02 September 2005

Spin-offs & Senior Management

There are times when an established company is faced with the opportunity to help develop a spin-off or launch an additional company. Senior management gets involved and unless certain rules are observed, the process can be one of pushing to create, only to let the newborn languish.

So here are The 4 Rules for Senior Management of Spin-offs:

1) Think beyond the money: Oftentimes, senior management looks at a potential project in terms of expenses and revenue. That's only part of the equation. From unconvering new opportunities and skill sets to elevating morale and attracting a wider range of talented employees, the decision to foster a spin-off effort has very positive intangibles. Leaving those off the decision matrix will most likely lead to a bad decision. And money is only part of the resources senior management and the company can bring to the project table. Everything from streamlining procedures to marketing and public relations are part of the toolbox a project needs for a successful launch, especially when senior management has experience in the same general field.

2) Give freedom and maintain control: No, The Jenius hasn't become a Zen monster. Senior management must allow the freedom for the spin-off team to seek solutions and make mistakes, while maintaining overall control of what the spin-off project needs to achieve. Upper management in these cases is not a player, but a coach. Stepping in to try to micromanage the project almost always weakens the effort, while simply letting the project team "do its own thing" tends to create spin-offs with no clear purpose to either the established company or any specific markets.

3) Establish clear "pull the plug" numbers: The worst thing for a spin-off project is to be shut down. To avoid the image of arbitrary or subjective decision-making, as well as reducing the potential effect of internal politics on the effort, clear objectives must be established and reviewed periodically. Not only does the process keep the team focused on achieving results, it also provides for an automatic project review with little extra effort. Obstacles are quickly identified and if more resources need to be allocated, they can be weighed and committed when needed.

4) Once the spin-off launches is when your real work begins: Senior management is not a checkbook and office space: it is a leadership role and leaders act. The moment a spin-off is ready to hit the market is when senior management is needed most, because they are the first, best and most respected salespeople for the project. Letting the spin-off try to "find its legs" is like building a bicycle and expecting it to be a motorcycle. At that point, the engine is senior management and a few weeks of ales and marketing by senior management may very well be the difference between spin-off success and limbo.

The Jenius Has Spoken.

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