Friday, May 7, 2010

Where Have You Been?

2010 is turning into an interesting year.

At the end of March, I joined up-and-coming software venture BP Logix in Vista, California.  BP Logix is the first company to fuse lean BPM, project management, and business intelligence. The company's flagship product, Process Director, liberates organizations from structured flowcharts and inflexible workflows, by enhancing traditional, workflow-based business process management (BPM) with advanced capabilities including timelines, Gantt charts, dependencies, and predictive analysis.

OK, got that memorized yet? Good.

So, the bottom line is that I am still blogging, but now that somebody's paying me to do it, I'm doing a lot less writing here.  As much as I've loved blogging here, the truth is that between work, home, and the novel I've been wanting to write since I was 7 years old, there's not a ton of free time these days for People Centered Leadership.

But I'll be back!  In the meantime, I hope you follow my new Twitter stream, and will consider reading me on the BP Logix blog (the layout is going to improve pretty soon, I promise.)

Thank you so much for taking the time to read People Centered Leadership, and an extra thank you to all of you who commented, or who told me how much you have enjoyed the blog.  That feedback has meant a lot to me.

Until next time.

Wednesday, December 30, 2009

How Risk Management Sucked the Joy Out of IT

It was 1986, and I was a young programmer at a little company nobody would ever hear of, writing firmware for an automated employee time clock system. Among other things, I was responsible for the code that rolled over the date at midnight:  so the 31st became the 1st, December became January, and eventually, in a single instruction that would only ever be executed once, 1999 became 2000.

As I wrote that bit of code, I realized its significance:  as I recall, I tagged that line with the comment: "Holy crap, I'm 37!"  I was young, and 37 seemed a long way off.  And now?  Well, a child born the day I typed that comment would be about as old today as I was then.

Plenty has changed in all those years.  For IT, the biggest change has been the rapidly growing emphasis on risk management, to the point that today it is indisputably the top priority for IT organizations.

From the earliest days of data processing, through the 80s, the key role of the IT leader was automation.  Primarily, our job was to take existing processes and computerize them, thereby enabling greater volumes and lower error rates. In the 90s, thanks to the Internet and the dot-com boom spawned by its emergence, the focus began to shift at last to the creation of new business models enabled by technology and the Web.  If I had my way, that's where things would have remained.

But, as the new century approached, a threat emerged: Y2K. The arguments continue as to whether or not the billions of dollars and hundreds of thousands of man-hours spent on remediating that problem were actually necessary;  I tend to think they were.  But there's no question that Y2K introduced risk management as a key function of corporate IT organizations.

After the Y2K scare passed, it's conceivable that IT organizations could have returned to the business of automating processes and creating new business models.  Sadly, though, that was not to be.  Before we even had time to utter a short prayer of thanks that nuclear power plants, hospital life-support systems, and cable TV had survived the four-digit date change,  the tech bubble collapsed, the September 11th attacks took place, and, perhaps most impactful in terms of corporate IT, Enron collapsed.

Each of these circumstances had a distinct impact on IT, and each contributed to the ultimate takeover of that area by risk-averse, bean-counting, wannabe laywer control freaks... er, I mean, "risk management professionals".

  1. Tech Bubble Collapse.

    The failure in early 2000 of the dot-com world seemed to have a simple moral: don't believe the hype. The IT-enabled "new business models" were speculative nonsense that couldn't stand up to scrutiny. The smart money was now on brick and mortar, and as for the web, well, it was going to be overrun by spam.

    Never mind that, in the long run, technology enabled business models would prove their worth.  At the close of 2009, is worth nearly eight times what it was at the end of 2000. And it is the rare brick-and-mortar business indeed that does not have a significant e-commerce or other web-enabled revenue source today.  Still, the turn-of-the-century meltdown of the NASDAQ and the exposure of so many web-based businesses as little more than dreams left a lasting impression on American corporate leadership.

  2. September 11th.

    We'd had tornadoes in the Midwest, hurricanes in the South, and even the occasional earthquake in Silicon Valley. But nothing illustrated the fragility of our infrastructure like the terrorist attacks of September 11, 2001.

    As the towers collapsed, the retaining wall holding back the waters of the Hudson River was breached.  As a result, the basement of the AT&T building across Vesey Street from the towers began to flood; by evening, there was no phone service in lower Manhattan.  Worse, data services were also impacted, including those relied upon by the great trading houses of Wall Street. Markets, which had closed early on September 11th, were in danger of not reopening for a long time.

    Through a herculean effort, which included running data and power cables along surface street gutters and sidewalks, markets did reopen the following Monday. American business had learned in the hardest possible way about the value of disaster recovery planning, alternate sites, and backups.

  3. Enron and the Creation of the Regulatory State.

    In America, whenever a bunch of crooks (or a single, really big crook) makes off with people's money, the call goes forth from Washington: more regulation! Never mind that existing regulations, if enforced properly, would have prevented the crime in the first place.

    And so it was with Enron, upon whose collapse was built perhaps the most burdensome regulatory framework since the Great Depression, the Sarbanes–Oxley Act, affectionately known as SOX. SOX changed everything, by making corporate executives personally liable for financial and other material statements made by the company. It didn't take long for CEOs to recognize that the greatest threats to the accuracy of their statements (and therefore to their own freedom and fortune) lie within the systems maintained by IT; thus, in short order, it became the primary job of the IT organization to keep the CEO out of jail.

Don't get me wrong: risk management is vital, as these examples all illustrate.  What's more, it's got to be a part of every segment of the business: finance, operations, sales, and yes, IT.  But when I look back, it seems to me that in the time that has passed since I wrote that single instruction, to the moment at which it was executed, along through another decade to today,  much of the fun has gone out of the IT role in large companies. And why?  Because that position no longer demands an emphasis on innovative and clever technical solutions building competitive advantage, but focuses instead on controls, audits, and reviews meant to ensure that the company's behind -- and that of its CEO -- remain safely covered at all times.

And so, I have moved on from big corporate IT to work with small companies.  In these ventures, technology is still all about competitive advantage and user experience.  It's about wowing customers and creating an "Aha!" moment for stakeholders.  It's about building teams and building value.  And it's about the best place I can think of to be if you are animated more by leadership, technology, and innovation than regulation, compliance, and audit.

Wednesday, December 2, 2009

3 Ways Your Software Business is Already Attractive to Potential Strategic Partners

Entrepreneurs tend to be very driven individuals.  Their twin mantras are "capital" and "growth", and they pursue both with a white-hot intensity I personally find invigorating.  They focus obsessively on improving their product, getting it to market, and selling it like crazy, and of course, there have been fortunes made in just this manner.  Then again, most entrepreneurs I know have spent years running around that particular hamster wheel, and have yet to reap the rewards.

Fortunately, then, it turns out that there are other paths to growth and capital beyond the build-release-sell cycle.  Strategic partnerships can turn your existing product into a quick or recurring source of revenue (or both). Even better, there are probably a number of ways in which your venture is already attractive to potential strategic partners.  Here are three of them:
  1. Market segmentation or integration
    Large companies might be capable of focusing their resources on any area they like, but even the largest can't focus on all of them at the same time.  There are always going to be opportunities to fit your product into the cracks in somebody else's portfolio.
    Let's say your product solves a big problem in the HR space. You may look to partner with, for example, a large business services company, one that offers a broad range of solutions across a number of industries. If your product can address a pain point for their customers, and the larger company doesn't already have a solution in that space, a partnership opportunity exists.

    It works in the other direction, too. Say you have built a platform for something like identity management, an application that could work for any kind of business.  Often I find that, with a little tweaking, you can take a broad solution like that and customize it for a particular market, such as financial services, or a particular function, such as HR. The trick is to find a partner selling into a particular vertical market, or into a particular corporate operational area — one that will pay you to configure a version of your product to meet the specific requirements of that space.

  2. Distribution
    Yes, sometimes the classics are still the best. You have customers, thus demonstrating you have a product that fills a need.  There are always companies that want to get a piece of that action; the trick for you is to find partners who specialize in selling into hard-to-reach markets.  My favorites are the government sector, which has its own rules and can be very difficult - and expensive - for a new entrant, and international markets. China, in particular, is a very tricky market, but even the European Union is awfully far away and downright foreign (just ask Oracle) if you're used to selling in the US. Generally, sector or geographic distribution arrangements can be negotiated to provide up-front capital, and cost you very little if you were not planning on entering these markets directly yourself any time soon.

  3. Private labeling
    Web developers have become incredibly sophisticated at building sites with eye-catching designs and interesting and engaging content.  Luckily for you, though, they often still struggle with taking the next step: converting their visitor flow into cash flow.  If your existing product offers a feature that can be leveraged by the site for that purpose, a partnership opportunity exists.

    Let's say, for example, that your software calculates an optimal portfolio allocation based on an investor's goals and external factors such as prevailing interest rates and technical market conditions. You might partner with a site devoted to financial news and discussion forums, which would offer your service to its users (either for a fee, or as a way to drive advertising revenue) using its own branding. Your partnership could involve revenue sharing, or perhaps just a recurring monthly or annual license fee - and all you had to do was to configure your software to enable easy rebranding (something you should consider doing anyway, if you haven't already).

The great thing about partnerships it that there are as many flavors as there are companies.   In my own work helping emerging growth firms find and land strategic partners, I've seen an amazing array of deals.  Some of these arrangements provide up-front capital,  some supply an ongoing source of recurring revenue, and most are non-dilutive or only mildly dilutive.  But the one thing they have in common is that they provide a stepping stone for the venture on its road to growth and profitability.  Even better, as the partners learn more about one another and become more comfortable working together, these deals can often lead to a liquidity event benefiting founders and investors alike.

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