http://www.theglobeandmail.com/servlet/story/RTGAM.20090205.expertInsight0210/BNStory/specialSmallBusiness
Dan MacDonald is president and CEO of Halifax-based InNOVAcorp, which operates as a venture capitalist through management of the Nova Scotia First Fund. Its seed and early stage investments target emerging technology companies that have high growth potential. Mr. MacDonald, who has 23 years of experience building businesses, talks about the investor-entrepreneur relationship.
What's your advice on how entrepreneurs can attract investors? What are investors looking for?
Dan MacDonald: Entrepreneurs need to be aware that individual investors – be they angel investors or institutions – tend to invest in certain types of industry sectors, business models, stages of growth, business size, locations, etc. While investors can obviously expand their scope from time to time, it is important to understand, as much as possible, the investor's tendencies in order to determine compatibility.
Investors who are open to considering investments in entrepreneurs are looking for opportunities that have the right combination of five elements: people, market, “barrier,” fundability and potential return. (And, of course, a product or service that is compelling and articulated clearly in a couple of minutes.)
People: This one is key. Investors might make their mind up in the first 60 seconds based on the approach and style of the entrepreneur. Beyond first impressions, investors want to understand the entrepreneur's relevant expertise, commitment to success, the level of their own skin in the game (money and time), ability to recruit and lead additional talent, to manage finances and to clearly communicate and execute the path forward.
Market: The addressable market for the product or service needs to be large enough for the potential revenues and profits to be interesting.
Barrier: The barrier to entry for a potential competitor must be high. The recipe of expertise, trade secrets, industry contacts, intellectual property, partners – or put another way, the “unfair advantage” of the opportunity – must be such that it will not be relegated to one of many.
Fundability: When the investor considers the amount of funds and time that will be needed to obtain a return on investment, the investor needs to believe that the business can attract the required funds and execute the plan.
Return: At the most basic level, investors are looking for a return on their investment. The potential risk and return from investing in an entrepreneur competes with the other types of investments. Entrepreneurs must appreciate the fact that the opportunity they are presenting to an investor may be one of many the investor has been presented with that month, that week, even that day.
What are common pitfalls of negotiating with an investor from the perspective of the entrepreneur?
Dan MacDonald: Entrepreneurs commonly approach investors before they are ready to clearly articulate the opportunity and answer or defend the questions on people, market, barrier, fundability and potential return. Many investors do not give second chances.
It's also not ideal to negotiate with your back against the wall. Obviously an entrepreneur who is virtually out of money is not going to be able to negotiate as good a deal as one who has time to consider other options.
Also, entrepreneurs need to consider the investment under negotiation in the context of what will likely happen, in at least the medium term. For example, how will the company valuation (that is, enterprise value based on the percentage of company purchased for the amount of investment) set by this investment look to future investors? Ideally, the valuation of the company will rise over time.
Another common pitfall is providing too much information too early. To get to a point where you are actually negotiating with an investor who seems compatible and trustworthy is an accomplishment in itself. Until this point, the entrepreneur needs to be careful to be truthful, of course, but also be aware of the timing and depth of certain information provided to the investor.
Proprietary information relating to the technology, detailed plans, financial information, etc., should be held until the investor has put an offer, pending due diligence, on the table. While the investor can back out of the deal at any time, the entrepreneur needs to understand the types of terms and conditions the investor expects for the given amount of investment. Better to know early on than find out after you have bared all.
Geneviève Gagnon, owner of La fourmi bionique granola company, got to know her investor. But she had her business mentor do the actual negotiating, so as to limit tension. She says this worked very well for her. What are your thoughts on this?
Dan MacDonald: Having a representative negotiate on your behalf has its pros and cons. Potential pros include avoiding potential damage to the working relationship, and time to consider and discuss terms and conditions without the pressure of a face-to-face encounter.
But there are cons, too. If you delegate negotiation responsibility, then you may end up with a deal you do not like. If you can't negotiate your own deal with a potential investor, it may be perceived as a weakness. You could also miss getting to really know the character of the investor. Many investors would not accept negotiating through a delegate.
Ideally, you, the entrepreneur, would seek advice prior to and during the negotiation. If you are uncomfortable with a term or condition, ask for it in writing so that you can seek advice. Have a sense of urgency but do not let yourself be rushed during negotiations.
Ms. Gagnon regrets sharing with the media the percentage of her business she sold (she did not disclose the dollar amount). What are your thoughts on how openly entrepreneurs should talk about such deals?
Dan MacDonald: While it is very tempting to share the details of an investment – especially one involving an investor whose name or brand can improve the credibility of the entrepreneur – it is not advisable. With the investor's permission, simply stating that they are an investor is all anyone should know. Depending on the market the entrepreneur is addressing, customers might request financial information looking to ensure solvency. This should be handled carefully, again without disclosing details of the investment.
Once the deal is signed, what's your advice on managing the investor-entrepreneur relationship?
Dan MacDonald: Regular and clear communication is key. Understand the investor's expectations for communication and involvement, and exceed these expectations without overdoing it. Communicate sales won only after the deal is truly closed. Whether it is good news or bad news, communicate the impact and your plan to capitalize on the good or manage and minimize the not-so-good. If there is neither good nor bad news to share, then call with a regular update anyway.
If you have set an expectation that for good reason is no longer achievable, or that you discover is not feasible, then reach out and explain yourself. Suggest a new go-forward plan and ask for their advice. Follow up in writing with the new agreed path.
Should entrepreneurs be prepared in case things go unexpectedly bad between them and their investors? If so, what can they do?
Dan MacDonald: Like most relationships, there are bound to be some rough spots. If things go unexpectedly bad, and you have regularly communicated and tried your best to keep things on track, then the investor-entrepreneur relationship may change but should be manageable.
If things go unexpectedly bad, and you have not regularly communicated and you surprise the investor with the bad news, you should expect – and maybe deserve – a rough ride.
Dan MacDonald
Thursday, February 12, 2009
Thursday, December 11, 2008
It has been a year already.
A year ago today, my father-in-law Roy McGonnell passed away at the young age of 69.
69 is way to young to die.
Roy was quite a guy.
He was a husband, a brother, father of three, proud grandfather of 7, a multi sport Canada games level athlete, policeman turned postman, umpire, story teller, literally every ones friend, the caregiver of his disabled wife for over 12 years.
As we say in in Atlantic Canada "Roy was a real character".
Roy was a person who constantly told stories. As I think back, these stories were Roy's way of sharing his views on everything from sports, to politics, to family matters. I never heard him say an unkind word about anyone.
Suffering from cancer for over a year, I never heard him complain once. Except for the night before he died he was watching harness racing on TV and expected to see 5 races not 4. He was pissed ;)
Some thoughts about Roy as we approached his anniversary;
1. Roy read the local paper every day from cover to cover. He especially read the sports section scores as statistics. I would hear him discussing the latest sports scores, players, issues with friends...he would catch people off guard when he even new who got what penalties for what in games across North America, but also the actual attendance of the game ie: "there was only 17,235 people at the game in San Jose on Tuesday night."
2. My youngest daughter always enjoyed getting an offer of a "freezy" when we visited Roy. It felt a little strange however to get the offer in February when it was -25C ;)
3. Roy often asked us all, if we felt we were "dressed up" even if we weren't really "If we were going to a beauty contest ?"
I and my three children have had the pleasure to know such a man.
They don't make many like Roy anymore.
Rest in peace Roy.
Dan MacDonald
69 is way to young to die.
Roy was quite a guy.
He was a husband, a brother, father of three, proud grandfather of 7, a multi sport Canada games level athlete, policeman turned postman, umpire, story teller, literally every ones friend, the caregiver of his disabled wife for over 12 years.
As we say in in Atlantic Canada "Roy was a real character".
Roy was a person who constantly told stories. As I think back, these stories were Roy's way of sharing his views on everything from sports, to politics, to family matters. I never heard him say an unkind word about anyone.
Suffering from cancer for over a year, I never heard him complain once. Except for the night before he died he was watching harness racing on TV and expected to see 5 races not 4. He was pissed ;)
Some thoughts about Roy as we approached his anniversary;
1. Roy read the local paper every day from cover to cover. He especially read the sports section scores as statistics. I would hear him discussing the latest sports scores, players, issues with friends...he would catch people off guard when he even new who got what penalties for what in games across North America, but also the actual attendance of the game ie: "there was only 17,235 people at the game in San Jose on Tuesday night."
2. My youngest daughter always enjoyed getting an offer of a "freezy" when we visited Roy. It felt a little strange however to get the offer in February when it was -25C ;)
3. Roy often asked us all, if we felt we were "dressed up" even if we weren't really "If we were going to a beauty contest ?"
I and my three children have had the pleasure to know such a man.
They don't make many like Roy anymore.
Rest in peace Roy.
Dan MacDonald
Saturday, December 6, 2008
Where is the bottom ?
November and December 2008 will go down as one of the most dramatic economic downturns in history. Yet depending on which type of business you are in and or where you are located, you may not have even felt it yet.
All indications are that virtually every business will be impacted in someway, some severely others less so.
It will be amazing to look back after the inevitable recovery to analyze the impact of the media on this economic downturn compared to others. If one was to read and view the news these days, which I for one find it hard not to, it is gloom and doom 24hrs a day.
The markets are directly impacted by our overall confidence. It is critical that we remain both optimistic and realistic.
I believe strongly that this is the time for us to maximize the efficiency of our businesses, to constructively challenge status quo thinking, to provide support for better methods, to ensure regular honest communications with customers, staff, suppliers and partners.
So where is the bottom ?
No one knows for sure, but by most accounts it will be in the next 6 to 12 months.
The best strategy is to be lean, mean, and fit to ride the inevitable recovery better and stronger than ever.
Dan MacDonald
All indications are that virtually every business will be impacted in someway, some severely others less so.
It will be amazing to look back after the inevitable recovery to analyze the impact of the media on this economic downturn compared to others. If one was to read and view the news these days, which I for one find it hard not to, it is gloom and doom 24hrs a day.
The markets are directly impacted by our overall confidence. It is critical that we remain both optimistic and realistic.
I believe strongly that this is the time for us to maximize the efficiency of our businesses, to constructively challenge status quo thinking, to provide support for better methods, to ensure regular honest communications with customers, staff, suppliers and partners.
So where is the bottom ?
No one knows for sure, but by most accounts it will be in the next 6 to 12 months.
The best strategy is to be lean, mean, and fit to ride the inevitable recovery better and stronger than ever.
Dan MacDonald
Friday, November 14, 2008
The State and Future of IT - Panel November 14, 2008
Speaking notes from
"The State and Future of IT - Panel Discussion" November 14, 2008 - Halifax Club
1. What will be the impact of Information Technology on business in the next five years?
IT will continue to be important to companies. It is still very relevant and one of the easiest ways to drive productivity. Many companies will be consolidating, merging, and acquiring over the next two years. The rationalization of the resulting business IT systems and ensuring maximum productivity will be key.
That being said, while the CIO, IT staff and partners attempt to get all of that right, we will see the return of the rogue IT systems of the mid nineties when work group networks and applications popped up everywhere as the main frame glass house was changing to client server.
This time it will not be PC hardware and unsupported desktop apps, it will be web based services and applications purchased\acquired underneath the radar by work groups and business units. Why ? They need to be competitive and will not wait for IT to deliver.
The gen Y's will fuel this kind of IT revolution
IT departments will have their hands full to ensure the security policy and overall integrity of this activity.
Mobilization of apps, access, data will further enable users and challenge IT
I believe that all of this anarchy will actually result in higher productivity for everyone except the IT staff. They will need to adapt, add value, and ultimately deliver an affordable supportable IT system.
2. What do businesses and the IT sector need to do in the near-term to capitalize on these opportunities?
From a professional services point of view, there will be a considerable opportunities in scoping, designing, implementing and supporting all of the IT related to company consolidation and M&A activity. This is a 1 to 3 year horizon
I believe that businesses in the IT sector need to balance the input and feedback from their classic customers ie: enterprises, CIO’s, IT departments with the reality of what is happening at the user/consumer/prosumer level.
I believe that if we only listen to the classic voices, then we will quickly become out of touch even extinct.
There will be opportunity in the professional services related to establishing sanity and integrity of the classic IT domain and that of the web 2.0 world.
3. What will the office of the future look like? What will tomorrow's business-person be able to do (say, in 5-10 years) that they can't do now?
The Office of the future is not an office.
Work will not be a place, it will be where ever you need to be. Home, at a customer site, at a project meeting, in a hotel, wherever you are.
Many of us will be independent contractors and or will be working with independent contractors
We will have a highly effective/efficient mobile device which will rival today’s portable computer
We will be increasingly mobile, and wireless
Like many of us do already today, the royal we will be looking for a compfortable, fast, free/inexpensive, and appropriately secure network from which we can work for 30 minutes of 3 or 4 hours, and then we will move on.
In the five year horizon, tomorrow's business person will be able to do what only early adaptors do today. Be highly productive, any place any time. This means of course that a business person in this horizon will find it very difficult to disconnect so as to concentrate on other important things ~ ie: life.
Finally we will live in a "paperless'ish office" mostly because when we are mobile we tend not to print ;)
Dan MacDonald
"The State and Future of IT - Panel Discussion" November 14, 2008 - Halifax Club
1. What will be the impact of Information Technology on business in the next five years?
IT will continue to be important to companies. It is still very relevant and one of the easiest ways to drive productivity. Many companies will be consolidating, merging, and acquiring over the next two years. The rationalization of the resulting business IT systems and ensuring maximum productivity will be key.
That being said, while the CIO, IT staff and partners attempt to get all of that right, we will see the return of the rogue IT systems of the mid nineties when work group networks and applications popped up everywhere as the main frame glass house was changing to client server.
This time it will not be PC hardware and unsupported desktop apps, it will be web based services and applications purchased\acquired underneath the radar by work groups and business units. Why ? They need to be competitive and will not wait for IT to deliver.
The gen Y's will fuel this kind of IT revolution
IT departments will have their hands full to ensure the security policy and overall integrity of this activity.
Mobilization of apps, access, data will further enable users and challenge IT
I believe that all of this anarchy will actually result in higher productivity for everyone except the IT staff. They will need to adapt, add value, and ultimately deliver an affordable supportable IT system.
2. What do businesses and the IT sector need to do in the near-term to capitalize on these opportunities?
From a professional services point of view, there will be a considerable opportunities in scoping, designing, implementing and supporting all of the IT related to company consolidation and M&A activity. This is a 1 to 3 year horizon
I believe that businesses in the IT sector need to balance the input and feedback from their classic customers ie: enterprises, CIO’s, IT departments with the reality of what is happening at the user/consumer/prosumer level.
I believe that if we only listen to the classic voices, then we will quickly become out of touch even extinct.
There will be opportunity in the professional services related to establishing sanity and integrity of the classic IT domain and that of the web 2.0 world.
3. What will the office of the future look like? What will tomorrow's business-person be able to do (say, in 5-10 years) that they can't do now?
The Office of the future is not an office.
Work will not be a place, it will be where ever you need to be. Home, at a customer site, at a project meeting, in a hotel, wherever you are.
Many of us will be independent contractors and or will be working with independent contractors
We will have a highly effective/efficient mobile device which will rival today’s portable computer
We will be increasingly mobile, and wireless
Like many of us do already today, the royal we will be looking for a compfortable, fast, free/inexpensive, and appropriately secure network from which we can work for 30 minutes of 3 or 4 hours, and then we will move on.
In the five year horizon, tomorrow's business person will be able to do what only early adaptors do today. Be highly productive, any place any time. This means of course that a business person in this horizon will find it very difficult to disconnect so as to concentrate on other important things ~ ie: life.
Finally we will live in a "paperless'ish office" mostly because when we are mobile we tend not to print ;)
Dan MacDonald
Friday, October 17, 2008
National Angel Organization: Vetting Early Stage Investment Opportunities
2008 National Angel SummitOctober 16-17, 2008
"Networking, Strategy, Leadership: A Forum for Smart Investing."
The event focused on a variety of angel-specific topics, including bridging funding gaps: idea to exit, best practices version 2.0, global angel access, and much more.
InNOVAcorp’s Dan MacDonald kicked-off the event as the morning keynote speaker on October 17. (To watch a video of Dan's presentation, "Vetting Early Stage Investment Opportunities," visit goldencoast.ca/2008/nao.)
For more information visit angelinvestor.ca.
"Networking, Strategy, Leadership: A Forum for Smart Investing."
The event focused on a variety of angel-specific topics, including bridging funding gaps: idea to exit, best practices version 2.0, global angel access, and much more.
InNOVAcorp’s Dan MacDonald kicked-off the event as the morning keynote speaker on October 17. (To watch a video of Dan's presentation, "Vetting Early Stage Investment Opportunities," visit goldencoast.ca/2008/nao.)
For more information visit angelinvestor.ca.
Saturday, August 9, 2008
Why bother greening your business?
Why bother greening your business?
You would have to be living on Mars over the past couple of years not to be aware of the “greening” of virtually everything in the name of environmental sustainability and cost savings.
As an individual, I am genuinely worried about climate change, the continuing damage to our environment, the ugly legacy we will leave our children and grandchildren, and the 100 year storms which seem to happen every couple of years now. Fuel costs have risen to a point where energy is a material portion of our family expenses. We recently traded our SUV for a smaller sedan and around the house we are more conscious of the principles of reduce, reuse, and recycle. We know we can do more and we understand it is up to us to make it happen.
As a business leader however, I and probably many others like me are not so confident on the logical steps required to “green our business”. While I am clearly not an expert in this area, I have given this some thought, conducted some basic research and would like to share some insights on the topic of “greening our businesses” in the form of a FAQ.
1. Why bother greening your business?
2. If oil prices drop to $100 again will all this green stuff blow over?
3. Is there a return on investment (ROI)?
4. Do customers really care about green?
5. Will customers pay more for green products and services?
6. How green is the business now?
7. What is “green washing”? What is “green sheen”?
8. How green do we need to be?
9. How might we create a green culture?
10. What is some good greening the business resources?
1. Why bother greening your business?
Many, including our customers would say this is a rather silly question at this point given all we know now. We must green our businesses because; it is the right thing to do, our employees (existing and even more so recruits) will expect it, our customers and partners will soon (if not already) ask us to prove it, and because there can be a return on investment. I wonder if General Motors debated “green” in the board room over the past couple of years.
2. If oil prices drop to $100 again will all this green stuff blow over?
No. The price of oil may drop some; it might even drop to close to $100. While possible, this is not likely to cause the green stuff to blow over. High oil prices are with out a doubt a key catalyst for every thing green because the impact is so universal, but I believe the green thing is more fundamental now. We all have a responsibility to lessen our impact on the environment and our purchasing power will increasingly only go to those we believe are on the same green page as we are.
3. Is there a return on Investment (ROI)?
Yes. But when a business looks at “green” in terms of getting off the grid by implementing for example a windmill, an energy savings based ROI can be measured in a decade or more. This ROI timeline is neither compelling nor practical for most small and medium sized businesses. This is not the way to think though. Many of the greening methods and initiatives do not require big capital expenditures. The ROI of “greening your business” should be measured in improved top and bottom line, improved employee and customer loyalty, market expansion, and yes reduced energy costs. Further, there is likely a financial risk in not being green because being so will have the opposite effects.
4. Do customers really care about green?
Yes. In business to business segments it is becoming common place for companies to demand their partners and suppliers are green. This in fact is essential for them to be green. Corporate responsibility, including being green, will become a common procurement specification.
In business to consumer segments, one could argue that the expectations here will rise even faster. Corporate brand managers are very concerned about their companies green reputation. Those businesses targeting customers which fall into the gen x and y categories had better be green or going that way.
5. Yes but will customers pay more for green?
Yes and No. In the short term, B2B and B2C companies will be able to charge a 5 to 10% premium, but not in the medium long term. Quality control and ISO certification were key business initiatives in the 80’s and 90’s. They were differentiators at first, but over time they became table stakes, part of the cost of doing business.
Green however I believe is different. Quality and ISO affected the delivery of your products and services only, not our environment which could affect us all.
When it comes to green, customers will look for the high value products and services which are also green (read will not buy your products and services unless they are green). While customers do in one way or another pay for quality, it is now table stakes and they have come to expect it. The same will go for green. For the next 5 to 10 years businesses will be able to differentiate by offering excellent products which are also green.
6. How green is the business now?
This is a tough question to answer. With out some type globally accepted or defacto neither green measurement nor documented comparables how can we tell how green we are. For now, beyond some rudimentary carbon footprint/green house gas emission calculators, we are sort of on our own. I wouldn’t try this as an excuse though. We need to proactively baseline “our greenness” in order to truly make measureable improvements and obtain a measureable return on investment. Every business needs a green plan of some kind and need to continually refine it over time. This does not have to be complicated. More on this later.
7. What is “green washing”? What is “green sheen”?
Green washing is a term used to describe the perception of consumers that they are being misled by a company regarding the environmental practices of the company or the environmental benefits of a product or service. The term green sheen has similarly been used to describe organizations which attempt to appear that they are adopting practices beneficial to the environment. Source: Wikipedia
It should go with out saying that neither green washing or green sheen would help the brand of any organization.
8. How green do we need to be?
I believe that we are all expected to understand where we are right now, and use best efforts over time toward greening our business. No one is expecting an overnight green makeover, just as no one will tolerate a total disregard for green. A business must make a genuine effort and be able to share with key stakeholders how they are approaching greening the business.
Share? Yes share, via a simple list of things which have been done, are being done, and will be looked into in the future. Employee involvement is key to making sure the maximum impact is felt.
When it comes to key B2B customers, a proactive review of their website to better understand published policies relating to green (environmental, carbon foot print, green practices, etc) will give you perspective on how green you will need to be.
9. How might we create a green culture in our business?
Be genuine. Share with the staff that you would are looking for ways to green the business and that everyone is responsible for making it happen. Set clear high level guidelines that green initiatives which cost more than $X to implement or will affect the performance of the business relating to customer satisfaction must be first approved. Make a list of greening opportunities and when implemented, list the persons who came up with the idea and those who implemented.
10. What are some good greening the business resources?
- Good ideas for the home and office: http://www.greenlivingideas.com/
- Calculating carbon footprint: http://www.carbonfootprint.com/
- Helpful information as well as incentives to green your home and business: http://www.conservens.ca/
- Information on carbon offsets: http://www.v-c-s.org/
- Information on ISO green standards such as ISO14064: http://www.iso.org/
- Resource for both businesses and individuals who want to be environmentally proactive and www.upongreen.com
Dan MacDonald
P.S. While we can all do our part in to green our homes and businesses in some meaningful way, we all need to be aware that many families are struggling to manage their finances especially high energy costs. A large percentage of these families are essentially unable to make some of the “green choices” many of us take for granted such as trade their vehicle for a more efficient one or use mass transit.
You would have to be living on Mars over the past couple of years not to be aware of the “greening” of virtually everything in the name of environmental sustainability and cost savings.
As an individual, I am genuinely worried about climate change, the continuing damage to our environment, the ugly legacy we will leave our children and grandchildren, and the 100 year storms which seem to happen every couple of years now. Fuel costs have risen to a point where energy is a material portion of our family expenses. We recently traded our SUV for a smaller sedan and around the house we are more conscious of the principles of reduce, reuse, and recycle. We know we can do more and we understand it is up to us to make it happen.
As a business leader however, I and probably many others like me are not so confident on the logical steps required to “green our business”. While I am clearly not an expert in this area, I have given this some thought, conducted some basic research and would like to share some insights on the topic of “greening our businesses” in the form of a FAQ.
1. Why bother greening your business?
2. If oil prices drop to $100 again will all this green stuff blow over?
3. Is there a return on investment (ROI)?
4. Do customers really care about green?
5. Will customers pay more for green products and services?
6. How green is the business now?
7. What is “green washing”? What is “green sheen”?
8. How green do we need to be?
9. How might we create a green culture?
10. What is some good greening the business resources?
1. Why bother greening your business?
Many, including our customers would say this is a rather silly question at this point given all we know now. We must green our businesses because; it is the right thing to do, our employees (existing and even more so recruits) will expect it, our customers and partners will soon (if not already) ask us to prove it, and because there can be a return on investment. I wonder if General Motors debated “green” in the board room over the past couple of years.
2. If oil prices drop to $100 again will all this green stuff blow over?
No. The price of oil may drop some; it might even drop to close to $100. While possible, this is not likely to cause the green stuff to blow over. High oil prices are with out a doubt a key catalyst for every thing green because the impact is so universal, but I believe the green thing is more fundamental now. We all have a responsibility to lessen our impact on the environment and our purchasing power will increasingly only go to those we believe are on the same green page as we are.
3. Is there a return on Investment (ROI)?
Yes. But when a business looks at “green” in terms of getting off the grid by implementing for example a windmill, an energy savings based ROI can be measured in a decade or more. This ROI timeline is neither compelling nor practical for most small and medium sized businesses. This is not the way to think though. Many of the greening methods and initiatives do not require big capital expenditures. The ROI of “greening your business” should be measured in improved top and bottom line, improved employee and customer loyalty, market expansion, and yes reduced energy costs. Further, there is likely a financial risk in not being green because being so will have the opposite effects.
4. Do customers really care about green?
Yes. In business to business segments it is becoming common place for companies to demand their partners and suppliers are green. This in fact is essential for them to be green. Corporate responsibility, including being green, will become a common procurement specification.
In business to consumer segments, one could argue that the expectations here will rise even faster. Corporate brand managers are very concerned about their companies green reputation. Those businesses targeting customers which fall into the gen x and y categories had better be green or going that way.
5. Yes but will customers pay more for green?
Yes and No. In the short term, B2B and B2C companies will be able to charge a 5 to 10% premium, but not in the medium long term. Quality control and ISO certification were key business initiatives in the 80’s and 90’s. They were differentiators at first, but over time they became table stakes, part of the cost of doing business.
Green however I believe is different. Quality and ISO affected the delivery of your products and services only, not our environment which could affect us all.
When it comes to green, customers will look for the high value products and services which are also green (read will not buy your products and services unless they are green). While customers do in one way or another pay for quality, it is now table stakes and they have come to expect it. The same will go for green. For the next 5 to 10 years businesses will be able to differentiate by offering excellent products which are also green.
6. How green is the business now?
This is a tough question to answer. With out some type globally accepted or defacto neither green measurement nor documented comparables how can we tell how green we are. For now, beyond some rudimentary carbon footprint/green house gas emission calculators, we are sort of on our own. I wouldn’t try this as an excuse though. We need to proactively baseline “our greenness” in order to truly make measureable improvements and obtain a measureable return on investment. Every business needs a green plan of some kind and need to continually refine it over time. This does not have to be complicated. More on this later.
7. What is “green washing”? What is “green sheen”?
Green washing is a term used to describe the perception of consumers that they are being misled by a company regarding the environmental practices of the company or the environmental benefits of a product or service. The term green sheen has similarly been used to describe organizations which attempt to appear that they are adopting practices beneficial to the environment. Source: Wikipedia
It should go with out saying that neither green washing or green sheen would help the brand of any organization.
8. How green do we need to be?
I believe that we are all expected to understand where we are right now, and use best efforts over time toward greening our business. No one is expecting an overnight green makeover, just as no one will tolerate a total disregard for green. A business must make a genuine effort and be able to share with key stakeholders how they are approaching greening the business.
Share? Yes share, via a simple list of things which have been done, are being done, and will be looked into in the future. Employee involvement is key to making sure the maximum impact is felt.
When it comes to key B2B customers, a proactive review of their website to better understand published policies relating to green (environmental, carbon foot print, green practices, etc) will give you perspective on how green you will need to be.
9. How might we create a green culture in our business?
Be genuine. Share with the staff that you would are looking for ways to green the business and that everyone is responsible for making it happen. Set clear high level guidelines that green initiatives which cost more than $X to implement or will affect the performance of the business relating to customer satisfaction must be first approved. Make a list of greening opportunities and when implemented, list the persons who came up with the idea and those who implemented.
10. What are some good greening the business resources?
- Good ideas for the home and office: http://www.greenlivingideas.com/
- Calculating carbon footprint: http://www.carbonfootprint.com/
- Helpful information as well as incentives to green your home and business: http://www.conservens.ca/
- Information on carbon offsets: http://www.v-c-s.org/
- Information on ISO green standards such as ISO14064: http://www.iso.org/
- Resource for both businesses and individuals who want to be environmentally proactive and www.upongreen.com
Dan MacDonald
P.S. While we can all do our part in to green our homes and businesses in some meaningful way, we all need to be aware that many families are struggling to manage their finances especially high energy costs. A large percentage of these families are essentially unable to make some of the “green choices” many of us take for granted such as trade their vehicle for a more efficient one or use mass transit.
Thursday, July 3, 2008
Call to Action for Exporters
Call to Action for Exporters
We should all be proud of Canada's economic track record. Several years of federal budget surpluses, debt maintenance, low interest rates, commodity price strength, and political stability position Canada as one of the world's strongest economies. Further, I must admit the strength of the Canadian dollar against the US dollar feels pretty good after decades of silly jokes about our weak loonie from my US colleagues.
That being said, exporters in the business community are aware of the now seemingly unavoidable impact of the weakening US economy on Canada. There is a “perfect storm analogy” for every difficult situation these days, and it is hard not to employ that overused term here.
The US downturn, like every other in history, will correct itself in time. However, the impact of the US subprime fiasco, the ongoing cost of war(s), the uncertainty of whether McCain or Obama policies will rule post November ’08, and the crushing debt are expected to make this downturn last longer than most. The US Federal Reserve is attempting to sound calm and confident, and politicians are even spending billions to artificially prop up the capital markets; however, any measureable positive impact seems to have a shelf life measured in hours.
The US is by far Canada’s largest trading partner. Exporters have been dealing with the effects of the high Canadian dollar for several quarters now. As the Canadian dollar rose to new heights, some “experts” said this was a wake up call for Canadian exporters that have long enjoyed the leverage of a weak dollar and now must become more competitive and productive to survive. I am not sure these same experts appreciated the difficult economic factors to come.
Canadian exporters are already facing slowed decision making, extreme price pressure resulting in a weaker bottom line due to reduced buying power of the US dollar, and creeping protectionism, all combined with the multidimensional impact of skyrocketing energy prices. By all accounts, exporters are facing very challenging top and bottom line pressures.
The prevailing wisdom among exporters seems to include the reworking of short and medium term financial assumptions airing conservatively that the Canadian dollar will continue at par, that sales cycles for certain product/service categories will lengthen, that the sales and value propositions of those same offerings must deliver a return on investment (ROI) in under 12 months, and that customer relationship management to ensure a keen awareness of the customer’s/partner’s overall situation is paramount.
Simultaneously, exporters are busy tuning up their go-to-market strategies aimed to attack the world’s growing markets, including Europe, China, South America and India. For many exporters that have until now ignored or only dabbled in overseas markets, diversifying beyond the US is now a necessity.
Many business people in Canada have always considered the US market to be the prime market. The large size and influence of the US market, its close proximity, shared language and business culture made it the logical place for most companies to enter first, launch in first, expand in first. Time may prove that this will continue to be the case, but for the next two to five years, exporters may want to seriously consider a balance or even a shift. Depending on the type of product or service, exporters may for the first time look to overseas markets first.
The costs of doing business overseas will be significant. Beyond the soft costs of gaining critical knowledge of the target foreign market, differences in language and business culture, and currency complexity, there will be hard costs related to navigating legislation, shipping, communications, and business travel. All these factors will need to be baked into the business case. Obviously exporters, which are typically highly creative and effective businesses, will figure this all out one way or another.
Early stage companies (aka “start-ups”) entering export markets for the first time will need to look carefully at their go-to-market strategies to maximize the leverage of their modest funds. Start-ups, which typically refine their sales and value propositions as they enter the market, will face an even tougher situation. They will be looking to establish credibility and mindshare in a very tough market. The prevailing wisdom here is to enter the export market with the highest probability of business success, and which best represents or can influence the other markets to be entered in the future. Further, savvy market validation research will be required to ensure start-ups are truly hitting the sweet spots of the market. For some start-ups these sweet spots will still be in the US, for others they will not.
Many in the business community will need to exercise export market business skills which may have become a little out of shape or perhaps were never used while the US was booming. Now would be a perfect time to engage the help of professionals who are from or understand these foreign markets, including people new to our community. It will be important to network and leverage the expertise of others who have successfully entered markets, and to tap into programs such as those offered by Export Development Canada and various Canadian Consulates around the world.
We should be proud of the Canadian economy’s strength. We should be confident about Canada’s future. We should also be highly aware of the inevitable impact the US economic downturn will have on Canada and work strategically and tactfully to minimize it. All of this is easier said that done, but is now absolutely necessary.
Dan MacDonald
Dan MacDonald is the president and CEO of InNOVAcorp based in Halifax. www.innovacorp.ca
We should all be proud of Canada's economic track record. Several years of federal budget surpluses, debt maintenance, low interest rates, commodity price strength, and political stability position Canada as one of the world's strongest economies. Further, I must admit the strength of the Canadian dollar against the US dollar feels pretty good after decades of silly jokes about our weak loonie from my US colleagues.
That being said, exporters in the business community are aware of the now seemingly unavoidable impact of the weakening US economy on Canada. There is a “perfect storm analogy” for every difficult situation these days, and it is hard not to employ that overused term here.
The US downturn, like every other in history, will correct itself in time. However, the impact of the US subprime fiasco, the ongoing cost of war(s), the uncertainty of whether McCain or Obama policies will rule post November ’08, and the crushing debt are expected to make this downturn last longer than most. The US Federal Reserve is attempting to sound calm and confident, and politicians are even spending billions to artificially prop up the capital markets; however, any measureable positive impact seems to have a shelf life measured in hours.
The US is by far Canada’s largest trading partner. Exporters have been dealing with the effects of the high Canadian dollar for several quarters now. As the Canadian dollar rose to new heights, some “experts” said this was a wake up call for Canadian exporters that have long enjoyed the leverage of a weak dollar and now must become more competitive and productive to survive. I am not sure these same experts appreciated the difficult economic factors to come.
Canadian exporters are already facing slowed decision making, extreme price pressure resulting in a weaker bottom line due to reduced buying power of the US dollar, and creeping protectionism, all combined with the multidimensional impact of skyrocketing energy prices. By all accounts, exporters are facing very challenging top and bottom line pressures.
The prevailing wisdom among exporters seems to include the reworking of short and medium term financial assumptions airing conservatively that the Canadian dollar will continue at par, that sales cycles for certain product/service categories will lengthen, that the sales and value propositions of those same offerings must deliver a return on investment (ROI) in under 12 months, and that customer relationship management to ensure a keen awareness of the customer’s/partner’s overall situation is paramount.
Simultaneously, exporters are busy tuning up their go-to-market strategies aimed to attack the world’s growing markets, including Europe, China, South America and India. For many exporters that have until now ignored or only dabbled in overseas markets, diversifying beyond the US is now a necessity.
Many business people in Canada have always considered the US market to be the prime market. The large size and influence of the US market, its close proximity, shared language and business culture made it the logical place for most companies to enter first, launch in first, expand in first. Time may prove that this will continue to be the case, but for the next two to five years, exporters may want to seriously consider a balance or even a shift. Depending on the type of product or service, exporters may for the first time look to overseas markets first.
The costs of doing business overseas will be significant. Beyond the soft costs of gaining critical knowledge of the target foreign market, differences in language and business culture, and currency complexity, there will be hard costs related to navigating legislation, shipping, communications, and business travel. All these factors will need to be baked into the business case. Obviously exporters, which are typically highly creative and effective businesses, will figure this all out one way or another.
Early stage companies (aka “start-ups”) entering export markets for the first time will need to look carefully at their go-to-market strategies to maximize the leverage of their modest funds. Start-ups, which typically refine their sales and value propositions as they enter the market, will face an even tougher situation. They will be looking to establish credibility and mindshare in a very tough market. The prevailing wisdom here is to enter the export market with the highest probability of business success, and which best represents or can influence the other markets to be entered in the future. Further, savvy market validation research will be required to ensure start-ups are truly hitting the sweet spots of the market. For some start-ups these sweet spots will still be in the US, for others they will not.
Many in the business community will need to exercise export market business skills which may have become a little out of shape or perhaps were never used while the US was booming. Now would be a perfect time to engage the help of professionals who are from or understand these foreign markets, including people new to our community. It will be important to network and leverage the expertise of others who have successfully entered markets, and to tap into programs such as those offered by Export Development Canada and various Canadian Consulates around the world.
We should be proud of the Canadian economy’s strength. We should be confident about Canada’s future. We should also be highly aware of the inevitable impact the US economic downturn will have on Canada and work strategically and tactfully to minimize it. All of this is easier said that done, but is now absolutely necessary.
Dan MacDonald
Dan MacDonald is the president and CEO of InNOVAcorp based in Halifax. www.innovacorp.ca
Sunday, June 15, 2008
A Great Dad
I wrote this after Dad passed away a a few years ago.
As we approach Father's Day, I thought I would share.
Feel free to pass on to others.
Have a good one !
A Great Dad
It's easy to be a great dad if you have known one, spent time with one, been close to one.
It's easy to be a great dad if you have played with one, shared a laugh with one, celebrated a win with one.
It's easy to be a great dad if you have argued with - then made up with one, been respected by one, learned from one.
It's easy to be a great dad if you have been supported by one, cried with one,supported one.
It's easy to be a great dad if you have been the child of one, grown up with one, you want to be one.
People say that I'm a great dad.
It's been easy for me.
Dan MacDonald - November'2001
As we approach Father's Day, I thought I would share.
Feel free to pass on to others.
Have a good one !
A Great Dad
It's easy to be a great dad if you have known one, spent time with one, been close to one.
It's easy to be a great dad if you have played with one, shared a laugh with one, celebrated a win with one.
It's easy to be a great dad if you have argued with - then made up with one, been respected by one, learned from one.
It's easy to be a great dad if you have been supported by one, cried with one,supported one.
It's easy to be a great dad if you have been the child of one, grown up with one, you want to be one.
People say that I'm a great dad.
It's been easy for me.
Dan MacDonald - November'2001
Sunday, May 11, 2008
Innovation and the story of Minnesota Mining & Manufacturing Est. 1902
Innovation and the story of Minnesota Mining & Manufacturing, Est. 1902
Innovation is about creating business value out of new ideas, whether it’s new ways of doing things, new products, or new services.
Organizations must continually innovate to remain competitive, let alone grow. Failure to innovate inevitably causes organizational malaise, and invites the competition to come and take market share.
Innovation – straight forward, right? For many organizations, it is not so straight forward.
As organizations grow, many migrate from being the challenger attacker to being challenged and attacked. The problem usually lies in inadvertently allowing a culture to emerge that does not foster innovation. Strict policies, procedures, and product and project management styles put in place in the name of consistency and best practice often lead to a culture of risk aversion and dampened creativity.
In 1948, William L. McKnight, then president of Minnesota Mining & Manufacturing, directed the management of his company as follows:
"As our business grows, it becomes increasingly necessary to delegate responsibility. This requires considerable tolerance and mistakes will be made. Management that is destructively critical when mistakes are made will kill initiative. It's essential that we have many people with initiative if we are to continue to grow.”
While many turn to the latest best selling business books and industry gurus for advice on just about everything, Mr. McKnight’s wisdom after 50 years still makes good common sense.
Later renamed 3M, Minnesota Mining & Manufacturing’s innovative culture is today the envy of companies around the world. From Post-it Notes, to Scotch tape, to health care and highway safety, to office products and optical films for LCD displays, 3M’s annual revenue tops $24.5 billion USD and its market capitalization is $52.72 billion. Mr. McKnight’s focus on creating and maintaining a culture of innovation is core to 3M’s continued success.
Businesses of all sizes need to enable a culture where innovation is encouraged, continuous, and recognized. Further, an innovative culture is one in which risk is managed, mistakes are learned from, customer and supplier input is welcome, and management is open minded to changes to established business models. To some this might sound like anarchy, but it simply describes a business culture where progress, positive change, and innovation are embraced.
Management must encourage and harness innovation across the entire organization. Processes, policies and procedures should be constantly evolved to ensure relevancy, competitiveness, and increased value add. Organizations can effectively leverage innovation and attract and retain top talent.
Whether you are trying to increase yield, decrease costs, increase customer loyalty, diversify into new market sectors, or all of the above and more, having a culture of innovation will help position you for success.
Innovation, while not straight forward, is next to impossible if you do not have the right culture.
Dan MacDonald
Dan MacDonald is the president and CEO of InNOVAcorp based in Halifax. www.innovacorp.ca
Innovation is about creating business value out of new ideas, whether it’s new ways of doing things, new products, or new services.
Organizations must continually innovate to remain competitive, let alone grow. Failure to innovate inevitably causes organizational malaise, and invites the competition to come and take market share.
Innovation – straight forward, right? For many organizations, it is not so straight forward.
As organizations grow, many migrate from being the challenger attacker to being challenged and attacked. The problem usually lies in inadvertently allowing a culture to emerge that does not foster innovation. Strict policies, procedures, and product and project management styles put in place in the name of consistency and best practice often lead to a culture of risk aversion and dampened creativity.
In 1948, William L. McKnight, then president of Minnesota Mining & Manufacturing, directed the management of his company as follows:
"As our business grows, it becomes increasingly necessary to delegate responsibility. This requires considerable tolerance and mistakes will be made. Management that is destructively critical when mistakes are made will kill initiative. It's essential that we have many people with initiative if we are to continue to grow.”
While many turn to the latest best selling business books and industry gurus for advice on just about everything, Mr. McKnight’s wisdom after 50 years still makes good common sense.
Later renamed 3M, Minnesota Mining & Manufacturing’s innovative culture is today the envy of companies around the world. From Post-it Notes, to Scotch tape, to health care and highway safety, to office products and optical films for LCD displays, 3M’s annual revenue tops $24.5 billion USD and its market capitalization is $52.72 billion. Mr. McKnight’s focus on creating and maintaining a culture of innovation is core to 3M’s continued success.
Businesses of all sizes need to enable a culture where innovation is encouraged, continuous, and recognized. Further, an innovative culture is one in which risk is managed, mistakes are learned from, customer and supplier input is welcome, and management is open minded to changes to established business models. To some this might sound like anarchy, but it simply describes a business culture where progress, positive change, and innovation are embraced.
Management must encourage and harness innovation across the entire organization. Processes, policies and procedures should be constantly evolved to ensure relevancy, competitiveness, and increased value add. Organizations can effectively leverage innovation and attract and retain top talent.
Whether you are trying to increase yield, decrease costs, increase customer loyalty, diversify into new market sectors, or all of the above and more, having a culture of innovation will help position you for success.
Innovation, while not straight forward, is next to impossible if you do not have the right culture.
Dan MacDonald
Dan MacDonald is the president and CEO of InNOVAcorp based in Halifax. www.innovacorp.ca
Friday, May 9, 2008
Fighter
I am a big fan of Barack Obama.
I respect Hilary Clinton.
I am torn between wishing Clinton would quit and gaining a new respect for her drive and toughness. The calls for her to quit only seem to make her stronger. West Virginia on Tuesday will only serve to embolden her. She is clearly a fighter.
A fighter...hmm...
I strongly believe we need a leader, a uniter, a mender, a communicator, a visionary, a president for all not some, ... NOT a fighter.
Go Obama !
Dan MacDonald
I respect Hilary Clinton.
I am torn between wishing Clinton would quit and gaining a new respect for her drive and toughness. The calls for her to quit only seem to make her stronger. West Virginia on Tuesday will only serve to embolden her. She is clearly a fighter.
A fighter...hmm...
I strongly believe we need a leader, a uniter, a mender, a communicator, a visionary, a president for all not some, ... NOT a fighter.
Go Obama !
Dan MacDonald
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