Main HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)
HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)Harvard Business Review
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How to go to your page This eBook contains 10 volumes. It contains an Index at the end of each set. The front matter and content of each book have their own page numbering scheme, consisting of a book number and a page number, separated by a colon. For example, to go to page 18 of Volume 1, type “V1:18” in the "page #" box at the top of the screen and click "Go." To go to page “123” of Volume 2, type “V2:123” or to go to page “vii” of Volume 8, type “V8:vii” ……and so forth. Please refer to the eTOC for further clarification. HBR’s 20-Minute Manager Boxed Set (10 Books) Contents: Presentations Creating Business Plans Giving Effective Feedback Delegating Work Finance Basics Getting Work Done Managing Time Running Meetings Managing Up Managing Projects Harvard Business Review Press Boston, Massachusetts eISBN13: 978-1-63369-096-7 Presentations H6353.indb i 12/12/13 2:44 PM 2 MINUTE MANAGER SERIES Get up to speed fast on essential business skills. Whether you’re looking for a crash course or a brief refresher, you’ll ﬁnd just what you need in HBR’s 20-Minute Manager series—foundational reading for ambitious professionals and aspiring executives. Each book is a concise, practical primer, so you’ll have time to brush up on a variety of key management topics. Advice you can quickly read and apply, from the most trusted source in business. Titles include: Creating Business Plans Delegating Work Finance Basics Getting Work Done Giving Effective Feedback Managing Projects Managing Time Managing Up Presentations Running Meetings H6569.indb ii 8/5/14 11:43 AM 2 MINUTE MANAGER SERIES Presentations Sharpen your message Persuade your audience Gauge your impact HARVARD BUSINESS REVIEW PRESS Boston, Massachusetts H6353.indb iii 12/12/13 2:44 PM Copyright 2014 Harvard Business School Publishing Corporation All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to firstname.lastname@example.org .edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. The web addresses referenced in this book were live and correct at the time of the book’s publication but may be subject to change. Library of Congress Cataloging-in-Publication Data Presentations. pages cm ISBN 978-1-62527-086-3 (alk. paper) 1. Business presentations. HF5718.22 P74 2014 658.4'52—dc23 2013024774 Find more digital content or join the discussion on www.hb.org H6353.indb iv 12/12/13 2:44 PM Preview It takes more than personality and PowerPoint to give an effective presentation. But you can learn how, whether you’re presenting for the ﬁrst time or you just need a refresher. This book walks you through the basic steps: • Articulating a clear message. • Tailoring it to your audience. • Organizing your content. • Gathering relevant, persuasive data. • Choosing the right tools and visual aids. • Rehearsing and getting feedback. H6353.indb v 12/12/13 2:44 PM Preview • Delivering your talk with clarity and conﬁdence. • Fielding questions and following up. • Making improvements for next time. vi H6353.indb vi 12/12/13 2:44 PM Contents The Key to Presenting 1 Why Give a Presentation? 5 Deﬁne Your Goal 9 Your broad objective Your desired outcomes 11 12 Your measurement of success 14 Know Your Audience 15 Craft Your Message 23 Step 1: Deﬁne your core message 26 Step 2: Identify relevant arguments and data Step 3: Organize the content 27 28 vii H6353.indb vii 12/12/13 2:44 PM Contents Identify Your Resources What’s your venue like? 35 37 How much time will you have? 38 What equipment will you use? 39 Plan the Visuals 41 Choosing the appropriate media Creating effective visuals 44 44 Practice Your Delivery 49 Rehearsing your content 51 Preparing yourself mentally 54 Deliver Your Presentation Keeping your audience engaged 57 60 Being ﬂexible 61 Manage the Response Timing the Q&A 65 67 Preparing for tough questions Outlining next steps 68 70 viii H6353.indb viii 12/12/13 2:44 PM Contents Debrief Your Presentation Critiquing your content 73 75 Analyzing your performance Asking colleagues for feedback 76 77 Follow Up with the Audience 79 Learn More 83 Sources 93 Index 95 ix H6353.indb ix 12/12/13 2:44 PM H6353.indb x 12/12/13 2:44 PM Presentations H6353.indb xi 12/12/13 2:44 PM H6353.indb xii 12/12/13 2:44 PM The Key to Presenting H6353.indb 1 12/12/13 2:44 PM H6353.indb 2 12/12/13 2:44 PM The Key to Presenting Y ou have a message to communicate, and you’ve decided to give a presentation. You’ll need to do some work to win people over to your way of thinking. But that’s deﬁnitely not out of reach, even if you don’t consider yourself a naturally gifted public speaker. No matter what form your presentation takes— whether it’s a status report, a product demonstration, a sales pitch, or a strategy rollout—the key to presenting effectively is to know your goals, your audience, and yourself. That core idea informs all the principles in this book. Let’s get right to them. 3 H6353.indb 3 12/12/13 2:44 PM H6353.indb 4 12/12/13 2:44 PM Why Give a Presentation? H6353.indb 5 12/12/13 2:44 PM H6353.indb 6 12/12/13 2:44 PM Why Give a Presentation? I f you’re planning to present to a business audience, you probably want to inform, persuade, or sell. This may entail: • Explaining new data. • Soliciting ideas or feedback to build consensus. • Asking people to take action. • Seeking help solving a problem. • Getting buy-in on an initiative. Are you trying to do one of those things or something else? Write down your purpose in a phrase as short as the ones listed above. 7 H6353.indb 7 12/12/13 2:44 PM Presentations Now look at what you wrote and ask whether you even need to give a presentation. Is that the best way to get the job done? For example, if the number of people you need to reach is quite small, perhaps a quick face-to-face chat with each of them would be more efﬁcient. If the audience is larger but the message is simple and you don’t need feedback, an e-mail might sufﬁce. Sometimes, of course, those forms of communication are inadequate and it’s clear you’ll need to give a presentation. If that’s the case, you’re ready to start working on yours. Hold on to that purpose phrase you wrote down a moment ago; you’ll need it. 8 H6353.indb 8 12/12/13 2:44 PM Deﬁne Your Goal H6353.indb 9 12/12/13 2:44 PM H6353.indb 10 12/12/13 2:44 PM Deﬁne Your Goal A n effective presentation begins with focused thinking. You’ll need to ﬁgure out your primary aim, which usually involves getting people to understand something or take action. Your broad objective Go back to that short phrase you wrote down earlier—turn it into a crisp sentence that states your goal. Begin with “I want,” and include your audience. Here are some examples: • “I want to inform my department about the new process for proposing new product ideas.” 11 H6353.indb 11 12/12/13 2:44 PM Presentations • “I want my colleagues to help brainstorm ideas for the project we’re about to start.” • “I want to show people how well my team’s new system works.” • “I want to get other managers to sign on to a set of recommendations I’ve developed for our top executives.” • “I want to give people in my group the tools they need to reach their targets this quarter.” Your broad objective may be nothing like those, but state it just as succinctly. Anyone should be able to understand it without reading it twice. Your desired outcomes Now it’s time to get speciﬁc, not about what your presentation will include (that comes later) but about 12 H6353.indb 12 12/12/13 2:44 PM Deﬁne Your Goal what results you want. Take, for example, this objective from the preceding list: “I want to show people how well my team’s new system works.” You don’t just want attendees to walk away impressed with the system. You seek outcomes. What are they? Maybe you need people to identify ways they can use the system in their daily work or to take the ﬁrst step toward implementation within one week. Or maybe you’d like them to troubleshoot obstacles and report back to you with their ﬁndings within 10 days. Whatever your desired outcomes, write them down in a list. There’s no magic number, but be realistic; fewer items are usually better. That way, you’ll tighten your focus and avoid setting your own and your audience’s expectations too high. 13 H6353.indb 13 12/12/13 2:44 PM Presentations Your measurement of success With your broad objective and desired outcomes in hand, identify how you will measure whether you’ve met your goals. Do you expect to leave the presentation with ideas that audience members generated? Do you want attendees to complete a set of tasks by a certain deadline? Are you trying to measure “soft” data, such as enthusiasm and buy-in? How will you gauge those? Keep the metrics simple and easy to assess, accounting for what your audience can realistically produce. If you’re looking for feedback, you might ask people to complete a brief form or online survey. If deliverables are part of the mix, provide a handout that lists those items—something physical that audience members can carry away with them and that you can easily send to people who missed the presentation. 14 H6353.indb 14 12/12/13 2:44 PM Know Your Audience H6353.indb 15 12/12/13 2:44 PM H6353.indb 16 12/12/13 2:44 PM Know Your Audience T he better you understand your audience’s goals and concerns, the more likely you are to achieve your objective and your desired outcomes. And the better able you will be to measure those successes. The audience, not the presenter, is the heart of any presentation. To ﬁgure out what makes it tick, answer these questions: 1. How big will the group be? Who will be absent? Are you expecting 5, 15, or 50 people? The size of the audience affects the type of presentation you’ll give and the resources you’ll need (see “Identify Your Resources” later 17 H6353.indb 17 12/12/13 2:44 PM Presentations in this book). Keep track of which people can’t attend. Absent stakeholders are stakeholders nonetheless; you’ll want to follow up with them afterward. 2. What roles do your audience members perform in the organization? To whom are they accountable? Having a basic understanding of their responsibilities will help you engage them. Consider why your message matters to them and how you can make their lives easier. You’ll highlight those things when you present. 3. What does the audience already know? What do people need to know? Don’t state the obvious, but give people enough background information to understand what you’re saying and how it affects them. 4. What are people likely to assume? Which of those assumptions are correct and which incorrect? Anticipating your audience’s assump- 18 H6353.indb 18 12/12/13 2:44 PM Know Your Audience tions helps you make better choices about how to present your content. If there’s a misperception you need to correct, this might be the time to do it—gently. For example, if your audience believes that the new system you’re proposing will take too much time and effort to learn, clearly explain how you’ll help ease the transition with training sessions and extra technical support. 5. How well does the audience know you? If you don’t already have strong relationships with the people in the room, you’ll need to establish a rapport with them early on. For instance, you might open with an amusing anecdote about your own struggles with the old system you’d like to replace. Show that you share the group’s frustrations with the way things are. 6. Will some attendees’ goals conﬂict with others’? If so, acknowledge that up front and explain how what you have to offer may help. 19 H6353.indb 19 12/12/13 2:44 PM Presentations 7. What types of presentations are your audience members accustomed to? Think about what’s likely to get their attention, given what’s worked in the past (data, demonstrations, personal stories). If you’re doing something that’s new to them, ﬁnd ways to make them comfortable with it. Talking to a group of number crunchers? Open with a relevant story to give your presentation greater personal meaning, but make it one that they can relate to. 8. Is someone requiring them to be there? Is that person you? This will affect how receptive people are to your message. You may need to overcome apathy or even hostility. 9. Will you or someone else hold them accountable for what happens during or after the presentation? Consult with the attendees’ managers about the feedback or deliverables you’ll be soliciting, to make sure your goals align with theirs. 20 H6353.indb 20 12/12/13 2:44 PM Know Your Audience Not every question here will be relevant to your presentation. And, clearly, other pertinent considerations exist. The point is not to write up answers to a bunch of questions in a handy book. It’s to reﬂect on the human context in which you will deliver your message so you can tailor it to suit your audience’s challenges and goals. Anticipating the needs and concerns of your audience helps you calibrate your mind-set as you prepare and execute your presentation. Take the old adage about putting yourself in others’ shoes to the next level: Put yourself inside their heads and behind their eyes. Imagine yourself sitting there witnessing what you have to say. Did you do that? Really do that? OK, now you’re ready to craft your message. 21 H6353.indb 21 12/12/13 2:44 PM H6353.indb 22 12/12/13 2:44 PM Craft Your Message H6353.indb 23 12/12/13 2:44 PM H6353.indb 24 12/12/13 2:44 PM Craft Your Message M any presenters mistakenly assume that a great idea will speak for itself, as long as it comes in an appealing package. Pack- aging matters, no doubt, but your audience needs much more than that. Guide people through your logic, facts, and examples, but without bogging them down in details that don’t pertain to them. You want them to arrive where you are and, ideally, enjoy getting there. So chart a clear path by following three basic steps. 25 H6353.indb 25 12/12/13 2:44 PM Presentations Step 1: Deﬁne your core message What main point do you want people to remember when they walk away from the presentation? That’s your core message. As with the phrase stating your purpose for presenting, it should be short and sweet. But test your assumptions: Have you really chosen the most critical message to articulate? Does it jibe with your objective and desired outcomes (see “Deﬁne Your Goal” earlier in this book)? Make sure your answer to both questions is a resounding yes. Every part of your presentation should advance the message you select. Does that mean you need to keep repeating it? Of course not. But almost anything you say or show that doesn’t support your main point may weaken it and undercut your goals. So keep a tight focus here. It will help you choose the right supporting material in Step 2. 26 H6353.indb 26 12/12/13 2:44 PM Craft Your Message Step 2: Identify relevant arguments and data Every good presentation makes a case. And a strong case needs support. Back up each assertion with well-chosen facts and data. Statements made without evidence are merely opinions, and opinions alone don’t move an audience. Give people reasons to share your views or adopt a course of action. Include only those facts and data that will persuade. Extraneous details distract listeners from what you want them to hear, process, and remember. If you’re not sure about the value of a point, leave it out. Excluding the extraneous doesn’t mean focusing only on cold, hard data. It’s also important to connect emotionally. Be explicit about why your audience should care about your message. Tap into the anger or pain wrought by the status quo. 27 H6353.indb 27 12/12/13 2:44 PM Presentations After you’ve gathered material for your argument, step back and reﬂect: • Will everyone in your audience be able to follow you? Or will you need to brieﬂy deﬁne terms or provide a little more background to bring some people up to speed? • Will your supporting content persuade your audience? What else might you need to make your case? • Are you showing people why what you’re saying should matter to them? • Are you making their journey engaging? Step 3: Organize the content A well-organized presentation makes it easier for the audience to listen and for you to achieve your goals. 28 H6353.indb 28 12/12/13 2:44 PM Craft Your Message Logically sequence your argument so that people can follow it from one point to the next. Let’s return to the example discussed earlier: If you’re proposing a new system, ﬁrst brieﬂy explain why the old one has to go and how the new one solves those problems. Then spell out how the new system works and how the audience can start reaping its beneﬁts. In most cases, a presentation should have four parts: an opening, a description of the need or problem you’re addressing, your proposed solution, and a call to action. The opening Use a hook—a comment, relevant story, statement, or example—to get your audience’s attention. Look for ways to engage attendees right away: For instance, you might ask for a show of hands in response to a provocative question that sets up your topic. 29 H6353.indb 29 12/12/13 2:44 PM Presentations In addition to establishing a rapport, a strong opening also: • Deﬁnes the purpose of your presentation. • Highlights what’s in it for the audience. • Conﬁrms your credibility. • Previews the main points very brieﬂy. The need or problem Keep this part of your presentation tight and focused so you’ll have plenty of time to propose your solution. An effective statement of the need or problem: • Spells out the main challenge you want to address with the audience’s help. • Shows how that issue directly affects the audience. • Has a sense of urgency. 30 H6353.indb 30 12/12/13 2:44 PM Craft Your Message • Reﬂects thoughtful input from others—through employee surveys, for example. • Incorporates relevant arguments, examples, and supporting material that sustain interest without distracting from the point. The solution Now it’s time to say how you think the problem should be solved or the need satisﬁed. You’ll want to: • Help audience members visualize the beneﬁts of your solution. • Phrase your solution in terms of their needs. • Use a story, when possible, to illustrate the solution. • Involve the audience in developing a path forward. • Make sure the strength of your solution matches the challenge. 31 H6353.indb 31 12/12/13 2:44 PM Presentations ASKING THE AUDIENCE FOR INPUT Figure out in advance when you’ll ask people for input during your presentation. You may simply want to ensure they’re with you as you lay out your argument, but you also may wish to draw on their knowledge to support your message. Empty questions aimed at the whole sweep of the room—“Is everybody following?”—generally don’t work. Most polite people will simply nod. Instead, directly address individuals: “Does that seem like the biggest problem with customer satisfaction, Maria, given your front-line perspective?” Asking audience members what they think is a great way to heed the pleasure principle. When people feel their voices and ideas are being heard, they’re happy and more likely to open their minds to what they’re hearing from you. 32 H6353.indb 32 12/12/13 2:44 PM Craft Your Message Call to action A good wrap-up has a strong call to action. These are the key ingredients: • Reiterate the challenge and your solution. • Recommend speciﬁc action. • Obtain commitment or buy-in. • Agree on assignments if appropriate. • Explain what you’ll be doing to follow up after the presentation. 33 H6353.indb 33 12/12/13 2:44 PM H6353.indb 34 12/12/13 2:44 PM Identify Your Resources H6353.indb 35 12/12/13 2:44 PM H6353.indb 36 12/12/13 2:44 PM Identify Your Resources K now exactly what resources you’ll have at your disposal the day you present so you can plan to make the most of them. These include the physical space you’ll be in, the amount of time you’ll get, and the equipment you’ll have in the room. What’s your venue like? If possible, visit the venue and scope out any limitations. Note where you’ll be standing and how far away the most remote audience member will be. Decide 37 H6353.indb 37 12/12/13 2:44 PM Presentations whether you’ll need a microphone to be heard. Also assess the seating: People who have to stand through a presentation are more likely to leave early than those who have a chair. How much time will you have? Pace yourself so you can make your argument comfortably within the window you have. Factor in audience feedback and participation when you budget your time. Also think about the time available to you after the presentation is over—for informal chats, feedback surveys, collection of deliverables, return visits, and so on. Often you must ﬁt your presentation into a timetable that someone else develops. For example, you may have 30 minutes to deliver a sales presentation to a buyer. In other instances, you control the timing. The following guidelines are helpful in both situations: 38 H6353.indb 38 12/12/13 2:44 PM Identify Your Resources • Speak just long enough to convey your key message clearly and completely. • It’s better to make fewer points and make them well. • If you don’t have time to make a point clear or acceptable to your audience, omit it or save it for another presentation. • Ending early is better than not completing the talk or rushing at the end. • Plan what to skip if your time is cut short. What equipment will you use? If a particular tool enhances your content, make sure you can use it competently. Delays that occur because you can’t work the equipment will annoy the audience and may throw you off your game. 39 H6353.indb 39 12/12/13 2:44 PM Presentations The next chapter of this book is about planning your visual aids. But before you turn to that, you’ll need to know what tools you’ll have handy: paper, whiteboards, projectors, a laser pointer, video conferencing, or other possibilities. Catalog what’s available, and secure anything extra that you need. Also check that any network passwords you’ll need to access ﬁles, an internet connection, or other software and devices are up-to-date. Test them out before the presentation to make sure log-ins will be seamless. 40 H6353.indb 40 12/12/13 2:44 PM Plan the Visuals H6353.indb 41 12/12/13 2:44 PM H6353.indb 42 12/12/13 2:44 PM Plan the Visuals T he visuals are often what stick with people well after a presentation ends. Consider these research ﬁndings: • People learn 75% of what they know visually, 13% through hearing, and 12% through smell. • A picture is three times as effective in conveying information as words alone. • Words and pictures together are six times as effective as words alone. So use visual aids to help your audience stay engaged, remember facts, and understand ideas, relationships, or physical layouts. You can also use them as cues that 43 H6353.indb 43 12/12/13 2:44 PM Presentations you’re moving to a new topic. Remember, however, that when people are looking at a visual, they’re not looking at you. That’s why it’s important to create visuals that they can process quickly. Choosing the appropriate media You have many choices for your visuals, including PowerPoint, video, and paper handouts. When selecting your media, consider ﬂexibility, cost, appropriateness for your presentation, and your comfort level with the format or technology. If you use handouts, avoid distributing them during the presentation. It detracts from what you’re saying. Creating effective visuals Not all visuals enhance a presentation. Put together a thick deck of boring slides, for example, and you’ll in- 44 H6353.indb 44 12/12/13 2:44 PM Plan the Visuals ﬂict “death by PowerPoint”—something you’ve probably experienced as an audience member. Steer clear of the following traps, which will frustrate your audience or even put people to sleep: • Having too many slides. • Using complex, confusing visuals, such as ﬂow charts with lots of boxes, arrows, feedback loops, and text. • Packing your visuals border-to-border with dense text or too many images. • Simply reading the text in your visuals aloud. To make your visuals more compelling, keep them simple. Use: • Graphics, icons, and symbols to reinforce concepts. • Key words, not full sentences. • Only one concept and no more than six lines of text per slide or page. 45 H6353.indb 45 12/12/13 2:44 PM Presentations • Only three to six ideas on each ﬂip chart or whiteboard display. • Color where possible, but not excessively. • Pictures where feasible. • Bullets, not numbers, for nonsequential items. • All-uppercase letters only for titles or acronyms. See what a difference it makes when you clear away the visual clutter: Before We follow the same basic process every time • We start with the invention. We take early stage ideas and turn them into demos—not technical demos but conceptual ones, like the rough version of Flare you saw. • Then our team takes this seed of an idea to customers, in conferences and forums, to get feedback that helps us shape it into something even more useful. • We improve it and build a prototype that we give to a set of early adopters, who use it and give us more feedback. • Eventually, after a few quick cycles of this process, we standardize the product features. • Only then is it ready to go out to our larger group of customers, like the ﬁnished version of Flare you saw. 46 H6353.indb 46 12/12/13 2:44 PM Plan the Visuals Invention F e e dba F e e db De Improve ck P roto e ty p ck mo a After Standardize Source: Nancy Duarte, HBR Guide to Persuasive Presentations (Boston: Harvard Business Review Press, 2012). Now that you’ve planned your presentation, it’s time to practice it. 47 H6353.indb 47 12/12/13 2:44 PM H6353.indb 48 12/12/13 2:44 PM Practice Your Delivery H6353.indb 49 12/12/13 2:44 PM H6353.indb 50 12/12/13 2:44 PM Practice Your Delivery I t feels great when you’ve ﬁnished creating a presentation. Indeed, many presenters feel so satisﬁed that they do nothing else until it’s time to speak. But to prepare thoroughly, you must also rehearse what you’re going to say and get yourself ready mentally so you’re both polished and relaxed. Rehearsing your content It’s tough to identify all the holes, dull spots, and excessive details in your presentation just by reviewing your notes and slides. You need to assess how your presentation will look and sound to other people. 51 H6353.indb 51 12/12/13 2:44 PM Presentations The best way to do that is to practice before a test audience. If you can, rehearse in front of a group of colleagues or friends. Try to include people who are similar to your real audience in terms of their roles, assumptions, perspectives, and expertise (see “Know Your Audience” earlier in this book). Interact with the test audience as you would with your actual audience. Of course, time and other constraints may not permit you to rehearse with a live group. In that case, play back an audio or video recording of yourself: You’ll ﬁnd ﬂaws you wouldn’t have discovered otherwise. Even practicing aloud in front of a mirror gives you the chance to hear your own voice and see how you’re coming across—though it’s hard to deliver your talk and assess yourself at the same time, so it’s no substitute for live feedback or a recording. Other tips to remember as you rehearse: • Practice with the equipment you’re planning to use. 52 H6353.indb 52 12/12/13 2:44 PM Practice Your Delivery • Use visual aids to reinforce your message, not to speak for you. • Know your content well so you won’t have your nose in your notes, but don’t script yourself word for word—it’ll sound memorized. • Rehearse the entire presentation to see how it all hangs together. • Use an expressive, conversational voice. • Avoid jargon and other terms your audience may not know. • Articulate responses to questions that people are likely to ask you. Focus on your tone. • Ask yourself, “What’s the worst that can happen during the presentation?” Prepare for that possibility by mapping out how you’ll move past it. 53 H6353.indb 53 12/12/13 2:44 PM Presentations • Practice in the same room where you’ll present, if that venue is available. Preparing yourself mentally Rehearsing your talk is one thing; putting yourself in the right state of mind before the curtain opens is another—and just as important. To win the mental game, try these techniques right before the presentation: • Visualize yourself giving a successful presentation. • Repeat positive statements to yourself, such as “I am relaxed and ready.” • Use deep-breathing and tension-relieving exercises to reduce stress. • Wear clothing that makes you feel comfortable, conﬁdent, and professional. 54 H6353.indb 54 12/12/13 2:44 PM Practice Your Delivery • Accept nervousness as natural. Don’t try to counteract it with food, caffeine, drugs, or alcohol. • Interact with audience members as they come into the room. 55 H6353.indb 55 12/12/13 2:44 PM H6353.indb 56 12/12/13 2:44 PM Deliver Your Presentation H6353.indb 57 12/12/13 2:44 PM H6353.indb 58 12/12/13 2:44 PM Deliver Your Presentation O nce you’re in the room with your audience, focus on engaging people and projecting conﬁdence. Here are some suggestions that will help: • Retain the expressive, conversational tone you practiced in your rehearsal. • Speak at a moderate pace. You’ll sound nervous if you go too fast; you’ll bore people if you go too slowly. • Make sure everyone can hear you. If you have a microphone and sound system, test its effectiveness before you begin. 59 H6353.indb 59 12/12/13 2:44 PM Presentations • Avoid watering down what you say with “kind of” and “sort of.” • Make eye contact with audience members. • Watch the audience for nonverbal cues, and use your facial expressions to convey interest in people’s reactions. • Take a breath now and then. It helps you relax and reduces ﬁller language such as “um” and “er.” Keeping your audience engaged You’ll probably confront one or more difﬁcult audience members: the tuned out, the overloaded, or the just plain grumpy. Inattentive people often cross their legs, ﬁdget in their seats, or look around the room more than usual. Here are some proven techniques for grabbing their attention: 60 H6353.indb 60 12/12/13 2:44 PM Deliver Your Presentation • Change what you’re doing—pause, for example, or alter your tone of voice. • Survey the audience: “Just out of curiosity, how many of you believe that our customers are satisﬁed with our current returns policy? Let’s see a show of hands.” • Add humor if appropriate. Audience members welcome a little comic relief. • Provide analogies and vivid examples. • Introduce personal stories. • Keep returning to how your message affects the audience: “Here’s what that last point means for you and your team.” Being ﬂexible Even the most well-planned, meticulously rehearsed presentation is a dynamic event. Rarely does every- 61 H6353.indb 61 12/12/13 2:44 PM Presentations thing go by the book. Technical difﬁculties may arise, circumstances affecting your content may change right before you speak, and audience reactions may take an unexpected turn. You can anticipate some wrinkles, as discussed in “Know Your Audience” earlier in this book. But you must be willing to embrace unforeseen developments and to remain ﬂexible in the face of them. A presenter who refuses to deviate from his or her plan risks being perceived as having a tin ear, a thick skull, or, worst of all, a ﬂawed message. Treat unexpected developments as opportunities, not threats. Don’t allow them to derail you from your core message, but don’t just barrel ahead without addressing them, either. This is especially important when an audience member throws you a curveball question or comment (see the next chapter, “Manage the Response”). If someone asks for more evidence on a peripheral point, for instance, view that as a chance to make 62 H6353.indb 62 12/12/13 2:44 PM Deliver Your Presentation an even stronger case. If you have more data in your pocket, share what you’ve got or offer to do extra research after the presentation. When technical or logistical problems arise, brush them off with good humor. A joke in the face of a glitch is a testament to your conﬁdence and level of preparation, and it shows that your message is more important than the medium. 63 H6353.indb 63 12/12/13 2:44 PM H6353.indb 64 12/12/13 2:44 PM Manage the Response H6353.indb 65 12/12/13 2:44 PM H6353.indb 66 12/12/13 2:44 PM Manage the Response S ome people feel that a presentation that generates no questions is a success. But if your listeners are engaged, they are very likely to have questions. Embracing those inquiries can allow you to offer greater detail in areas that matter to your audience. Timing the Q&A Many speakers take questions after they present. This allows them to complete the talk within a speciﬁed time and to ensure the audience has the whole picture. If you choose that approach: 67 H6353.indb 67 12/12/13 2:44 PM Presentations • Make your transition to the Q&A session clear. • Tell the audience how much time is left for Q&A. • Maintain control of the Q&A session by repeating each question and giving the answer to the whole group, not only to the questioner. You may decide to take questions throughout the presentation or ask for reactions and ideas along the way to keep people engaged. In your notes, identify places where you’d like audience feedback so you won’t forget to ask for it. Tell people explicitly why you’re pausing. That will help them focus their questions and comments. Keep your own questions and responses brief so that the presentation stays on track. Preparing for tough questions Suppose you’re presenting your unit’s new strategic plan to a group of anxious managers and employees. 68 H6353.indb 68 12/12/13 2:44 PM Manage the Response Or the CEO has asked you to go to each regional ofﬁce to explain upcoming layoffs. What do these situations have in common? The great potential for resistance. Here’s how to handle it: 1. Anticipate tough questions. Before you present, write down whatever objections you think may come up and brainstorm how you’ll respond. Run your responses by a trusted colleague to make sure you’ll give those objections a fair hearing. 2. Be gracious, not defensive. Show curiosity and enthusiasm in both the tone and content of your responses. Replies such as “That’s a great question, and here’s why . . .” make it clear that you have already thought about things from the audience’s perspective. Be open to exploring options you hadn’t considered, and the people raising them will be more likely to hear you out, too. 69 H6353.indb 69 12/12/13 2:44 PM Presentations 3. Don’t try to be all things to everyone. If people raise questions that go beyond the scope of your presentation, don’t hesitate to say so. They’ll understand that you had to draw a line somewhere. 4. Answer questions honestly. When you know the answer, articulate it clearly and brieﬂy. When you don’t know it, admit that. Either direct the questioner to another source or offer to do some digging yourself. Write down questions you can’t address on the spot to demonstrate your commitment to answering them. Outlining next steps Even if the questions you get aren’t especially tough, show that your message has a life beyond the presentation. For instance: 70 H6353.indb 70 12/12/13 2:44 PM Manage the Response • Specify how—and to whom—audience members should give their feedback about the presentation. • Explain how deliverables, if any, should be transmitted to you or others (see “Deﬁne Your Goal” earlier in this book). • Offer whatever support you can to help people put your ideas into action. • If a follow-up presentation or other event is planned, provide whatever relevant details you have. • Emphasize your genuine interest in continuing the conversation if there’s more to discuss. • When you’re sharing your contact information, be sure of your ability to respond and promise to do just that. • If feasible, talk to attendees as they leave the room. Don’t allow one or two people to 71 H6353.indb 71 12/12/13 2:44 PM Presentations monopolize your time so that others feel snubbed. Now that the presentation itself is ﬁnished, it’s time to debrief what happened and to measure your success. 72 H6353.indb 72 12/12/13 2:44 PM Debrief Your Presentation H6353.indb 73 12/12/13 2:44 PM H6353.indb 74 12/12/13 2:44 PM Debrief Your Presentation Y ou wrapped up your presentation by outlining next steps for the audience. Of course, you’ll follow through on your end of those commitments (see the next chapter, “Follow Up with the Audience”). But you also have an obligation to honestly assess the talk you just gave and to sharpen your skills before your next one. Critiquing your content No matter how well you’ve planned your presentation, the act of delivering it will often expose ﬂaws, 75 H6353.indb 75 12/12/13 2:44 PM Presentations gaps, or other shortcomings, even if you’re a polished presenter. You may discover small glitches, such as a slide that could not be read from the back of the room, or bigger ones, like a missing step in a process you outlined. Make a list of those ﬂaws as soon as possible— no more than an hour or two after your presentation ends, if that’s feasible. Incorporate the changes into your slides and other master ﬁles within a few days. Trying to reconstruct and correct the problems weeks or months later almost always yields worse results, if you remember to ﬁx the mistakes at all. Analyzing your performance Problems with delivery run the gamut. You can easily identify minor ones, such as weak opening remarks and awkward attempts at humor, the moment they happen. Just look at the audience’s reaction: Are people nodding? Or is everyone sitting dead still? Watch- 76 H6353.indb 76 12/12/13 2:44 PM Debrief Your Presentation ing a video recording of the event will also help you see trouble spots. Think of speciﬁc ﬁxes for next time, and write them down. If you ran into technical problems, they may have thrown your whole talk off track, but those, too, are relatively simple to ﬁx. Perhaps you really didn’t know how to use the projector, and that slowed you down or made you fumble. Learn how to use it for next time. Enlist an assistant if appropriate. Chronic issues, such as your general comfort level and skill in delivery, require more work. If you felt very nervous the entire time (not just during the ﬁrst few minutes) or if you found yourself clinging to notes or stammering despite having rehearsed thoroughly, you may need some coaching. Asking colleagues for feedback If trusted coworkers were in the audience, tap them for advice on how to improve your presentation and on 77 H6353.indb 77 12/12/13 2:44 PM Presentations how to become a better presenter. Set up one-on-one meetings to receive that feedback. A quick “How did I do?” in the corridor is likely to generate a polite, perhaps less than honest, response, particularly if other people are within earshot. Your meetings with your colleagues should be brief and informal, but don’t be afraid to ask for people’s frank reactions to both the content and the delivery of your presentation. It takes a long time to master presentation skills. But if you continuously work to improve, your presentations will become more and more effective, and your standing with your audiences will rise. 78 H6353.indb 78 12/12/13 2:44 PM Follow Up with the Audience H6353.indb 79 12/12/13 2:44 PM H6353.indb 80 12/12/13 2:44 PM Follow Up with the Audience Y our presentation is ﬁnished, and you’ve evaluated how it went. You can relax now, but not for too long. Even the most well-articulated ideas can evaporate into thin air if you don’t take concrete steps to make sure they’re implemented. Of course, you should keep the promises you made during the presentation (“I’ll send those tables to you, Beth”) and correct any errors that came to light. You will certainly want to follow up on explicit directives you’ve given, such as asking the audience to report back to you about a key item within a speciﬁed time frame. But those are just the essentials. Other gestures can also make a big difference. These include: 81 H6353.indb 81 12/12/13 2:44 PM Presentations • Sending thank-you notes to key attendees. • E-mailing the entire audience to brieﬂy reinforce your takeaway message and to get your address in their in-boxes. • Making yourself available for questions that occur to people after the presentation. • Booking “next steps” meetings to ensure that your implementation plan proceeds efﬁciently. • Giving the same or a similar presentation to another group that needs to hear your message. Whatever follow-up techniques you choose, remember that a presentation is not an isolated event. It ﬁts into a larger context that you share with your audience. If you want to persuade people for the long term, not just for the brief period when you stand in front of them, let them know that you see and understand the big picture. They’ll be more likely to take action if you do. 82 H6353.indb 82 12/12/13 2:44 PM Learn More Books Duarte, Nancy. HBR Guide to Persuasive Presentations. Boston: Harvard Business Review Press, 2012. Terriﬁed of speaking in front of a group? Or simply looking to polish your skills? No matter where you are on the spectrum, this guide will take the pain out of presentations by giving you the conﬁdence and tools you need to get results. Written by presentation expert Nancy Duarte, the HBR Guide to Persuasive Presentations will help you: • Win over tough crowds. • Organize a coherent narrative. • Create powerful messages and visuals. • Connect with and engage your audience. • Show people why your ideas matter to them. • Strike the right tone, in any situation. 83 H6353.indb 83 12/12/13 2:44 PM Presentations Harvard Business School Publishing. Harvard Business Essentials: Business Communication. Boston: Harvard Business School Press, 2003. With advice and tools for improving a wide array of communication skills—from delivering an effective presentation to drafting proposals to the effective use of e-mail— Business Communication helps managers deliver information effectively. Harvard Business School Publishing. HBR’s 10 Must Reads on Communication. Boston: Harvard Business Review Press, 2013. The best leaders know how to communicate clearly and persuasively. How do you stack up? If you read nothing else on communicating effectively, read these 10 articles. We’ve combed through hundreds of articles in the Harvard Business Review archive and selected the most important ones to help you express your ideas with clarity and impact, no matter what the situation. Leading experts such as Deborah Tannen, Jay Conger, and Nick Morgan provide the insights and advice you need to: • Pitch your brilliant idea—successfully. • Connect with your audience. • Establish credibility. • Inspire others to carry out your vision. • Adapt to stakeholders’ decision-making styles. 84 H6353.indb 84 12/12/13 2:44 PM Learn More • Frame goals around common interests. • Build consensus and win support. Morgan, Nick. Give Your Speech, Change the World: How to Move Your Audience to Action. Boston: Harvard Business Review Press, 2005. Do you remember the topic of the last speech you heard? If not, you’re not alone. Studies show that audiences remember only 10% to 30% of speech or presentation content. Given those bleak statistics, why do we give speeches at all? We give them, says communications expert Nick Morgan, because they remain the most powerful way of connecting with audiences since ancient Greek times. But as we’ve evolved to a more conversational mode of public speaking, thanks to television, we have forgotten much of what the Greeks taught us about the nonverbal aspects of speech giving: the physical connection with audiences that can create an almost palpable emotional bond. Morgan says this “kinesthetic connection” comes from truly listening to your audience, not just with your brain but with your body. In this book, he draws from more than 20 years as a speech coach and consultant, combining the best of ancient Greek oratory with modern communications research to offer a new, audience-centered approach to public speaking. Through entertaining and insightful examples, Morgan illustrates a threepart process—focusing on content development, rehearsal, and delivery—that will enable readers of all experience levels 85 H6353.indb 85 12/12/13 2:44 PM Presentations to give more effective, passion-ﬁlled speeches that move audiences to action. Articles Denning, Stephen. “Telling Tales.” Harvard Business Review. May 2004 (product #R0405H). A carefully chosen story can help the leader of an organization translate an abstract concept into a meaningful mandate for employees. The key is to know which narrative strategies are right for what circumstances. Knowledge management expert Stephen Denning explains that, for optimal effect, form should follow function. Challenging one professional storyteller’s view that more is better, Denning points out that it’s not always desirable (or practical) to launch into an epic that’s jam-packed with complex characters, cleverly placed plot points, an intricate rising action, and a neatly resolved denouement. If the aim is to motivate people to act when they might not be inclined to do so, it’s best to take an approach that’s light on detail; particulars can bog down listeners and prevent them from focusing on the message. Drawing on his experiences at the World Bank and observations made elsewhere, the author provides several dos and don’ts for organizational storytellers, along with examples of narratives that get results. Denning also presents seven distinct types of stories, the situations in which they should be 86 H6353.indb 86 12/12/13 2:44 PM Learn More told, and tips on how to tell them. Leaders with the strength to push past some initial skepticism about the enterprise of storytelling will ﬁnd that the creative effort pays off. Elsbach, Kimberly D. “How to Pitch a Brilliant Idea.” Harvard Business Review. September 2003 (product #R0309J). Coming up with creative ideas is easy; selling them to strangers is hard. Entrepreneurs, sales executives, and marketing managers often go to great lengths to demonstrate how their new concepts are practical and proﬁtable, only to be rejected by corporate decision makers who don’t seem to understand the value of the ideas. Why does this happen? Having studied Hollywood executives who assess screenplay pitches, the author says the person on the receiving end— the “catcher”—tends to gauge the pitcher’s creativity as well as the proposal itself. An impression of the pitcher’s ability to come up with workable ideas can quickly and permanently overshadow the catcher’s feelings about an idea’s worth. To determine whether these observations apply to business settings beyond Hollywood, the author attended product design, marketing, and venture-capital pitch sessions and conducted interviews with executives responsible for judging new ideas. The results in those environments were similar to her observations in Hollywood, she says. Catchers subconsciously categorize successful pitchers as showrunners (smooth and professional), artists (quirky and unpolished), or neophytes (inexperienced and naive). The research also reveals that catchers tend to respond well when 87 H6353.indb 87 12/12/13 2:44 PM Presentations they believe they are participating in an idea’s development. As Oscar-winning writer, director, and producer Oliver Stone puts it, a screenwriter pitching an idea should “pull back and project what he needs onto your idea in order to make the story whole for him.” To become a successful pitcher, portray yourself as one of the three creative types and engage your catchers in the creative process. By ﬁnding ways to give your catchers a chance to shine, you sell yourself as a likable collaborator. Guber, Peter. “Four Truths of the Storyteller.” Harvard Business Review. December 2007 (product #R0712C). A well-told story’s power to captivate and inspire people has been recognized for thousands of years. Peter Guber is in the business of creating compelling stories: He has headed several entertainment companies—including Sony Pictures, PolyGram, and Columbia Pictures—and produced Rain Man, Batman, and The Color Purple, among many other movies. In this article, he offers a method for effectively exercising that power. For a story to enrapture its listeners, says Guber, it must be true to the teller, embodying his or her deepest values and conveying them with candor; true to the audience, delivering on the promise that it will be worth people’s time by acknowledging listeners’ needs and involving them in the narrative; true to the moment, appropriately matching the context—whether it’s an address to two thousand customers or a chat with a colleague over drinks—yet ﬂexible enough to allow for improvi- 88 H6353.indb 88 12/12/13 2:44 PM Learn More sation; and true to the mission, conveying the teller’s passion for the worthy endeavor that the story illustrates and enlisting support for it. In this article, Guber’s advice—distilled not only from his years in the entertainment industry but also from an intense discussion over dinner one evening with storytelling experts from various walks of life—is illustrated with numerous examples of effective storytelling from business and elsewhere. Perhaps the most startling is a colorful anecdote about how Guber’s own impromptu use of storytelling, while standing on the deck of a ship in Havana harbor, won Fidel Castro’s grudging support for a ﬁlm project. Morgan, Nick. “How to Become an Authentic Speaker.” Harvard Business Review. November 2008 (product #R0811H). Like the best-laid schemes of mice and men, the bestrehearsed speeches often go astray. No amount of preparation can counter an audience’s perception that the speaker is calculating or insincere. Why do so many managers have trouble communicating authenticity to their listeners? Morgan, a communications coach for more than two decades, offers advice for overcoming this difﬁculty. Recent brain research shows that natural, unstudied gestures—what Morgan calls the “second conversation”—express emotions or impulses a split second before our thought processes have turned them into words. So the timing of practiced gestures will always be subtly off, just enough to be picked up by listeners’ unconscious ability to read body language. 89 H6353.indb 89 12/12/13 2:44 PM Presentations If you can’t practice the unspoken part of your delivery, what can you do? Tap into four basic impulses underlying your speech—to be open to the audience, to connect with it, to be passionate, and to “listen” to how the audience is responding—and then rehearse your presentation with each in mind. You can become more open, for instance, by imagining that you’re speaking to your spouse or a close friend. To more readily connect, focus on needing to engage your listeners and then to keep their attention, as if you were speaking to a child who isn’t heeding your words. To convey your passion, identify the feelings behind your speech and let them come through. To listen, think about what the audience is probably feeling when you step up to the podium and be alert to the nonverbal messages of its members. Internalizing these four impulses as you practice will help you come across as relaxed and authentic, and your body language will take care of itself. Morgan, Nick. “The Kinesthetic Speaker: Putting Action into Words.” Harvard Business Review. April 2001 (product #R0104G). Speeches and presentations offer an interesting catch-22: Executives don’t want to spend long hours creating them, and people don’t want to sit for long hours listening to them. Ultimately, though, executives can’t live without them. That’s because a good speech or presentation has the power to inspire people to act on the speaker’s behalf and create change. Author Nick Morgan, a longtime speechwriter and speaking coach, says what’s most often lacking in today’s speeches and presentations is what he calls the “kinesthetic connec- 90 H6353.indb 90 12/12/13 2:44 PM Learn More tion.” Many good speakers connect aurally with their audiences, telling dramatic stories and effectively pacing their speeches to hold people’s attention. Others connect visually, with a vivid ﬁlm clip or a killer slide. Some people do both, but not many also connect kinesthetically. Morgan says the kinesthetic speaker feeds an audience’s primal hunger to experience a presentation on a physical, as well as an intellectual, level. Through awareness of their own physical presence— gestures, posture, movements—and through the effective use of the space in which they present, kinesthetic speakers can create potent nonverbal messages that reinforce their verbal ones. In this article, Morgan describes techniques for harnessing kinesthetic power and creating a sense of intimacy with an audience—a closeness that is more widely expected from speakers since the advent of television. For instance, kinesthetic speakers should make use of audience proxies—individuals in the crowd who serve as representatives for the others. Ultimately, the author says, a speech or presentation offers something of great value to business executives: It’s the best vehicle for winning trust from large groups of people—be they employees, colleagues, or shareholders. Tannen, Deborah. “The Power of Talk: Who Gets Heard and Why.” Harvard Business Review. September 1995 (product #R9977). Most managerial work happens through talk—discussions, meetings, presentations, negotiations. It is through talk that managers evaluate others and are themselves judged. 91 H6353.indb 91 12/12/13 2:44 PM Presentations Using research carried out in a variety of workplace settings, linguist Deborah Tannen demonstrates how conversational style often overrides what we say, affecting who gets heard, who gets credit, and what gets done. Tannen’s linguistic perspective provides managers with insight into why there is so much poor communication. Gender plays an important role. Tannen traces the ways in which women’s styles can undermine them in the workplace, making them seem less competent, conﬁdent, and self-assured than they are. She analyzes the underlying social dynamic created through talk in common workplace interactions. She argues that a better understanding of linguistic style will make managers better listeners and more effective communicators, allowing them to develop more ﬂexible approaches to a full range of managerial activities. 92 H6353.indb 92 12/12/13 2:44 PM Sources Primary sources for this book Harvard Business School Publishing. Harvard ManageMentor. Boston: Harvard Business Publishing, 2002. Harvard Business School Publishing. Pocket Mentor: Giving Presentations. Boston: Harvard Business School Press, 2007. Other sources consulted Duarte, Nancy. HBR Guide to Persuasive Presentations. Boston: Harvard Business Review Press, 2012. Harvard Business School Publishing. Harvard Business Essentials: Business Communication. Boston: Harvard Business School Press, 2003. Morrisey, George L., Thomas Sechrest, and Wendy B. Warman. Loud and Clear: How to Prepare and Deliver Effective Business and Technical Presentations. Reading, MA: Addison-Wesley Publishing Company, 1997. 93 H6353.indb 93 12/12/13 2:44 PM H6353.indb 94 12/12/13 2:44 PM Index action, call to, 33 analogies, 61 anecdotes, 19. See also humor arguments sequence for, 28–31, 33 supporting, 27–28 assumptions, of audience, 18–19, 52 attention, of audience, 20, 29, 60–61 attire, 54 audience assumptions of, 18–19, 52 engagement, 43, 60–61 following up with, 81–82 getting attention of, 20, 29 input from, 32, 67–72 interacting with, 55, 71–72 knowing your, 17–21 needs of, 21, 31 nonverbal cues from, 60 questions from, 53, 62–63, 67–72 relationship with, 19 size of, 17–18 surveying, 14, 61 test, 52 background information, 18, 28 breathing, 54, 60 call to action, 33 clothing, 54 colleagues, feedback from, 77–78 contact information, 71 conversational tone, 53, 59 core message, 26, 62 critiques, 75–78 95 H6353.indb 95 12/12/13 2:44 PM Index data, supporting, 27–28, 62–63 debrieﬁng, 75–78 deliverables, 14, 20, 38, 71 delivery analyzing your, 75–78 practicing your, 51–55 tips for, 59–63 engagement, 43, 60–61 equipment, 39–40, 52 eye contact, 60 facial expression, 60 facts, 27–28 feedback, 38, 52, 68, 71, 77–78 ﬂexibility, 61–63 follow-up, with audience, 71, 81–82 goals conﬂicts in attendees’, 19 deﬁning, 11–14, 26 humor, 61. See also anecdotes information, background, 18, 28 input, from audience, 32 jargon, 53 main point, deﬁning, 26 mental preparation, 51, 54–55 message arguments and data to support, 27–28 crafting your, 25–33 deﬁning core, 26 organizing, 28–31, 33 metrics, of success, 14, 17 need, deﬁning, 30–31 nervousness, 55, 59, 77 nonverbal cues, 60 objective, 11–12, 14, 17, 26 opening, 29–30, 76 organization, of presentation, 28–31, 33 96 H6353.indb 96 12/12/13 2:44 PM Index outcomes, desired, 12–13, 14, 17 pace, 38, 59 performance analysis, 75–78 personal stories, 20, 61. See also story, use of positive statements, 54 PowerPoint, 44, 45. See also slide presentations preparation, 51–55 presentations audience input during, 32, 67–72 crafting message for, 25–33 debrieﬁng following, 75–78 delivery of, 59–63 ending, 33 ﬂexibility during, 61–63 follow-up, 71, 81–82 goal for, 11–14, 26 key to, 3 length of, 30, 38–39 mental preparation for, 51, 54–55 openings, 29–30, 76 organization of, 28–31, 33 reasons for giving, 7–8, 11–14 rehearsing, 51–54 visual aids for, 40, 43–47 problem deﬁning, 30–31 solution for, 31 purpose, of presentation, 7–8, 11–14 questions, from audience, 53, 62–63, 67–72 rapport with audience, 19, 30 rehearsals, 51–54 relaxation techniques, 54, 60. See also stress reduction resources for further information, 83–92 identifying, 37–40 self-critique, 75–77 slide presentations, 44–47, 51, 76 solutions, 31 97 H6353.indb 97 12/12/13 2:44 PM Index sound system, 59 story, use of, 20, 29, 31, 61 stress reduction, 54, 60. See also relaxation techniques success, measurement of, 14, 17 technical difﬁculties, 62, 63, 77 test audience, 52 time, for presentation, 30, 38–39 venues, 37–38, 54 visual aids, 40, 43–47 choosing appropriate, 44 creating effective, 44–47 uses of, 43–44, 53 wrap-up, 33 98 H6353.indb 98 12/12/13 2:44 PM Notes 99-H6353-Notes.indd 101 12/12/13 2:41 PM Smarter than the average guide. Harvard Business Review Guides If you enjoyed this book and want more comprehensive guidance on essential professional skills, turn to the HBR Guides series. Packed with concise, practical tips from leading experts—and examples that make them easy to apply—these books help you master big work challenges with advice from the most trusted brand in business. AVAILABLE IN PAPERBACK OR EBOOK FORMAT WHEREVER BOOKS ARE SOLD • Better Business Writing • Managing Stress at Work • Coaching Employees • Managing Up and Across • Finance Basics for Managers • Office Politics • Getting the Mentoring You Need • Persuasive Presentations • Getting the Right Work Done • Project Management 18813_Press_HBRGuides Ad_BoB.indd 1 7/31/14 10:27 AM Creating Business Plans H6474.indb i 3/28/14 8:49 AM 2 MINUTE MANAGER SERIES Get up to speed fast on essential business skills. Whether you’re looking for a crash course or a brief refresher, you’ll ﬁnd just what you need in HBR’s 20-Minute Manager series—foundational reading for ambitious professionals and aspiring executives. Each book is a concise, practical primer, so you’ll have time to brush up on a variety of key management topics. Advice you can quickly read and apply, from the most trusted source in business. Titles include: Creating Business Plans Delegating Work Finance Basics Getting Work Done Giving Effective Feedback Managing Projects Managing Time Managing Up Presentations Running Meetings H6569.indb ii 8/5/14 11:43 AM 2 MINUTE MANAGER SERIES Creating Business Plans Gather your resources Describe the opportunity Get buy-in HARVARD BUSINESS REVIEW PRESS Boston, Massachusetts H6474.indb iii 3/28/14 8:49 AM HBR Press Quantity Sales Discounts Harvard Business Review Press titles are available at signiﬁcant quantity discounts when purchased in bulk for client gifts, sales promotions, and premiums. Special editions, including books with corporate logos, customized covers, and letters from the company or CEO printed in the front matter, as well as excerpts of existing books, can also be created in large quantities for special needs. For details and discount information for both print and ebook formats, contact email@example.com, tel. 800-988-0886, or www.hbr.org/bulksales. Copyright 2014 Harvard Business School Publishing Corporation All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to firstname.lastname@example.org .edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. The web addresses referenced in this book were live and correct at the time of the book’s publication but may be subject to change. Library of Congress Cataloging-in-Publication Data Creating business plans. pages cm. — (20-minute manager series) Includes index. ISBN 978-1-62527-222-5 1. Business planning. HD30.28.C7325 2014 658.4′01—dc23 2014000382 Find more digital content or join the discussion on www.hbr.org. H6474.indb iv 3/28/14 8:49 AM Preview Writing a business plan is an important ﬁrst step in starting any new venture. Your goal is to provide a detailed description of your new product or service and a concrete strategy for making it a success, while also conveying a hearty dose of enthusiasm that inspires investors and other supporters to want to be involved with your project. This book walks you through the basics: • Articulating your business idea • Communicating your goals • Analyzing the industry • Introducing your management team H6474.indb v 3/28/14 8:49 AM Preview • Distinguishing your business from rivals • Developing a compelling marketing plan • Describing your business’s daily activities • Providing sound ﬁnancial projections • Anticipating potential stumbling blocks vi H6474.indb vi 3/28/14 8:49 AM Contents Why Write a Business Plan? Getting started 1 5 The structure of a business plan 10 Describing the Opportunity 15 Presenting your idea 17 Executive summary Business description 19 29 Analyzing the business environment Industry background 36 Competitive analysis 43 Market analysis 34 45 Introducing Your Management Team 57 Highlighting qualiﬁcations 60 Presenting the team as a unit 62 vii H6474.indb vii 3/28/14 8:49 AM Contents Bringing Your Product to Market 71 Operations plan: Articulating day-to-day business 74 Marketing plan: Promoting your value proposition 77 Projecting Financial Risk and Reward 93 Preparing your ﬁnancial plan 96 Anticipating readers’ concerns 99 Attachments and Milestones Supplemental information Milestones 109 111 112 Conclusion 115 Test Yourself 119 Learn More 129 Sources 135 Index 137 viii H6474.indb viii 3/28/14 8:49 AM Creating Business Plans H6474.indb ix 3/28/14 8:49 AM H6474.indb x 3/28/14 8:49 AM Why Write a Business Plan? H6474.indb 1 3/28/14 8:49 AM H6474.indb 2 3/28/14 8:49 AM Why Write a Business Plan? S o you’ve got a brilliant idea for a new product or service. You feel energized, inspired, and ready to forge ahead. Your ﬁrst challenge: Write a business plan. You may be thinking: “Why should I bother taking the time to draft a formal plan? Shouldn’t I just get going already?” If you’re working at a large company and your boss asks you to put together a plan before you move forward with a new product extension, you may feel equally frustrated. “What’s the point of this busywork?,” you might think. “Why can’t I just take the plunge?” Don’t fall into this trap. Writing a business plan for internal or external ventures is beneﬁcial in a variety 3 H6474.indb 3 3/28/14 8:49 AM Creating Business Plans of ways, including gaining buy-in and generating enthusiasm for your idea, improving your odds of successfully creating a new product or service, establishing a company, raising capital, generating sales, and sustaining your business over time. Whether you’re planning to build a new company from scratch, expand an existing ﬁrm, spin off from a parent corporation, or even start an initiative within an established organization, writing a business plan gives you an opportunity to thoroughly evaluate your idea. It’s also a way for your audience—namely potential investors, managers, and the people who control vital resources you need to start and operate your business—to assess the feasibility of your concept. Your goal is to create a road map for your business that helps you navigate the opportunities and inevitable obstacles you’ll face and, perhaps most important, develop strategies to avoid problems before they arise. This book shows you how to craft a persuasive argument for your idea by walking you through the ele- 4 H6474.indb 4 3/28/14 8:49 AM Why Write a Business Plan? ments of writing a business plan and providing a fully developed primary case study of an imaginary and hypothetical venture—TechnoExercise Corporation— which we’ll follow throughout the chapters. Getting started Most business plans devote too much ink to numbers and too little to the information that matters most to potential investors, according to William Sahlman, a professor at the Harvard Business School and an expert in entrepreneurial ventures. After all, savvy investors understand that ﬁnancial forecasts for a new company—particularly detailed, month-by-month projections that extend for years and years—are typically nothing more than wildly optimistic fantasies. In light of this, Sahlman recommends organizing your business plan around a framework that assesses four factors that are critical to every new venture: 5 H6474.indb 5 3/28/14 8:49 AM Creating Business Plans • The people. Those who will be starting and running the business, in addition to any outside parties who will provide important resources. • The opportunity. A proﬁle of the business itself: what it will sell and to whom, whether it can grow and how quickly, what its economics are, and what might stand in the way of success. • The context. The big picture—the regulatory environment, interest rates, demographic trends, inﬂation, and so on. Essentially, factors that inevitably change but that you cannot control. • The risk and reward. An examination of everything that can go wrong and right, as well as a discussion of how the team can respond. With Sahlman’s four critical factors in mind, you’re ready to start thinking about what information you’ll gather to create the most compelling business plan 6 H6474.indb 6 3/28/14 8:49 AM Why Write a Business Plan? you can. As you begin your research, ask yourself some important questions: • What’s your purpose? If your business plan is a proposal within the resource-rich environment of a large corporation, certain parts of it—such as the marketing or operations sections—could be shorter and less developed than other sections. In this case, you ought to focus on the value proposition and competitive analysis. On the other hand, if you’re using the plan to raise money from venture capitalists, you ought to focus more on the opportunity itself and the management team. • Who’s your audience? Knowing who will be reading your plan and why and having some sense of their goals and needs will help you tailor your message. To learn about your audience’s particular requirements and motivations, do some research. Tap your network—ask 7 H6474.indb 7 3/28/14 8:49 AM Creating Business Plans colleagues and other industry professionals for their views on the problem you’re trying to solve. Also, think about your proposal from the perspective of your audience. A corporate management committee or board of directors, for instance, will consider your idea within the context of the company’s other initiatives and may look for potential cost savings or other sales opportunities related to your idea. Investors and lenders, on the other hand, may want to know about the breakeven points and the business’s longer-term potential. • What do you want? Think about your ultimate goal. Do you need a corporate stamp of approval or the active support of upper management? Are you just looking for funding, or do you want connections with other investors or business partners? Do you want to repay a loan, or are you willing to share ownership and proﬁts? 8 H6474.indb 8 3/28/14 8:49 AM Why Write a Business Plan? What information will you need? Now that you’ve organized your thoughts, you need to determine whether you have all the relevant material on hand. Some of this will be ﬁnancial and legal information. For example, have you conﬁrmed the necessary production costs for your product? Have you considered the most appropriate legal structure and tax status for your business? There are many sources for this kind of information. You should identify trade journals that target business owners in your industry, seek out research by respected analysts, and scour your network for experts who may be able to help you develop a fuller picture of the business environment. Online resources are also available, including your local chamber of commerce’s website and the ofﬁcial sites of the Small Business Administration, the Internal Revenue Service, the Census Bureau, and state departments of economic development. 9 H6474.indb 9 3/28/14 8:49 AM Creating Business Plans The structure of a business plan The most common business plan structure opens with short, general summaries (such as the executive summary and the business description) and then proceeds to more in-depth explanations in the body of the plan. That’s where you’ll provide thoughtful descriptions of your business’s fundamental elements and concerns. The attachments at the end include the most detailed information—ﬁnancial data, management résumés, and so forth. Writing a business plan is a big undertaking that requires time, dedication, and discipline. Rather than tackling it all at once, go section by section. Dividing the task into manageable chunks will help you better plan your time. Throughout the process, seek input from others. Talk over your idea with mentors, business partners, and colleagues. Ask them to look for gaps in your plan or potential red ﬂags. Then make adjustments as you go. 10 H6474.indb 10 3/28/14 8:49 AM Why Write a Business Plan? Most business plans contain the following components, which we’ll cover in more detail throughout the book: • Cover page: This ought to include the name of your business or project, as well as your name and contact information. • Table of contents: An at-a-glance view of which topics will be covered. Use straightforward language to allow readers to easily skim or ﬂip through to ﬁnd what they’re looking for. • Executive summary: A brief and formal explanation of what your company is, where you want it to go, and why it will be successful. • Business description: A high-level overview of your proposed venture. • Industry background: Historical data as well as current information about the shape, size, trends, and key features of the industry. 11 H6474.indb 11 3/28/14 8:49 AM Creating Business Plans • Competitive analysis: A breakdown of current and prospective rivals. • Market analysis: Your assessment of your target customers and their wants, needs, and demographics. • Management summary: An introduction to your team as well as a description of how they will work together to form an effective and successful unit. • Operations plan: The ﬂow of the business’s daily activities and the strategies that will support them. • Marketing plan: Your detailed strategy for how you intend to sell your product or service. • Financial plan: A synopsis of the current status and future projections of the company’s ﬁnancial performance. 12 H6474.indb 12 3/28/14 8:49 AM Why Write a Business Plan? • Attachments and milestones: Additional documents that supply more detailed information about elements of the plan. Of course, not all business plans follow this model precisely. As you’ll see in the next chapter, your plan may combine some of these sections, add new ones, and eliminate others, based on your audience and its needs. 13 H6474.indb 13 3/28/14 8:49 AM H6474.indb 14 3/28/14 8:49 AM Describing the Opportunity H6474.indb 15 3/28/14 8:49 AM H6474.indb 16 3/28/14 8:49 AM Describing the Opportunity Y ou know your idea inside and out, so it can be easy to lose sight of the details that will matter to investors when you draft your business plan. Ensure that your plan explains how your offering will help customers and places that offering within the larger business context, too. Presenting your idea Win readers over with a description of your idea that addresses a clear and speciﬁc business need and provides details about the larger context within which your offering will thrive. 17 H6474.indb 17 3/28/14 8:49 AM Creating Business Plans To add customer focus to your plan, consider these questions as you deﬁne your product or service: What customer pain are you easing with your offering? What special technology, new perspective, or unique concept will you offer customers that is better than what’s available now? And what will compel them to buy your product rather than your competitors’? Even if you’re not trying to raise a round of venture funding and are instead trying to build a persuasive case for a new product or initiative within your company, you must make sure the business need is clear. If your investors and managers don’t agree with your explanation of the problem, they’re not going to support your venture. Let’s say, for instance, that you’re trying to solve the problem of low customer usage of your company’s mobile retail shopping app. You have an idea to redesign the app that could increase customer engagement. But what if the technologists at your company don’t think there’s anything wrong with the app? What if, instead, they believe that low 18 H6474.indb 18 3/28/14 8:49 AM Describing the Opportunity customer usage is the result of poor marketing? To gain buy-in for your idea, you’d have to build a case for the technology group and other decision makers with evidence that proves that the root cause of low engagement is a design ﬂaw, not a problem of branding or awareness. Of course, you can’t really describe your plan and its customer focus clearly without addressing the “context” in which your business will ﬂourish. We’ll explore that part later, in “Analyzing the business environment.” Executive summary The executive summary is a concise description of what your company is, where you want it to go, and why it will be successful. In just one page, it gives readers an understanding of your proposal and captures their interest in your new venture. In some cases, this is the only section your time-pressed audience may read, so the key is to present your concept passionately 19 H6474.indb 19 3/28/14 8:49 AM Creating Business Plans SAMPLE COVER PAGE To give you a better sense of how a business plan might look, this book oﬀers a primary case. Meet TechnoExercise Corporation (“TechEx”), an imaginary, hypothetical online diet and exercise service based in Cambridge, MA. Woven throughout this book, you’ll ﬁnd examples of certain sections of TechEx’s business plan that will help you understand how it ﬁts together. This is just one sample—there are many variations, since a good business plan is always tailored to its audience. Here is the material that goes on the cover page: TECHNOEXERCISE CORPORATION TechEx 559 Treburke St. Cambridge, MA 02115 (617) 555-1234 www.technoexercise.com 20 H6474.indb 20 3/28/14 8:49 AM Describing the Opportunity Ping Huang Founder and Chief Executive Oﬃcer email: email@example.com cell: (617) 555-8888 Anjali Banerjee Chief Financial Oﬃcer email: firstname.lastname@example.org cell: (617) 555-2222 Mercedes Meceda Chief Technology Oﬃcer email: email@example.com cell: (617) 555-7777 Plan prepared July 2014 by Corporate Oﬃcers 21 H6474.indb 21 3/28/14 8:49 AM Creating Business Plans and lay out why you believe the business will be a resounding success, even as you acknowledge the risks and costs involved. A well-crafted executive summary will inspire your reviewers to read on. Sketching out your executive summary can give you a rough idea of what you plan to say, but rewrite and polish it once you’ve ﬁnished drafting your entire business plan, paying attention to those areas that may have changed during the writing process. An executive summary typically includes the following elements: • A mission statement: one or two sentences that describe what your business is about, its philosophy, and your vision for its future. • A succinct description of the industry and market environment in which your new venture will develop and ﬂourish. • An explanation of the unique business opportunity you’ll be taking advantage of. 22 H6474.indb 22 3/28/14 8:49 AM Describing the Opportunity • A brief mention of the competitive advantages that differentiate your product or service from rivals’ offerings. • A rundown of the ﬁnancial potential of your new venture, as well as the anticipated risks. • A description of the management team and their respective roles. • Information about the stage of the business (on the drawing board, in start-up mode, ready to expand), its ﬁnancial status (whether you’ve raised any money or have taken out any loans for the business thus far), and its structure (partnership, corporation, afﬁliate). Online resources such as the website of the Small Business Administration will be very helpful here. • Details on the capital requested so that readers understand what you hope to gain from them, such as money, contacts in the industry, or other resources. 23 H6474.indb 23 3/28/14 8:49 AM Creating Business Plans SAMPLE EXECUTIVE SUMMARY TechEx’s mission: The driving principle of TechnoExercise Corporation (“TechEx”) is to change the way women lose weight and tone their bodies using four key elements: customized data-driven metrics, personal psychology, access to certiﬁed health professionals, and emotional support from a community. How it works: Customers wear a stylish monitor (ﬁtfast) that tracks their eating and exercise patterns online. They also receive one-on-one weekly video chat sessions with a registered dietician, behavior coach, and trainer, all of whom monitor their weight loss and muscle gain via a customer-supplied wireless scale. Through message boards, instant messaging software, and moderated chat rooms, customers also have access to a community of fellow dieters who provide them with emotional support and encouragement. 24 H6474.indb 24 3/28/14 8:49 AM Describing the Opportunity Structure: TechEx, which was incorporated under the laws of the State of California on August 30, 2013, is headquartered in Cambridge, MA, in the heart of the US entrepreneurial community. The company has ﬁled a petition with the Internal Revenue Service seeking to qualify as an “S Corporation.” Market: The service appeals to busy professional women who don’t have time for traditional ﬁtness and weight loss programs. These women may be overweight and in search of diet plans, or they may already be at a healthy weight and looking to mix up their ﬁtness routines. TechEx will promote its service through targeted advertisements in diet and ﬁtness magazines. The company will expand its marketing activities through strategic alliances with employers and insurance plans as well as partnerships with healthcare groups and gyms. (continued) 25 H6474.indb 25 3/28/14 8:49 AM Creating Business Plans SAMPLE EXECUTIVE SUMMARY Management team: The company’s founder, Ping Huang, is a former operations manager at an online nutrition start-up. She met her business partners, Anjali Banerjee, who worked at Morgan Goldman investment bank in Dublin, Ireland, and Mercedes Meceda, a former Dain consultant, at MIT’s Sloan School of Management. Together, this management team is responsible for TechEx’s daily operations and owns 100% of the company. Competitors: The weight loss industry is crowded and the market environment is highly competitive. TechEx’s primary rival is E-Fitfab, a full-service program similar to TechEx. However, E-Fitfab does not have any element of community and social support, which research indicates is very important to female dieters. Other large, well-known weight loss companies, such as Calorie Counters and Jenny Haig, tend to focus more on healthy eating rather than exercise; furthermore, 26 H6474.indb 26 3/28/14 8:49 AM Describing the Opportunity they are so big that they cannot oﬀer customized services. Other competitors include free apps like MyExerciseBuddy and Lose Weight!, which help users track food and exercise while also networking with friends. These products are aimed at customers who take a DIY approach to diet and exercise, while TechEx is targeted at customers who prefer a tailor-made full-service program. In short, TechEx is the only company that oﬀers customizable and convenient diet and exercise solutions combined with the social support critical to eﬀective weight loss. Nonetheless, one of the biggest risks the company faces comes from potential me-too competitors who might exploit parts of TechEx’s business model. Pricing strategy: TechEx is priced below E-Fitfab, which will put it in square competition with that company, but TechEx’s pricing still positions it as a ﬁrstclass service provider. (continued) 27 H6474.indb 27 3/28/14 8:49 AM Creating Business Plans SAMPLE EXECUTIVE SUMMARY Financial status: TechEx seeks funding of $250,000 that will add to the $84,000 of initial ﬁnancing that was raised among friends and family. At this point, the biggest challenge that TechEx faces is cash ﬂow. The company requires immediate funding for system development and technology programming as well as advances for contracts with dieticians, behavior coaches, and trainers. These represent TechEx’s biggest costs. What is TechEx’s future? The company estimates ﬁrst-year sales of $11.74 million, gross margins over 60%, and net margins of approximately 42% before taxes. The company expects to be proﬁtable after the ﬁrst six months of operations. After that, TechEx plans to embark on an international expansion plan in Europe. Ultimately, the management team would like to take the company public. 28 H6474.indb 28 3/28/14 8:49 AM Describing the Opportunity Business description The business description is another summary, but it differs from the executive summary because it provides a high-level, forward-looking overview of your proposed venture. This is the section of the plan where you go into greater detail about your business. Think of it as an extended elevator pitch that helps readers and potential investors quickly grasp the concept of your business and its value proposition. The business description must also demonstrate how an opportunity can grow—in other words, how the new venture can increase its range of products or services, expand its customer base, or widen its geographic scope. In some cases, your proposed product or service is so unusual or technical that it deserves its own separate section to explain what it is and how it functions. This will also highlight your venture’s special features and points of differentiation from the competition. 29 H6474.indb 29 3/28/14 8:49 AM Creating Business Plans SAMPLE BUSINESS DESCRIPTION TechEx oﬀers a distinctive blend of exercise and diet monitoring that combines cognitive behavioral approaches to weight loss using cutting-edge technologies. It is aimed at time-crunched women who either travel extensively for their jobs or have little time to get to the gym because of other demands in their lives. It provides three important beneﬁts that address the target end user’s needs: ﬂexibility, support, and targeted weight loss. The plan works like this: When a customer establishes an account, she receives a wearable and stylish ﬁtfast monitor that tracks her eating and exercise patterns online. She is also granted access to a range of auxiliary services, including one-on-one weekly video chat sessions with a registered dietician, behavior coach, and trainer, each of whom keep track of her weight and progress via the ﬁtfast monitor. (This 30 H6474.indb 30 3/28/14 8:49 AM Describing the Opportunity increases the eﬀectiveness of the program: According to a study in the Archives of Internal Medicine, patients in weight-loss treatment programs lost more weight when they coupled nutritional coaching and exercise with prompts from mobile apps.) The customer may also tap into a community of fellow dieters that provides her with social and emotional support through message boards, moderated chat rooms, and instant messaging software. The community also shares tips, including products, recipes, and ideas for how to keep ﬁt while traveling. TechEx’s interface is user-friendly, and the service allows the client to conﬁgure packages that will meet her unique needs. For instance, customers can easily: • Register and activate the product using nothing more than a credit card and mobile phone. (continued) 31 H6474.indb 31 3/28/14 8:49 AM Creating Business Plans SAMPLE BUSINESS DESCRIPTION • Specify weight loss and/or ﬁtness goals, and modify those numbers at any time. • Enjoy one-on-one weekly video chat sessions with a registered dietician and a behavior coach. • Discover exercise opportunities unique to their speciﬁc location, such as running routes in a foreign city or the best yoga class near home. • Receive low-calorie meal suggestions for restaurants in any major metropolitan area. • Check community boards for notes on spots that are friendly for a “table for one.” • Participate in weekly virtual personal workout sessions with a certiﬁed trainer, using small 32 H6474.indb 32 3/28/14 8:49 AM Describing the Opportunity weights, bands, and other portable exercise tools. • Customize exercise plans for targeted work on certain body parts, such as abdominals or arms. • Review their weekly and monthly progress at any time. • Engage with other members of the TechEx community as often as they choose. TechEx also has plans to expand internationally. The ﬁrst targets include Ireland and the United Kingdom, where obesity rates are on the rise and where a large number of professional women are in the workforce. There is additional long-term growth potential in other countries in Western Europe. 33 H6474.indb 33 3/28/14 8:49 AM Creating Business Plans Analyzing the business environment This section illustrates the potential of your idea within the context of its industry and market. We use the terms industry and market to describe separate but overlapping parts of the broader business environment. Industry refers to the group of companies that produce and sell products or services to the market. The market is where your product or service will be sold. The industry deﬁnes both your colleagues and your competitors; the market determines your opportunity and your customers. The area of intersection represents your business opportunity—that space in which the customer’s need meets the product or service you provide. To clarify the context for your opportunity, address these two questions: Is the market for your new product or service big, growing fast, or—ideally—both? And: Is the industry now, or can it become, structur- 34 H6474.indb 34 3/28/14 8:49 AM Describing the Opportunity ally attractive—that is, where sales or demographic trends are favorable? Why does this context matter? As William Sahlman notes, investors seek out large or rapidly growing markets because getting a share of an expanding market is often easier than competing with established players for a share of a mature or declining market. Indeed, savvy investors try to spot markets with high growth potential early in their development because that’s ultimately where the big payoffs are. Start by demonstrating an awareness of your new venture’s environment and how it helps or hampers your particular proposal. You should include information on the macroeconomic situation, as well as background on the range of government rules and regulations that will affect your plans. Such information is readily available from ofﬁcial government websites, trade association sites, and published news articles from reputable magazines and newspapers. Next, show that you understand that the venture’s context 35 H6474.indb 35 3/28/14 8:49 AM Creating Business Plans will undoubtedly change and try to articulate how those changes might inﬂuence the business. Finally, describe how management will react if the context changes in an unfavorable way (see sidebar “Sample Industry Background”). A tip: As you research the industry background, competitive analysis, and market analysis sections, document your sources. Support your claims about market growth and competitive strategies with veriﬁable information and expert sources such as a market research ﬁrm, trade association, or credible journalist. Good record keeping will pay off in the short and long term. Industry background The ﬁrst element of the business environment analysis is industry background, which provides details about the shape and size, as well as other important features, of the industry. The following questions will help frame your thinking: 36 H6474.indb 36 3/28/14 8:49 AM Describing the Opportunity • What is the industry? What are the products or services currently produced by the industry? How big is it? What is its overall proﬁtability? What characteristics deﬁne the industry? What are its special challenges? Is the industry spread out geographically, or is it concentrated? • What is the industry’s outlook? What important trends are emerging? What is the industry’s predicted growth rate? What factors might contribute to future growth? What new patterns of growth are emerging? • Who competes in this industry? Is the industry fragmented, consisting of many small participants? Or are there a few major competitors controlling it? Which companies have offerings that meet the same needs as your proposed product or service? What resources do they control? 37 H6474.indb 37 3/28/14 8:49 AM Creating Business Plans • What are the industry’s barriers to entry? What is your window of opportunity to enter the market? What are the obstacles that could block you from entering this industry? What resources, knowledge, or skills does it take to enter this industry? Are there restrictive federal or international regulations, large capital requirements, or areas of sophisticated technical knowledge associated with providing the products or services? SAMPLE INDUSTRY BACKGROUND The global weight loss and obesity management market—which is estimated to be worth $265 billion— includes a wide variety of products and services in three main categories: over-the-counter consumer goods, such as diet beverages, low-calorie packaged meals, and nutritional supplements; weight loss ser- 38 H6474.indb 38 3/28/14 8:49 AM Describing the Opportunity vices, such as structured diet plans; and ﬁtness equipment and surgical procedures. Within this industry, TechEx competes as a weight loss service. Market growth: Obesity rates are rising around the world, but the United States—which has the sixth highest rate of obesity in the world—remains the leading market for diet and exercise companies. The global increase in obesity and associated chronic diseases, namely diabetes and heart disease, are accelerating the growth of the industry. Other key factors driving growth include: rising disposable income, a pronounced stigma against excess weight, policy initiatives to raise awareness about the importance of health and ﬁtness, and technological advancements that enable simple, expedient tracking of diet and exercise. In 2012, the weight loss industry as a whole grew at a steady 3% in the United States. (continued) 39 H6474.indb 39 3/28/14 8:49 AM Creating Business Plans SAMPLE INDUSTRY BACKGROUND Industry landscape: The US diet and exercise industry is highly saturated; it includes several big, well-established players in addition to thousands of small competitors vying for a share. (See competitive analysis.) Most of these companies target female dieters, but thus far none have concentrated on the niche market of highly educated professional women. (See market analysis.) Emerging trends: In the aftermath of the global ﬁnancial crisis and the subsequent recession, dieters in the United States have recently gravitated toward free and/or inexpensive do-it-yourself diet plans. These include over-the-counter solutions such as diet pills and books, as well as online eating and exercise platforms and mobile apps. According to Marketdata Enterprises, the internet-based diet plan market is worth at least $1.1 billion and is growing at 40 H6474.indb 40 3/28/14 8:49 AM Describing the Opportunity 8% per year. Customers seek online solutions because they’re convenient, easy-to-use, and cost eﬀective, but most online weight loss solutions are one-sizeﬁts-all programs that do not work for all customers. TechEx’s unique selling point: The TechEx platform is highly attractive to professional women who are overweight as well as those who are in shape but looking to mix up their ﬁtness routines. These women require personalized services tailored to their speciﬁc diet and exercise needs, and they want these services to be structured in a way that is convenient to their busy lives. This group tends to earn above-average incomes and demonstrate willingness to pay a premium for convenience. Such women are motivated and highly educated, and also predisposed to heed advice from experts. TechEx blends customized expertise with a (continued) 41 H6474.indb 41 3/28/14 8:49 AM Creating Business Plans SAMPLE INDUSTRY BACKGROUND straightforward interface that customers can access at any time they wish. Barriers to entry: Generally speaking, there are very few natural barriers to entry (such as capital requirements or proprietary technology) that would prevent new market entrants. Consequently, prospective competitors will likely develop and promote competing products once they learn of TechEx’s success. Anticipating the threat of new market entrants, TechEx is forming strategic alliances with employer-based health and wellness programs to oﬀer its services to employees who must travel frequently for their jobs. TechEx believes that these exclusive arrangements will eﬀectively preclude potential competitors from reaching the target markets in a cost-competitive fashion. TechEx is seeking to establish a second barrier by creating a brand identity for its stylish ﬁtfast wear- 42 H6474.indb 42 3/28/14 8:49 AM Describing the Opportunity able monitor so that clients will come to recognize the TechEx brand as a reliable, high-quality service. Sources: The US Weight Loss & Diet Control Market (Tampa, FL: Marketdata Enterprises, April 2013); Weight Loss and Obesity Management Market (Dublin, Ireland: Research and Markets, May 2013); and CIA World Fact Book. Competitive analysis The second part of evaluating the business environment is a competitive analysis. In this section, you identify any direct and future competitors of your venture and describe the threats they represent to your success. Whether your target audience is potential investors or a corporate leadership board, your readers require that you thoughtfully appraise your current and potential rivals in order to weigh the viability of your idea. 43 H6474.indb 43 3/28/14 8:49 AM Creating Business Plans Here are some questions to consider: • Who are your competitors? Think in terms of which companies solve the same problems for the customer that you intend to. What are their products and services? How much market share does each competitor control? Consider that rival companies could exist in another industry. For instance, a competitor to TechEx might be a shapewear company. Customers may forgo paying for a diet and workout service and instead buy better foundation garments to look good. • What are your competitors’ strengths and weaknesses? Do they enjoy strong brand recognition of their products? What are their marketing strategies? What has been key to their proﬁtability? • What distinguishes your business from rivals? How are you responding to a customer need in a new and useful way? What differentiates your product or service from competitors’ offerings? 44 H6474.indb 44 3/28/14 8:49 AM Describing the Opportunity • What is the competitive outlook for the industry? How much of a threat are your competitors to your venture? Will they aggressively block the entrance of a new rival? Will they poach your ideas, appropriating them for their own business (killing your unique value proposition)? Who else might be able to observe and exploit the same opportunity? Market analysis The ﬁnal part of assessing the business environment is the market analysis. In this section, you focus on your target market—the group of people or companies that will choose to purchase and remain loyal to your product or service because you solve a problem or meet a need for them better than your rivals do. This is where you demonstrate that there is indeed an opportunity within this market and that your new venture can capitalize on it. 45 H6474.indb 45 3/28/14 8:49 AM Creating Business Plans SAMPLE COMPETITIVE ANALYSIS Industry competition for TechEx comes in several forms. But while the companies listed below represent some threat to TechEx, none oﬀers precisely the same cognitive behavioral approach to sensible eating and exercise, while also providing crucial emotional and community support. 1. E-Fitfab: TechEx’s closest rival is a full-service program in which customers wear a monitor that tracks their eating and exercise patterns. Its advantages are that customers have access to a registered dietician and a behavior coach. However, its biggest drawback is that E-Fitfab lacks any element of community, which research indicates is very important to women dieters. (Studies show that people derive satisfaction from an online weight loss community because it oﬀers recognition for achievement, 46 H6474.indb 46 3/28/14 8:49 AM Describing the Opportunity accountability, friendly competition, and humor. They also value non-judgmental interactions with others.) TechEx oﬀers a wide range of online social support through its community of fellow dieters via message boards, chat rooms, and video conferencing software. 2. Calorie Counters: The 800-pound gorilla in the industry is perhaps the most recognized brand in the commercial weight loss world. The Calorie Counters program is based on accountability and community support, à la Alcoholics Anonymous. Its main strength is that members are weighed weekly and attend meetings where they ﬁnd encouragement from a community of fellow dieters. The company uses a system that assigns points to every food and members get (continued) 47 H6474.indb 47 3/28/14 8:49 AM Creating Business Plans SAMPLE COMPETITIVE ANALYSIS a daily target number so they easily know how much they should eat in order to lose weight safely. Calorie Counters’ biggest problem, however, is that it has been slow to adapt to new technologies. It does not, for instance, oﬀer online meetings and provides limited internetbased support. Its system is very inconvenient for busy customers who are not able to make it to the meetings on a regular basis. Finally, Calorie Counters is so large that it cannot oﬀer custom eating and exercise services, which is what many dieters so desperately need. By contrast, technology lies at the heart of the TechEx business model. TechEx’s cutting-edge system enables customers to engage when it’s easy and convenient for them. 3. Jenny Haig: Another industry powerhouse, Jenny Haig provides a program based on 48 H6474.indb 48 3/28/14 8:49 AM Describing the Opportunity restricting calories, fat, and portions using prepackaged meals. Members also receive weekly one-on-one counseling sessions with a Jenny Haig consultant. The company’s strength lies in the fact that it makes eating well very easy for customers. However, the program is cost-prohibitive for many people, and it does not have enough variety for customers with special food allergies or dietary concerns. It’s also too narrowly focused on the food aspect of weigh