Betting On (or Against) the Future—Your Choice

Remember back about a decade ago when Xerox was stumbling toward the cliff of bankruptcy? They regained their footing by going on a cost-cutting rampage. Fortunately for Xerox, they kept one cost center sacrosanct: Research and development. The corporation has since recovered and pulled in a billion dollars a year. Chalk up the lion's share of earnings to products developed by their comfortably budgeted R&D team.

This should send a clear message to our small-business community. Your products and services need constant improvement—hard-earned customers demand it. Whether technological, procedural or educational tweaks, you gotta do it. Otherwise you're betting against your future.

There's an interesting broader context here. In recent years, our country's leaders have been betting against our collective future. Just look at our stunted growth in science and medicine. Why is this? U.S. university science grads now rank 17th in the world. That's just the start.

To make matters worse, many of our best graduates are immigrants who, for a variety of reasons, go back to their countries of origin to develop new technologies and fuel employment and innovation outside the U.S. In a global economy, that spells disaster for America.

Why has the U.S. fallen backward and how do we right ourselves? We need to coordinate our political, educational, and business communities to promote opportunity. (Microsoft's Bill Gates rightly lobbies all the time to improve our schools and liberalize our immigration policy.) That takes financial support, expanded curricula and more quality teachers.

You can do your part. As a small businessperson, don't take your eye off innovation. Consider getting involved in your local community to increase focus on science and technology. Your community and business's future depends on it.

Strategic Alliance is for Small Business Too

Sunday I settled into The New York Times business section and found a surprisingly delightful Page 1 story about Disney’s 2006 purchase of Pixar Pictures and the combination’s success. Here’s an instant where small-business people could tear a page from Corporate America’s playbook.

Sure, strategic alliance is something of an overused phrase. But it’s an important part of your small-business arsenal. Alliances can land access to otherwise unavailable technologies, employees, customers or financing. “Strategic alliance” is a catch-all for everything from special vendor relationships, mergers of equals, sales or acquisitions. Yet all of them contain potentially treacherous curves.

Consider these five points prior to, during and after a strategic pairing:

1. Team only with companies whose values and philosophies match your own healthy culture.

2. When finalizing details of the combination, define in writing:
a) What each player brings to the field
b) Each player’s needs and desires
c) Authorities and responsibilities
d) Directions for dissolution—how would the combo unwind? Assume nothing and imply nothing. Murphy’s Law is even more present in strategic alliances.

3. Insure the two companies have seamless borders. Firewalls create miscommunication and inefficiency. Personnel from the combining companies should talk directly to one another rather than send smoke signals up and down the corporate hierarchy. This isn’t as simple as it sounds. Each party needs to introduce people by telephone, videoconference or in person and define the communication channels.

4. Leaders should hold team sessions to explain the reason for the combination and its benefits.

5. Also hold regular conferences to discuss how each side’s pre-agreed needs are being met, what’s going well and what needs attention.

For the small businessperson, a well-considered and executed strategic alliance can mean 1 + 1 = 4.