Sunday, April 13, 2008

Speaking of the 5 o'clock Shadow: Case Study

I find it ironic that a week after I write an entry about companies who believe they have a product that can save the world, yet no one buys it, I come across an article touching upon the issue.

As I was readying Inc. there was a case study on a similar situation. Is the Small Biz. Guru beginning to foresee the future? Anyways, here is the what transpired:

Bill Randle was a bank executive with an entrepreneur waiting to emerge. His software promised, "big savings, while also allowing banks to offer better service. They could give customers one easy place online in which to view all sorts of accounts, from checking to savings to mortgage and auto-loan balances. The product would also give banks a real-time unified view of balances, inflows, and outflows, which could help them make more informed lending and financing decisions throughout a day." (Salkever, Alex Inc. Magazine, pg 70)

The background information was that of a situation where banks were unable to adequately judge cash levels until the close of business. On top of that, it required tremendous labor time.

Mr. Randle left his executive job at the bank, purchased full control of the software, raised millions of dollars, and hired a CEO.

Yet, as the article mentions, the timing could not have been any worse. "Banks feared losing business online to upstarts... and were looking for ways to offer similar online services" As a result, R&D money was limited thanks to the Y2K scare! (Ahhhh, to think, two digits instead of four could have caused world chaos!) Add in the dot-com/Internet bubble choking and welcome economic "gloom."

So, needless to say, Bill laid off most of his work force, at one point he had 120 employees, he emptied all the way down to 10. It was at that point, he realized, maybe it was time to change market segments. Not too mention the over reliance on two main clients. What were to happen if one of these clients were to leave? Eek! Now, imagine 10 people trying to manage current accounts and bring in new business?!

As a result, Synoran (company name) decided to join in on the mess that is health care. Now, I will be the first to say my knowledge in health care is limited. All I know is that it is extremely expensive, no clear vision, and there is probably someone making a lot of money because of this chaos. The article's brief description of health care, "deal with a mass of incompatible computer networks among insurance companies, testing labs, third party plan administrators.." all that interact in a very secure environment.

But, there are 100s of IT companies in the mix as well.

So, the present situation today is:

Randle left with a skeleton crew, limited funds, no r&d resources, nor marketing.

Now let's do a little analyzing here:

Synoran thought they had struck gold. They had a product/service that could reduce costs, streamline processes, and take the load off of employee workload. But, timing is everything and they were off. Not only was timing off, it seems they expected for the product to sell itself. And we all know, you have to put in the sweat and tears to reach success... oh yea, and have a sales force.

A business needs employees knocking on company doors, making calls, building PR, and raising awareness in the communities. Unless a business is very well connected, building a foundation takes a lot of time. I have spent almost 10 months building my foundation and I feel that I am still a ways off and I'm glad. I am doing the grunt work, fortifying my long term success because that is what it all comes down to... long term success and have an invincible foundation. I do not give it to the short-term mumbo-jumbo.

Synoran is down to a skeleton crew, barely a sales force, no resources, and moving into an industry where the competition is so fierce and the time-line is so long a battle of attrition is the main factor. I love under dog stories and stories of businesses that went against all odds, but this may be much bigger than simply David vs. Goliath.

Good luck Synoran, good luck.

~the GURU

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