Tuesday, April 26, 2011

Colorado success stories: Otterbox

Founder cites innovation, strategic planning and adaptability for success

This series of articles about clients and friends focuses on companies that have grown during the downturn with new business models, flexible strategies, and superior execution. This article was originally published in Colorado Biz magazine on April 26, 2011.

Curt Richardson, CEO and founder of OtterBox, recently spent time with me, sharing some of the challenges and keys to OtterBox's explosive growth. The OtterBox tagline, "We've got technology covered," is descriptive of the protective cases the company designs and sells for smartphones and other technology devices.

How do you compete with all of the other cases and covers on the market?

Our biggest competitor is ourselves. We are a premium brand and have a superior product. We need to stay ahead of the market, to continue to "out-innovate" both in products and business processes, systems, and brand. Sensing and adjusting to the market is very important. What does the customer "feel" with your product? We are constantly looking to improve. We re-examine our strategic plans and action initiatives every 6- 8 weeks, sensing what is happening in the market and making any necessary adjustments.

Why do you revisit strategic plans every 6-8 weeks?

We have grown 1600 percent over the past 3 years. We operate on what we call "Otter-time." Change that may occur over a year or more in another environment may happen at OtterBox in a month. Plans and initiatives need to adapt to the rapid growth and the changing market. We utilize a strategic planning process that focuses everyone in the company on productivity, competitiveness, and adaptation. Every division in our company has a "plan on a page" that contains their initiatives. Every 6-8 weeks we re-evaluate and make adjustments based on the progress and any market changes.

With such significant market growth, is it difficult to keep the organization focused?

We have said, ‘If it doesn't fit in your pocket, we do not do it,' meaning that we are focused on smartphones and other pocket-sized technology." That may now expand a little bit with the growth of the iPad, but we intend to remain very focused.

Has the growth path always been smooth?

There is always a bottleneck or constraint. The constraint seems to rotate through three departments. Last year, we focused on improving the supply chain (getting the right mix of products, to the right customer, at the right time) and staying ahead with systems. This year we are working on upgrading our sales systems, and processes. Then, we will move the focus on to engineering design and product development.

You have a unique culture. How do you maintain the culture and still build the team required to grow?

We may change the way we do things, but our core values do not change: Treat each other the way you want to be treated; being totally open and honest. Things like gossip are not tolerated. We don't throw people under the bus. We use open book management. We have profit-sharing. We focus on high performance, being adaptable and accountable, and systemic in our thinking.

Is it difficult finding good people?

Yes, finding people who fit the culture is a challenge. We look to hire people who have ‘been there and done that.' One of our best sources is our employees. Each good hire typically knows three other good people. Again, it all backs up to the strategic plan which dictates the organization, which then dictates the specifics for the job and the person.

How do global factors influence your growth?

We are truly a global company. This impacts many things: product design needs to be country-specific, in tune with needs of the region; distribution needs to be global; we are moving manufacturing closer to the end-customer. We have offices now in Cork, Dubai, Hong Kong, and Shenzhen.

You have grown to one of Colorado's largest private companies. What are the keys to continued growth over the next 5-10 years?

Continued innovation: sense what the customer wants and exceed their expectations. Innovation needs to be in systems and business processes in addition to products. Speed and adaptability will be critical. We need to continue to focus on what we are good at - product development and marketing. This will be facilitated by the way we develop and execute our strategic plan. Last year we managed for growth. This year we will manage more for profitability. The market itself is projected to more than double by itself this year, so we expect to double our size again this year. Revenue size is not important in and of itself. It is more a measurement of our brand, a high-end brand. We are building a long-term company with a strong legacy.

Sunday, April 24, 2011

What do burgers, focus groups and web conferencing have in common?

What do burgers, focus groups and Web conferencing have in common? All are crowded, competitive spaces that might be considered to be commodity markets. Most of the products are relatively similar with little differentiation among competitors.

Conventional wisdom might suggest that these markets have limited opportunity for new entries unless sold at a lower price. Yet even the most commoditized markets offer opportunities for innovation, new business models and superior execution.

Several Colorado companies like Smash-burger, Qualvu, and ReadyTalk have changed the paradigm in their categories. Each of these companies has enjoyed significant growth during the recent recession.

Enter a niche with a better experience.

Smashburger found that while the hamburger was America's favorite food, people were dissatisfied with the general fare offered by the major competitors in the market. So it developed a way to deliver a more flavorful, juicy, fresh burger - smashing the burger to the grill to seal in the juices.
However, its success was not just about entering the "better burger" niche. Smashburger found that consumers also wanted a better experience - a fast casual sit-down dining experience with very friendly service in a smaller, high-energy setting. Better burgers and a better experience are just the start.
The company has demonstrated the ability to scale with superior execution in its hiring, training and rewards for great service, as well as by tracking data and metrics to ensure consistent delivery. It has become the fastest three-year start for a restaurant company - in history.

A disruptive innovation with
"home video."

Clayton Christensen, author of "The Innovator's Dilemma," coined the term "disruptive innovation" to describe innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.

Characteristics of disruptive businesses, at least in their initial stages, can include lower margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics.

Qualvu changed the way that focus groups are performed. By putting video cameras (now in most smart phones) in the hands of consumers to provide feedback and testimonials about consumer products, it can develop, execute, upload and analyze a focus group with the customer's desired demographics - virtually overnight - at significant savings.

Consumer products companies, such as Procter & Gamble, Johnson & Johnson and Adidas, can achieve faster turnaround, more cost-effective research and video testimonials from real people where and when the products are used.

Using "homemade videos" for research would not be something that would occur to established market research firms who are more likely to disregard this segment of the market in lieu of the traditional methods, giving Qualvu a window of opportunity.

A new business model - Free.
ReadyTalk entered a crowded conferencing arena with a new approach. It had developed technology for Web conferencing that had a much lower cost than audio. ReadyTalk decided to provide the Web conferencing service for free along with the audio conferencing as a way to differentiate itself in the market among the large competitors and to buy market share.

At the same time, ReadyTalk saw that the actual cost of audio conferencing was significantly lower than the per-minute fees being charged by the major providers. So it priced its audio product significantly below the then-prevailing rates. ReadyTalk was able to develop customers and gain market share with its lower pricing and free Web conferencing services model.

Ultimately, as the market matured, demand flipped, and the market required more Web conferencing services. ReadyTalk was then in a position to change its pricing model and charge customers for Web conferencing services. The company enjoyed 483 percent growth between 2004 and 2009 and added another 35 percent growth in 2010.

Clayton Christensen explains the opportunities for these companies this way: "Because companies tend to innovate faster than their customers' lives change, most organizations eventually produce products or services that are too good, too expensive and too inconvenient for many customers ...unwittingly opening the door for disruptive innovation and new business models."

Tuesday, April 19, 2011

Colorado success stories: 3t Systems

From the Front Lines: Colorado Success Stories

This series of interviews with Mead Consulting clients and friends focuses on companies that have succeeded during the recession through disruptive innovation, new business models, or superior execution. The stories are told by the CEOs and business owners themselves. This article was first published on April 19, 2011 in ColoradoBiz magazine or you can read it below.
Down-to-earth customer focus helps company thrive in the cloud
Discussions of cloud computing and Managed IT Services have become the rage. 3t Systems, through its strong commitment to client satisfaction and customer service, has grown dramatically - mostly from word-of mouth referrals - doubling in the last year alone.
Ciaran Dwyer, President and CEO, was born in Kilkenny, Ireland and came to Colorado as Controller of the Irish Dairy Board in 1999. He fell in love with Colorado and in 2001 joined 3t Systems, what was then primarily an IT consulting company. In 2008, he took on responsibility for the Managed Services division becoming CEO in 2009. We recently discussed the explosive growth that 3t Systems is experiencing.
The recession brought some serious issues for many companies, but did it create an opportunity for 3t?
When the bottom hit in 2008, our traditional consulting business flattened out. We decided on a significant change in strategic direction. We had been providing our own blend of ‘high touch' hosting for many years, we provided software as a service for our sister company's clients from our datacenters and we believed that the recession would boost that aspect of our business. Clients realized that they needed to address their aging IT infrastructure and, with the appeal of our fixed monthly fee, the ‘cloud' solution drove a huge increase in that part of our business, so much so that our hosting business has surpassed our IT consulting business.
Who uses your products and services?
Our sweet spot is companies between 50 seats and 1,000 seats with vertical specializations in the healthcare, financial services, and construction industries. In the Front Range, however, we have clients from a broad array of industries and like that diversity. We like the blend of IT consulting and managed services, since the consulting element enables us to maintain a high level of technical proficiency and vendor certifications that are very useful in delivering high quality managed services. It all fits nicely together into what we call IT Co-Sourcing; a partnership approach to IT Outsourcing. Some clients have a strong IT staff but need our pinch hitters for a specific project, while others don't have any dedicated IT people and hand it all over to 3t to be an extension of their team.
What makes you different?
Most of our competitors started as either data center providers or managed services providers. As such they are either operationally efficient or customer-centric, but generally not both. We are somewhat unique in that we have experience with both customer relationships as well as operational excellence. We are totally focused on the user experience. We understand the needs of small and mid-size client organizations. Since many of these companies they have little or no IT resources, they rely on us to take more responsibility and provide them a complete solution. Many times the decision to outsource has been precipitated by a trigger event - an outage, a loss of personnel, or running out of capacity - so these clients need someone to help quickly get them back on track.
What are your biggest challenges?
With the market for managed services growing so fast, by far our biggest challenge is staffing, finding people with the right skills. Virtualization skills are in high demand right now. Since our culture has been to develop people from within, we will need to continue to help train and upgrade skills.
Another challenge is to define where and what we want the next stage of growth to be. We want our growth to be very intentional. We are embarking on a North American strategy which focuses on the healthcare and construction vertical industries, as well as a blend of different mid-size companies within the state of Colorado.
So what really keeps you awake at night - besides your 2-year-old twins?
Managing through the "growth pains" - people, client satisfaction, scale. I think about the current and future competitors and the next ways to further differentiate 3t. Most of all, I think about ways we need to grow in order to continue to be the best at serving the customer.
What are the keys to continued growth over the next 5-10 years?
An ability to take advantage of an "early-mover" advantage. We need to balance the need to scale quickly with our overriding commitment to maintain high levels of client satisfaction. We have had the benefit of growing to this point without much sales and marketing effort. We need to manage sales and marketing to the next level.
How would you describe your culture?
Fast-paced. We say a year at 3t is like three years at another company. The "3t" in our name stands for truth, trust, and teamwork. We tell clients exactly how it is. If we make a mistake, we own it and fix it.
Comment on the business climate here in Colorado.
Coming from Ireland, I see dramatic advantages here. I love the rugged individualism of the people in Colorado. People have a real entrepreneurial spirit, a glass-is-half-full optimism, and ‘mid-western values' that make this a terrific place to build a company. Everyone says that Ireland is beautiful and green but there is a reason for that. I'll take the 300 days sunshine any day.

Monday, April 11, 2011

Colorado success stories: Newsgator - Enterprise social computing: making Facebook, Twitter, and LinkedIn work for the enterprise

From the Front Lines: Colorado Success Stories

This series of interviews with Mead Consulting clients and friends focuses on companies that have succeeded during the recession through disruptive innovation, new business models, or superior execution. The stories are told by the CEOs and business owners themselves. This article was first published on March 30, 2011 in ColoradoBiz magazine or you can read it below.
NewsGator specializes in Enterprise Social Computing which involves integrating social media and social computing (Facebook, Twitter, and LinkedIn, etc.) at the enterprise level. The company started in 2004, but hit an inflection point in 2007 when it married NewsGator's software product to Microsoft's collaborative software, SharePoint. NewsGator has been doubling in size each year for the last three years. I recently met with President and CEO, J.B. Holston in NewsGator's downtown Denver offices.

How do you compete? To what do you attribute the fast growth?

We have a bit of a first-mover advantage. We solve problems and fill voids in the Microsoft product set. We can easily drop our NewsGator solutions on top of SharePoint. The IT folks love us because our solutions are simple to deploy and allow them to take advantage of the latest innovations. Literally, we can email the application. We make SharePoint a much more user-friendly product. SharePoint was created when collaboration was document-centric; today it's people-centric. Our solutions enable the social computing side. Since SharePoint has a 100 million seat installed base around the world, we have a considerable available market to target.

Has the growth always been smooth? Were there any bumps in the road?

While from a financial point of view things have been relatively smooth, there have been a series of big decisions regarding focus. We had to decide to STOP doing certain things so that we could concentrate on other areas. For example, at one point we had an online consumer RSS reader (similar to Google Reader). We made the decision to port our product to Google. So, along the way, we have had to learn to focus well - and saying NO is tough.

Your culture is very important to your success. How would you describe it?

Our culture is centered on innovation and is very client-focused. We spend our days watching what the consumer is doing and determining how to deploy these new features and applications on an enterprise level. Because the adoption of new applications is accelerating so rapidly on the consumer front, we can wait to see if something is successful with the consumer before we decide to commit resources. That means we can effectively avoid false signals. By reading these signals accurately, we provide our customers with only the most valuable, innovative tools.

How do you maintain that culture?

We do a number of simple things. Communication is extremely important. We have an all hands meeting by video conference and in person every week. We hold mandatory meetings every six weeks in each region. As CEO, I am very transparent. We use our own system. Perhaps 50 times a day, I post messages on our system (like Facebook) sharing information, praising an employee, commenting on a project schedule, etc. By posting these messages on an open system, we include a broader group of employees rather than guessing who should be included on an email distribution. The pleasant surprise is when someone in the whole population comes up with an unexpected solution. Interestingly, we have reduced email use by 2/3. We also have an ongoing focus on training and recruiting which we are working to improve as we scale the business.

How do global factors impact your growth?

Currently, 30 percent of current sales are outside the U.S. We will need to continue to establish operations outside the U.S. where local and regional "go to market "strategies are different. Additionally, outsourcing and cost competition are factors that need to be addressed and balanced with such factors as speed to market.

What are the keys to growth for NewsGator over the next 5 -10 years?

The company needs to grow at least 4X over the next two years - just to keep pace with the market. How do we keep up with that growth? Talent management is the most critical variable. We'll need to find, recruit and develop the right people, including building a management team that can scale as the company grows and adapt to an ever-changing environment. Along with finding adaptable people, we need to keep pace with the technological shifts.

A great example is what has happened in our sales effort. In the early stages, we needed a high percentage of people in outside sales. Now we no longer need to evangelize; enterprise social computing is well understood, but we need sales people who can understand the customer's specific need for social collaboration much more quickly and get to a 'quick yes.' We will also need more inside sales people. With the advances of video technology, I can see a time when even our "outside sales" people will not actually travel.

Comment on the business climate in Colorado?

While there are not as many people in Colorado who have operated in a hyper-growth business environment (such as Silicon Valley, for example), Colorado employees are extremely smart, loyal and engaged. There needs to be a better eco-system in Colorado to support software companies that want to grow to a significant size. This will be a critical issue for us as we continue to grow.


1. From the Front Lines: MORE Company Success Stories

2. Watch for the following upcoming series:

The Coming Window for Selling Your Business. Are You Preparing to Sell During the 2012-2014 Window of Opportunity?