www.colettesymanowitz.com

Perspectives on entrepreneurship, MBA-related issues, networking, personal branding, technology, investing, education and more…


6 Comments

Cannibalise your business before someone else does

cannibalise.png

This article also appeared in Finweek Magazine in their 21-March 2013 issue

Prozac, a breakthrough treatment for depression, is one of the biggest-selling, most profitable medications of all time. Since its launch in 1988, Prozac accounted for US$ 21bn in sales and 34% of Eli Lilly’s revenues in that time. In essence Lilly was the house that Prozac built. However, the US patent for Prozac was coming up for expiry in 2001. Executives at Lilly knew that this would trigger such a huge loss of revenue that 2001 was known throughout the company as “Year X”. So how did Eli Lilly prepare for Year X? In South Africa in 1997, Eli Lilly introduced Lilly Fluoxetine, its own generic version of Prozac. But this would eat into sales of Prozac. Why would Eli Lilly conceivably do such a thing?

Inevitably, markets are cannibalised. As business leaders, we have a choice: we can either cannibalise our own business lines, or we can enable existing or new competitors to cannibalise it for us. With pricey Prozac coming off patent, it was inevitable that other pharmaceutical companies would jump in to claim their share of the very lucrative antidepressant market. Rather than let competitors grab its Prozac market share with generics, Lilly chose to bring out its own generic. The thinking was that Prozac users could be converted to the cheaper, chemically similar Lilly Fluoxetine, rather than to the competitor antidepressants, and this would prevent some of the Prozac fallout. It was a smart strategy and helped Lilly stay in the antidepressant game.

So why should you cannibalise your own business? And what can happen if you don’t? Continue reading

Advertisements


Leave a comment

Should you pay people to quit?

This article also appeared in Finweek Magazine in their 14-March 2013 issue

zappos_tony-Lisa was in a group of new recruits going through an intensive week of immersion training at a new employer, learning everything about its strategy, culture and processes. Frank, the training class leader, left the room, and long-standing employees Joe and Cheryl came in to discuss the new group’s progress and offer support. Or so Lisa thought.

Instead, Joe and Cheryl kicked off a candid conversation with the newbies about their future at the company. They asked: “Does it seem like the right fit for you? Is this genuinely where you think you want to be?’” Lisa was slightly confused as to where this was heading. Then Cheryl made a very surprising offer to the entire class: “If this isn’t the place for you, we want to let you know about an early resignation offer that you can take advantage of. We’ll pay you for the time you’ve already spent training, plus a bonus of $4,000, to quit and leave the company right now.”

Lisa could not believe what she was hearing. Were they paying her to quit? Do companies really do this? Continue reading


7 Comments

Entrepreneurs: stop cloaking your ideas in secrecy

share ideas entrepreneursThis article also appeared in Finweek Magazine in their 4-April-2013 issue

Joe and I met at a networking event recently. Joe is new to the entrepreneurial game and wants to start a business in the restaurant industry. When I asked Joe to tell me more about his concept, he immediately clammed up. “I’d prefer not to discuss it until it is launched”, he said hesitantly. “However if you could sign a confidentiality agreement, I do have one with me …”

I meet entrepreneurs like Joe all the time. Like most entrepreneurial newbies, he is very protective of his idea. His greatest fear is that copycats will steal it. So he guards his baby zealously, and doesn’t even tell his friends about it. By contrast, mature entrepreneurs who have been in the game for a while are only too happy to tell others about their ideas. Here’s why: Continue reading


Leave a comment

Your business: Is organic the way to grow?

tulips-growing

This article also appeared in Finweek Magazine in their 07-March 2013 issue

In last week’s article we explored how growing too quickly could sometimes, but not always, be bad for your business. By contrast, even though it often gets a bad rap, slower, organic growth, could actually be a better strategy for your business in the long-run. Continue reading


8 Comments

Is rapid growth bad for your business?

rapid growth graph tech bizThis article also appeared in Finweek Magazine in their 28-Feb-2013 issue

In 1999, the Webvan Group promised to transform the grocery shopping industry. Thanks to an über-successful IPO and other sources such as venture capitalists, it raised a staggering $1.2bn in start-up capital, rivalling big players like Amazon.com. Fast forward to 2001, when Webvan went bankrupt, barely 18 months later. The cause? It ran out of money.

How is this possible?

When investors inject capital into a business, they want a return on their money. And the expectation is that rapid growth will usually fuel this return. Americans even have an expression for fast-growing firms: “gazelles” are publicly traded companies that have grown at least 20% for each of the previous four years, kicking off with US$ 1m or more in sales.

But sometimes, growing too quickly can actually be bad for business. Continue reading