The number of seismic changes in the way business is done during the past 10 to 15 years is unprecedented. Just ponder the magnitude of all that has occurred as you read this list: Cell phones became ubiquitous, and computers with 24/7 Internet access moved from the strident screechy tones and beeps of telephone dial up to today’s broadband connections that transmit huge amounts of data in seconds, resulting in virtually everyone being constantly connected.
Instead of getting the latest news at 11 p.m. and sleeping on it, we now receive a constant stream of information in real time. Reaction time has moved from digesting the myriad of hard copy reports that awaited you at the office each morning to now making decisions simultaneously with that first sip of morning coffee while reading data on a smart devise.
In addition, the era of easy money is also long gone, along with what seemed to be extraordinary and unlimited growth where the average company would do just fine, propelled by a rising tide of good times.
The tragedy of Sept. 11 jolted the world permanently, altering the way people live and think about the future. There are no more givens that one will grow up, go to school, get a job, have a family and live happily ever after. Two major wars have lingered beyond anyone’s worst expectations. Then came the economic meltdown of 2008 when the wheels came off the wagon and the music stopped playing while everyone frantically searched for too few remaining chairs. With the stock market crash and the banking/lending meltdown, even the most sanguine turned jaundiced toward their views of government, business and what the future holds.
Even those businesses naively ensconced in their fairytale cocoons realized it was no longer business as usual. What worked for years would no longer move the needle. Customers’ attitudes and loyalties could no longer be taken for granted as businesses acknowledged that future success and prosperity could well be the exception, rather than the rule.
Does this mean that everything that we’ve learned in the past has gone swirling down the drain, including basic business principles and practices that were sacrosanct?
There are no pat answers to deal with almost revolutionary metamorphoses, if you don’t change, you most certainly will become a victim of change.
Welcome to the new ‘now.’ If you’re leading an organization today, you must devote the majority of your time and efforts to looking ahead and trying to find the answers before your competitors even know the questions. Change has become how we must do business. What worked for your company previously is, at best, a fleeting memory overshadowed by the customers’ mindset of “What have you done for me today?” In short, there are no guarantees other than you’ll have to continuously get better or be gone.
A scary thought? It all depends how you approach this new reality. With changes come new opportunities, new ground rules and the ability to find a better way and deliver that better way more efficiently and effectively.
So how do you go about preparing for the future? Certainly use all of the new tools that are at your fingertips. Instant information on the Web is available to all of us with a few keystrokes directed at a growing number of sophisticated search engine. Data that took weeks and months to gather can now be gleaned in minutes or hours. While Americans are graying as the over-50 crowd mushrooms, don’t ignore the young who know only this new way of life. Does this mean you should add a few 14-year-olds to your board? Maybe not a practical idea, but be sure you’re at least talking to a couple of them on an ongoing basis. Ideas come in many forms, many times from the most unlikely.
You must retrain your team to challenge virtually everything and find a better way, envision products, goods and services that no one knows they even need yet, and create a strategy to deliver them compellingly and creatively.
Will there continue to be business casualties? You bet. Much more importantly, however, there will be many business successes for those companies led by visionaries who answer that morning wake-up call each day with an open mind to the new now.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at firstname.lastname@example.org.
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If you’ve been running a business for some time, then I’m sure you know some CEOs who are struggling to keep their business going or have already closed their doors.
In some cases, the cause might be the economy. Maybe they were in an industry hit particularly hard and were crippled by the drop off in sales or maybe a large customer folded or took its business elsewhere.
The most troubling aspect in many of these situations is that the person in charge didn’t necessarily do anything wrong. The leader made all the right calls and did everything by the book but still ended up with a struggling business.
After you’ve been running a business for a while, you realize that even doing everything right doesn’t guarantee success. The harshest lesson to learn is that you can’t control everything and bad things happen to good people and good companies.
The real test for many begins not with how they deal with success but how they deal with setbacks. Most have never tasted defeat before, and it can be a difficult experience. One day they are the CEO of a successful and respected company, and the next day they are sitting at home wondering what they could have done differently. The experience can be depressing for some and overwhelming for others.
But there’s a saying that as one door closes, another opens, and that certainly holds true with business. If you find yourself in the situation of leading a struggling business, you need to approach it as a challenge. Don’t waste time lamenting what could have been; focus your energy on what could be. Maybe you need to tweak your business, or maybe you need to completely reinvent your company, but the key is to do something.
Take McDonald’s for instance. In the early 2000s, the company was distracted by multiple acquisitions, a massive expansion plan and a menu cluttered with items consumers didn’t necessarily want. The stock price dropped to $12. The company reinvented itself by returning to its roots, divesting of the distracting side businesses and revamping its menu and restaurants to appeal to consumers. The results changed the perception of McDonald’s from a restaurant in decline to the undisputed king of the industry with a stock price in the $80 range.
Another example is IBM. The company was saddled with low growth after trying to dominate the consumer and business hardware and software segments, and its stock dropped to $10. The leadership refocused the company on business software, a few key business hardware components and IT services. It now dominates the business IT services category and its stock commands almost $200 per share.
While you may not be as large as IBM or McDonald’s, the point is that business is constantly evolving. Sometimes it means getting back to your roots, and other times it means abandoning one line of business in favor of another.
Take a hard look at your company and think about what you could do differently. Are there some product lines that are better than others? What if you focused on your core products and did them better than anyone else? Can you follow the lead of McDonald’s or IBM to chart a new course?
If it’s too late for that, look at your current situation and find a new path to success. You led a successful business once, so you can surely do it again. Reach out to friends and colleagues to find out where the opportunities may be in the market and think about a way they could invest in your new venture. You never know who may be able to lend a helping hand. One door may have closed in your career, but with some entrepreneurial thinking, the help of some friends and prayer, another will open. The best is yet to come.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
We recently met a defense attorney who chatted with us about wooing a potential client who had a big case against a “whistle-blower.” What was our free, unsolicited advice for that meeting?
Stop calling the plaintiff’s key witness a whistle-blower. A whistle-blower is someone who comes into the case with a distinct credibility advantage, and therefore is someone jurors want to protect.
Instead, we suggested he describe it as a lawsuit filed by a “disgruntled employee.” Rather than ramping up that person’s believability, this language calls into question his or her motives for testifying.
Defining the language allows you to control the debate. Instead of allowing others to control the conversation with their potentially biased vocabulary, set your own terms with language that tells your story.
Control the terms
This is how so many companies became the leaders in their markets, because they controlled the terms: Kleenex for tissue, Chapstick for lip balm, Xerox for photocopy — and Starbucks for the Tall, Grande and Venti sizing system that most of us still use even when we’re buying coffee from a competitor.
Groupon’s catchy name — short for “group coupon” — has now become the word of choice to describe any online daily deal. Perhaps this is why, according to a Bloomberg report released this in August, Groupon still holds the majority of the market share in its industry.
Language can also be used to help you connect with others on a fundamental level. We recently worked with an emergency room doctor whose humility was in sharp contrast to the stereotypes about arrogant, presumptuous physicians. When he described his background, we were immediately taken in by his story of growing up in rural Kentucky and eventually going to medical school overseas.
But a few descriptors painted an even more appealing picture: This doctor was raised by an apple farmer and a schoolteacher, and after helping with the farm for several years when his father died, was named a Rhodes Scholar and earned his medical degree in London. Just a few more words, but the portrait is much more captivating — and his testimony that much more credible.
Watch for connotations
Language also worked — and didn’t work — for health care providers we met with in North Carolina. When we asked a doctor involved in a medical malpractice childbirth case why he chose his specialty, he gruffly replied, “It had the shortest residency.”
The answer might be 100 percent accurate, but it is also 100 percent likely to turn off a jury. A nurse at this same hospital had by far the better response to why she chose to work in labor and delivery: “I wanted to be there for that miracle.” Even we cynical jury consultants melted — and when she testified a month later, so did those jurors.
Your ability to define and control the language, whether it’s for a product, service or telling your side of the story in the courtroom allows you to own the terms of the discussion.
For example, Best Buy’s Geek Squad is so newsworthy that the media even reports when it switched its fleet of Geekmobiles from VW Beetles to Ford vans.
The Apple Store and its Genius Bar attract millions of visitors each year, and they’re not just gawking at smartphones. The Apple Store chain’s 2011 sales of $3,085 per square foot ranked first among U.S. retailers in terms of sales per unit area in 2011, almost double that of second-place retailer Tiffany & Co., according to a story by David Segal in The New York Times.
Whether in business, the courtroom or in the coffee shop, owning the language means your product or service is the one people will remember.
Chris St. Hilaire is the author (with Lynette Padwa) of 27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams, and politicians.
A little over a year ago, Randy Highland came back home.
He had been away from the California division of McCarthy Building Cos. Inc. for nearly eight years, heading the company’s Nevada/Utah division in Las Vegas. In 2011, he accepted an offer to return to the company’s Newport Beach office as the president of the California region. It’s a place where he had served the construction contractor in a variety of roles for 16 years before leaving for Las Vegas in 2004.
But when you leave as a subordinate and return as the man in charge, the perspective changes.
“There is obviously a big challenge getting yourself familiarized with all our people here,” Highland says. “There are a lot of new folks here who weren’t here seven and eight years ago. So, initially, I was taking a lot of time to get acquainted with them, understanding everybody’s strengths and making sure all of the new folks who didn’t know me from my first stint here got an opportunity to meet me and ask whatever questions they might have.”
But it wasn’t as simple as handshakes and introductions. As the regional president, Highland needed to form a vision for the future of McCarthy in California, help form a plan for executing the vision, create buy-in on the plan and see it all through to completion.
“When you step into a role like this, you need a plan, and then the biggest challenge is making sure you are adequately communicating the vision,” Highland says. “I needed to make sure it was communicated accurately and frequently, and that I was getting multiple touches with all of our folks in all the areas where we operate.
“They say you can never overcommunicate, and I think it’s true. You need to take the opportunity to communicate that vision and your strategic direction for the company at all times.”
Form the vision
As the president of a division within a larger organization, Highland is in the position of ensuring that the goals of his region fall in line with the goals of the company at large.
When he took over as the president of McCarthy’s California operations — which generated $950 million in revenue last year — Highland began a period of internal assessment. He wanted to know where the region stood, so he could form the best possible plan for where it needed to go.
“There is obviously a direction for the division and goals and objectives for the division that already exist,” he says. “And there is a strategic vision for the division. So you come in, you assess where everything stands, and you form an adequate time frame for the transition to the new leadership. That is one thing I think we did extremely well.”
Instead of an abrupt switch — picking a day and switching the nameplate on the president’s office door — Highland worked with retiring regional president Carter Chappell over eight months to help smooth the transition process. Highland officially assumed total capacity of the president’s role this past February.
“The last thing you want in a transition like this is for it to have a negative impact on the division’s goals and financial results for the year,” Highland says. “So you want to make sure you don’t take a step backward because you’re spending all your time on the transition while failing to keep your eye on the ball.”
During the first half of the transition, Highland served as something of an apprentice to Chappell, shadowing the outgoing president to begin meeting employees and learning the processes that are employed throughout the region.
Over time, Highland took increasing control of responsibilities and decision-making. During the second half of the transition, Highland effectively served as the president, with Chappell as his adviser.
As Highland assumed more control, he began to fashion a new direction for the region. His vision didn’t differ from Chappell’s vision on a fundamental level, but there were some new areas Highland wanted to explore.
“Certainly, my predecessor had a vision, and for the most part, there is agreement in the overall vision,” he says. “But there are going to be some tweaks on what I see as our vision and where I want us to head as an organization.”
Specifically, Highland wanted to focus his efforts on driving McCarthy’s California region to $1 billion in annual revenue. He also wanted to commit resources to the company’s San Diego-area operations with the goal of becoming the top commercial construction contractor in San Diego.
“It’s a vision that has both short-term and long-term aspects,” he says. “It is important to set the stage of where you see the organization in five years and beyond. You definitely want to spend time thinking about the big-picture objectives surrounding the long-term vision.
“Then, you spend time formulating the short-term strategies that will help you ultimately achieve those longer-term goals. That stuff is a little more tactical, as opposed to strategic.”
Once you have formed a detailed vision for where you want to take your company, the next crucial step is to get everyone in the organization on board with it. You do that through a multifaceted communication strategy that encourages dialogue and feedback.
Throughout his first year as regional president, Highland has repeatedly stressed the importance of utilizing a communication strategy that offers multiple interaction points between him and his management team and the hundreds of employees who work both at the regional home office and at job sites throughout the state.
The interface opportunities come in a variety of methods and settings, including formal seminars, informal social functions, person-to-person meetings and electronic avenues.
“As far as the big-picture opportunities go, we perform a divisional seminar twice a year,” Highland says. “It’s an update on both the division and the entire company. The seminars are a mechanism for me to set the vision for where we are headed and do so in front of everyone in the region.
“Last October, when I was still in my transitional period, we had one of those seminars, and that is one of the first places where I laid down my vision for the region and set up the goals and objectives for the whole group.
“However, you still need multiple touches, because you can’t expect all of this to happen in one get-together. You need numerous opportunities throughout the year.
“Another thing we’ll do is have quarterly updates within the division. Those are different from the twice-yearly seminars in that they’re constructed as informal social hours. We try to have a little fun with those. It’s kind of like a happy hour where I’ll get everyone in the office here and bring them together, and we’ll just talk about the current division highlights, then take any questions that the group may have.
“Those gatherings are smaller than the seminars, where we can have 400 to 500 people. The smaller groups offer more of an opportunity to take questions and give updates.”
The formal, twice-yearly gatherings allow Highland and his leadership team a chance to roll out large-scale presentations. The smaller, informal gatherings are a chance to inform the staff of smaller-scale tweaks and alterations to the plan, along with any other changes that have come up in the interim. It allows the leadership to drill down on areas that might need a more detailed explanation.
It’s those areas of detail that allow for dialogue between management and employees, which is a critical aspect to his communication strategy because McCarthy is constructed as an employee stock ownership plan, or ESOP, — a company structure that allows employees to have an ownership interest.
With an ESOP structure, employee input becomes necessary regarding the company’s future, since employees are stakeholders.
“There were a couple of questions at the first meeting about what work, exactly, we are going to do within our commercial business unit,” Highland says. “We talked a bit about one market that we are definitely going to chase in that unit, which is the wastewater market. We talked about a few other areas in those markets, including detention and correctional facilities, hospitality and entertainment, and airport work.
“So creating those opportunities for dialoguing is just another way to connect the dots throughout the whole organization, getting everybody to understand what the tactical approaches are going to be for executing on the strategic vision — meaning, what markets we are going to attack.”
In addition to his own personal contact with employees, Highland utilizes communication avenues that don’t require him to be in the room. It’s an important aspect of communication for any CEO or president, particularly if your company covers a large geography. You can’t be everywhere at once, but your message still needs to resonate with all employees at all locations.
Highland uses email blasts to inform the staff of events, new hires and promotions, and various other accomplishments within the division.
But Highland believes a computer screen can’t be the only other face of the company besides his, so he relies heavily on his management team to keep the messages clear and the dialogue moving. He enables his management team and middle managers to communicate the vision, but he also wants feedback to ensure that the message is reaching everyone’s eyes and ears in the form he intended.
That’s why he checks in regularly with many of his managers, asking them what feedback they’re getting from their teams.
“It is important that you take the time to have touches with those people, so that you’re getting a sense at all levels of the company about what the pulse is out there, how people are responding to the direction you are headed, and it gives you another opportunity to see if the communication is getting through.
“You kind of do an ‘end-around.’ You might think you’re communicating well, but it’s always good to go back and see if the message really resonates, if people understand it. Are your midmanagers communicating the message effectively to all members of the organization? It’s kind of a trust-but-verify approach.”
Highland will often ask his managers what types of questions they’re receiving from their teams. It’s often a good barometer for determining whether the message is getting through clearly as it passes through the various levels of the company.
“Just by the questions that folks have, you can get a read on whether the message was communicated accurately,” he says. “You can find out if some folks legitimately have a point or an issue with what we’re doing, if it’s something we need to address.
“My direct reports and the layer under them understand that part of their job is to make sure they take the time and make the effort to take the pulse of the company, find out what folks are saying about the information they’re hearing. That is a key part of communication and making sure everyone is on board with your vision.” <<
How to reach: McCarthy Building Cos. Inc., (949) 851-8383 or www.mccarthy.com
The Highland file
President, California region
McCarthy Building Cos. Inc.
Born: Lansing, Ill.
Education: Civil engineering degree from Bradley University, Peoria, Ill.
First job: I was a paperboy for a paper called the Village Press. I’ll never forget it, because it wasn’t a subscription paper — it went to everybody. So I had to deliver like 600 papers twice a week on my bike. Obviously, that teaches you that hard work pays off.
It also demonstrates something that I try to teach our younger people: Try to ace everything. Sometimes you’ll be asked to do things you don’t want to do, but even if you’re not passionate about it, it’s a short-term thing, and what is important is that you ace it. If you do that, you’ll be recognized earlier in your career as someone who has the ability to do a lot of different things successfully.
What is the best business lesson you’ve learned?
I have two. One is the importance of communicating the strategic vision to your folks, getting the right people on the bus, give them the support to be successful and then stay out of their way. Another is to take a genuine interest in the development of your people. You are only as good as the folks around you.
What traits or skills are essential for a business leader?
If you don’t have honesty and integrity, people are going to see right through you. You also have to be a good communicator, a solid evaluator of talent and you need to be willing to put the interests of other ahead of your own.
What is your definition of success?
Achieving the goals that you set is my most basic definition of success. But it’s also watching your people grow and develop, and becoming successful themselves – and having a little bit of fun while you’re at it.
In her summary blog from the World Innovation Forum, author Andrea Meyer noted an acronym, WeKE, which epitomizes how IT environments often perceive themselves. It stands for, “We Know Everything.” The sarcasm of the acronym may seem biting to IT directors who struggle daily with the escalating pace of change, the demand for improved performance and the increased financial pressures of the current technology world.
However, as resources become more limited and demands become more immediate and complex, Professor Mohanbir Sawhney, director at the Kellogg School of Management, says a new operational dynamic is needed. In this shifting model, IT environments accept that they don’t have a monopoly on expertise, are prepared to let go to grow, should communicate to internal stakeholders across the enterprise that open innovation is complementary to internal innovation, and create new roles and units responsible for implementing outside innovations.
“Outside collaboration can help create a synergism within organizations that counters the strain of performance demand, charting new ways of accomplishing more for less,” says Deen Ferrell, a business development executive at Cal Net Technology Group.
“While seminars, trade articles, focus groups and conferences all provide generalized ideas, only trade consultants, with their ability to analyze and assess each specific environment, can provide the particulars that often spark innovation,” he says.
Smart Business spoke with Ferrell about how IT consultants can help your internal department adapt in an ever-changing environment.
How can in-sourcing specific skill sets benefit a lean internal IT team?
In-sourcing specific skill sets that are expensive to hire internally and difficult to retain can help organizations improve knowledge-share without bankrupting their IT budgets. FMS Financial Partners, for example, a company specializing in employee benefits, found a need to ‘in-source’ a core business function outside their area of expertise. The company reported that this type of in-sourcing offered a competitive edge that it couldn’t have gotten on its own.
Specific skill sets that may be tapped include:
- Unified communications such as VoIP telephony, wireless access, mobile computing and video conferencing.
- Cloud consulting.
- Virtualization, which includes server virtualization, VDI and thin provisioning.
- Backup and storage, for example, business continuity management, disaster recovery planning and SAN replication.
- SharePoint programing and implementation.
- Security, including pen-tests, compliance audits and risk management.
- Infrastructure maintenance such as daily resource provisioning, issue management and on-going network monitoring.
- Help desk support.
- Technology design that would encompass assessments, system architecture, return on investment and budgeting.
Even top-level IT teams benefit from in-sourced specialists, who bring a unique perspective to the team — one grounded in wide-ranging practical experience.
Can a collaborative approach to projects really offer a better chance that they’re completed on time, on scope and on budget?
When Harvard-Westlake School, one of the top preparatory schools in Los Angeles County, needed a firewall solution, it decided to work together with an outside IT consultant. Two years later, with hundreds of collaborative projects completed together, school officials said the collaboration allowed projects to be completed rapidly while ensuring a high quality outcome.
World Vision, a not-for-profit organization operating in more than 100 countries with some 40,000 employees globally, had a similar experience. The organization had an enterprise-level project involving a Microsoft product and needed specific expertise, so it turned to a staffing firm, but after several weeks was still unable to meet the specific requirements. That’s when it contacted a local IT consulting firm, which provided the services and solutions that were required for the project and saved money for the organization in the long term.
How does a collaborative relationship spur innovation?
For any real innovation to occur, you have to have a baseline — you have to know what you don’t know. That’s where collaboration comes in. One of the best ways to enter a collaborative relationship is with a frank assessment. Some companies shy away from assessments because they worry about the cost, but having a clear picture of where you are is the best place for creative thinking to begin. In some instances, the right pieces are there, they just need to be pulled together in the right way. An effective IT assessment, coming from outside the organization, provides new critical eyes to clarify where internal vision is clear and where it doesn’t quite hold up. Once weak points are identified, the stage is set for effective problem solving. Collaboration leads to new perspectives, and from new perspectives, innovation is born.
Can this really help safeguard against uncertainty?
Peter Salmon, managing director at FISCHE Consulting in New Zealand, says collaborative innovation may soon define the organization of the future. He says as future uncertainty and change increase, organizations will face increasing pressure to adapt, evolve and remain viable, making collaborative innovation a critical success factor.
The effective trade consultant not only provides a springboard toward collaborative thinking but also provides the very tools to help innovative ideas come to fruition on time and on budget. In uncertain times, this seems to be a safeguard none of us can afford to ignore.
Deen Ferrell is a business development executive at Cal Net Technology Group. Reach him at (818) 725-5062 or firstname.lastname@example.org.
Insights Technology is brought to you by Cal Net Technology Group
Intellectual property (IP) is an area regularly overlooked; however, this is a pivotal area of law, especially for entrepreneurs and mid-size businesses.
“We often get calls once a client has already landed in some sort of IP trouble, but many of these issues could have been averted through some simple diligence early on,” says Salil Bali, an Intellectual Property Litigator at Stradling Yocca Carlson & Rauth.
Bali says many people are overwhelmed by the topic and might think it to be in the purview of larger companies.
“Surprisingly, for small businesses, this is an area we have seen affect them the most, and often this impact is significant,” he says.
Smart Business spoke with Bali about the importance of protecting your intellectual property, regardless of the size of your company.
What types of businesses are most at risk when it comes to IP?
Most people, when they think about IP, assume it pertains just to tech-based innovations. However, at some level, every company has IP rights to protect. In today’s world, fewer companies have tangible assets such as equipment, manufacturing facilities or real estate. Instead, the vast majority of companies today have most of their assets based on IP rights. This includes the ‘mom-and-pop’ yoga studio that needs to protect its name, all the way to the biotech company that has inventions to protect. No matter what type or size company you have, there are aspects of IP law that touch your company and those rights need to be protected.
What are some common intellectual property issues entrepreneurs should recognize?
The four main areas of IP affecting business today are trademarks, copyrights, patents and trade secrets. Companies need to be aware of all four areas and how to protect themselves with regard to each.
Trademark law deals with the protection of a word, name, symbol or device used to indicate the source of the goods or services. The purpose is to distinguish from other similar goods or services and prevent public confusion. When determining your brand or company name, you should perform trademark clearance to ensure you don’t infringe on pre-existing marks and that your desired mark is strong and protectable. Discussing such issues with a trademark attorney early on can minimize exposure and create IP assets for a company right out of the gate.
Copyright law deals with the protection and permissible uses of original works of authorship, including photographs, videos and written documents. These issues often arise with hastily launched websites, when companies start loading copyrighted images or text without first getting permission or the appropriate licenses. This could lead to cease-and-desist notices and claims for damages. Similar issues can arise with the use of personal likenesses, especially those of celebrities.
Patent law grants an inventor the right to exclude others from making, using or selling his or her invention. If you have an innovative idea, it’s important to talk with an attorney to determine what is patentable and whether or not your idea infringes on other patents. Doing this early diligence can protect your idea from being abandoned to the public domain or help you sidestep and minimize potential litigation exposure.
As far as trade secrets, companies need to be mindful about how they manage information to make sure secrets stay protected. Early-stage companies often aren’t careful about employment contracts and what information is being divulged to whom. This lack of discipline can adversely affect the company’s ability to claim trade secret protection. If you share sensitive information without outlining the recipient’s duties to hold it in confidence, you can lose the ability to protect your trade secrets.
What are the potential consequences of ignoring intellectual property issues?
The risk of not protecting your mark is that someone else assumes a similar name and thus limits or destroys the value of your brand. Though there may still be recourse, it becomes an uphill battle. An infringement lawsuit by a trademark holder for your use of a confusingly similar mark could cost your company its brand and/or logo, the goodwill associated with them and subject you to potential damages.
The risk with copyright infringement is financial penalties. Unlike patent and trademark laws, there are express damages written into the copyright statute that can be considerable.
The consequence for infringing on a patent is litigation, which may result in an injunction preventing further sales or use of the infringing product. Damages and costs in such cases can quickly add up. Conversely, if you fail to seek patent protection for your innovation, you could permanently lose your ability to protect your invention. When you have a new idea, there are key timelines you should be aware of that can be impacted by public disclosure and sale. You must act quickly to secure your idea or you could lose your rights, even if your invention is otherwise patentable.
With trade secrets, it’s simple: If you don’t protect them, you lose them. As soon as a secret enters the public domain, it’s gone.
How could these problems be avoided?
Often, talking with someone who is knowledgeable can help you understand how to protect yourself from infringement. The costs associated with protecting yourself are proportionately low and can have a big impact on your company’s valuation when you’re looking for funding. The stronger your IP portfolio is, the stronger your company is. However, if these issues are ignored, it can become a costly distraction for you and your company. Taking steps early on to make sure your IP house is in order can pay dividends.
Salil Bali is an Intellectual Property Litigator at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4278 or email@example.com.
Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth
Over the past five years, layoffs have become an undeniable fact of life for millions of Americans, and even today as we slowly recover from the great recession, layoffs continue. For example, in June, there were 4.3 million total separations, according to the Bureau of Labor Statistics.
And as painful as they may be, layoffs are sometimes necessary to allow a business to reorganize or restructure to remain viable. If they are not handled correctly, however, a reduction in force could be devastating to the future of a company. Research done after the economic downturn in the 1990s found layoff survivors had high levels of distrust and lower levels of motivation. In addition, absenteeism increased and productivity decreased.
“The keys to effectively managing a layoff are planning, communication and treating people with dignity,” says Jerry Miller, vice president, marketing, at Executive Career Services. “Your goals should be to preserve morale and the intellectual capital of the organization and to avoid litigation.”
Smart Business spoke with Miller about how employers can mitigate the negative effects of layoffs when they become necessary.
What role should planning play with managing layoffs?
Planning encompasses numerous areas, so you need to first understand the reasons for having the layoff in the first place. What do you hope to accomplish? You need to determine what the company will look like going forward — post-layoff.
Then you’ll need to decide which positions are going to be eliminated and why. Also, how much notice will be given and what type of severance packages and other benefits will be provided, including outplacement assistance? While you don’t want the legal department to drive the layoff, you need to know the relevant laws and understand all the legal ramifications. Some of the more important laws to be concerned with include The Worker Adjustment and Retraining Notification Act (WARN) and laws dealing with age and other forms of discrimination.
Finally, and very importantly, you’ll want to formulate your communication strategy, both during and after the layoff. Once the planning process is complete, move swiftly. Don’t drag things out. Word travels fast in an organization and you want to stay ahead of rumors.
How does a good communication strategy look during a reduction in force?
Once the implementation phase begins, communication should be wide and frequent. A critical component of this phase is the notification meetings, which should be conducted by the immediate supervisor or department head, and if the meeting is expected to be especially sensitive, a representative from human resources. This is not a time to delegate. It is critical that these managers, particularly if they have never delivered a layoff notice, be coached in how to conduct the notification meetings. If you are using an outplacement firm, it will be able to provide this type of coaching.
What do managers and department heads need to keep in mind during a notification meeting?
Information packets should be prepared in advance with all the necessary information. Expect that impacted employees will likely be in a state of shock after learning of the job loss and much of what is said afterward will not be heard or understood. They need information to take with them to read when they are finally able to process the bad news. Notification meetings should be private and take place as early in the workday as possible on a day that is not immediately prior to a weekend, a holiday or a planned vacation.
The impacted employees must be treated with dignity and respect. They will share their experience with survivors, and if they are not treated appropriately, it could have a very negative impact on those remaining. Managers should imagine themselves on the other side of that table and treat their exiting employees as they themselves would like to be treated. Be brief and direct in the notification meeting. Anticipate emotional reactions and be prepared to deal with them. Don’t engage in small talk or allow your anxiety to cause you to say something to ease the immediate situation that can’t be lived up to. Explain that positions, not people, are being eliminated. You want to be sensitive to the employee’s situation but direct and firm, making sure he or she knows the decision is final and non-negotiable. Tell employees how much you appreciate their work and thank them for their contributions. Finally, direct them to the next step in the process.
How should an employer handle the remaining employees?
Oftentimes a company is so focused on the layoff itself that it loses sight of the impact on the survivors, but doing so can cause significant problems later. This is where leaders need to lead. Meet with the remaining employees to discuss the layoffs in an honest and forthright manner. Share the latest company news with them and commit to keeping them informed. Acknowledge their emotions and give them time to deal with them, but not too much time — don’t allow them to engage in endless carping or complaining. Work must go on. Managers should lead by example. Be positive but also realistic. Discuss the workload and how it will be distributed, perhaps even asking the team what they would recommend. Keep lines of communication open and check in regularly with individuals. Above all, be available to remaining employees. Don’t spend time in your office with the door closed.
Remember, how you treat people matters, to those impacted as well as to those who remain. If you plan effectively, communicate openly and often, and treat people with dignity and respect, a layoff can be done with minimal disruption and little or no negative impact on the organization going forward.
Jerry Miller is a vice president, marketing, at Executive Career Services. Reach him at (949) 251-5600 or firstname.lastname@example.org.
Insights Human Capital Solutions is brought to you by Executive Career Services
The recent uptick in sales is like a breath of fresh air for beleaguered business owners — unless they don’t have enough cash to meet rising expenses while they wait out a typical invoicing cycle.
A conventional line of credit may seem like the prefect solution, but since an owner’s personal and business finances are intertwined, those who fell behind on mortgage payments or bills during the recession may not qualify.
“Owners need short-term funding to carry receivables and hire staff now that the economy is improving,” says Paul Herman, small business lending manager at California Bank & Trust. “Their best bet is a short-term line of credit (SLC) since bankers primarily focus on a company’s cash flow cycle during the underwriting process.”
Smart Business spoke with Herman about the opportunities to grow your business by tapping a short-term line of credit.
What is an SLC and when are they advantageous?
Essentially, an SLC is bridge financing. Savvy executives tap the line to pay expenses between the time revenue is generated and receivables are collected. For example, they may need cash to purchase supplies or inventory to handle seasonal spikes or new contracts before the goods are finished, delivered and paid for. Contractors frequently use an SLC to pay bonding and insurance premiums so they can bid on new projects, and veteran attorneys and doctors often use the funds for operating expenses when they launch a new practice.
You can draw on the line as needed and repay the funds at will as long as you meet the terms of your agreement and attend periodic reviews with your bank.
How does an SLC differ from other loans?
It’s assumed that owners will pay down a short-term line as cash is received, so bankers are primarily concerned with how quickly a company converts receivables into cash when they consider an SLC request.
Long-term debt is typically used to purchase equipment, buildings or other fixed assets, so bankers must consider depreciation as well as a company’s profitability to assess its ability to service the loan. In fact, stable but slow growth is often a key indicator of a company’s ability to service debt over the long term, while an SLC is the perfect solution for cash flow shortages resulting from a growth spurt.
Are there risks associated with an SLC?
No loan is risk free. However, prudent owners can avoid default or cash shortfalls by following these best practices:
- Accurate forecasting — Some owners are so afraid of taking on debt that they run out of cash because they don’t ask for a large enough line. This won’t happen if you accurately forecast your company’s growth and cash conversion cycle. In fact, it’s better to ask for the maximum limit since you have the option of drawing the funds as needed.
- Be disciplined — Only use the funds to close short-term cash flow gaps. Otherwise, you may run out of money and have to liquidate assets to pay bills or meet payroll.
- Be responsible — Bad debt, delinquent customers or risky business practices can leave well-intentioned owners holding the bag. Are you ready, willing and able to accept responsibility for managing your company’s credit, cash flow and an unmonitored credit line?
How can a business maintain the quality of its assets and increase borrowing capacity?
Owners often emphasize sales, but what good is top-line growth if the margins are bad or you can’t collect your hard-earned money? Even tenured customers may encounter a cash crunch as the economy rebounds, especially if they wait too long to secure short-term financing. Be disciplined about verifying a customer’s credit worthiness, keep an eye on receivables and don’t forget to make timely collections calls.
Finally, don’t ignore your balance sheet because a business can’t survive with high debt and little equity. Grow assets as well as revenue, and make sure your balance sheet reflects the norms for your industry.
What do bankers consider when evaluating a request for an SLC?
In addition to reviewing traditional underwriting criteria like business and personal credit scores, bankers want to know whether you have the means and ability to manage and repay a line of credit.
They’ll look at your industry experience, the viability and diversification of your customer base, along with the ebb and flow of your company’s cash flow during previous cycles. Will your customers pay on time? Can your business survive if one customer defaults? Do you have enough personal assets or sources of secondary support to pay your bills while you wait for an invoicing cycle to conclude?
Bankers may be able to use government guarantees to overcome minor risks, and you could qualify for a conventional line of credit down the road if you use an SLC as a stepping stone to build your credit score and your company.
Paul Herman is the small business lending manager at California Bank & Trust. Reach him at Paul.Herman@calbt.com.
Insights Banking & Finance is brought to you by California Bank & Trust
When David Rippy and his business partners Scott Winsett and Bill Jackson founded Bonfire Studios in 2008, they and their 30 employees focused on the emerging mobile and social gaming markets. Their initial games were created for the iPhone/iPad and Windows platforms, and the success of those games put the company on the map and got the attention of Zynga, the world’s largest social media game maker.
“If you’ve played FarmVille or CastleVille, for example, on Facebook, those are Zynga games,” says Rippy, Zynga Allen’s general manager. “Zynga also makes the popular Words with Friends and Draw Something games for phone. We immediately felt a connection with Zynga, and it acquired Bonfire in late 2010.
The company is now known as Zynga Allen, and since the acquisition, the the Allen, Texas, studio has grown to about 70 full-time employees and Zynga has grown to well over 3,000 employees spread all over the world.
Smart Business spoke with Rippey about the growth of the company and how the Allen location has helped it succeed.
How has Zynga positioned itself in the worldwide gaming market?
Zynga Inc. is the world’s leading provider of social game services, with more than 305 million monthly active users playing games that include FarmVille, Words With Friends, Matching With Friends, Scramble With Friends, The Ville, Bubble Safari, Ruby Blast, Draw Something, Zynga Slingo, CastleVille, CityVille, Hidden Chronicles, Zynga Poker, Zynga Bingo, Zynga Slots, Empires & Allies, The Pioneer Trail and Mafia Wars.
Zynga’s games are available on a number of global platforms, including Facebook, Zynga.com, Google+, Tencent, Apple iOS and Google Android. In addition, through Zynga.org, Zynga players have raised more than $10 million for world social causes. Zynga is headquartered in San Francisco and has offices throughout the U.S. and abroad in locations including Tokyo, Frankfurt, Dublin, Toronto and Bangalore.
How does Zynga’s business model operate?
Zynga’s business model is a big change from the traditional retail model that the industry has relied on for more than 30 years. In the traditional model, consumers had to drive to a store, spend up to $60 on a boxed game, install it and either play it at their desk or in front of the TV. Zynga’s games, on the other hand, are free to play and accessible whenever and however you wish to play them – on your PC, your phone or your tablet.
Most players enjoy Zynga games for free and the games have become an important part of their everyday lives, allowing them to connect with friends and family members all over the world. Zynga makes its money from players who pay for extra features or special items in its games.
Which Zynga operations are based in Allen?
Our Allen location is focused on creating new games for Zynga. CastleVille, our first game as Zynga, was launched in November of last year. It was a huge success and continues to be one of the top games on Facebook today.
As game developers, we have a team of really diverse talents. If you break down the studio, we’re made up of about equal parts software engineers, artists, and game designers. The designers come up with the ideas for the game, write the fiction and create the rules. The artists create the game worlds, the characters and the animations that bring it all to life. The engineers are the geniuses that make it all work on your phone or computer.
In addition to those disciplines, we have analysts who study how people play the games so that we can invest more time in what people enjoy the most. Finally, we have several producers who keep track of project scheduling and costs and basically keep the trains running on time.
How did the company settle on the Allen location, and what role did the Allen Econonic Development Corporation play in that decision?
Bonfire Studios was originally located just north of downtown Dallas. We began looking for new space at about the same time we were being acquired in 2010. We knew we wanted to be north of Interstate 635 because most of our employees are married with kids and live in the Allen, McKinney, Plano and Frisco parts of town.
We did an extensive search all over the Metroplex and considered many factors, including distance from our employees’ homes, quality of the schools and amenities that are attractive to our work force. In the end, Allen was really the ideal fit for Zynga, and our employees love working here.
We found a space that works perfectly for us, and it is located right by Watters Creek, one of the best mixed-use retail, restaurant and entertainment complexes in the Dallas area. Our out-of-town visitors also like our location because of its easy access to the Dallas/Fort Worth Airport via State Highway 121.
The Allen Economic Development Corporation was instrumental in our decision to move to Allen. From Day One, they made us feel like Allen was the right home for Zynga. Their people were always available to answer questions, introduce us to local businesses and were a great partner in the transition. They continue to be a great partner today.
What would you say to other companies consider locating all or part of their operations in Allen?
I would absolutely recommend Allen, Texas, as a location for other businesses to consider. It offers just about everything a business could need, from high-speed Internet infrastructure to hotels, restaurants, great schools and easy access to the rest of the city.
David Rippy is general manager of Zynga Dallas. Reach him at email@example.com.. Reach the Allen Economic Development Corporation at www.allentx.com or call (972) 727-0250.
Insights Economic Development is brought to you by Allen Economic Development Corporation.
In business, as in life, there’s a benefit to having guidance that’s tried and true. Most successful business owners can cite mentors who have directed their paths along the way. As companies grow, those informal relationships are usually replaced by formal boards of directors. A board of directors is a very useful method for allowing significant shareholders to feel they have a say in the strategic planning for the company.
It’s my opinion that all companies – regardless of size – need to have a board. In this two-part series, I will explore the benefits that a small company can gain from having a corporate board and how a small business owner can establish a board.
First, let’s examine the benefits:
1) A good board of directors will do what employees often are afraid to do: challenge the leader. Most employees don’t feel empowered to speak up when they think a strategy is misguided or out of sync with customers or a target market. Board directors should be willing to openly question ideas and the assumptions that guide strategic planning to help the president or CEO suss out their soundness.
2) A board can provide accountability – particularly in family-run businesses where it can be hard for an unbiased assessment of the business without familial issues clouding judgment.
3) Boards can help with recruiting, evaluating and selecting top job candidates, as well as setting compensation criteria that are fair and transparent. Since directors are removed from the daily running of the business, they can help with succession planning.
4) For companies considering a public offering, setting up a board early can help acclimate the owners to the enhance scrutiny that they will face once the company is publicly traded.
5) A board of directors is legally required for registered corporations.
Next column: How to create your own board.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.