
to your advantage?

• Could they counter your weaknesses with their strengths?

• What parts of the market is your competition moving into? Moving
away from? Do these trends have any bearing on your business?
188 Build Long-Term Growth



Worksheet 6.1
Assessment of Competition
Competitors Name and Location(s)


Parent Company Information




Product Lines




Year Sales Net Income Total Assets Owner™s Equity




Estimated Market Share



Rate the following areas in order to determine major strengths and weaknesses of the
competitor. Check the box to rate each area as a Strength (S) or Weakness (W).
S W Comments




Briefly describe the competitor™s reputation, competitive advantages and disadvantages, and
overall marketing strategy:
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Growing Profitably with Marketing and Product Development



• Are your competitors more stable and better capitalized than you
are? Does this matter much in your market?

• How does your company™s market position compare to those of
your competitors? Are you a market leader or a market follower?
Is there an advantage to being one or the other (which is more
profitable over time)?
190 Build Long-Term Growth



PRODUCT SALES BY MARKETING METHOD

Marketing a product often costs more than the manufacture of the prod-
uct itself. Ineffective marketing efforts result in failed products, even if
the products themselves meet every other criterion for product success.

To spend marketing dollars most effectively, the company must know
what works, spend its money on those activities, and seek to eliminate or
modify efforts that are less successful. This is a constant process”a mar-
keting method that has worked for years may decline, and another type
of effort may suddenly become more important. To this end, it™s impor-
tant to track not only what the sales were by product but also which of
the company™s sales efforts made the customer aware of the product, de-
cide to order it, and place an order by phone, mail, or in person, to the
company directly, or through one of its other distribution channels.


Making It Happen

Most companies use a variety of marketing methods. Worksheet 6.2 lists
many of these methods across the top. To begin, list your products and the
total dollar volume sales attributed to each in the first and last columns on
the sheet. Then determine how much of your business is new and how
much is from customers who have done business with you before.

All of the new business should be broken down into how the customer
first heard about you: by mail pieces you sent out, through the phone book,
from telemarketing, from an advertisement (television, radio, or print
media), through someone who sells for you (i.e., a retail establishment),
through one of your sales reps, by word of mouth from another satisfied
customer, or from some other channel. In the top left portion of the box,
list the actual dollars attributed to that type of marketing. Once all the
boxes are filled in, use the bottom right corner of the box to calculate
the percentage of business attributed to that effort by dividing the total
sales effort by the new sales total.


Reality Check

Consider these questions about your completed worksheet:

• Is one type of marketing responsible for most of your sales dol-
lars? In total or just in one type of product?
Worksheet 6.2
Product Sales by Marketing Method for (Year)
Note: For each method, sales dollars are on top, and a percentage of the total sales is on the bottom.
Method A B C
New Sales Repeat Total Sales
Telephone
Product Direct Mail Book Telemarketing Advertising Distributors Sales Force Referrals Other Total Business (A + B)
$ $ $ $ $ $ $ $ $ $ $
% % % % % % % %




Total ($):
192 Build Long-Term Growth



• Is this because your marketing expertise is limited or because
you™ve tried other methods and this is the one that works?

• Are most methods of marketing represented to some extent, or
are many boxes blank?

• Could you use other marketing methods that you aren™t currently
using?

• Is a disproportionate amount of your business either repeat or
new? (You may be missing new opportunities if it is mostly repeat.
However, if it is mostly new, it may mean that customers are not
satisfied enough to return.)

• Does it say anything about new products you haven™t considered?

• Why aren™t you producing a requested product now? Is there lit-
tle demand? Is it too difficult to begin the process?

• Who should follow up on ongoing communications?
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Growing Profitably with Marketing and Product Development



PRODUCT DEVELOPMENT CHECKLIST

Even if product development is routine at your company, it is easy to re-
alize at the last moment that some important step was missed”packag-
ing not ordered, price discounts not set, no plan for notifying current
customers, and many other common missing pieces that can undo an
otherwise well-thought-out plan. Worksheet 6.3 helps you make sure you
have covered all the important steps in the product development process.


Making It Happen

Once you have decided to pursue development of a product, there are
many decisions to be made and things that must be done between idea
and prototype. Worksheet 6.3 lists some of the many items. Chief among
these are projected ship date and initial quantity. Experience is the best
guide to make these decisions, but most small companies try to schedule
twice the normal production time to new products and keep early
batches to the smallest cost-effective unit.

Although production and operations usually require the most attention
during new product development, don™t ignore marketing efforts. Espe-
cially if the new product moves away from or beyond traditional markets,
more time and effort will have to go into sales and promotion.

Some owners and managers fall into the trap of thinking that they can
sell a product after they™ve made it. Try to keep the production and mar-
keting functions as simultaneous as you can. This worksheet can help.
Meet with your product development team regularly and review the
checklist. Use it as a record of each step, and add to it items that are rele-
vant to your company.


Reality Check

Consider these questions about your completed worksheet:

• Have you discussed the new product and its development with all
employees who will play a role in the production, marketing, or
sales of this product?

• Did you include their input to make this process as smooth as
possible?
194 Build Long-Term Growth



Worksheet 6.3
Product Development Checklist
Product
Projected Ship Date Initial Quantity


Check All That Apply Comments
Production
Design Specification
Materials Required
Person-Hours Required
Temporary Help Required
Equipment Required


Miscellaneous Production
Storage Requirements
Other Packaging


Other Costs
Licensing Fees
Order Entry
Pricing Discounts
Shipping Schedule
Distribution


Marketing
Marketing Research
Marketing Plan
Pricing
Methods
Stuffers
Direct Mail
Telemarketing
Sales Reps
Commissions Schedules
Packaging with Other Products


General
Set Sales Goals
Determine Costs
Calculate Breakevens
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Growing Profitably with Marketing and Product Development



• Did you set a realistic timetable to get everything done?

• Will you have sales as soon as the new product is ready to
ship? How do expected sales change the initial quantities you™ll
produce?

• Have internal production and operations functions gotten ahead
of external sales and marketing functions? If so, what can you do
to bring the two together?



W H AT ™ S N E X T

Now that you know how to bring your products to market and to
grow your business, I turn in the final two chapters to leadership
tactics for guiding your business and communicating your values.
You™ll learn how to manage your employees on a day-to-day and
long-term basis and how to manage your own growth as a leader.
PART IV
LEAD WITH COURAGE
7
DRIVING EMPLOYEES TO
PEAK PERFORMANCE
A people that values its privileges above its principles
soon loses both.
”Dwight D. Eisenhower




T he quality of human resource management in your company deter-
mines the success or failure of most of the other goals you have set
for yourself. If you manage people well in all aspects”hiring, training,
coaching, reviewing, compensating, motivating, promoting, and cele-
brating”the impossible often becomes possible.

The single biggest mistake made by CEOs and other managers is spend-
ing more time analyzing and acting on the company™s financial particu-
lars than on its people issues.

But you can™t talk about employing people today without talking about
the erosion of trust between employees and their bosses. A recent Watson
Wyatt WorkUSA® survey showed that only 39 percent of employees trust
the senior managers, and only 31 percent feel that their companies do a
good job communicating with them.

Lack of trust is probably the biggest problem in corporate America today,
and it can™t be ignored at small companies either. How can you be sure
your employees trust you and believe in your goals for the company? The
simple answer is that you must be trustworthy.

Owners, CEOs, and managers must all behave in a way that inspires
trust. If you talk to one employee about another in a negative way, that


199
200 Lead with Courage



employee learns what he or she can expect from you. If you come in late
and leave early, you send a message about acceptable behavior. If you
aren™t honest about critical issues, don™t expect to find trusting employ-
ees when you need them.



SET THE STANDARDS FOR YOUR EMPLOYEES

Another significant finding of the Watson Wyatt survey was that only 52
percent of employees see the link between their company™s business ob-
jectives and their jobs. This number was at 72 percent only two years be-
fore the survey. Increasingly, employees are feeling disconnected from
their managers, their peers, and their jobs.

One result of this disconnection is the rise in fraud (by CEOs, boards,
and managers) and in workplace violence (by employees). People who
don™t feel committed and connected to other people and their welfare act
in ways that are callous, self-centered, and dangerous. Not recognizing
early signs in your business can have catastrophic results. Just ask the ex-
employees of Enron and Arthur Anderson. And as is so dramatically il-
lustrated by these cases, disconnection and abuse takes place at all levels.

Setting standards for acceptable behavior at your company is as critical
an area of focus as any other. And start at the top. Your own behavior as
CEO sets the standard. We will cover that in detail in the next chapter.

Demand that all employees treat one another”not just customers”with
respect. Encourage respect for deadlines and create a forum for listening
to individual concerns. Create a culture that encourages employees to feel
and express passion for their work and one that celebrates work done well.

In addition, be sure to recognize and promote employees who solve prob-
lems and help others solve problems. People who make things happen
and who don™t let anything prevent their pursuit of doing the right thing
are precious to the success of your company. Make sure they know that
you know who they are and fully appreciate their efforts.



INVEST IN PEOPLE

Think of the difference one person can make when that person is highly
motivated to get something done; then think of a group of people, pulling
201
Driving Employees to Peak Performance



together toward a common goal. A high-quality team of people working
together is your single biggest competitive advantage. Don™t assume that
you pay employees to come to work and that ought to be enough.

Conduct monthly management staff meetings to review the employee
data you™ll compile using the worksheets in this section. Then evaluate
management performance based on how well your managers implement
the actions decided on in these meetings.

Look at your payroll as an investment. It™s just as important to have a
plan for your human resource dollars as for any of the money you spend
on plant and materials.



Quality in Your Workforce

You have a right (and a duty) to select the right employees for your work-
place. Don™t give up that right. If your intuition tells you not to hire
someone with all the right credentials on paper, don™t hire them. While
you can™t (and shouldn™t) discriminate based only on gender, ethnicity,
and a number of other criteria, you can (and must) be discriminating in
choosing people in terms of their skill, character, and ability to make a
positive contribution.

List the character traits you want your employees to possess. While the
exercise may be challenging, the rewards are profound. Consider ques-
tions such as: How important are initiative and resourcefulness? What
about trustworthiness and loyalty? Getting this right is likely to prevent
employee lawsuits later.

One of the most important characteristics of a superior workforce is that
all employees remain employable. This means that you employ only
those people whom your competitors would want to hire if they could. It
should be a goal of your human resource planning to seek state-of-the-
art employees. Employees should know that you expect excellence from
them and that they probably will need to invest in themselves through
outside training to keep their end of this bargain.

From the beginning, you should decide how many employees are opti-
mal to do the work and what skills and qualities you want them to pos-
sess. You can look at the quantitative issues objectively by looking at
overtime rates, the amount of temporary help needed, and the numbers

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