Have you ever observed the energy that leaders of publicly traded companies exert to announce and then deliver promised quarterly financial results? Surely, like me, you’ve wondered how multi-billion dollar companies composed of multiple divisions, and even more business units, achieve their financial forecasts – exactly. My concern is not just about the non-value added time leaders spend pulling orders forward into the quarter and costs back into the next quarter so that reported results match predictions, lest stock prices plunge. I am far more concerned about the value-destruction set in motion by yet another prevalent dysfunctional behavior – promising unrealistic growth, which appears to also happen a lot. A recent analysis of earnings trends by strategy firm McKinsey & Company shows that earnings growth is much lower than many companies’ publicly announced growth targets. From 1997-2007 (go-go years in the economy), large…
The Broken US Healthcare System Can Heal
What if you found out that your company is spending over twice as much as your competitors on a key element of your business, but the excess spending provides no differentiation, market-share gains or price premiums for your company? You’d likely appoint a team to unearth root causes of this wasteful spending. Welcome to the US Health Care system. We spend 16% of our Gross Domestic Product (GDP) on healthcare – seven percentage points of our GDP more than the average of all OECD nations and 5 percentage points more than the second highest spender in the OECD, France. (The 34 member countries in the OECD span the globe and include many of the world’s most advanced countries.) Yet we have nothing to show for our excess spending in terms of population health, as cited in Forbes. Today’s situation will only worsen absent…
Best practices from mid-size gazelles with winning business models
Four fast-growing mid-size company CEOs shared success drivers at the recent Milwaukee Biz-Tech Conference-Expo. With rapid growth rates and distinctive business models, their advice is worth heeding. The panelists Mary Isbister, President of GenMet, a custom metal fabricator Mike Malatesta, founder and president of Advanced Waste Services, Inc. a customized service provider that reduces customers’ risks and waste. Sue Marks, founder and CEO of Pinstripe, Inc. a talent sourcing solution Craig Schiefelbein, president and CEO of PDS. PDS architects, supplies and implements IT solutions for mid-size companies. (See my PDS blog.) Their advice Never waste a downturn. Pinstripe invested in self-service infrastructure during the downturn that will speed throughput of candidates and allow its employees to do more work and higher-level work as the economy recovers. According to Harvard Business Review, market shares shift significantly during a downturn, a lesson Pinstripe capitalized upon….
Smart business models start with the right target market decision
Never let market size fool you into making a misconceived target market choice. Social media pioneer Ning wisely gave up its Facebook-inspired dream of success with millions of consumers to serve a much smaller set of business customers instead. In making the change, its customer base grew from 17,000 to over 100,000 according to Fortune Magazine, while the certainty of paid subscriptions replaced uncertain advertising revenue. Ning’s software enables its customers to launch and run their own private social network with employees, customers, fans or suppliers. The switch from consumers to organizations emerged from the CEO shutting down Ning’s free service. Consumers jumped ship for one of the 125 plus free social media Facebook clones. With a narrower but relatively under-served target market, Ning was free to add services that deepen and differentiate its value to business customers. Additions include analytics for the…