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Our prime mission is helping you optimize your business through management, operational and finance process improvements, which may include organizational changes, business integration, and potential restructurings. To this end, we publish a monthly newsletter on a specific topic to help improve your business processes, communications and structure.

Business Planning Company Valuation Sales and Marketing Financial Management Management Practices

 

Business Planning

Markets in Time

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We work with established technology companies, either through Board service, or alongside management teams on growth plans. A consistent theme that runs through this work is that these companies actively plan for and anticipate that their markets will evolve. This planning can take many forms, including cost reduction roadmaps, assumptions on price erosion, and feature set evolution. Another theme is that these companies typically understand the value of the business infrastructure, of ongoing relationships with customers and of a functioning supply chain.

We also work with, and occasionally invest in, technology start-ups. While some of these companies are disciplined in considering the effect of market evolution on their business, many get so busy working on their programs that they lose track of the industry they propose to enter. Cost points erode, technology entrance points shift. Many start-ups simply don't manage to profitably engage because they dramatically underestimate how much progress a given industry can make while the start-up is in early development.

Business Models and Financials

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We've been discussing business plans over the last several newsletters. Our final newsletter on this topic focuses on how different business models affect the valuations that companies can reasonably achieve.

This newsletter looks at the linkage between company valuations and business models. In working with companies that are struggling to create meaningful value, this process often leads to tackling very tough and difficult decisions relative to strategic issues, such as product development and placement, channel distribution, internal versus external development, etc.

Markets and Products

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This month we continue our series on business plans, focusing on understanding the market and different aspects of the product, or service, including differentiation and barriers to market entry.

Many business propositions fail to excite investors because of communication gaps concerning markets and products. These failures are sometimes caused by simple deficiencies, such as not using standard business definitions and not comprehensively outlining differentiation arguments or barriers to entry. A much more serious issue is a lack of detailed market understanding. This newsletter will provide definitions of a few market metrics, and then provide our take on what defines good – and not so good – marketing and product strategies.

Evaluating The Business Plan

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At InSite, we see many businesses. This is great fun; it allows us to think about many markets, business models, products and teams. Obviously, our value is providing feedback to these companies about their prospects in the business world, helping them fix their weaknesses, and, if all goes well, getting them quickly up and running. By and large, we look for business plans that are reasonably strong on all points, and reject plans that have a significant weakness on any major portion of the business plan.

We are finding that many companies have similar weaknesses in their business plans, and consequently much of our feedback is repeated. We have come to see this as a bit of an opportunity: we will be providing a convenient tool on our website to allow companies to get faster feedback on many basic elements of their business plan, allowing them to address some of the initial problems before they engage with any outside firms. In addition, by pre-screening, this tool will effectively let us see more companies that are further along in their business plan development.

This series of newsletters will lay the groundwork for the kick-off of this tool early next year by discussing the different fundamental elements of a business plan, including the following: the team, the value proposition, the market, product/service differentiation, barriers to market entry, competition, business model and financials. In this newsletter we cover the first two topics.

Forecasting Revenue

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One of the key pieces to developing a business plan is attempting to develop a revenue envelope for the future. The easy and standard joke about revenue forecasts is the typical "hockey stick" forecast. Such a forecast is neither believable nor helpful in developing a new business nor in running an existing business. We discuss revenue forecasting for new businesses, where there are currently no existing sales, and for established companies, where interlocking functional coordination can lead to improvements in future revenues and profitability.

The Human Side of Core Competence

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In Core Competencies: Part II we continue our discussion of Company Core Competencies. When a company approaches the issue of identifying its core compentencies, you will find that many players react strongly to the process. In this newsletter, we discuss these reactions and provide suggestions how you might handle them.

Building the Core of the Company

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The February newsletter discusses the very real problems of figuring out what the core competencies are within a company, particularly a technology company, and the relevance of these competencies to the corporate strategy. We also focus the discussion on the cost of maintaining these competencies, so that in planning for core competencies, the economics of the overall business model are considered in parallel.

Company Valuation

Read a Company Fast

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During your career, you will need to assess the prospects of companies in which you might invest your time and resources. Most of the time you will need to make an initial assessment quickly and with limited information. In this newsletter we provide a framework aimed at helping people quickly size up a company, whether they are a candidate interviewing for a job or a business development professional performing early due diligence.

Venturing Into Reality

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This month we shift our focus to the process of funding and valuation of a company in search of Venture Capital. The prospects of giving up some degree of ownership and possibly some control of their company can be emotionally charged for principals in startup companies. This newsletter discusses how a realistic approach to strategic planning and execution can lead to tradeoffs that benefit both the company and the Venture Capital funders.

Dazed And Confused

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We saw in the September Newsletter that analysts' recommendations were, in general, poor indicators of companies' performances. In this newsletter, we discuss some of the biases that contribute to this poor performance.

It can be difficult to obtain reliable information for foreign companies. Consequently, accurately gauging the behavior of an industry where a significant portion of the manufacturing is in China can be very difficult. Also, performance in the green energy sector is heavily biased by reaction to changing oil prices. InSite Partners October Newsletter discusses how these biases affect the accuracy of analyst reommendations.

Solar Blindness

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Buried within every strategic decision made in the business world is an implicit forecast of the future. A decision to buy or sell a stock, to build a factory, to embark upon a new direction of business, or to acquire a new company critically hinges upon a reasonable understanding of the risks that the future holds.

In this newsletter, we explore the question: Just how effective are analysts at evaluating the future performance of company valuations? We consider the effectiveness of roughly 40 Sell-Side Wall Street analysts who are tasked with understanding the solar sector. We examine their biases, their accuracy and the performance of portfolios constructed using their recommendations.

Finally, we introduce the concept of anticipating the future performance of an industry sector through an analytical approach where we identify and develop leading indicators tailored to that industry. We illustrate the benefit of this approach by comparing the performance of a portfolio based on the signals from just a single leading indicator with the performance of a portfolio based on the buy and sell recommendations of solar sector analysts.

Looking At The Sun With Open Eyes

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In this newsletter we look at how Investors value the Solar and Telecom Industries, focusing on valuation metrics frequently cited by analysts. What we discovered was that there are large differences in financial metrics that drive Investor valuation in these two industries. Given these disparities, we tested a larger set of ideas that are often held as truisms within the technology community for these sectors.

In addition to testing the "conventional wisdom" in these sectors, we mapped the valuations of both of these sectors using our proprietary modeling methods. By looking at this model of the valuations of the Solar Industry over an extended time-period, we determine how long a company remains over- or under-valued before it returns to the level predicted by its performance and peer group.

Solar Flares

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In response to a number of requests from our readers, we elected to apply our analytical process to the Solar Cell Industry.  Alongside peoples' timely interest in this industry, a number of important concerns come up:

  1. The solar business is heavily subsidized -- without subsidies could it collapse
  2. The government subsidies will end due to financial spending constraints
  3. The solar industry competes with many different types of alternative energies
  4. The solar industry does not have sufficient cash flow to repay its debt

This newsletter works to examine these issues by focusing upon the financial performance of this industry by comparing it to the telecom industry, in both times of strong growth and rapid declines. This review exposes surprising, and fundamental, differences, leading to strong conclusions concerning the forward trajectory of the solar industry.

Industry Analytics

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In the June newsletter we introduce an analytical approach for evaluating corporate and sector performance. We apply the first level of this approach to an analysis of the optical telecom component sector over the period from 1997 to 2008. Through the different market conditions over these years, we discuss appropriate strategies along with metrics that measure executive performance.

Sales and Marketing

Major Accounts Selling: An Introduction

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During my 25-year career managing sales for technology companies, I've kept a watchful eye out for a book, which would help me build my sales organization into a true differentiator for my company.

I've found books written by academics based on warmed-over consumer behavior theory and books written by Masters of the Obvious organizing platitudes into a 'winning system'. For anyone focused on building an effective team while under the constant pressure of hitting quarterly numbers, these books just weren't much help. -- Scott Parker

With these statements, Scott launches his book distilling his approach and the management processes he used to create successful Major Accounts teams. He has successfully applied his experience with Executive Sales Management to running teams focused on Fortune 500 companies, including HP, Cisco, IBM, Alcatel Lucent and many others. InSite is pleased to be able to present Scott's book in the form of a series of InSite newsletters. This month's newsletter is his Introduction.

Major Accounts Selling: The Role of Sales

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If you ask around a company regarding the Sales team's responsibilities it's likely that you will get different answers. 

This kind of confusion creates opportunities for team members to be passionate and wrong. Chances are your customers see this confusion as well.  

The first task in building an effective organization, and the topic of this chapter is to ensure that everyone with customer facing responsibilities understands their deliverables and knows where to go to get things done.

Major Accounts Selling: Driving the Quarter

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As a Sales Executive, a lot rides on calling the current quarter right, since revenue growth is the engine that drives the company. In addition, your commitments are represented to outside stakeholders such as your Board and the investment community.

The purpose of this newsletter is to provide a structured process for forecasting and driving the production of revenue. Specifically, for any given quarter, you will be able to develop a clear view of revenue status and the actions needed to drive the organization to meet or exceed the target.

Major Accounts Selling: Revenue Forecasting

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The ability to forecast revenue over time isn't quite as critical to the Sales Executive's career as driving the current quarter, but it's awfully close. If the Executive team doesn't feel you have a handle on customer demand and market conditions, you won't be long for the Sales Management lifestyle.

This newsletter focuses on forecasting revenue beyond the current quarter, more specifically, forecasting for the time frame that aligns with the planning horizon for your company. A reasonably accurate Revenue Forecast is crucial to a company's survival. Many companies have been ruined because they put in substantial capacity as the market turned down, or they didn't increase capacity and missed a market upturn.

Major Accounts Selling: Closing New Business

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Winning new customer programs is the lifeblood of any company. Driving processes that lead the team to close new business is critical for ongoing revenue growth, and is, therefore, another skill that must be mastered by any Sales Executive.

In this newsletter we present how to manage and drive your team's effort to close new programs, to compensate for customer programs that are coming to end of life, and to provide for future revenue growth.

Major Accounts Selling: Channel Strategies

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Your channel strategy defines your "go to market" strategy, so it is crucial to get it right.

This newsletter begins with an overview of the channel options for high technology products, then discusses how to think through these options on your way to building the best strategy for your Major Accounts. The newsletter closes by outlining how to select highly productive channel partners and a process for managing them effectively.

Major Accounts Selling: Account Planning

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Customers relationships are a company's most important asset and this month's newletter presents a process for Account Planning that will get your team aligned around strategies that will maximize revenues and strengthen relationships.

Account Planning has two primary objectives: First, it provides an opportunity for salespeople and their managers to develop a plan and drive it up the management chain for alignment and resourcing. Second, it defines success metrics for specific customers, ensures that resourcing is adequate and monitors progress to targets. These objectives and mechanisms for achieving them are discussed in this newsletter.

Major Accounts Selling: Incentive Plans

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A financial incentive plan for your Sales Team can be a powerful means for motivating them to build and maintain an exceptional customer base. The trick is developing incentives that actually work. If you’ve been in the world of work for much time at all, you’ve probably seen many plans that operated more like "dis-incentive plans."

This newsletter will focus on Incentive Plans in the context of a Major Accounts selling program. Our goal here is to provide a way for thinking through which elements to include in your plan and how to administer the plan as it rolls out.

Major Accounts Selling: Winning Big Deals

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Winning Big Deals, outlines processes for managing the few, high value opportunities that drive your business. Those opportunities include both recurring volume negotiations for your current business -- usually annual or semi-annual -- and high value, new business opportunities.

For volume negotiations, the focus is on negotiation preparation and how to scale that process across your team. To improve your team's ability to close new business opportunities, an outline of Miller Heiman's Strategic Selling will be presented, as an example of a process that helps build winning strategies. Practical advice is also included on how best to roll this kind of process out in your organization.

Major Accounts Selling: Walking the Tightrope

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"What you don't measure, you can't understand" is certainly true in business today.

As a Sales Executive you walk a tightrope. Fall to one side and you spend all your time managing the numbers and neglecting the real priority, your customers. But fall to the other side and you become disconnected with your team, losing your grip on the real mechanisms of the company.

The only way to strike this balance is to maintain a coordinated set of review processes that are structured to appropriately balance the team's focus. This allows you to provide leadership on strategy and ensure the team is on track to meet its commitments.

This newsletter leads with the topic of effective goal development process, the core of any effective sales management program.

The discussion then moves to the limited, but effective use of staff meetings and reviews to "track and drive" progress to your goals. Reviews can be a very efficient use of your time provided there is good follow up. This requires you allocate a skilled administrative resource to keep the calendar and all of the assigned action items straight.

With a framework in place to manage the current quarter business, we'll close the newsletter discussing effective implementation of more strategic planning meetings such as Staff Off-Site Meetings, and Corporate Sales Meetings.

Financial Management

Rational Numbers

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Many aspects of a business are qualitative. Topics like the markets that a business serves or the differentiation offered by the products are both examples of topics that are at least partially subjective.

Numbers can provide a very different perspective. Our next series of newsletters will discuss different aspects of financial statements, and how to rapidly use numbers to reach some fairly significant conclusions about the operations of companies.

This newsletter will introduce the areas that will be covered in greater detail in the coming months. Our objective for these newsletters is to help non-financial people understand financial statements better, and faster. We also hope that our work will also help folks from the finance or investment world better understand the viewpoints of people actually working to run enterprises. We’ll define some of the jargon that is thrown around, and give real examples from public companies.

The Income Statement

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In this newsletter we walk through different aspects of the Income Statement. Our objective is to help non-financial people to better and more quickly understand the Income Statement. We hope that our work will help folks from the finance or investment world better understand the viewpoints of people actually running enterprises. We’ll define some of the jargon that is thrown around and give examples from actual Income Statements released by public companies.

The Balance Sheet

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In the previous newsletter we discussed the Income Statement. This month we move on to the Balance Sheet. Although the Balance Sheet is a bit more complicated than the Income Statement, in general it provides a better picture of the health of the company. We discuss the various sections and subsections of the Balance Sheet and some of the relationships between these sections. We will also introduce you to a few ratios of values found on the Balance Sheet that are commonly used to help evaluate a business.

Cash Flow Statement

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This newsletter completes our trilogy on financial statements. Our last two newsletters reviewed the Income Statement and the Balance Sheet. This one discusses the most obscure of the three: the Cash Flow Statement. The Cash Flow Statement is typically looked at briefly, if at all, by most operational managers and can be the most confounding statement to produce and audit by financial people. We will focus this discussion on using the Cash Flow Statement to supplement the operational insights derived from the Income Statement and the Balance Sheet.

Management Practices

The Elephant In The Room

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For us at InSite, business is often about problems: how to find them, understand them, and either fix or avoid them. Many people bravely talk about dealing with their company's obvious problems. Sure, it makes great sense to deal with them; however, we’ve also worked quite hard to focus on helping organizations prevent problems before they come to exist in the first place. This newsletter describes problem areas that can lead, with little notice, to dysfunctional, unprofitable behavior. Perhaps by understanding some of their characteristics, you can avoid creating your own "elephant in the room".

Variable Compensation

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Compensation serves several purposes. Well designed, variable compensation programs nurture behaviors that advance the company's strategy, improve its competitiveness, and reinforce the desired corporate culture. In the May newsletter we discuss how variable compensation can be used to change and drive employee behaviors.

Keeping Your Eye On the Ball

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It is trivial to say that strategy should be supported by core competencies. In practice, however, the real art of management is the ongoing selection, maintenance and growth of core competencies to support company strategy. Strategy, by definition, must evolve to keep pace with a changing marketplace. In the rapidly changing business environment of technology companies, this management challenge can be far more difficult.  Part III of our Core Competencies series discusses these problems as experienced by several companies at various places in the business cycle.

Management, the Board and Difficult Times

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In the January newsletter we focus on dealing productively with a board through hard and uncertain times.

Evaluating Your Business Structure

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In the December newsletter we discussed the need to assess the structure of your business and its effect on business performance.