Promoting your content through RSS feeds

To many of you, this article will be preaching to the choir. In fact, quite a few people already read these articles via an RSS feed in a newsreader, browser, or on their Google, Yahoo or MSN personalized homepage. If you haven’t already done so, you can subscribe to my articles simply by clicking on one of the icons on the right side of the Morettini on Management Blog, just below “Google News” link. There is an icon for a generic XML feed, and also simple icons for adding my feed to your Newsgator Reader, or your MSN or Yahoo personalized page. There’s even a way to have the feed sent to you instantly via email as soon as it’s published, via the email subscription box provided by Feedblitz. So you can play around with receiving an RSS feed, right here on my site.

However, RSS is still an emerging opportunity which many companies haven’t yet exploited. So for those of you not already using RSS in your business, here’s a brief tutorial:

The origin of the term RSS is a bit hazy, and it has several different definitions. But to most people, it means “Real Simple Syndication”. RSS is an XML-formatted method of publishing a variety of documents. There are a number of different RSS formats, which can be a bit confusing. But there is an easy way of getting around that, which I’ll discuss later. The important thing is that it’s another simple, free way of promoting your content, whether it’s a Blog, Press Release, Newsletter, or any other document published on the Web.

There are a couple of major advantages to adding an RSS feed to your content:

1. Changes to your site or content will be instantly “published” and available to your readers—nothing required by you, the publisher.


2. The RSS formatted content will appear instantly without any action required by your readers—on their preferred personal page, or in their favorite newsreader or browser.


3. Completely eliminates delivery issues (Spam Filters, etc.) that have become a major problem with content delivery via email

I now want to recommend a great way to get around the “alphabet soup” of emerging RSS standards. I use a service called Feedburner to publish my RSS feed. Feedburner is a great service which takes the guesswork out of deciding what format to publish in. It serves as an intermediary, converting your feed into any of the major standards that a reader might require to read a feed in his particular software solution. So while the native feed of Morettini on <High Tech> Management is in an ATOM format, it doesn’t matter. Feedburner will convert it to whatever major standard is required by the subscriber.

Feedburner also provides the publisher with a nice set of statistics about what content is being viewed, what readers are being used to view the content, etc. There are also diagnostic tools available to make sure you feed is valid and conforming. It’s a great service, and it’s FREE—I highly recommend it.

Try it out, and let me know what you think!

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

Hiring and Retaining High Tech Employees

Among the many interesting things that I get to examine in my Consulting Practice, one of the most fascinating is the differing cultures that are created within Software and Technology companies. Much of a company’s culture flows from the attitudes of the founders of the company. But the culture really consists largely of the people who are employed by make up the company. A company’s culture is a living, changing concept that is controlled by these employees in aggregate—from the CEO all the way down to the “worker bees”. I believe that culture plays a huge role in the company’s success or failure in the long run. For this reason, as well as many other obvious ones, there is probably nothing more important to a high tech company’s long-term success, than hiring and retaining employees.

So what’s the best way to hire “the best” and motivate and retain them for the long haul? That’s the $64,000 question. There are many paths to success, and even many ways of accomplishing the same goal. I will present one path and lay out my “best practices” in hiring and retention.

Hire Slowly
This is a major part of my hiring philosophy, and one that I must credit my time at HP for teaching me. When I worked at HP our hiring process was very thorough and deliberate. Employees weren’t simply chosen by a manager filling out his or her staff. A major part of the interviewing process was “chemistry interviews” with potential peers and other managers. While a company thrives with a diversity of styles and opinions, it is also very important that a prospective employee be a “fit” in the culture. It’s good for the candidate as well; they should have a good idea of what they are getting into, should they join the organization.

Another aspect of “hire slowly” that I will credit to my HP experience is to limit your growth in headcount, to a fraction of your revenue growth. This isn’t a hard and fast rule. When you are a startup, there are no revenues—and there must be employees! But this practice, if used as a general rule, puts a governor on exuberant hiring, which often quickly needs to be undone—at great financial and emotional cost to the company. Many times hiring accelerates just at the peak of the revenue growth curve—right before a downturn. I’ve always been a proponent of expanding “program spending” first to support business expansion—hire permanently only when you are more certain that your financial resources and revenue levels will support it.

Fire Slowly
This is another basic tenet of mine. It’s by far the best to hire properly up front, so that you don’t have to fire. In all companies, however, there comes a time when this becomes necessary. It may be layoffs due to a business downturn, or someone who isn’t pulling her weight in their present role.

I believe strongly that if you’ve hired someone, you’ve received a commitment from them, and you owe them a commitment in return. Now that’s not guaranteed lifetime employment, mind you! But it is important to do your best to treat them fairly. If it’s a layoff, don’t pull the trigger until you’re sure it’s necessary, and then give them all of the outplacement assistance and severance benefits that you can afford. If it’s someone that is underperforming in their present position, first think how you can remedy the situation without firing. Will additional training or an inside mentor make a difference? Is there another role within the organization, where they may be better suited to contribute? It is imperative to consider all possibilities before using termination as a last resort.

There are exceptions to my “Fire Slowly” advice. Bad attitudes, disruptive personalities and general disloyalty have no place, and are poisonous to a culture. Address these cases quickly, and let them know where they stand—including the consequences without a quick change of behavior. If you don’t see sincere change in a short time period, do what must be done quickly, and move on.

Don’t treat employees like fixed assets—they're not furniture
In my “Hire Slowly, Fire Slowly” advice above, some of you may have been thinking that I’m a bleeding heart. Trust me; my advice comes strictly from the perspective of optimizing a business. The things I recommend can be done entirely for self-serving reasons as a manager. If you feel good because you’ve done the right thing—that’s an added bonus.

In my experience, if you treat people with respect, consideration and loyalty, you are most often rewarded in kind. Organizations that treat their employees as their biggest asset, to be protected and nurtured, usually have a workforce that will run through the wall for them. What could be more important to the success of a business?

I’ve worked in organizations that treat all assets the same—like items on the balance sheet. Anything that is fully depreciated or is excess due to current business levels, was simply disposed of. It didn’t matter if that asset was branch office furniture, or Sally, the clerk in Accounting. It should be intuitively obvious—but what a great way NOT to build morale among your employees! If you treat people like furniture, you will get the initiative, loyalty and energy of a desk chair in return. Why would you expect anything different? Remember, there are survivors left behind, and they know what you did. They will have no reason to feel that their fate will ultimately be any different.

I find this to be the single-most stupid management practice, a relic from a bygone era, which unfortunately is still in widespread practice. It amazes me how often I see this in practice—I consider it an attribute of managers who have risen above their level of competence.

Match Temperament and Personality to the Job
In job advertising and position specifications, you will see much effort devoted to attracting people with experience and technical skills, which match well with the requirements of a particular position. Much less thought is given to “softer” aspects, which often mean the difference between success and failure.

That sales rep you’ve just hired may have been great in a big, well-known organization, “farming” a major account. Does he have the drive and perseverance to be as successful, now that he will be “hunting” new accounts, for a company with little track record and an unknown brand?

The new technical support rep has five years of experience in software applications similar to yours—but does he have the temperament to deal with anxious and angry customers, 8 hours per day?

Look past the obvious and pay attention to the more mundane attributes which may differentiate between success and failure.

Treat everyone fairly—not necessarily the same
One of the areas I think managers often make a mistake, is to have a firm set of rules that apply to all equally, at all times. I believe that to optimize an organization’s performance, you must manage people as individuals. Different people respond in a dramatically different manner to the same stimuli. An employee with one type of personality may respond to an independent assignment with pride that you’ve showed such confidence in them. Their colleague, with a different personality, may treat the same assignment as a sign of neglect and lack of caring about them. Each of these people may be equally capable, but how you manage them will greatly affect their ultimate performance. This area is where managers really earn their money, in my opinion. Figure out how to get the most out of every single employee, while maintaining an overall environment that still appears equitable, and fair to everyone as a whole.


Tie compensation to the long term success of the company
I want all of my employees to think like owners. So give everyone stock options—that’s my strong advice. If that isn’t desirable or practical for some reason, figure out a reasonable proxy, to try to get the same results. Utilize Profit sharing programs based not only on short term results, but long term as well. It’s important to get everyone to share your goal—which is building the long term value of the company. If your compensation looks like that of a King, and theirs looks like that of a serf—it won’t happen. Cut everyone in on a piece of the pie, and your slice will end up much bigger in the end.

Build teamwork with group goals & incentives
Just as it’s important to tie everyone to your long term goal for the company, it’s also important to tie people to each other. I’ve seen many cultures which are very collaborative, where everyone is pulling in the same direction. There are organizations which have the greatest chance of success—the whole ends up being bigger than the individual parts. But all too often, even in early stage tech companies, I see companies where the employees seem to be fighting each other in an attempt to get ahead. They are expending energy fighting over the biggest piece of a still small pie, rather than using that same energy to expand the pie for everyone. Cutting everyone in with stock options helps. But I also recommend that part of each employee’s incentive compensation be based upon their internal team reaching its objectives—not just the achievement of individual goals. I find this really helps create greater teamwork, and ultimately a higher value company.

Hold employees accountable—but with compassion
Finally, the sum of it all is that I don’t recommend a country club environment, where no one is responsible for their actions. On the contrary, I recommend that you do your best to attract high performers, give them the tools to do their jobs, and hold them accountable for their actions. But do it with respect, helping them in every way that you can. And above all, treat them with compassion.


That’s my take on hiring and retaining employees for high tech companies—what’s yours? Post a comment or drop me an email note.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/

Software vs. Hardware

Much of my consulting practice centers on working with early stage software companies. But I have substantial hardware market experience in my background, and I do take on consulting assignments with hardware companies.

So what are the differences and similarities between successful software and hardware businesses?

Capital Requirements
One of the larger differences is that software companies generally require much lower capital to reach profitability and continued growth. This is primarily because of the lack of need to invest in expensive semiconductor development tools, semiconductor masks, manufacturing plants/equipment, manufacturing engineering personnel, unfinished goods inventory, higher cost of finished goods inventory, etc. So except for startups backed by substantial institutional capital, it’s much easier to startup software companies compared to their hardware counterparts.

Margins
Another important area where software companies have an advantage is in margins—both in the area of typical gross margins, as well as the potential for higher net margins. This is primarily due to the negligible cost-of-goods-sold for most software companies.As a result, it easier for software companies to get to profitability, and if a large market is found, sustain profitability. Remember, throughout this article I am talking “on average”. There are hardware businesses with excellent gross margins (dominant semiconductor companies come to mind) as well. But in general, this is an area where the advantage goes to software.

Pricing
The big difference here also is related to product cost. The major difference comes down to product cost, which in the long run creates a floor for anyone who would actually like to make a profit. While optimal pricing of hardware or software should be based upon a value-based approach—with market segmentation as the key However, I rarely find this to be the case in my consulting practice—whether the company markets a software or hardware product.

In the hardware business, you tend to see a lot of simple pricing models that are cost-based. For software businesses, the negligible product cost can be the other end of the proverbial double-edge sward when it comes to pricing. In a competitive market, you may see competitors in software markets literally “give away” the initial product, and rely on the upgrade stream to make a profit downstream. This can strain the profitability of the entire segment, and in severe circumstances, can suck all the profit from the market. You see this scenario most often started by weaker competitors, or in markets where switching costs are high. While hardware pricing can be even more competitive generally, it is less likely for a weaker competitor in a hardware market to introduce a “zero-margin” program. This is because it is often tougher to hang onto a customer in the second generation (if the market has commoditized), and the market leader often has a gross margin advantage—making it an ill advised maneuver other than as an attention-getting, short-term promotion.

Distribution
The advent of the Internet has created a major difference in distribution between software and hardware companies, where there was very little difference in the past. It has made direct distribution much more practical for small software companies, in markets where a simple download is practical. For those companies which aren’t direct-only, distribution is similar for hardware and software companies. Traditional distribution through third parties tends to be very similar, although higher inventory costs are still a burden that hardware companies need to manage more closely, both for in-house finished goods and those held by the channel.


Defensible Strategic Advantage
This is an area in which software and hardware markets have both similarities and large differences. Both hardware and software companies value patents as a form of providing a sustainable competitive advantage. But in my opinion, the inherent malleability of software makes patent protection less useful in software than in hardware. It is easier to “find another way” of accomplishing the same end result when you are dealing strictly in software code. It’s also easier to segment in software markets, creating a targeted, niche version of a software product for a specific segment, nipping at a market leader without drawing their fire. It’s much harder for a small hardware company to differentiate itself this way. On the other hand, the market leader that establishes itself and creates a large volume business, creates the important competitive advantages—cost efficiencies and brand recognition are the huge, defensible advantages. So I believe this point comes down to scale—in software markets, it’s easier for a small competitor to overcome the scale of larger competitors, and develop a niche strategic advantage. While in hardware, the large competitors can use scale to create the ultimate competitive advantage.

Localization Requirements
This is an area in which hardware companies normally have an advantage. They usually have simpler user interfaces, and sometimes utilize symbols extensively in their interfaces, greatly reducing translation requirements into local languages. Hardware companies do have to deal with some physical differences in standards, such as electrical—but these have stabilized over time, and are often handled in the standard product.

Conversely, software user interfaces are usually language intensive and more complex, with thicker user manuals. This requires software companies to live with higher localization costs and longer lead times to market worldwide. The exception to this is complex software sold to highly technical users, where English is often used as the standard language.

Potential for Dominance
I’m going by mostly by empirical evidence here. It seems that there have been a lot more hardware companies who have dominated there respective businesses, for a longer period of time than in software. For every Microsoft (and there’s really only one of those!) it seems there are many more examples like Intel, Cisco, IBM, HP, Dell, etc. Hardware markets tend to commoditize more easily, but with standardization on a couple of leading brands. It’s hard to make money in the long run in hardware unless you are one of the top two or three players. Large hardware markets are also relatively larger in revenue than large software markets, allowing market leaders to more fully utilize their profit and cost advantages over competitors, by spreading marketing costs over large product volumes. So if you’re looking to build a truly dominant company, the odds are greater in hardware—although you probably are still better off heading to Las Vegas, and putting your life savings on roulette red!

There are many more ways to contrast and compare hardware and software companies, but I will end it here. What other points would you add? As usual, post a comment or send me an email message.

Phil Morettini
PJM Consulting
http://www.pjmconsult.com/