So, if you recall the model we used from yesterday we start with Present Position. This model also includes a visioning step and finally a step wise goal step. I recommend this process highly and if anyone is doing any planning then it is a great way to get going.
Present Position is a pretty simple concept. It is: Where are we today? The problem is that there are often perception or assumption issues that are wrong. The only way to overcome these is to study the data. Really study it. Break it down. Build it up. Do it over again. This creates a bit of tedium and is actually a lot of work. You need to study yourselves, your customers, your competitors, and the market you are in. Are there any outside influences that are likely to change (like regulation)?
One of the things people don't think about are the easy way to information about external entities like your competitors and customers. At least some of them are likely to be public entities or companies similar to them are public. All of these companies do all kinds of things to market their stock - Conference Calls, Investor Presentations and Financial Conferences. If you listen to Quarterly Conference Calls, you will here the senior management discuss the good and bad of the previous quarter. You will hear them talk about the future of the business. You will hear analysts ask them questions about the performance of the company. On top of that most companies make a large amount of marketing material available on their website. White Papers, Product Brochures, FAQs and more are available at the click of a button. Finally, there are 3rd party analyses of different technical and fundamental questions for any kind of business. Most often these reports cost money. But most Stock Brokers have some amount of industry research available and people to ask about it. The question for all of you is: "Who in your organization is looking at all of that and pulling the gems out of it?"
Your internal information is going to be based on the business you are in. For us at AFC, we looked at things like cabinet shipments, who was buying what and types of systems as they were deployed. One interesting note that came out of that is that although we had lots of customers in the IOC space, only a few were doing sizable volume any year. Each of those carriers would go through an upgrade cycle and then buy spares and expansions as required. So we might have 800 IOC customers every year but really in any given year 50 - 100 were doing major purchases.
The thing that you need to get out of the internal look at Present Position is what metrics are Key Performance Indicators (KPIs) for your business. A KPI is a predictor. The idea is that if you have a good set of KPIs then your business is set up well for the future. If I look at Red Condor as an example, Renewal Rate was a big indicator for us. A business like that makes most of its money off the subscription part of the business (it is constantly being updated to protect against new spam campaigns). So I high Renewal Rate meant that we would have that busines for a long time and thus could expect a good base of revenue for some time.
Once we were done with exercise the Executive Team as a whole had a great view who we (and others) sold our kind of equipment to and why the customers bought it. One conclusion this made is that we were not going to win the DLC battle in the RBOCs against Alcatel's Litespan. At best we could be an irritant and cause Alcatel to make less money in that business. This conclusion will become important later in our decisions about the future.
As a sidenote before I close today, if anybody out there wants to get my newsletter and is not already getting it just let me know.
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