Management in High-tech

Management in High-tech

Presented by

Gordon O’Grady

–

Director, Electronic Commerce

Canada Customs & Revenue Agency

Ravi Singh

–

Senior Consultant, Planning Services

The/Marketing/Works, Inc.

Mike Smith

–

Vice President, Learning Services

Alcatel Networks

Introduction

It is our contention that all businesses,

and correspondingly their products and

services, follow strikingly similar

patterns from start-up to IPO to

maturity. We have found this to be

Research Methodology

Interviews

Library/Internet Research

2 Life Cycle Paradigms

Organizational

Product

Organizational Life

Cycle

Maturity

Incubator

_Growth

The Chasm Bowling Alley / Tornado Sales Volume Profits Investment Recovery

Early Market Main Street End of Life

The Product Life Cycle

Incubator

Maturity

Growth

Incubator - The Early

Market

Strategies

l

Basic Products

l

Selective Distribution

l

Product Awareness

l

Branding

l

Market

Differentiation

Options

Characteristics

l

Low Sales

l

High Costs

l

Negative ROI

l

“Innovator

Customers”

l

Limited Competition

I

ncubator

– The Chasm

Visionaries

l

Intuitive

l

Support Revolution

l

Contrarian

l

Break Away from

Pack

l

Leaders

l

Take Risks

l

Motivated by Future

Opportunities

Pragmatists

l

Analytic

l

Support Evolution

l

Conformist

l

Stay with the Herd

l

Followers

l

Manage Risks

l

Motivated by Present

Problems

Entrust - Finance

Nortel Incubator (Dec/96)

IPO Nasdaq Aug/98, $79M

l

Greater capital pool

l

Better valuation

l

Must execute business plan

l

High first-year volatility

l

Valuation trends = estimated growth for industry

Entrust - Finance

Advantages over Silicon Valley

l

_{R&D tax credits (13%)}

l

Lower Salaries

l

_{Canadian Dollar}

Strategic Planning-Entrust

l

_{Early Stages}

l

Product R&D (B2B, B2C - potential revenue)

l

Heavy reliance on key customers

l

_{Later Stages}

l

Challenge to keep all plans aligned

l

“Customers, Competitors, Partners”

Entrust

Entrust -Marketing/Sales

Dominance of an Emerging Market

l

_{Early Adopters (“business solutions”)}

l

Direct sales approach

l

_{“Elephant Hunters” (hustlers)}

l

_{Customer growth equally important}

e-Value Chain

Internet Business Models

l

_{Content Sites}

l

Portals

l

_{Direct Sales Sites}

l

_{Brick and Click i-tailers}

l

_{Dot.com i-tailers}

e-Value Chain

Customer Expectations

l

_{Enhanced buying experience}

Channel Conflict

Entrust e-Value Chain

Primarily direct sales

l

_{Complex products}

l

Enterprise contract negotiation

e-value chain

l

_{CRM & KM-value added services}

l

_{Product maturity-commodity product}

Entrust – Human

Resources

Ability to attract top-notch talent

Ability to retain employees

Maturity

Incubator

Growth

Startup Odds

2.5 Million Entrepreneurs with a big idea

500,000

5-15,000

3-5,000

600

Went public / acquired

Received venture capital

Received other financing

Business plans shopped

1 in 5 ideas become

business plans

1 in 174 receive VC funds

1 in 833 made it big

Bowling Alley

Challenges

Chasing moving targets

Customized products

Establish de facto standard for product

Installed base means powerful mind

Tornado Challenges

Quarterly reporting drives short term

strategy

Engineering and marketing are in silos

Marketing becomes strategic function

Revisiting core competencies

Sun - Entrepreneurship

Fast growth

Self-starters / entrepreneurs are desired

Corporate cultural fit

Sun - Finance

•Focus on financial results

•Sales and profitability drive share price

Tornado

•Story becomes important

•Focus on increasing revenue

•Share price a measurement of success

•Analysts must understand the story The Chasm Bowling Alley Sales Volume Time Profits Investment Recovery

Sun – Human Resources

Ethics and values guide employees

One vision

Sales people are business people

Systems engineers gather competitive

intelligence

Marketing – Engineering

Mismatch

Engineering

Marketing

Product Launch

Product Development

Product Definition

high

Workload

low

Finance

Marketing Strategy

Quality Driven Strategy

•

Customer seeks quality

•

Strategic emphasis on

features and capabilities

•

Functional focus on

product and service

•

Marketing’s role is

quality enhancement

IBM

Value Driven Strategy

•

Customer seeks value

•

Marketing must create

a sustainable source of

superior value

•

“Just give me a good

deal”

Dell

Price Driven Strategy

•

Customer seeks basic

product at lowest price

•

Strategic emphasis on

cost elements

•

Functional focus on

process R & D and

operations

•

Marketing’s role is cost

containment

Marketing

Buyers with special needs

Value-adding features / services

Communicate economic value to buyers

Establish distribution channels

Promote ‘uniqueness’ of product

Develop customer ‘intimacy’

Characteristics of a

Winning Position

Is it unique? Can it be sustained?

Apple iMac, iBook, G4

Does it meet customer needs? Will they know it?

Sun, Oracle, Microsoft

Maturity

Incubator

_Growth

Cabletron - CSGI

Founded in 1983 by Craig Benson and

S. Robert Levine

Reached apex in 1996

Levine and Benson gone by 1999

Four separate entities in 2000

CSGI – Finance

CSGI is a holding company for four

subsidiaries:

l

_Enterasys

l

_Riverstone

l

_Global

_Network

_{Technology Services}

l

Aprisma

CSGI - Marketing

Marketing was considered a dirty word

Took on Cisco in 1996

CSGI - Channel

Cabletron went direct to customers

Now established partners / vendors to

market products

CSGI - eValue

Offers its products and services through

the web

Goal to generate sales at higher level

through the web

CSGI - HR

Heavy investment in training sales and

service group

Unable to keep up with Bay, Cisco etc.

Outsourced bulk of training

CSGI – Entrepreneurship

Cabletron founded by two mavericks

Management was hands-on with

tendency to over control

New management more apt to delegate

and trust

Lessons Learned

Paradigm Shifts