It’s a great day for an IPO!!

ticker-tape

Admittedly, on any given day, I don’t pay a lot of attention to the stock market. That said, I noticed this morning that five companies, across a wide band of industries, chose today to launch their IPOs. There was a sixth one that pulled out at the eleventh hour, but we’ll get to them later. The five newly minted stocks belong to a drug maker (Versartis, VSAR), a  network software play (A10 Networks, ATEN) , another technology company (Amber Road, AMBR), a finance company (TPG Specialty Lending, TSLX, and an e-commerce platform provider (Borderfree, BRDR). Each leverages new technology, innovative thinking, creative applications, and a clear focus on the customer.

Not surprisingly, the investment community reacted overwhelmingly positive to the offerings of all five, sending their prices spiraling up, as subscribers exceeded shares available, and the laws of supply and demand took hold. It is on days like this that I am reminded why we are in business. The companies that demand more of themselves than their customers do, the ones that challenge their paradigms and get outside their comfort zone, and reinvest consistently, appropriately into resources, both technological and human, are the ones that will stick. They possess what it takes to achieve a solid, enduring relationship with their marketplace, and they stand create value, for their customers and their shareholders.

Having read the prospectuses for at least two of these companies, I was encouraged by what I saw. They have a clear, distinct and market-centric leadership vision… They know what they are in business to do, and they have carefully managed their funds to date to provide them with a runway to profitability… They have invested in things of substance, like innovation, people, and the community they live in.

I mentioned earlier that there was one company that decided, on the eve of its public offering, to pull out of the process. I had to wonder: Could it be that the very forces that propelled the other five companies to success, when inverted, became the detriments of this one, failed attempt? If innovation, creativity, market focus, and fiscal conservatism, are turned inside out, what do you have? The opposite of innovation is to be a commodity provider, lagging in thought leadership and execution. What is not creative is by definition stale. Firms that lack a tight focus on their marketplace will demonstrate that they are short on new ideas to be harnessed and adopted by their customers. And, as we have seen so many times, especially with the memories of the “dot com” bubble, financial shortcomings can lead to all sorts of maladies, including organizational death or corporate dismemberment.

The one company that could not launch today, a reseller of retail gift cards (Globoforce PLC) may be analogous to what it means to swim inside a riptide. There are very few ways to survive in a fast-moving current, especially when you lack the skills necessary to save yourself.

Buying a product at retail (in their case, a gift card or gift certificate), marking it up 30-50% from its face value, and selling to corporate customers for employee gifts, is notably short on the scale of innovation and creativity. Lacking any unique or patented technology that affords the buyer something that they can’t get from any number of alternative sources, is not exactly a recipe for success. Ask JCPenney or Kmart about that.

One would have to question where the market focus is here.  And, having read their prospectus, the financials of this company would leave one scratching his head as to why the savvy investor would willfully participate in the offering at all. With short-term obligations far in excess of liquid assets, the balance sheet is unattractive to the point of questioning why anyone would choose to have it published for scrutiny. Marketing will only go so far. At some point the numbers have to be there.

Instead of needlessly pondering the vagaries of one failed launch, I would far prefer to hoist up an Irish brew and toast the five wonderfully exciting and invigorating companies that set a new course for themselves today. Congratulations and a hearty “Cheers!”  to all.

Hugh MacLeod, whom you have seen me quote on many occasions, famously said, “The market for something to believe in is infinite”. I believe this is true on many levels, from the spiritual to the pragmatic, and particularly so in the investment community. It’s what has made the capitalist system work, and has elevated many great inventors and tinkerers to positions of national prominence. Here’s to those who toil, ceaselessly, to be the best there is!

Selling branded mud in a rainforest…

mud

I find a dark irony in the fact that a company which peddles one of the most cost-ineffective devices for recognizing employee or channel performance, and staked their credibility on one of the most dubious concepts ever for performance management (the ludicrous and dangerous “Crowdsourced Performance Review”) has now seen fit to air all of their financial “dirty laundry” for the world to see in an IPO filing that, as a novice investor, strikes me as doomed to fail spectacularly.
Over the past twenty-five years, I have witnessed some of the most remarkable disasters brought to the business services marketplace, from the web-crazed days of Flooz and Beanz, to the Hindenburg-like arrival and departure of Amazon.com in the recognition and rewards space, and the frenzied rush to load debit cards when cash was declared the “king” of all things recognition. Flooz and Beanz went away when the first dot-com bubble burst. Amazon got caught with its pants down and realized that having an army of peddlers out there selling merchandise for awards purposes left them exposed to have to charge sales taxes in all 50 states. And money was outed for what it is: great for compensation, but a horrible idea for rewarding and recognizing incremental productivity.
So here we are in 2014, with the latest truly bad idea that involves a company which has loaded up with red-ink cartridges to print their income statements, while publishing audited financial reports showing a profound inability to meet their short-term debt obligations without a quick injection of liquidity, readying themselves for what may be the most embarrassing IPO in memory. This company (which I shall refer to only as “Globo”) would appear to need money, and is willing to shoulder the scrutiny of merciless investment analysts in order to try to get some. What I don’t get is why anyone would buy into a company that: (a) sells a pure commodity product (one that does not deliver value to the buyer on any level); (b) is known largely for a laughable HR premise that serves no interest, beyond possibly that of litigators; (c) doesn’t seem to be able to find a path to profitability no matter what they have tried; and, (d) has 30-40% of their business seemingly wrapped up with one customer. Does that sound like a recipe for success to you? Me neither.
The lessons to be learned here are many:
First, if you are going to attempt to brand a commodity dispenser, you need to have some significant and patented value-add. Poor “Globo” has neither. Anybody can buy gift cards for WalMart, mark them up 30% and try to sell them. The question is: Who would buy them? And who would come back for more?
Second, if you are going to go so far as to have your CEO write a book, it is generally a good idea to have something of value to say. Not just “different” or “revolutionary”, but viable and sustainable. The notion of rating your employees’ performance based on how many friends they have and not the results they generate has the unanimity of appeal of outcome based education, but with fewer subscribers.
Third, Abe Lincoln knew “you can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” Having read the S1 filing for our subject firm, you would have to take the leap that Mr. Lincoln did not know whereof he spoke in order to buy into the value of an investment. It’s not generally a good idea to challenge Abraham Lincoln on just about anything he said.
My advice to anyone who is still with me here: Create value. Hugh MacLeod reminds us that “the market for something to believe in is infinite”. The opportunity to build and sustain engagement across organizations, brands and markets, is also infinite. The idea of peddling a commodity product with a “one size fits none” technology (see my earlier post on “The Procrustean Approach to Employee Engagement”), based on a self-serving vision of corporate enrichment is a lot like selling branded mud in a rainforest. Don’t sell branded mud in a rainforest.

The Procrustean approach to employee engagement and recognition…

the bed of procrustes

Greek mythology tells of a son of Poseidon named Procrustes, who welcomed passersby into his home, fed them a warm meal, and invited them to spend the night. The catch: the guest would have to fit his iron bed just perfectly, neither too tall nor too short. Tall guests would find their limbs cut to the exact length of the bed. Shorter ones would be stretched on a rack until they satisfied the dimension of the bed. Too often, I sense that SaaS models assume a similar approach with the client.

Technology built on a multi-tenant platform can be a highly effective and efficient model for certain applications. There are many examples, including the operating systems, web technology, and office suites we all use most every day. However, when you factor in those aspects of an organization that make it unique –  the complex mélange of HRIS, Financial, Logistics, Operational, and Communications systems, tuned to deliver specific data, insight and information, across Sales, Finance, Operations, R&D, Distribution, Marketing, etc. –  the likelihood of  satisfying these divergent priorities becomes tenuous, at best.

Many of the players in the Employee Engagement space these days showcase their SaaS model for communicating, recognizing, rewarding and measuring individual achievement and appreciation. One of the common problems associated with these service providers is that they are, in many ways, built on a Procrustean infrastructure that requires the client to either, (a) accept what the service provider offers for functionality, reporting and communicating, or (b) amend its strategies around who to recognize, how to recognize them, and what to recognize them with.

The most frequent complaints I hear from customers of these “multi-tenant” technology models center on inflexibility and misalignment of the systems, interface, and processes. The companies sell their technology much in the same way that a CRM provider markets their wares – as a “one size fits all” tool that will work within any organizational model. The problem is that while a CRM houses data, organizes, tracks, monitors and reports on very specific  issues (customer relationship and sales, typically), an effective employee engagement and recognition tool must satisfy many differing requirements. The result is more akin to “one size fits one size”.

Smaller companies, generally with less than 500 employees, can usually be configured to fit within most of the available rewards and recognition technology provided by companies that offer only a SaaS model. Larger, multi-national organizations, certainly those which have grown by acquisition, are not likely  a good fit for the SaaS approach. So what are these frustrated organizations to do? One solution is to look beyond the marketing hype, to find out if a potential provider offers technology on BOTH a single-tenant as well as a multi-tenant basis.

A single-tenant model, when built alongside a multi-tenant strategy, can offer many of the cost efficiencies, while harnessing the customizations that make your organization, your culture and your brand unique. The costs may appear slightly higher, but not necessarily so, when you look at the true cost of having to settle for what a provider can deliver instead of what your company really needs.

The bottom line: Before making a decision to work with a service provider that offers ONLY a multi-tenant technology for your organization, dig a little deeper and find the partner that has a more adaptable, flexible, functional and cost-effective alternative – which may just be the single-tenant option.

If you need some help identifying who is purely multi-tenant, and who can more effectively help you to meet your exact requirements, feel free to drop me a line. When it comes to attracting and retaining your most valued human capital, you should not have to compromise for the sake of a supplier.

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Footnote:  A fond acknowledgement to Nassim Nicholas Taleb, for his wonderful and thought-provoking book, The Bed of Procrustes – Philosphical and Practical Aphorisms, a source of inspiration and fodder for exercising (or exorcising) the intellect.

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The murmuration of life…

A murmuration of starlings over Gretna

Ask any starling…Time flies when you are having fun. Well, I sure must have been enjoying one heckuva good time the last six and a half months!! Wow. Has it really been that long since I posted up on ideationz? Yup. It sure has.

I feel as if I owe my friends and readers a little explanation. So, here goes: I have none. All I can tell you is that  I’ve been working with some wonderfully talented folks, creating global engagement solutions for some of the biggest household names in the land. I’ve been listening, reading, watching, speaking with, sharing ideas among, and mostly learning about a myriad of changes underway in organizations, cultures, brands, and channels.

New issues, from wading through the market realities of ACA, to the migrational shift underway in the workplace, to the global reallocation of resources and capital, to the impact of QE3 on worldwide equity markets, have made for no shortage of change in all aspects of business, politics, economics and lifestyles.

This hiatus from ideationz has provided me with more to muse over, more to ruminate about, and more time to re-energize my emotional batteries. Change is good, change is real, change is everything. And it is time to get back to the fundamentals of adapting, innovating, and enduring. The flock of thought is forming.

Thank you for being there while I was away. A new year of ideationz starts today. Hang on, it’s gonna be a helluva ride…

It’s what you aspire to, and what you fear…

aspirations3

I was reading a wonderful post on Tom Asacker’s blog (www.acleareye.com) about the business of change. Tom is a brilliant author, speaker and trainer on matters of inspiring and driving change, via marketing, sales, design, coaching and other important facets of our creative, professional and/or personal lives. You should seriously consider getting to know Tom’s most current book, The Business of Belief.

One very eloquent and simple point is that in order to manifest change, you must replace fear with aspiration. People don’t react negatively to the idea of change. More commonly we fear the unknown. Replace fear, uncertainty and doubt, with an inclusive, realistic and positive vision of the future, and people will flock to the idea.

There is a fundamental construct in the field of behavioral economics around a human quality referred to as “loss aversion”. What it means is that we fear that which we might lose by making a change more than we value the potential benefit that making a change would incur. In other words, we place greater emotional value on that which we have (even if it is glaringly imperfect) than we do on that which we stand to gain by changing a situation or a behavior.

You see this every day. Unhappy married couples stay together because of fear of the unknown, of what their lives could become if they were to separate. The degree of personal discomfort or pain needs to be exceedingly powerful in order to amass the emotional wherewithal required to overcome the inertia brough on by fear.

I recall years ago visiting with an older woman who had lived in Manhattan for over forty years. She was describing to me the times her car had been stolen, her apartment broken into, her purse taken, and other assorted maladies that accrue to someone who lived in New York City from the 50’s to the 90′s. When I asked her why she still lived there, she didn’t hesitate to reply, “What? And give up all this?”

Too often companies fail to articulate a vision of the future that their associates can aspire to be part of. Instead, the communications will point out organizational realignments, new units or divisions, changes in leadership, financial performance, and the like. What is lacking in that is something that the broader number of employees can attach their emotions to, that they can feel excited about being a contributor to. What’s worse is when new ideas are either ignored by senior leaders, or simply dismissed as “not how we do business here”.

The savvy leader  will actively seek out and accept (even if not adopt) the perspectives that are offered by those across the layers of the organization, and reciprocate with a positive outlook for what lies ahead, a realistic vision of what the years ahead may offer, a plan to get there, and a confirmation that everyone has a role to play in shaping and making the desired future.

Everything we do begins and ends with what we believe in and what we value. If you harness and leverage those qualities inside your company as well as in your marketplace,  there is no limit to what the future may hold. Show me that quality in your firm, and I will give you a better than even shot of making it happen.