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jerryking : life_cycle   13

Business Development Not-to-Do #5: Live In the Past | JD Supra Perspectives -
April 21, 2017 | JDSupra | by Mike O'Horo, co-founder of RainmakerVT. O'Horo has trained 7000 lawyers in firms of all sizes and types, in virtually every practice type. They attribute $1.5 billion in additional business to their collaboration. His latest innovation, Dezurve, reduces firms’ business development training investment risks by identifying which lawyers are serious about learning BD.]

If you’re seeing more competition for each engagement, greater pressure on rates, more involvement by professional buyers in the Purchasing Dept., and perhaps worst of all, longtime clients putting out RFPs for “your” work, your work has reached the Maturity stage of its Product Cycle. If you fail to change, you’ll ride a downward spiral until you can no longer make money on that work.

What is the product cycle?  Introduction ->Growth -> Maturity -> Decline. Revenue and profit follow a fairly predictable path through this cycle. Most buyers understand that, among the three forms of value -- Good, Fast, Cheap -- they can only have two. During the Introduction and Growth phases, they opt for Good and Fast. At Maturity, they favor Good and Cheap. At Decline, they may demand all three......

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Defending market share becomes the chief concern.
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At the maturity stage, sales growth has started to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern. Most lawyers don’t know how to do that other than by reducing their price to try to hold on to the work. Additionally, more competitors have stepped forward to challenge you for every engagement, and offer a lower price. This can touch off price wars. Lower prices mean lower profits, which will cause some wise lawyers to discontinue offering that service altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a service to be in the mature stage for several decades. Whatever you’re experiencing now is also the future.

For quite awhile, lawyers who thought about this at all could be forgiven for believing that legal services were immune from this. After all, for more than 20 years, buyers and work were plentiful, and clients accepted annual rate increases of 6-10%. All that meant, though, was that legal services had a longer Growth phase than is normal. Even during that 20-year boom, many legal services declined in value and pricing power, to the point that many lawyers lost that business to lower-cost competitors, off-shoring, or to in-house legal staffs.
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You can’t justify investing in a declining asset.
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The symptoms cited in the opening paragraph are reliable indicators that it’s time to begin reducing your dependence on that work. You can’t justify investing in a declining asset.......One of the big factors causing price pressure in mature categories is decreased risk. The first time a company tackles a type of legal matter, the perceived risk is high. They want to get it done right, and quickly, so they’re less sensitive to cost and place greater value on expertise as a way to reduce risk.

After something has been done a number of times, the risk of getting it done right goes way down, so the perceived value of the service declines, and they no longer feel the need to pay the top lawyer in the game.......

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When risk and business impact declines, so does your access...
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Once the recipe is known, the risk declines and, along with it, the buyer’s willingness to pay a premium for the wizard practitioner.

When risk and business impact declines, so does your access. While the top people pay attention to unfamiliar matters with potentially high stakes, once the risk goes down, they delegate downward and move on to emerging issues that have greater risk and impact.
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associate yourself with a business problem that triggers demand for your expertise, and opens doors to those experiencing that problem.
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Just as it’s imprudent to invest in declining categories of legal matters, it’s a bad idea to hitch your wagon to a declining industry (unless you do Bankruptcy or Restructuring). Clients in mature industries experience the same increased competition, price pressure, and shrinking margins as you do. They’ll opt for Good and Cheap.

To avoid suddenly realizing that you’re in a tough spot such as described in the opening paragraph, focus on an industry. Become an industry expert, knowledgeable about their challenges and opportunities, and keep yourself well informed so you can recognize the early signs that your Door-Opener (the problem that drives demand for your service) is maturing and declining in significance. If you know what’s going on in the industry, you’ll know which problems to shift your association toward.

Always invest in emerging issues, preferably in robust, growing industries
cash_cows  decline  industry_analysis  law_firms  lawyers  life_cycle  industry_expertise  professional_service_firms  product_cycles  obsolescence  price_wars 
7 weeks ago by jerryking
Conglomerates Didn’t Die. They Look Like Amazon. - The New York Times
Andrew Ross Sorkin
DEALBOOK JUNE 19, 2017

Amazon's purchase of Whole Foods re-opens the debate about conglomerates which supposed to be dead, a relic of a bygone era of corporate America as investors supposedly want smaller, nimbler, more focused companies......Amazon is just one of several digital-economy conglomerates. Alphabet, the parent company of Google, is another. Facebook is quickly becoming a conglomerate, too...... today’s tech-enabled conglomerates, are spending, and often losing, tens of billions of dollars annually on all sorts of projects and acquisitions that may or may not turn out to be successful. But investors are seemingly willing to give these new behemoths a free pass in the name of growth and innovation — until they aren’t.

If there is any lesson from the last breed of industrial conglomerates, it is that there is a natural life cycle to most of them....When it comes to Amazon (or Alphabet, or any of the new conglomerates), the question is whether there is something fundamentally different about these businesses given their grounding in digital information — especially as they expand into complex brick-and-mortar operations like upscale supermarkets.

In an age of big data and artificial intelligence, are businesses that look disparate really similar? And can one company’s leadership really oversee so many different businesses? When does it become too big to manage?...a recent article in the Yale Law Journal made a compelling case that Amazon has built perhaps the ultimate economic mousetrap — one impervious to the natural life cycle of a conglomerate, but one that might ultimately prove to be anticompetitive.

The author, Lina M. Khan, a Yale Law student who has written about antitrust law and competition policy, argued that Amazon had created a “platform market” and can use its size and scale to subsidize its entrance into new businesses through predatory pricing.....The economics of platform markets create incentives for a company to pursue growth over profits,.....Amazon’s role as both a distributor and cloud provider for many of its competitors gives it an unfair advantage. “This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors,”.....Jeff Bezos, is clear. The man who is assembling the 21st century’s most fearsome new conglomerate once explained his view of competition this way: “Your margin is my opportunity.”
conglomerates  Andrew_Sorkin  Jeff_Bezos  Amazon  GE  Jeff_Immelt  unfair_advantages  Whole_Foods  Silicon_Valley  digital_economy  Alphabet  Facebook  lessons_learned  Yale  Charles_Munger  antitrust  competition  Berkshire_Hathaway  platforms  predatory_practices  diversification  FTC  margins  staying_hungry  life_cycle  Lina_Khan  competition_policy 
june 2017 by jerryking
How to Avoid the Innovation Death Spiral | Innovation Management
By: Wouter Koetzier

Consider this all too familiar scenario: Company X’s new products developed and launched with great expectations, yield disappointing results. Yet, these products continue to languish in the market, draining management attention, advertising budgets, manufacturing capacity, warehouse space and back office systems. Wouter Koetzier explores how to avoid the innovation death spiral....
Incremental innovations play a role in defending a company’s baseline against competition, rather than offering customers superior benefits or creating additional demand for its products.
Platform innovations drive some market growth (often due to premium pricing rather than expanded volume), but their main function is to increase the innovator’s market share by giving customers a reason to switch from a competitor’s brand.
Breakthrough innovations create a new market that the innovator can dominate for some time by delivering new benefits to customers. Contrary to conventional wisdom, breakthrough innovations typically aren’t based upon major technological inventions; rather, they often harness existing technology in novel ways, such as Apple’s iPad.......A recent Accenture analysis of 10 large players in the global foods industry over a three-year period demonstrates the strategic costs of failure to innovate successfully. Notably, the study found little correlation between R&D spending and revenue growth. For instance, a company launching more products than their competitors actually saw less organic revenue growth. That’s because the company made only incremental innovations, while its competitors launched a balanced portfolio of incremental, platform and breakthrough innovations that were perceived by the market as adding value.
Accenture  attrition_rates  baselines  breakthroughs  correlations  disappointment  downward_spirals  howto  incrementalism  innovation  kill_rates  life_cycle  portfolios  portfolio_management  platforms  LBMA  marginal_improvements  Mondelez  moonshots  new_products  novel  product_development  product_launches  R&D  taxonomy 
march 2016 by jerryking
Darwin and Demon: Innovating within Established Enterprises
July-August 2004 | HBR | Geoffrey A. Moore

Innovation comes in many forms--products, processes, marketing, business models, and more. Which kind should you be pursuing? It depends where are you in your product category's life cycle.
innovation  HBR  product_launches  taxonomy  life_cycle  market_windows  sales_cycle  Geoffrey_Moore  intrapreneurship  product_category  new_categories 
december 2012 by jerryking
Growing at a Smart Pace
Growing at a Smart Pace

What Every CEO Should Know About Creating New Businesses
1 Ultimately, growth means starting new businesses.
Most firms have no alternative. Sectors decline, as they did for Pullman’s railroad cars and Singer’s sewing machines. Technology renders products and services obsolete—the fate Polaroid suffered, as digital cameras decimated its instant photography franchise. Markets saturate, as Home Depot is now finding, after establishing more than a thousand stores nationwide.
2 Most new businesses fail.
3 Corporate culture is the biggest deterrent to business creation.
New ventures flourish best in open, exploratory environments, but most large corporations are geared toward mature businesses and efficient, predictable operations.
4 Separate organizations don’t work—or at least not for long.
5 Starting a new business is essentially an experiment.
6. New businesses proceed through distinct stages, each requiring a different
7. New business creation takes time--a lot of time.
8. New businesses need help fitting in--"bridging"--with established systems and structures.
9. The best predictors of success are market knowledge and demand-driven products and services.
10. An open mind is hard to find.
growth  Thomas_Stewart  HBR  CEOs  Junior_Achievement  hard_to_find  start_ups  failure  organizational_culture  experimentation  trial_&_error  life_cycle  tacit_data  entrepreneurship  dedication  obsolescence  demand-driven  infrastructure  new_businesses  bridging  large_companies  customer-driven  market_saturation  Home_Depot  Fortune_500  mindsets  open_mind  decline  Michael_McDerment  Polaroid  digital_cameras 
december 2012 by jerryking
Managing: What entrepreneurs should watch out for
July 16, 1996 | The Globe and Mail |

fourth pitfall is the most difficult, Mr. Drucker says. “It's when the business is a success and the entrepreneur begins to put himself before the business. Now he asks himself, ‘What do I want to do? What's my role?’ "Those are the wrong questions. If you start out with them, you invariably end up killing yourself and the business. You should be asking, ‘What does the business need at this stage?’ The next question is: ‘Do I have those qualities?’
Peter_Drucker  entrepreneur  challenges  selfishness  pitfalls  cash  self-analysis  self-assessment  life_cycle 
july 2012 by jerryking
The Six Stages of Growth
2000 | Ministry of Economic Development and Trade. • To help
CEOs of leading growth companies understand the patterns of growth in
their companies, so that they can see their own challenges and
opportunities in the context of the stages through
which they have passed,are passing and will pass, thereby enabling them
to identify and deal with emerging situations more effectively. These
insights will also help the startup entrepreneur to develop his/her
vision for their future.
•To help business service providers to understand the needs of this
vital sector in their present and
future client base, so that they can attract leading growth firms as
clients by approaching them in
a way that meets their unique needs. This applies to organizations
ranging from banks, through
consultants, to economic development agencies.
growth  small_business  life_cycle  start_ups  entrepreneurship  patterns  pattern_recognition  filetype:pdf  media:document 
february 2010 by jerryking
Find Your Business Life Cycle: The Seven Stages of Business Life
By Darrell Zahorsky, About.com. 1. Seed Stage; 2. Start-Up
Stage; 3. Growth Stage; 4. Established Stage; 5. Expansion Stage: 6.
Decline Stage; 7. Exit Stage:
life_cycle  business  growth  decline  stages_of_life 
october 2009 by jerryking
The More, the Merrier, - Inc. Article
The More, the Merrier

An industry isn't mature--and you can't be secure--until a lot of other people are doing what you do.
By: Norm Brodsky

Published September 2005

The truth is, our biggest problem from the beginning had been a shortage of competition. I'd even gone so far as to help other people get started in the business, knowing that they might someday compete against us for new accounts. (See "A Few Good Competitors," August 2002.) Why did I want more competitors? Because they'd help us educate the market about the need for document-destruction services. In a young industry like ours, you have to spend an inordinate amount of time and money just explaining what you do and why prospective customers should pay you to do it. The more competitors you have, the easier that task becomes. As the industry matures, the market expands, and customers focus on the type of service they want rather than whether they need the service at all. And then you can spend more time explaining why they should buy your service rather than somebody else's. That's a lot less time-consuming--and leads to a lot more sales--than having to explain the whole concept.
Norm_Brodsky  industries  life_cycle  growth  product_category  new_categories  mature_industries 
may 2009 by jerryking

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