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Managing Autonomy
In his September 1993 feature on self-directed work teams ["What the Experts Forgot to Mention," [Article link]], John Case wrote that a manager's job is to "encourage and reward good ideas and innovations -- but make sure teams don't take too much responsibility into their own hands." How do you balance those two conflicting forces without micromanaging?

Peter Huller

San Francisco

* * *

We're partial to participative management styles that encourage group problem solving, so we'd urge you to continue tapping the collective wisdom of your employees. Some CEOs would say that's your primary duty: "As a manager, you want to minimize the number of things you personally have to touch and maximize the initiative of your employees," says Bob Freese, CEO of Alphatronix, a maker of optical-storage systems in Research Triangle Park, N.C. (For snapshots of diverse employee-involvement systems in action, see "People Power," July 1993, [Article link].)

But you can't empower employees without holding them accountable for their actions, notes Bob Rosen, author of The Healthy Company (Jeremy P. Tarcher, 1991, $14.95). Laying down decision-making guidelines for people to follow is hardly micromanaging. Plus it will make your job of "disciplining" employees easier. When people foul up, managers at some of the best-run companies we know of typically confront them with two questions: "What are you doing to fix this?" and "What can I do to help you?"

"The biggest problem is when subordinates make decisions without the full knowledge of how their actions will impact other areas of the business," observes Dave Wiegand, CEO of Advanced Network Design, a telecommunications company in La Mirada, Calif. The solution is basic, though it's easier said than implemented: everyone from the boardroom to the shop floor has to clearly understand the company creed, so that each person will be able to make decisions -- even split-second ones -- that embody the core values you (and ideally, your employees) espouse.

Your top priority is to concentrate on shaping your company's culture. Consider adding to your mission statement a definition of management's role in helping employees formulate and meet expectations. "We set up a system in which every employee in a given situation would pretty much make the same decision a manager would," says Freese. Post the new creed at your company's high-traffic intersections, and mail copies to your business associates.

Then develop checks and balances that remind employees of their responsibility to stay within agreed-upon decision-making boundaries, says Rosen. Communication is key. Give your employees a direct link to the top: electronic mail, suggestion boxes, and sound-off sessions are useful. Alphatronix compiles employee feedback into single-page reports; frequent, results-driven discussions are also de rigueur. Teams gather regularly to debate and set productivity goals. CEO Freese and his four senior managers meet each Monday for an hour to kick around company developments. Quarterly check-ins give work teams the chance to meet with managers to modify their departmental business plans, point out production bottlenecks, and propose solutions. And once a year, at the five-year planning assembly, Alphatronix's employees get a bird's-eye view of their company. "It ties everything together," says Freese.

Never presume your employees can't handle workplace freedom, because you can always train them to handle it. The trick, says Wiegand, is to win the respect of new hires early on by setting up a series of one-on-one interviews to discuss what they want to accomplish at your company. From there, you might let employees write their own job descriptions or help you improve the profit-sharing plan, as Rick McCloskey does. McCloskey, the founder of System Connection, a cable maker in Provo, Utah, says that the risks involved in employee empowerment are well worth taking. To make it work at your business, you have to believe that, too.

* * *

Which Way to Market?
I have a unique software idea that I'd like to promote either by selling it to an established company or by bringing the product to market myself. How do I decide which route to take? How can I protect my idea while I decide?

Alan Meyer Perla

President

Perlas of Wisdom

Topanga Canyon, Calif.

* * *

The barriers to entering the software market are formidable: the industry boasts a quickly maturing customer base and well-established distribution channels that won't carry you until you've proved your worth. (But you can't prove your worth until your product has been successfully sold -- it's a catch-22.) Also, even well-capitalized software start-ups underestimate packaging and advertising costs, notes programmer-turned-CEO Bob Parsons. His $50-million company, Parsons Technology, in Hiawatha, Iowa, collapsed twice in its early years, despite periodic cash infusions and drastic price cuts.

First off, realize that quality is the single most important factor. Once you've developed the product, conduct a benefits-and-features analysis on it and on a handful of competing products, suggests Tom Mosley, author of Marketing Your Invention (Upstart, 1992, $19.95). You can use the outcome as ammunition when you pitch your product's worth.

Given that your chances of securing shelf space by yourself are slim, experts agree that licensing is a natural. But first you might get a feel for who's been licensing what to whom by visiting the nearest depository library of the U.S. Patent & Trademark Office. (Call 703-308-4357 for locations.) Then conduct a search for potential licensees via Dialog or another on-line service to generate a list of candidates broken down by standard-industrial-classification code, product, and location. (The cost of research: about $200.)

You should measure initial interest among the contacts you've found by mailing a not-too-revealing package of information about your product. "Licensees have to earn the right to get the whole enchilada," says author Mosley.

Once you've found a suitable licensee, negotiate your compensation as if your life depended on it. As a rule, the higher the gap between the manufacturing cost and the wholesale price, the higher your royalty should be. If a licensee offers you 20% to 25% of net profits on sales of your product, force it to calculate your cut based on the product's gross income. "Inventors don't know how a company calculates profits," says Mosley. And be skeptical of a cut that's tied to the wholesale price of your software. A licensee could always turn around and sell the product directly to the consumer.

If you're still up for marketing the product yourself, and if you've got trustworthy contacts who have a vested interest in your success, you might be able to use those contacts to reel in potential customers and maybe even distributors. But industry insiders urge you first to interview other inventors who have built companies around their products. Find them by calling the National Congress of Inventor Organizations (801-753-0888), which will provide contacts at local inventors' clubs, associations, and innovation centers.

Always fence in your intellectual property. If you're unable to write code yourself, you'll need to protect the idea in the short run by signing a work-for-hire contract with the programmer. For a roundup of later-stage copyright and patent options and the different legal issues they raise, read Stephen Fishman's Software Development: A Legal Guide (Nolo Press, 800-992-6656, 1994, $44.95; includes a disk).

* * *

Foiling Direct-Mail Fraud
What can a growing direct seller do to reduce its chances of being ripped off by customers?

Scott Griggs

President

Model Train

Atlanta

Even seasoned direct sellers are targets for would-be con artists. "We've been given names of fictitious industrial parks," says Rob Reidl, president of Fox Valley Spring, a maker of industrial springs in Appleton, Wis. The onus is on you to qualify buyers and to hire and lean on processors to verify customer credit and guarantee payment.

But let's concentrate on the front end. You really must filter out less desirable customers. Start by figuring out whether you're advertising in the right places to attract repeat buyers. Targeting is key: "We placed ads in trade and hobby magazines, but those callers said they wanted to build models, not buy them," says Suzanne Learned, co-owner of Seacraft Classics, a seller of model ships in Scottsdale, Ariz. When Seacraft switched to more upscale publications such as the Wall Street Journal , Forbes , and the New Yorker , sales picked up.

Once you start receiving inquiries, you've got to screen them. Rinaldo Brutoco, cofounder of Red Rose Collection, a card and gift catalog company in Burlingame, Calif., suggests you set up a different, more comprehensive screening process for first-time buyers. Ask callers where they heard about you and if they'd like to receive a brochure, a catalog, or a videotape that will give them a better sense of what you do. Better yet, says Brutoco, sell such marketing material for a modest fee through display ads, and let the fee go toward the purchase of merchandise.

It's also important to have sound credit-verification procedures in place. Refer to publications offered by the Direct Marketing Association. (Call 212-768-7277 for a catalog; annual membership starts at $725.) For quick tips on how to remedy credit-card or check fraud, scan How to Protect Your Business (Council of Better Business Bureaus, 703-276-0100, $14.95).

It also helps to provide superior customer service in case you have to call on the services of a collection agency. (If an agency sees that you've taken ample precautions to avoid misdirecting shipments or sending unordered merchandise, it will probably work harder for you.) Be as flexible as you can about shipping and payment, but ask for a down payment. Learned also urges you to insure shipments and follow up to make sure packages arrive intact. n

-- Reported by Karen E. Carney.




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