Theory of Constraints POOGI - Part 49

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Do-it- yourself 'Viable Vision' continued ...

Brad: "Most businesses find that their fixed costs increase nearly proportionately when sales increase. How is this avoidable?"

Dr Lisa: "Yes, and some gleefully hit a sales goal only to notice that profits have decreased due to having to increase fixed costs to meet the goal."

Dr. Lisa: "By leveraging the resources they have. There needs to be a monitoring system for the performance of operations. By determining the reasons why due-date commitments are threatened, actions can be taken-using lean and six sigma tools-to improve performance, normally without adding resources."

Brad: "Can a small business owner lead this kind of improvement process?"

Dr. Lisa: "Sure. The companies going through the Velocity Scheduling System Coaching Program are doing that now. They are getting to 100% due date performance in about 2 months WITHOUT a consultant camped in their conference room and at a fraction of the price. Next, those companies will participate similarly in an on-line version of the Mafia Offer Boot Camp. The combination of those 2 programs will get those companies on their way to a Viable Vision."

Dr Lisa: "Actually, having the owner and his/her executive team really drive Viable Vision kind of improvement is the only way to go. They just need a proven process and little coaching so they know how to apply the concepts to their situation along the way."
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If you are a business owner that would like to turn your company's sales level into its profit level in four years or less, please contact Brad Stillahn at Brad@ScienceofBusiness.com with an email that says "I'm interested". We recommend our www.MafiaOfferBootCamp.com to develop your Mafia Offer, and our www.VelocitySchedulingSystem.com to achieve 'perfect' operations

Here's to maximizing YOUR profits!

Dr Lisa Lang

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Theory of Constraints POOGI - Part 47

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints. {This series was co-written with Brad Stillahn.}

Do you really think you can do it all yourself? continued

Brad: "So, we agree on the problem. What's the direction of the solution? How can a small business owner get the talent they need to grow profitably?"

Dr. Lisa: "Well, that depends. It is ultimately the business owner's decision. I think it comes down to two choices that are not mutually exclusive:
1. Build an effective management team, and/or
2. Get outside help."

Dr. Lisa: "When small business owners think about getting outside help, they generally think about solving specific problems, not about running the overall business better. They'll get one consultant for one type of improvement, and a different consultant for another type of problem."

Brad: "We're back to affordability. Outside help costs a lot of money. If I have a problem I can't fix myself, I'll get the help I need to fix the problem. Like a plumber, electrician, or a 6S Lean consultant."

Dr. Lisa: "Think bigger. A business should be a money-making machine. There is one overall process that needs to be defined and improved."

Brad: "Well, I can think of a couple of examples of ways to get outside help. One is to belong to and be active in an industry association like NTMA. That's a way to learn from successful peers. Another is to join a CEO membership organization like Vistage. I've been a member for six years and it has provided me value."

Dr. Lisa: "Absolutely, both are important. But I have a recommendation. Get help to specifically improve your business, your money-making machine."

Brad: "I did that. I paid for the best TOC consultants available for four years before I felt I was self-sufficient. But that was expensive. The day-rates were sky-high. We're back to affordability."

Dr. Lisa: "Any good consultant should be willing to get paid if and only if they produce bottom-line results."

Brad: "But we've made the case that a business owner can't know everything. Can a consultant know it all?"

Dr. Lisa: "Well, we like to think so! I recommend a business process improvement team that is involved over a period of time to help the business owner achieve his or her goals. To help them think big, we recommend 'Viable Vision'. Viable Vision is defined as turning your sales level into your profit level in four years or less. It's aggressive but doable. And the value of the business soars with such increased profitability."
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If you are a business owner that would like to turn your company's sales level into its profit level in four years or less, please contact Brad Stillahn at Brad@ScienceofBusiness.com with an email that says "I'm interested". We'll follow up to discuss how it just might be possible for you, and share with you our 100% results-based option where you pay if and only if your bottom-line increases."

Here's to maximizing YOUR profits!

Dr Lisa Lang

P.S. If you have an internal constraint, check out http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.velocityschedulingsystem.com%2F&id=preview Group 5 starts November 23, 2009! (for job shops only)

P.P.S. If you have an external constraint, check our our ON-LINE at http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.mafiaofferbootcamp.com%2F&id=preview; GROUP and PRIVATE Mafia Offer Boot Camps at http://rs6.net/tn.jsp?t=ejsoxadab.0.0.vsi4mocab.0&p=http%3A%2F%2Fwww.mafiaoffers.com%2F&id=preview

P.P.P.S. If you have a cash constraint ACT NOW! Free cash video, click here --> The Fastest Way to Increase Cash Flow.

(c)Copyright 2009, Dr Lisa, Inc. All rights reserved.

Stompernet Mafia Offer Presentation by Dr Lisa

If you want the PowerPoint slides from my Stompernet Live 8 (SNL8) Mafia Offer presentation, just click here: Dr Lisa Mafia Offer Stompernet Presentation

For more on our private or group Mafia Offer Boot Camps, please visit http://www.mafiaoffers.com/

For more on our ON-LINE Mafia Offer Boot Camp, please visit http://www.mafiaofferbootcamp.com/

A couple links that you may find of interest that Brad Fallon covered in his Stompernet Live 8 presentation:

Video overview on Critical Chain Project Management -->Critical Chain Overview

Report on how to do the T/CU calculation Brad Fallon did at the event -->http://www.informationoverloaddestroyer.com/

Books Mentioned:
The Goal by Eliyahu M Goldratt
It's Not Luck by Eliyahu M. Goldratt
The Choice by Eliyahu M. Goldratt
Critical Chain by Eliyahu M. Goldratt

Dr Lisa's Vistage speech, Achieving a Viable Vision (find out about T, I and OE)

Mafia Offer Theory of Constraints Marketing Theory of Constraints Sales

We have dramatically REDUCED THE PRICE of our ON-LINE Mafia Offer Boot Camp which is based on Goldratt's Theory of Constraints.

You have no excuses! --> Theory of Constraints Marketing

Interested in an in-person boot camp? Check our our GROUP, and PRIVATE Mafia Offer Boot Camps at www.MafiaOffers.com

A Process Of On-Going Improvement (POOGI) - Part 29

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

How will we know if we have a good solution before we try to implement it?

As business leaders, we’re smart people and fancy ourselves as problem-solvers. So, not only do we skip the step of developing a deep understanding of the problem, we jump to our favorite direction of the solution. Usually, we propose the solution and are surprised by the resistance we encounter. If we have enough power and stamina, we impose the solution. If we require the consensus of other people, we often get stuck arguing about the pros and cons of alternative solutions. Other people are very good at seeing what is wrong with our idea!

A useful way out is to identify the few criteria that would be associated with any good solution to the problem. And then list as many alternative solutions that meet the criteria in whole or part as possible.

For each alternative, also predict the negative effects and the implementation obstacles. These are what are normally referred to as the “problems” with a proposed solution. In the example above, the recently imposed no-overtime policy was an attempt to control costs in the face of declining productivity. Could you have predicted the negative reaction to such a policy? When the incentive system was initially implemented, do you think management expected it to de-motivate the workforce at the end of every quarter in which it was not earned? Probably not, but it was a predictable negative effect that should have been thought through before the incentive plan was implemented.

In this example, criteria for a good solution might include:

• Immediately improve the morale of the plant
• Immediately support increased productivity
• Be sustainable.

As for alternative solutions with our example company, one is to do nothing differently. This, in fact, is what is normally done. Remember Einstein’s definition of insanity: “doing the same thing over and over but expecting different results”. Inertia is powerful. Better to live with the devil we know…

Another direction is to address directly the conflict between the current company policies and the employees’ security and satisfaction. Notice that this does not require an employee survey. We all have enough intuition about causes of security and satisfaction. The difficulty is in removing bad policies and replacing them with better policies.

So what happened? The owner took charge, realizing that the company was lax in keeping current with employee reviews. While to every employee his or her review was very important, the company had not prioritized doing them, especially since that would require delivering bad news and having to talk about pay rates. The management had also allowed a few bad attitudes to affect everyone. The bad attitudes were addressed; there was a company meeting acknowledging the importance of employee security and satisfaction, and brief reviews were held emphasizing the importance of skills, cross-training, and attitude. The company committed to paying its most skilled people better than they could make anywhere, but needed their help with increased productivity. The feedback was positive and that “something really changed” this time.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEW -- Seattle Group Mafia Offer Boot Camp. October 20 (all day), October 21 (pm), October 22 (pm), and October 23 (pm). If you're interested please contact me by email.

Are you a Vistage/TEC member who would like your team to hear my speech? Here it is: NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/. You can register by fax or on-line.

A Process Of On-Going Improvement (POOGI) - Part 22

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

You will possess a sustainable competitive advantage when you have value-creating products, processes, and services for your customers that cannot be duplicated or imitated by your competitors.

Having a competitive advantage, even a sustainable one, does not necessarily mean that you or your customers and prospects are aware of it. So, there is a need to create an Offer or positioning in the market that clearly states your competitive advantage. We call this an un-refusable market offer or a “Mafia Offer” (this term was originally coined by Dr. Goldratt). A Mafia Offer is an offer so good that (1) your customers can’t refuse it and (2) your competition can’t or won’t match it.

A Mafia Offer is NOT a list of strengths, a cliché, subjective, or offered by competition. In addition, it is sold differently. When you have a Mafia Offer, you are making a business proposal. A business proposal promises substantial improvements for your prospect, and it is appropriate to present at the highest levels of your prospects organization. A Mafia Offer addresses a significant need of your prospect in a way that your competition can’t or won’t.

Developing a Mafia Offer is not trivial, but having one improves closing rates from less than 5% to as much as 80%. Typically, additional sales people aren’t required, but sales funnel management is.

If you are interested in more information about developing a Mafia Offer, and the significant increase in sales and profits it can bring, we recommend you read “It’s Not Luck” by Dr. Goldratt. This book is the sequel to The Goal. It also is an easy to read novel that provides a story for the development of three Mafia Offers. Also, check out our website http://www.mafiaoffers.com/ to hear an example, find out how you can develop a Mafia Offer for your company, and learn about our Mafia Offer Boot Camp.

Next time, we will address managing the sales funnel once you have that compelling Offer.

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at http://www.mafiaoffers.com/. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at http://www.viable-vision.com/

FREE Marketing & Sales Constraint Assessment Webinar July 28 from 2 to 3 pm Denver time. To register, just drop me an email with which date works best for you. We have expanded our seat limitation to 50 for each Webinar. Seats are filled on a first come first served basis and both sessions are already more than half filled.

A Process Of On-Going Improvement (POOGI) - Part 21

We are continuing our series based on The Goal by Eliyahu M Goldratt and the Theory of Constraints.

When asked about what is unique and different about their company, most people reply with some of the following typical answers:

• We provide great customer service
• Our quality is outstanding
• We innovate and/or help our customers to innovate
• We have great employees
• We deliver results
• We have a very knowledgeable staff
• We are responsive to our customer’s needs
• We have a great reputation
• Our customers trust us

Don’t your competitors say the same thing? All good companies have these qualities or they wouldn’t be in business for long. We call this the “blah, blah, blah” answer because that’s what is sounds like to your customers and prospects.

Your Mafia Offer is a sustainable competitive advantage that differentiates you from your competitors. It separates you from everyone else. It is usually the reason you are in business. It answers the question “Why should I buy from you?” or “How are you better that my current supplier?”

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

NEXT Group Mafia Offer Boot Camp: September 24, 25, 26 2008 in Denver. More information at www.MafiaOffers.com. There are also PRIVATE and On-line Mafia Offer Boot Camps. The July boot camp SOLD OUT and there is no group boot camp in August. Don't miss September!

NEXT Maximizing Profitability Event (no charge): September 23, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at www.Viable-Vision.com

FREE Marketing & Sales Constraint Assessment Webinar July 21 from 2 to 3 pm Denver time or July 28 from 2 to 3 pm Denver time. To register, just drop me an email with which date works best for you. We have expanded our seat limitation to 50 for each Webinar. Seats are filled on a first come first served basis and both sessions are already more than half filled.

A Process Of On-Going Improvement (POOGI) - Part 20

We are continuing our series based on The Goal by Eliyahu M Goldratt.

What are the problems associated with marketing and sales? A few of the typical problems include:

• To prospects, what you say sounds the same as your competitors
• You have nothing unique or compelling to offer that is different
• Prospects aren’t aware of you
• You aren’t aware of enough prospects
• You have a collection of sales individuals, not a sales team
• You have difficulty getting in to see your prospect
• You have a long sales cycle
• You have a low closing rate
• You have difficulty quoting as many jobs as you would like
• Quote turnaround is too long
• There are peaks and valleys of booking sales

Yikes! That is a lot of problems! Where do we start to improve marketing and sales?

We recommend you start with your market offer or as we like to call it, your Mafia Offer. Without differentiating yourself from your competitors, it is difficult to determine what else is wrong with your marketing and sales process, and how to improve.

...to be continued.

Here's to maximizing YOUR profits!

Dr Lisa Lang(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Dr Goldratt offers his new book Inherent Simplicity at no charge, click here to get the details: http://www.scienceofbusiness.com/dr-lisa/eliyahu-goldratt/goldratts-new-book.aspx

2008 Odyssey Program. Click here to learn about the low cost life changing event for young adults. You WANT to send your kids to this! http://www.scienceofbusiness.com/events/2008-odyssey.aspx

NEXT Group Mafia Offer Boot Camp: July 30, 31, Aug 1 2008 in Denver. More information at www.MafiaOffers.com. There are also PRIVATE and On-line Mafia Offer Boot Camps.

NEXT Maximizing Profitability Event (no charge): July 29, 2008 in Denver from 1:00 to 5:00 pm at the Science of Business Training Center. More information at www.Viable-Vision.com

Also check out our FREE Theory of Constraints videos. New videos added weekly! http://www.scienceofbusiness.com/free-stuff/free-videos-audios.aspx

A Process Of On-Going Improvement (POOGI) - Part 11

Conventional cost accounting assumes that incremental and isolated cost improvements are productive and in support of an organization’s goals, and that global improvement equals the sum of local improvements.

Since a conventional cost accounting system relies on transaction data—each transaction is a separate event—it is incapable of a holistic or systems thinking perspective except when closing the books. In addition, conventional cost accounting is not capable of giving good information because it assumes that all the company’s resources are equally important.

So, how would cost accounting block you from implementing the Drum-Buffer-Rope scheduling methodology? In at least two ways:

• because of the way inventory is valued, and
• because of the impact on efficiency measurements.

Remember from the discussion of Drum-Buffer-Rope last month that we expected a reduction in Work-in-Process inventory to about half of its initial level. What is the effect on the monthly Profit and Loss statement from this?

...to be continued.

Here's to maximizing YOUR profits!
Dr Lisa Lang
(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

_____________________________________________
About the authors:
Brad Stillahn is a business owner that has successfully implemented Goldratt's Theory of Constraints (TOC) methods in his own business and is now helping other business owners do the same. His consulting company, TOC Professionals engages in long-term relationships with companies implementing TOC. His business and personal partner is Dr. Lisa Lang. Brad can be reached at Brad@ScienceofBusiness.com or 303-886-9939.

“Dr. Lisa” Lang is President of the Science of Business. Her speech “Maximizing Profitability” is popular with Vistage groups and as a keynote speech. Recently Dr. Goldratt’s Global Marketing Director, she offers the “Mafia Offer Boot Camp” for companies wanting to develop and implement a Mafia Offer. She can be reached at DrLisa@ScienceofBusiness.com or 303-909-3343.

Mafia Offer Boot Camp Preview Video

Our Mafia Offer Boot Camp is based on Goldratt's Theory of Constraints. Mafia Offers or Unrefuseable Offers were first introduced in It's Not Luck. This is a video preview of the one and only Mafia Offer Boot Camp. Enjoy.

A Mafia Offer is the key to exploiting a market constraint or sales constraint. It could also be called an unrefuseable offer, an irristible offer, a market offer, a touchstone, a competitive advantage, a value proposition, or a unique selling proposition.

However, when most people are talking about a touchstone, a competitive advantage, a value proposition, or a unique selling proposition (USP) these are actually quite different from a Mafia Offer. They basically take what you already do and state it succinctly and with more specificity. A Mafia Offer typically requires that you do something different to actually deliver something unrefuseable to your customers and something that your competition can't or won't do because they are not willing to or don't know how to make the change.

In this way, a Mafia Offer is a longer lasting competitive advanatage instead of just a positioning.

Here's to maximizing YOUR profits!

Dr Lisa Lang

P.S. The next Group Mafia Offer Boot Camp is in Denver March 25, 26, 27 in Denver.

(c)Copyright 2008, Dr Lisa, Inc. All rights reserved.

Upcoming Theory of Constraints Events

1st Quarter Group Mafia Offer Boot Camp
- January, 30, 31, Feb 1 2008 in Denver
- February 25, 26, 27 2008 in Denver
- March 24, 25, 26 2008 in Denver
- More information at http://www.mafiaoffers.com/

NEW REMOTE (on-line) Mafia Offer Boot Camp
- Done at your own pace and time of your choosing
- One on One support provided by phone conferencing
- More information at http://www.mafiaofferbootcamp.com/

PRIVATE Mafia Offer Boot Camp
- Done at your location and at a mutually convenient time
- More information at http://www.mafiaoffers.com/

NEW Theory of Constraint PRICING Project
- We usually do pricing projects as part of larger results based consulting engagements, but because they have been so successful (typically 10 to 20% return on sales), we have decided to offer stand alone pricing projects.
- If you have not yet gone through “Pricing using Theory of Constraints”, please see: http://drlisamaxprofit.blogspot.com/2007/05/pricing-using-theory-of-constraints.html
- More information at http://www.scienceofbusiness.com/Default.aspx?tabid=144

Goldratt CCPM Webcast starting February 13, 2008
- Watch Goldratt LIVE or rebroadcast.
- Dr Goldratt will be covering, never before released knowledge using the Strategy & Tactics tree.
- There are five 2.5 hour sessions. There are a number of options for viewing the webcast with pricing from $350 to $2500.
- More information at http://www.scienceofbusiness.com/Default.aspx?tabid=140

Executive Access Boot Camp
- Feb 28, 29, and March 1 2008 in Denver
- March 27, 28, 29 2008 in Denver
- More information at http://www.executiveaccessbootcamp.com/

SPECIAL: Free Shipping on the live recorded 3 hr workshop “Achieving a Viable Vision”, send an email to order for $99 (regularly $199). For more information: http://www.scienceofbusiness.com/Default.aspx?tabid=133

How to Sell Your Mafia Offer - Part 10

Who should we target with our offer? and How should we roll it out?

STEP 3

Your marketing and sales core team generates a list of prospects for your mafia offer roll out:

• Mapping current prospective clients (existing, past, new) creating a wide list of prospects belonging to the preferred market sectors.
• Defining prospects for test launch (representative clients salespeople can approach as soon as possible); Prospects which are already in the pipe line and that are quite suitable for the offer; Existing clients with substantial business yet to be gained suitable for the offer; New prospects which are best suitable for the offer and have a short internal decision time.
• Defining prospects to become key accounts. Based on Returns: Barriers assessment, the company should focus its sales efforts on winning a big share of their business.
• Giving high priority to reduce the risk of losing key accounts.
• Warning: if a client is responsible for a high share of the Company business – do not increase its share.

If you follow the 3 Steps outlined, you now have a good list of prospects for both near term and longer term development.

In this 10 Part series we covered how to sell your mafia offer. How to present it, to whom to present it, how to get in to present it, who to target with your offer and what to watch out for along the way. The first step, however, is to create YOUR mafia offer. Mafia Offers were first introduced in Theory of Constraints by Eliyahu M Goldratt's It's Not Luck and you get some idea of how to create one. However if you need more guidance, you may want to consider a Mafia Offer Boot Camp!

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

NEW We have developed a REMOTE (on-line) Mafia Offer Boot Camp. Click here for an informational video and a FREE Preview of Session 1: http://www.MafiaOfferBootCamp.com/

Next GROUP Mafia Offer Boot Camp in the US is January 30, 31, February 1, 2008 in Denver. Sign up today, registration is limited to 5 companies. $10,000 per company.

How to Sell Your Mafia Offer - Part 9

We started this discussion about how people are more interested in avoiding (or reducing) pain than they are in increasing pleasure. We discussed how to present a Mafia Offer (based on Goldratt's Theory of Constraints) consistent with that desire.

Because mafia offers are business deals we also discussed how to get in to the right level to make your offer. See Executive Access Boot Camp below.

The next questions likely are: Who should we target with our offer? and How should we roll it out?

Here are some guidelines:

STEP 1

•Examine the different market sectors you serve, evaluating the extent which your mafia offer solves solves a significant problem for each market sector. What are the consequences of not solving that problem for each market?
•Examine 3 (prospective) clients per market sector (less than 3 may risk looking at extreme case, more are not needed).
•Based on the above identify the preferred market sector(s) to leverage YOUR offer.

STEP 2

Having looked at where the problem (that you solve) is the greatest, now let’s look at other considerations:

• Is there a market(s) that yeilds higher Throughput than others?
  Past experience can point to the type of clients/market-sectors/product-types that yield better Throughput. A particular client may yield less Throughput initially but would enable you to win good future business (penetrating a client, establishing reputation, gaining experience, steady annual income).
• Is there a market(s) that are more quickly accessed or has shorter sales cycles than others? Some big organization clients have decision processes which prolong significantly the sales cycle. To win the business of some types of clients/market-sectors/product-types, you may need to invest in qualification. In some regions/market sectors, you have much less sales infrastructure than in others.
• Is there a market(s) that are bigger than others?

Based on your answers to these questions, your marketing and sales core team should evaluate returns and barriers to create a proper sales plan - a plan that aims at increasing business in the short and medium horizon while preparing the ground for bigger sales in the future.

... stay tuned for STEP 3 in Part 10

NEW We have developed a REMOTE (on-line) Mafia Offer Boot Camp. Click here for an informational video and a FREE Preview of Session 1: http://www.MafiaOfferBootCamp.com

Next GROUP Mafia Offer Boot Camp in the US is January 30, 31, February 1, 2008 in Denver. Sign up today, registration is limited to 5 companies. $10,000 per company.

Next GROUP Executive Access Boot Camp is February 28, 29, March 1, 2008 in Denver.

$1,875 per person for all 3 days.

Here's to Maximizing YOUR Profits!

Dr Lisa Lang

(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

How to Sell Your Mafia Offer - Part 5

You wrap up a Solution for Sales Mafia Offer presentation the same way you do any presentation. You agree on the next steps and get a specific commitment to the first next step.

So far we have focused our discussion on the more formal PowerPoint presentation. However, there are some offers that lend themselves to a simpler One Pager/Sell Sheet. And in both cases having the shorter version is useful for websites and other collateral.

Check out this website: http://www.drewco.com/. Drewco is a client having gone through a private Mafia Offer Boot Camp in November 2006 and proudly displays their offer on their website. And, if you know anyone who has to have custom workholding devices when promised, please also send them to Drewco's site!

... stay tuned for Part 6

Next Mafia Offer Boot Camp in the US is January 30, 31, February 1, 2008 in Denver. Sign up today, registration is limited to 5 companies.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

How to Sell Your Mafia Offer - Part 3

In Part 2 we discussed how we start the Theory of Constraints Mafia Offer Solutions for Sales presentation by agreeing on the problem. I can't stress enough how important it is to really nail this first part of the presentation.

In no more than 4 slides you should be able to describe how YOUR industry (you and your competitors) are having a negative impact on your customer's bottom-line. If you can do this instead of the typical "Background of Our Company" and "Background of Our Products" they will be eager to hear what yo have to say next instead of being half asleep.

During this part of the presentation I like to generate conversation if there is an opportunity. This is nice because often there are people in the room (we will discuss who should be in the room later) who are not fully aware of these situations or the order of magnitude of them. For example (continuing for the Part 2 example) I may ask if in fact they have the experience of having to hold higher inventories due to a supplier's policy and if despite the fact that they have too much of some inventory do they stock out or almost stock out of others. I'm hoping to hear a story about a time when they ended up having to dump a bunch of inventory and also one about what happened when the stocked out.

Once we have our customer's head shaking in agreement and they have shared a couple stories, they are actually eager to hear what you have to say next. You are the first vendor that has so eloquently described the dynamic between industry practices and you verbalized it better than even they have or could.

The next thing we cover is "Agree on the direction of the solution".

... stay tuned for Part 3.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

PS There are only a couple Mafia Offer Boot Camps remaining this year. Act fast or January 2008 will be your next opportunity!

How to Sell Your Mafia Offer - Part 2

In Part 1 we discussed some background on "framing" and the importance of how you present an offer. So now we are going to apply that to presenting a Theory of Constraints (TOC) Mafia Offer.

During a Mafia Offer Boot Camp we create either a PowerPoint presentation (called a Solutions for Sales presentation) with your offer and/or what we call a 1 Pager. In both cases we follow the same framing.

1. Agree on the problem.
2. Agree on the direction of the solution.
3. Agree that our solution solves the problem.

The above is part of the Theory of Constraints buy-in process. Notice the resemblance to what was presented in Part 1 regarding Ludwig von Mises' three requirements for an individual to change:

1. The individual must be dissatisfied with the current state of affairs.
2. They must see a better state.
3. They must believe that they can reach that better state.

Let's look at each step in some detail.

1. Agreeing on the Problem.

In the PowerPoint presentation we start with "Analysis of the Supplier's Practices". In this part of the presentation we show how suppliers in our industry (us and our competitors) have a negative impact on our customer's business. These negative effects are due to our practices. Typically these practices are common across our industry and include minimum order requirements, scheduling practices, lead-times, and so on. In this way we are starting with how OUR practices are the cause for at least some of their problems.

Here's an example:
Supplier Practice: Minimum Order Quantities and Volume Discounts
Customer's Mode of Behavior: Batch orders (delay ordering) to accumulate needs and order larger quantities than immediate needs require to get the discount.
Implications on Customer's Business: High inventory with all the cost and risk that goes with it.

Here's another:
Supplier Practice: Charge based on time or by project.
Customer's Mode of Behavior: Slow decision process (check references, etc.) to be sure that promised benefits will be actualized.
Implications on Customer's Business: Promised benefits are not always realized or if they are, they were delayed.

When you do the typical sales call -- show up and throw up spouting all the features and benefits of your product or service, the customer is automatically resisting and looking for reasons not to buy. By starting with how WE negatively impact them, customers are more open to hear what we have to say next.

I typically like to generate discussion around these problems because often times there are people in the room that were not aware of the situation or the magnitude of the problem.

In the 1 Pager we start similarly but we have an opening sentence or two to explain the problem(s). We would start with something like:

Widget suppliers typically require their customers to order minimum quantities and give further incentives to place even bigger orders because that's what's best for them. Have you followed the rules? Have a small mountain of inventory? But still stock out? Is doing what's best for us, not as good for you?

... stay tuned for Part 3.

Here's to Maximizing YOUR Profits!
Dr Lisa Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

Book Review: Blue Ocean Strategy

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the
Competition Irrelevant by W. Chan Kim and Renee Mauborgne.

This review will focus on pointing out those things that are consistent with Theory of Constraints (TOC) and my opinions from those things that are not.

The authors have done a nice job of explaining the problems with current strategy and market development techniques. Specifically, I agree that:

• "... with supply exceeding demand in more industries, competing for a share of contracting markets while necessary, will not be sufficient to sustain high performance." pg 5
• "The result has been accelerated commoditization of products and services, increasing prices wars, and shrinking profit margins." pg 8
• "In overcrowded industries, differentiating brands becomes harder in both economic upturns and downturns." pg 8
• "The trend toward globalization has compounds the situation." pg 8

No question. There is a problem. We can't continue to do things in the same way and expect different results. However, I believe that a couple key assumptions have lead the authors astray.

Here is what I don't agree with:

• "To seize new profit and growth opportunities, they need to create blue oceans." pg 5

Blue oceans are new products in new markets/industries and I believe that in many cases this is an invalid assumption -- that you MUST create new products and/or new markets/industries to substantially grow profits. I believe that this is invalid because we have experience in creating irresistible market offers that we call Mafia Offers. These Mafia Offers are typically for existing products in existing markets. The reason we focus our Mafia Offers develop on existing products in existing markets can be traced back to the 5 Focusing Steps that were discussed in The Goal by Eliyahu M Goldratt:

1. IDENTIFY the system's constraint.
2. Decide how to EXPLOIT the system's constraint.
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the system's constraint.
5. If in the previous step the constraint has been broken, go back to Step 1.

If your system's constraint is the market, then new products or new markets/industries is an ELEVATION step. I believe that before we elevate we should first try to get more (EXPLOIT and SUBORDINATE) out of what we already have.

The authors then address the risk associated with new products in new markets/industries:

• A systematic process will minimize risk to expanding into new products and/or new markets/industries. I agree with this, but then they go on to imply that it would be no more than the risk of strategies around existing products/markets/industries.

I think the business owner who was investing in the new development would disagree.

In contrast, a good Theory of Constraints Mafia Offer will achieve all the positives of a blue ocean strategy without the risk. Because mafia offers are developed on existing products/markets/industries and with little or no investment, it is an EXPLOIT and SUBORDINATION step.

Okay, now back to more about what I liked:

• If and when you need to develop new products/markets/industries then I think the process outlined by the authors is very good.

Almost everyone at some point WILL need to develop new products/markets/industries and I liked this approach. I do think it would be difficult to implement the approach just based on what's in the book. But the framework is there.

Here's to maximizing YOUR profits!

"Dr Lisa" Lang

(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

Need an example of a Mafia Offer? http://www.podcasternews.com/programs/87/better-process-podcast/3574/?A=1

Blue Ocean Strategy Review on its way ...

I'm currently reading Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne.

After several people coming up to me after speeches and telling me that my mafia offer idea sounds a lot like the blue ocean strategy, I have decided that I better determine for myself if that is true.

So far, let's just say it is NOT exactly true. But, I will do a full review once I finish. If any of you have any comments on the topic, please drop me a line.

I'll be back after I complete my review.
Here's to maximizing YOUR profits!
"Dr Lisa" Lang

P.S. Next GROUP Mafia Offer Boot Camp is Aug 29, 30, 31 in Denver. More information at http://www.mafiaoffers.com/

All rights reserved. ©2007 Dr Lisa, Inc.

Mafia Offer Boot Camp Schedule

We just completed another successful Mafia Offer Boot Camp. This was a group boot camp with 4 companies in attendance. We developed 4 very nice mafia offers. The group dynamic is always very interesting because other companies provide feedback on your offer.

We just set the schedule for the rest of the 2007 GROUP boot camps:

• August 29, 30, 31 - Denver, CO
• September 26, 27, 28 - Denver, CO
• October 24, 25, 26 - Denver, CO
• TBD Nov/Dec - Sydney, Australia
• TBD Nov/Dec - Auckland, New Zealand

We also did a private boot camp at the end of May and I received this quote:

"We participated in a Mafia Offer Boot Camp in May 2007. It was a great 3 days! There's a lot of passion that "hey we can do this" and the offer we developed is so much more powerful than where we started! We are looking forward to the follow up calls and to getting started!"
Bob M, General Manager of a small division of a fortune 100 company

Here's to Maximizing YOUR Profits!
"Dr Lisa" Lang

P.S. I'm on vacation next week on a week long bicycle ride through Colorado. I'll be back at the first of July.

Mafia Offer Boot Camp Season

I did not write last week. We were doing a boot camp in Kansas City plus a speech for a TEC/Vistage retreat in Michigan. It's Mafia Offer Boot Camp Season. This is a good time of year to do a Mafia Offer Boot Camp because budgeting and preparation for next year are right around the corner. What better way to prepare?

• To have a mafia offer to strategically drive your organization!
• To answer the question why change!
• To sell the improvements you made this year! (If you uncover capacity or increase efficiencies, but don't sell them -- what bottom-line impact have you had?)
• To have a specific plan on how to substancially increase sales AND profits!

We have a group boot camp coming up June 13, 14, 15 in Denver. If you need to decide what next year will bring and the plan to do it, you should consider attending. Drop me a line if your interested in the details and if your company is a good fit. See also www.mafiaoffers.com

And, if you're ready for a break from HUMIDITY then you are also ready for a visit to Denver, Colorado! Did I mention we were in the midwest this week?