CSIA Conference – A Great Event to Share Best Practices

April 29, 2009

I’m looking forward to attending the CSIA Conference, April 30 – May 2. It is always a great opportunity to learn more about best practices. I’m particularly looking forward to the “Survival and Growth in These Trying Times” presentation by Don Roberts from Exotek. If you are not familiar with CSIA (Control Systems Integrator’s Association), they are committed to the business development of system integration companies. And Exotek is a management-consulting firm focusing specifically on system integration companies.

A Little Reminiscing

I first heard of CSIA in the mid-1990s when National Instruments was making our first foray into the Industrial Automation industry with our BridgeVIEW (now LabVIEW DSC), Lookout, and our Distributed I/O products. I attend my first CSIA conference in 1996 with the sole purpose of finding potential NI integrators, but discovered a group of system integration managers that were willing to share their ideas about managing system integration companies successfully. Over the years, I’ve been an active participant and promoter of CSIA I’ve supported the development of CSIA Best Practices and Benchmarks which provides performance standards in critical business areas. NI was the first company to endorse the CSIA audit, when we included it as part of our Select Partner qualification process.

Alliance Partners Contributions to CSIA

I’m proud to say that our NI Alliance Partners have made significant contributions to CSIA over the years. To date, over 30 NI Alliance Partners have joined CSIA. Over 20 have passed the audit, constituting nearly 1/4th of the 100 Certified CSIA members. And, I’d like to especially recognize Dean Streck from V I Engineering and Jim Campbell from Viewpoint Systems, who have just completed their tenure on the CSIA Executive Council. They have made substantial contributions to the organization including: Dean – leading the Best Practices committee and Jim – for his service at Treasurer and on the Insurance committee. Thanks for your efforts and being good representatives of NI and our Alliance Partners.

Question: Are you going to the CSIA conference? Or if you do, let us know what you thought of it.

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Your Business Foundation – Part 5 – Putting Plans into Action

April 27, 2009

With the annual strategic plan completed, you can now bring your new corporate objectives back to the organization. Take the opportunity to call a company meeting. It’s a good chance to show the organization your commitment to the business as well as eliminate thoughts about hidden agendas. You can then chart new directions and announce necessary adjustments.

Tie Corporate Objectives to Management Goalsplans-into-action

You also want to meet with your managers. Even if they participated in the strategic planning, it is a good idea to follow up and ensure that there is as seemless integration from mission/vision to business plan/objectives and down to goals/actions. The goals and actions should be: specific, short-ranged, obtainable, and measurable.

Speaking of measurable, you should agree on how to monitor and review them. Finally, check for understanding and agreement to complete the delegation process. Consider tying them into their compensation (e.g. MBOs).

Use KPIs to Create Corporate Dashboard

Once you have established the metrics by which you will monitor if you are on track to meet your business plan, then you determine which ones are most critical. These are commonly known as KPIs (Key Performance Indicators). Note there may not be a KPI for every single element of your business – just those critical to your success or perhaps important to a new aspect of your strategic plan. These KPIs become your Corporate Dashboard. Similar to a car, you’re corporate dashboard contains the vital information about where you are going and how your vehicle is performing.

apna-metrics-dashbrd

During my business consultation with APNA, our second Select Alliance Partner in India, they showed me their corporate dashboard – actually a LabVIEW VI with nothing but LEDs that were either green or red for each of their KPIs in each of their business areas. I was particularly curious about the Project indicator. So, I asked Gigi Mathews, their quality officer, who I would also learn was affectionately known as the ‘evil metrics woman’ by her colleagues. She responded, “If 100% of all projects are on time and budget, then it’s green. Otherwise, it is red.” I wondered if it had ever been green. She said, “No.” So, I suggest to her with all due respect that I didn’t know of any system integrators for which the indicator would be green. Nevertheless, I appreciated their efforts to define and track KPIs to build a corporate dashboard for their business.

Question: What are some of the KPIs on your corporate dashboard?


Your Business Foundation – Part 4 – Annual Strategic Planning

April 22, 2009

The business plan becomes the basis for your strategic planning process. On an annual basis, you should:

  1. Review your business plan
    1. Revisit your mission and vision. Are you fulfilling your business purpose?
    2. Review your company performance. Are you meeting your objectives?
  2. Analyze your business. I recommend a SWOT analysis of each of the following areas.
    1. Markets – who are you serving? How well are you serving them?
    2. Assets – what are the most valuable assets? Are they being captured? Grown?
    3. Organization – are you structured to execute the business plans?
  3. Make plans accordingly.
    1. Set (or continue) directions and objectives.
    2. Just as important to determine what you aren’t going to do

 Note that you don’t have to work out every detail and step, just create a clear picture by which management can lead the company.

Get Away from the Office

When conducting your strategic planning, it is worth the formality of an annual meeting. It is your business, so it is important enough to take some time once a year to plan for its future. There is a huge difference between the daily management of your business and strategic planning. By getting away from the office, you can avoid the interruptions and distractions of your daily management responsibilities. It also creates a more open environment to have frank discussions about the business.

Another benefit of an annual meeting is that it provides the opportunity to make adjustments to the company’s plans and operations. It gives you the opportunity to say, ‘we met with the board, and have decided that ….’

Get an Outside Perspective

Speaking of ‘the board’, it also raises the issue of who should be involved in your annual strategic planning process. If the ownership resides completely within the current management of the company, than it is an excellent idea to involve external people. Note that it doesn’t necessarily involve ownership, just an outside perspective — someone who is not involved in the daily company operations to test your ideas. For one thing, it will keep you honest and force you to create and justify your business plans. You’ll have someone to challenge your assumptions and offer fresh perspective.

If you don’t have external ownership with a vested interest, here are some potential advisors:

  1. Vendor or customer – need to be careful about potential conflict of interest
  2. Perhaps, a business person in your community that you respect and admire. Don’t know one. Ask you banker.
  3. SCORE – Service Corps of Retired Executives
  4. Exotek – very knowledgeable about business, but more likely as a facilitator

Next, we’ll talk about putting your strategic plan into action.


Your Business Foundation – Part 3 – Creating a Business Plan

April 20, 2009

Creating a business plan requires an understanding of the owner’s purpose for the business as well as the guiding principles for the business. A business plan typically describes the 2-5 year direction and objectives for the organization. That is, where the organization is going and how it is going to get there.

Basic Elements of a Business Plan

Check out the Small Business Association Planner for some good tools and advice. Typical business plans include:

  1. The purpose of the business – essentially a statement of the owner’s purpose, the company’s mission and vision
  2. Objectives – where will the company be 2-5 years from now (size, profitability, efficiency, ….)
  3. The organization – a description of how the company is organized to meet it’s purpose and objectives
  4. Strategies – Overall strategies for obtaining objectives
  5. Action plans including metrics for implementing strategies

Porter’s Five Forces

porters-five-forcesThere are a number of methods for determining a business plan. One of the common is to review ‘Porter’s Five Forces’. That is to look at the most common factors that affect your business. 

  1. Your buyers – the current and potential customers of your products and services
  2. Your suppliers – the basis for your products and services on. How is that changing and affecting your business?
  3. Your competitors – those competing with you for your business. What are your relative strengths and weaknesses?
  4. Substitutes – really another form of competition. What outside forces can affect your business?
  5. Barriers – kind of the opposite of substitutes. What can is protecting your business? How can you take advantage of that?

Obviously, you could spend a lot of time working on this and I’m not advocate wasting time. Still, if your business is important, then you need some sort of business plan to get you where you want to go. This business plan will fuel you annual strategic planning process – Part 4 of this Business Foundation series.

Question: Did you evaluate Porter’s Five Forces to create your business plan? If not, what other analysis did you find useful?


Your Business Foundation – Part 2 – Establishing Guiding Principles

April 15, 2009

Once, we understand the owner’s purpose for the business, and then we can better define the guiding principles for how it is to be managed. That typically starts with the mission and vision of the company.

Mission Statement versus Vision Statement

There is often confusion about a mission statement versus a vision statement. There are number of web sites that attempt to explain the difference – for instance, the Free Management Library. For me, it simply boils down to:

  1. A mission Statement is the ‘why’ the company exists.
  2. A vision Statement is ‘what’ the company does.

So, the mission statement is more about the internal motivation of the company and usually inspires the employees of the company. For instance, National Instruments mission is to empower engineers and scientist to improve the world. So, our mission explains why we exist, but doesn’t really explain what are going to do.

Then, the vision statement provides a basic description of what are doing to accomplish our mission. The vision statement is usually less ‘fluffy’ and more customer-facing. At NI, we create hardware and software tools (e.g. graphical system design) that empower ….

Core Values

Next, companies often like to define a core set of values that dictate ‘how’ the company will operate. It is essentially codifies the personality, spirit, and culture of the company. For instance NI’s core values are:

  1. Respect for people (customers, employees, stakeholders, suppliers, and partners)
  2. Honesty and integrity in our business dealings and activities
  3. A focus on customer service
  4. And emphasis on both break-through innovations and continuous improvement in all that we do

Note that if these values are indeed intended to drive the behavior of your company, then it is important that they be written down, posted around your facilities, and published for others to see.

By establishing your guiding principles, you create a solid foundation for your business plan – the subject of my next post.


Your Business Foundation – Part 1 – Why are you in Business?

April 13, 2009

Whenever I am going to spend a day with an NI Alliance Partner discussing how they are building their company, I like to start with the simple question. First of all, I want to understand who actually owns the business. In most cases, the owner(s) is the entrepreneur(s) who started the company and continues to work full-time at the company.

Ownership versus Management

It is often difficult for them to recognize the difference between ‘ownership’ and ‘management’. But, there is an important distinction.

  1. Ownership is the legal right of possession of the business, including its assets and liabilities.
  2. Whereas, management is the controlling and directing of the affairs of that business.

It is also important for the entrepreneur to distinguish between ‘running the company’ and the ‘business of the company.’ Often, someone starts an Alliance company because they are a LabVIEW developer. But as the business grows, he must realize that, as an owner/manager, his role is to build a company that develops LabVIEW applications. This is often a dilemma if they perceive that managing the company is simply a distraction from the work, in this case LabVIEW development.

The E-Myth – An Entrepreneurs’ Dilemma

There is an excellent book that helps to illustrate this challenge, called The E-Myth, Revisited. The ‘E’ doesn’t stand for electronics, but for ‘entrepreneur.’ And, the myth is the mental block that keeps him from seeing his business for what it is – and being able to grow it beyond his own limitations.

So, let me ask again, as an owner of a business venture, what is its purpose?

  1. Are you trying to create wealth and lifestyle for you and your family?
  2. Are you just trying to create a fun place to work? (and care less about the money)
  3. How important is it for you to maximize growth or profitability?
  4. Do you want to build a company that is ‘Built to Last’?

img_0015

Your answer to these questions will greatly define the ultimate purpose of the business and how it should be managed. Here’s another way I like to get at the business purpose. Forget that you own a system integration company for the moment. Let’s just say that you are invested in an $XM business venture (could be a car dealership, a restaurant, ….)

Once you are clear about what you, as an owner, want and expect out of that business venture, then you can establish your guiding principles – the topic of my  next blog post.


Building Stronger Partners

April 9, 2009

At National Instruments, we create innovative computer-based products that empower engineers and scientists to improve our world and every day life. Now, to have a broad impact on engineering and scientific endeavors around the world, we recognize that we can’t do it all. So, we focus on building a powerful, flexible platform with tightly integrated software and hardware components. And, we rely on our partners to make our customers successful.

The NI Alliance Partner Program

So, we established the NI Alliance Partner Program, a worldwide network of more than 600 consultants, system integrators, developers, channel partners, and industry experts who join NI in providing customers with complete, high-quality solutions.

Partners are key stakesholders in our success.

Partners are critical to our success.

 

 

The Need for Stronger Partners

As the National Instruments product line grows capable of solving more demanding applications, we recognize the need to develop relationships with system integrators and value-added resellers that are more than just experts in our products. We need to partner with companies that have the resources and skills to handle larger projects and deliver solution-level products.

Fostering Better Business Practices

During the past fifteen years, I’ve worked with hundreds of companies from small consultants to large system integration organizations. What I discovered is that service companies encounter common challenges as they grow their business. I’ve been able to observe good business practices to overcome these challenges.

In addition, NI is a member of the CSIA (Control Systems Integrator’s Association) who are committed to the business development of control system integration companies. I have been active an participant in the creation of the CSIA Best Practices and Benchmarks which provides performance standards in critical business areas that are critical to successful system integration. I also work closely with Exotek, a management-consulting firm who are experts in best business practices for system integraton companies.