Monthly Archives: January 2010

Some Initial thoughts on the iPad

Once again Apple will export California chic to the rest of the world.  Certainly Apple is likely to carve out a “new” niche with style and an interface that just works with its new  iPad.

The success of netbook has proven that most users don’t need much more that email, web and multimedia display.  The iPad has this plus much more in a device that simply oozes with style, both in looks and the interface.

Most importantly though, the large majority of non-corporate Mac users that I talk to purchase Apple products because they like what they say about them.  This device seems to say connected, edgy, fashionable.  Certainly I wouldn’t want to listen to a “social media expert” who wasn’t toting one around.   But down to the guts of it.

The Pro’s

  • Bags of style
  • The included functionality will make it useful from the time you switch it on.
  • The pricing is right, but lets not forget it won’t look like this in Australia.
  • The Interface has already been validated my millions of iPhone users, so using it will be instinctive for most.
  • The connectivity to their iStore was a given, but it sets it apart from the other major intermediate product, the netbook.
  • It is simply a better device than Amazon’s Kindle as it offers more at a similar price point.
  • The level of grunt and battery life seems sufficient for most users and I wouldn’t expect to hear many complaints.
  • Your investment in iPhone apps isn’t wasted as all your existing apps can be uploaded for free.
  • All iPhone apps, in theory, will work on the iPad so that they can leverage their 150,000 or so apps already written.

The Cons

  • There’s some stuff missing such as a Camera and Video.  Expect version two to fix this, plus the lack of “vibrate when in silent mode”.
  • It doesn’t multitask (do more than one thing at the same time) which has been a source of frustration with users of the iPhone.
  • Locking us into their store may seem a revenue generating master stroke for Apple,  but not many like the locked down approach.  Especially when it means things such as no Skype.
  • There is no USB or firewire ports which is also sure to disappoint  many who want to extend the device with non-Apple approved gadgets.

But what about Australia?
At least 60 days for launch in the US means at least 120 days away for Australia.  So I wouldn’t expect to see the 3G version before June 30th, and I’m sure it will be bundled with data plans that are set to gouge us.    Think AUD$899 for entry level with 3G and $50 pm for data and I’m sure you will still be disappointed.

However I would expect to see the first models appearing within the first weeks of April, picked up by tech savy frequent flyers to the US.

The verdict?
At emotional level I just want one.  But at an intellectual I know that version 2 and 3 will be much sweeter, and by then true competitors will be in the market with new or revised products  including Dell, HP, Microsoft and HTC & Google.  Apple has changed the ball game, but it not might be all to their benefit

Time & Materials V’s Fixed Price billing

Just before Xmas I had one of my coffee/mentoring sessions with a vibrant young Victorian entrepreneur and an interesting question came up around how she should invoice her services. Although not an expert in the area of pricing models (I generally recommend Jon Manning of Sans Prix for some hard core consulting), I have owned and run a number of businesses that billed in a variety of ways and therefore had a general framework for thinking about it that I thought worth sharing.

So her question was “should I invoice for Time & Materials or Fixed Price?

Truthfully the question isn’t either/or as your entire package can have a combination of the two – eg a fixed call out fee, then Time & Materials (T&M). You can also add tweaks such as capped T&M or fixed fee covering a certain number of interactions – eg “includes up to 3 re-design sessions”. But each component of your product or service can usually be broken down into one or the other.   So lets look at Time & Materials

Time & Materials

Professional Service’s firms love T&M billing and are very good at it. Lawyers & Accountants traditionally have always billed that way to generate large incomes, however I have noticed lots of fixed price services starting to creep in.

The Pros of T&M are:

  • It massively reduces your risk on the job, as you get paid for all the the work you do regardless of whether you run into problems or not.
  • It allows you to be more dynamic and instantly respond to a client’s changing needs or priorities as you are not dependent on specific outcomes for your profitablity.
  • There is no need to trap and manage clients variations for billing purposes as it all gets picked up – although you still need to manage your clients expectations if the job drags out.
  • It reduces the effort required in pre-sale design, research & planning forecasting or writing quotations – all of which may be unbillable or just not desirable for the time pressed or lazy.

The Cons are:

  • Although your risk is reduced on the project, your client’s risk is increased. This means that they may review every invoice critically and demand a lot of meetings.
  • Clients may demand verbose invoicing, wanting to know exactly what you have done, then argue about which components should be billable – eg. “Why should I pay for your learning”. It also means you have a lot of recording to do – think Lawyers recording their time in 6 minute increments.
  • Its not a particularly scalable model as there is a ceiling for the amount of hours you can bill per week. Unless of course you can bill out large teams and its easy to put on / lay off resources.
  • Its lack of scalability generally makes it unattractive to investors
  • Your pricing is easily compared to competitors & near competitors, which puts a lot of downwards pressure on your pricing. Everyone loves to complain about hourly rates
  • In tiny organisations, it may mean you can’t take holidays because if you don’t work, you don’t eat.
  • Your motivation to complete the job quickly and efficiently is massively reduced, which is a regular source of client conflict.

So where is it suitable?

  • If your offering is highly malleable and therefore individualised for each customer, T&M provides the simplest way to construct an proposal.
  • Its suits areas where the people cost is the major component of the job as that is where your profit risk is.
  • It suits projects where there is considerable danger of the job dragging out because of unknown factors such as technical risk.
  • It suits projects where there is likely to be a lot of, or regular of scope creep.
  • It suits young organisations attempting to understand their market place before creating products.
  • It suits young organisations that need to pad out their revenue from a product with consulting, or even just contracting themselves out.

So what are some top tips when using Time & Materials Billing?

  • As part of negotiations, get the clock turned on as early as you can. Don’t allow the client to turn “pre-sale” negotiations into unpaid early design work.
  • Invoice early and often. There is nothing wrong with invoicing on a weekly basis for longer jobs, because clients argue less about small invoices and it has the added bonus of reducing your credit risk.
  • Trade high prices for longer hours being billed. Clients are almost always more price sensitive than time sensitive.
  • Avoid spending the majority of the project working at the client site. Harsh clients will audit your every movement and its difficult to perform multiple tasks for multiple clients at the same time
  • Have pre-set pieces of text you can use in your invoices so you can turn a phrase like “tweaked server” into a paragraph about checking logs for errors, applied patches, optimised configuration etc.
  • Where possible and keeping an eye on quality, substitute cheap resources to do the work at the higher rate – use graduates, or even outsource the work to overseas individuals or groups through solutions such as Odesk or Elance.

Next post I will have a look at billing fixed price.

What would a Sales 101 course look like?

Something that drives me mad is that in my humble opinion, our Universities are undermining the success of Australian business. I say this because from my observation the number one skill required for success in business, regardless of profession, is the ability to sell. To sell your product, yourself as the right candidate for the job, your idea, your project, your venture to an investor. Every single person I have met at the top of their profession has been a great sales person. This includes University Vice Chancellors, Politicians, Judges, and CEO’s of billion dollar operations.

But according to my research (I’d love to be proven wrong) no universities in Australia teaches sales. The rationale behind this is that Sales is a “skill” and therefore should be taught at lower level than university (read short course). Our Business schools are instead trying to train consultants that are good at strategy, but not getting your hands dirty.

I disagree that sales is just a skill, but think that argument is ridiculous anyway if its the most important ability you need to succeed in business. Everybody is selling something. Even if it isn’t necessarily a product, it might be a service or image. You might be an online financial advice and comparison website (http://www.lovemoney.com/), a bookstore or an entertainment manager. Without a grasp of basic sales abilities, you won’t go far. Selling is an art, and a difficult one to master. If I was designing a commerce degree in Australia, I’d have a 10 week course that looks like the below as a core unit. Each of the topics can also be applied to non traditional “sales” activities such as getting your project up with a winning business case. I’d also suggest that if you are a business owner and don’t understand what I am talking about – you better fix it or you will be doomed to obscurity.

Week 1 Sales in Context
Sales is the engine that pulls a business along not production or accounting and sales should fit hand in glove with the rest of the marketing efforts. Sales is where customer contact happens, and this is what steers the business and uncovers tomorrow’s opportunities.

Week 2 The Sales Cycle
There is a standard sales cycle for capturing and harvesting customers which I’ve talked about before. Its critical to the design of the business to optimise the activities within each step so that money isn’t wasted, nor opportunities left on the table.

Week 3 Customer Psychology
Every time I meet someone new to selling, they seem to be surprised that its all about the customer. Customers are interested in the benefits to them, not the features of your product and they like to be able to quantify them (the value proposition). They also like to be listened to, which as a bonus, allows you to find out what they want.

Week 4 Product & Service Design
Most technology businesses seem to start off selling projects, then wonder why they can’t forecast how much they will sell next month. It seems to come as a surprise that you should design your product to have features customers are willing to pay for, or have a range of prices for different customer segments. Great models abound

Week 5 Sales Infrastructure
Good support can dramatically increase the effectiveness of a sales team, whether it be quotation templates, configurators, point of sale materials, CRM systems or POS Equipment.

Week 6 Proposals, Presentations & Pitching
I got a quote the other day from an Australian software engineer that said “I will charge $450”. No time frame, no warranty, not even a mention whether it was ex or inc GST. Writing a proposal isn’t that hard, and it pretty much follows the same sequence whether its selling a peanut or a power station. Understanding which decision maker gets which information in which format isn’t that complex either. However it does need to be thought through.

Week 7 Sales Law
There is more to sales law than just the Trade Practices Act and a smidgeon of contract law. Terms and Conditions of Sale normally run to at least a couple of pages about intellectual property, transfer of title, reasonable behaviours and warrantees. Do you really want your layer to decide what should be included?

Week 8 Sales Activities
Sales activities generally fall into one of two camps, finding new customers or minding existing customers. Highly effective sales people do more than turn up to just more than industry events. They develop relationships with loads of potential customers through creative means.

Week 9 Agents, Distributors & Channels to Market
Businesses such as Accounting firms generally interface directly with their customers, but others such as insurance or IT have distribution channels that can be complex and overlapping. Designing a channel to market locally and overseas is not something that should be left to chance.

Week 10 Sales Management
I’ve never met a salesman that didn’t have sales manager on their resume. However only 1% of them have actually been any good at managing a team. Sales Management is very much about deciding which KPI’s are the drivers of sales, how to design the team and set goals, and how to reward the team for success.

So this is how I see the core components of a Sales 101 course. Is there anything you would drop or add?

Keeping Smart Productive People

So after last weeks post on looking after smart but lazy people, I got some interesting feedback from a friend who’s a Human Resources Manager in a national organisation with a couple of thousand employees in what seems like hundreds of locations.   She agreed with me, but extended my idea either further with a number of points that she thought were fairly important. I thought it was worthwhile passing on her ideas about the whole smart/stupid v’s productive/lazy thing.

I should point out firstly though that her main point was she didn’t like me using the word like stupid. Not so much because it wasn’t true (oh boy is it true) but just because its not the done thing to call people stupid out loud.

I however strive to be a realist, plus, I generally don’t care if I upset stupid people.

Anyway, her main points were:

  • If you can’t promote smart, productive people – then give them a big project they can sink their teeth into, in an area where they are passionate and watch them fly. Don’t forget though that you need to think about what will happen at the end of the project, because if its back to business as usual, they will fly out the window.
  • Never leave a smart / lazy person idle – they will do nothing (or surf the net all day – but they’re smart so it will be within your so-called “guidelines” so you won’t be able to sack them for it).  And then they’ll complain very loudly how no-one appreciates them .
  • Never leave a “not so smart” but lazy person with not much on. They are guaranteed to ignore policies & procedures and getup to no good.

I just can’t resist practical advice, and hers is certainly practical.

Cherish Smart but Lazy People

So last time I posted, I discussed dealing with lawyers – lessons learned from my long lunches with a Barrister/Army friend.

Another interesting discussion we had was around the need for stupid or lazy people. Ian’s point of view was that in any organisation, you have people who are smart and people who are stupid. You also have industrious people and lazy people. The key to success though was how you use those people.

Smart / Industrious people
These people you want as your leaders. They come up with new solutions and drive outcomes. They will also set the example for others. Conversely – you don’t want smart/industrious people in non leadership roles, as they are just disruptive and are sure to leave you if they don’t get promoted.

Smart / Lazy people
These people you want as your mid-level managers. They are the people that create the systems to make their own life easier, which benefits the organisation. I should point out that you don’t want smart / industrious people as mid level managers as they will always rather take on the work themselves to get the job done, rather than generating the systems you want.

Stupid / Industrious people
These people you want as your workers. They don’t ask questions or cause problems. Just point them in the right direction and let them go. They are the ones that get the job done.

Stupid / Lazy people
These are the people you fire. Its to your benefit if they are working for a competitor.

Of course everything is relevant – Ian was quite comfortable with the fact he was the smartest person he knew. Right up to the moment he became a Barrister, when he then met people that made him look completely stupid.

So have a look at your own organisation (just quietly). What would it look like if your graphed employee intelligence v’s activity levels. Would your Managers sit in the Smart/Lazy quadrant? Have you got the right people in the right quadrant – or are you just waiting for trouble to erupt?