Increasing the Effectiveness and Enhancing the Lives of CEOs
and business owners.

Contents of this issue...
   .. Welcome - A few words from the publisher, Gary Lockwood
   .. Thought-Starter -  "May I Have Your Attention Please?"
   .. Guest article - "Who will win - Dot coms or Not coms?"
   .. CEO Resources
   .. Quotes to use in your staff meeting this month
   .. Humor to lighten up the executive suite
   .. Contact the publisher
   .. Subscribe and unsubscribe instructions

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      WELCOME to this issue of the CEO Success Report!
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Hello again. I'm Gary Lockwood, President of CEO Success.

Welcome back once again to the CEO Success Report. I know you
have no shortage of material to read and I thank you for choosing
to read our newsletter.

Find resources For Your Success at www.CEOSuccess.com

We now have our own website for CEO Success. See the website
for more information on CEO Peer Groups as well as the archive
of past issues of the CEO Success Report.

Check it out at        http://www.CEOSuccess.com/

We work hard to provide practical ideas, thought-provoking concepts
and useful information for you. Please give me some feedback
about this issue or about the website. Send your comments to
   mailto:Gary@CEOSuccess.com

Did you ever wonder why some things catch your attention and
others don't?  By taking advantage of how your brain works, you
can increase your creativity, reduce boredom, boost recognition
of opportunities and accelerate achievement of your goals.

My "thought-starter" in today's issue looks at a little-known part
of your brain that determines what you pay attention to. Learn how
to control it.

Our guest article this month is written by Paul Minton. Paul is a
business strategy consultant with the Center for Simplified Strategic
Planning. I met Paul several months ago and we talked for hours
about business and the world around us. I came away with a great
respect for Paul. He has a solid grasp of strategic business issues,
coupled with a bird's-eye perspective on the marketplace.

Paul's guest article today is a very thoughtful treatise on the clash
between dot-com companies and traditional industries and how
your company can thrive in the Internet-based new Economy.

Read more about Paul at the end of his article.

I hope you enjoy receiving these articles and ideas to
help you sharpen your thinking about being an effective CEO.

My wish is that you use the ideas in the CEO Success Report to
get the results you really want. If you want some help in putting
them into practice, or if you have questions, email or call.

As you know, our specialty is Increasing the Effectiveness
and Enhancing the Lives of CEOs and business owners.

May I ask a small favor? Please forward this issue to other CEOs
and company presidents who may be interested in receiving
these messages. Thank you.

Enjoy this issue with my compliments.

Sincerely,
Gary Lockwood
CEO Success

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       This month's THOUGHT-STARTER
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   Attention Please  - May I Have Your Attention?
   by Gary Lockwood

Why do some things catch your attention and others don't?

Remember the last time you decided to buy a car? Once you decided
what kind of car you wanted, you started seeing more of that kind of
car on the streets. Were they there before and you just didn't pay
attention to them? A pregnant woman will start noticing other
pregnant women. Your new house is close to railroad tracks, yet
after a few days, you don't hear the trains anymore.

What is it that provokes your attention? At the base of the brain
where it connects to the spinal chord is a region known as the
Reticular Activating System (RAS). The RAS acts as a newspaper
editor. Editors make decisions regarding which stories get big
headlines, page one treatment, and which items wind up buried
with the ads on page sixteen.

The RAS receives thousands of messages each second. Everything you
see, hear, smell, feel and touch is a message entering your brain. The
Reticular Activating System filters through all these messages and
decides which ones will get page one treatment - that is, arouse
the brain.

One of the things we've learned from working with entrepreneurs is
that we tend to pay attention to the things which are important to
us at the time. If our currently dominant thoughts are about creating
a new brochure, we'll start seeing other brochures. We'll hear
conversations about brochures. We'll pick up ideas relating to
brochures and even notice colors that would be attractive for the
new brochure.

In other words, the Reticular Activating System will pass through
anything even remotely related to the important issue - the brochure.
>From a practical point of view, this means that, if we want to solve
a problem or achieve a goal, keep it at the top of your mind. Think
about it, talk about it, write about it and imagine it completed. This
is one of the reasons why affirmations work so well and why it is
important to review your goals frequently.

Some people will keep an idea at "top of mind" by creating a notebook
of pictures cut from magazines, that reflect their idea or their
desired end result. This "image book" helps the visualization process,
keeps the brain focused on the important issue and triggers the RAS.

By taking advantage of how your brain works, you can increase your
creativity, reduce boredom, boost recognition of opportunities and
accelerate achievement of your goals.

Where do you start? Write down the five most important outcomes
you want to achieve in the coming year. Put this paper in a conven-
ient place where you can read it every day. This affirmation of your
preferred future will keep your Reticular Activating System working
for you, filtering in the sights, sounds, ideas and people to help you
get there.

In other words, it will get your attention.

   About the Author...
Gary Lockwood is Increasing the Effectiveness and Enhancing the
Lives of CEOs, business owners and professionals.
Get the Free BizSuccess newsletter -
     http://www.bizsuccess.com/newsletter.htm
or send any blank email to mailto:subscribe@BizSuccess.com


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          Guest Article
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Who will win - Dot coms or Not coms?
Will Your Company be Road Kill on the Information Superhighway?
by Paul A. S. Minton

The frenzy over internet and other technology related stocks indicates
that investors expect a large fraction of the economy's future profits
to come from the so-called "New Economy." In total, New Economy
firms contribute modest revenues to GNP and many of them have
accumulated losses as opposed to profits. However, among publicly
traded securities, they boast whopping valuations. For example,
at one point, Amazon.com was worth more than all bricks-and-
mortar booksellers combined.

Will New Economy firms render all other businesses irrelevant?
Certainly not! Some parts of the economy are the exclusive domain
of these new firms and are likely to remain so. It is hard to imagine
that e-mail, cyber-chat rooms, and internet portals will ever be
dominated by "Old Economy" firms.

At the same time, vast portions of the economy rely on physical
assets and make physical things. Businesses in fields like
construction and heavy manufacturing are unlikely to be displaced
by internet upstarts. Can these firms ignore the emerging
technology? No. The internet and the technology of networked
computing will affect all firms because, to some extent, all firms
depend on information, the use and management of which will
be transformed completely.

In reality, the economy spans a continuum from "information"
dominated firms to firms that deal in "things." These extremes
have also been characterized as "bits" and "atoms." In between,
many industries exhibit some of both elements. Today, it seems
to be a foregone conclusion that information-based firms will be
road-kill for the "dot-coms" on the information superhighway.
Many industries that are currently dominated by existing, "not-com"
firms are under attack from New Economy upstarts.

It is important to consider that changes that favor growth of dot-
coms, also create opportunities for new kinds of physical things.
Many technology firms in fact make "things" such as the computers,
networks, switches, servers, and cables upon which the New
Economy depends. In addition, seemingly Old Economy businesses
such as automated warehouse equipment, boxes, bubble wrap,
and delivery trucks have attractive opportunities driven by the New
Economy. These kinds of physical infrastructure and consumable
items should benefit from substantial increases in future demand,
pulled along by the dot-com engine.

The AOL Time Warner deal makes clear that successful New
Economy firms have the asset strength to buy and reposition Old
Economy assets. At the same time, Old Economy firms with solid
cash flows still have the ability to pursue the New Economy by large
acquisitions, such as AT&T's cable TV purchases for broadband
access to homes and internet telephony and NTT's bid for Verio.

How "Old Economy" firms can become internet savvy

Executives should take steps toward understanding the possible
effects the internet will have on their firms and industries. A great
first step is to use the tool themselves. For example, at General
Electric, Jack Welch has required all senior executives to have an
"internet mentor," many of whom are much younger than the exec-
utives whom they are helping.

In addition, executives can and should try the following, if only to
get insight into what others are doing and to start thinking about
what role the internet should play in their firms' strategies:

  Make a consumer purchase on the world wide web
  Do research as a consumer (e.g. for a car, CD, or medical data)
  Conduct investment research
  Make a securities trade
  Open an internet bank account
  Check out your own firm's web site
  Check out competitors' web sites
  Check out some "best in class" web sites such as Cisco, Dell,
   and Amazon


Using the Internet to Improve Your Business

There is no "one size fits all" approach to making the best use of
emerging technologies in networked computing and the internet.
As with many other investments it is prudent to adopt internet tools
based on perceived value, probability of success, management
effort, and downside potential.

In the sections that follow we will discuss four approaches:
  1. Gathering competitive intelligence in the strategic planning
       process
  2. Refining market segmentation and market segment strategies by
       reaching different sets of targeted customers through the
       internet
  3. Internet enabled strategies
  4. End-to-end Internet Business Solutions

1. Competitive Intelligence

Most firms can improve their competitive intelligence at modest
cost thanks to the internet. The burden of information gathering
plummets. Many competitors are careless about what is on their
web sites. It is easier than it has ever been before to assimilate
data from diverse sources such as public filings, trade associations,
competitors' web sites, and specialty information providers.

Many web sites - possibly including your competitors' sites - are
information leaks. They may not be integrated into marketing filters
& processes, leaving inappropriate content available to your browser.

You can test your own firm's web site as an example of why web
sites often reveal more than they should. For example, do high
level executives in your firm review all high level marketing liter-
ature? Do they apply the same scrutiny to your web site? Do your
customers use your web site? Is it also accessible to competitors
or is it password protected for your private community?

Many firms and sites specialize in making available at low cost or
no cost precisely the kind of information that helps you figure out
where competitors are going. Some examples:
  EDGAR (for Securities and Exchange Commission filings)
  State/local government dockets
  Dun and Bradstreet
  Newspapers on line - e.g. wsj.com
  integrainfo.com
  Washington Researchers

Search engines and directories let you search for names, keywords,
or topics. However, they do not all work the same way. Some are
best at finding a few words in a string - the proverbial needle in the
haystack. Others do a better job of helping you refine your search
based on what you find. For example, the author has used the
following tools for different purposes:
  AltaVista search engine - for key words and strings of words
  Yahoo directory - for quality-screened links
  HotBot, Lycos, Infoseek - for refining searches
  PointCast and AOL News Profiles - for getting press releases
    with key words emailed to you

These tools are good for finding information on other topics as well.


2. Market Segmentation

The purpose of market segmentation is to sort customers into groups
based on differences and then tailor offerings and strategies to those
differences. Traditional approaches to market segment analysis
often use trade association data, for example. However, this
information is demographic, not behavioral. It can be hard to
measure many attributes, and research to refine the information
is often time consuming and expensive. It may difficult or impos-
sible to run experiments. Furthermore, in changing markets,
information is often out of date before it is available.

In contrast, the internet enables many improvements:

  Self-selection into diverse segments
  Behavioral segmentation
  Rapid experiments
  Rapid adjustment to your offerings
  Inexpensive accumulation of market data
  Less expensive than direct mail

3. Internet Enabled Strategies

The following examples are strategies that several firms developed
to take advantage of some features of the internet, without fund-
amentally changing their business models.

Value-Based Pricing: Airlines use yield management software and
low price fares on the internet both to sell out seats that would
otherwise go unsold and avoid the expense of their own call centers
or a commission to a travel agent.

Self-selection by consumers: A medical insurer can track con-
sumers' paths through its web site. The path reveals information
about the preferences of the consumers, such as whether they are
concerned about price of care, extent of care, or access to health
information. The insurer can refine its offerings to yield higher
consumer satisfaction and lower costs of care. These offerings
can be tested in a matter of weeks based on consumers' reactions
on the internet.

Two tiered offering as a price spoiler: Two capital equipment man-
ufacturers compete in a category. Their offerings typically sell for
several million dollars and require highly technical and expensive
selling efforts. Company A leads the world market. Company B has
a similar offering with low market penetration. Company B offers
customers two ways to buy their offering: 10% below the leader's
price for the full service selling approach, but 40% below the
leader's price for an internet transaction where the customer
bears its own expenses of evaluation, site visits, etc.

The result is that Company B has captured significant sales to price
sensitive customers without having to incur the typical level of sales
expense. In addition, Company A is always having to explain the
large price dispersion and has had to cut price somewhat on a large
number of units even though they still incur the expenses of the full
service selling approach.

Implications: The internet enables many useful strategies without
forcing firms to pursue the full "internet business solution" right
from the start. Early adopters are transforming their businesses
and increasing productivity. Many firms can reap rewards without
jumping into the total approaches of Dell, Amazon, and Cisco Systems.

4. End-to-end Internet Business Solutions

On the other hand, why not put the internet at the very center of your
business? The Information Technology Services Marketing Assoc-
iation (www.itsma.com) has developed a thought-provoking case
study of how Cisco Systems saves money and achieves scalability
by using networks and servers instead of people. Cisco's own web
site makes a similar case. Both are worth studying if you want to
consider how completely the internet can transform your own, your
suppliers', your competitors', or your customers' businesses.

So who will win?

Winners are likely to emerge from across the spectrum of New and
Old Economy competitors. The key to winning will be the successful
integration of new technologies with a deep understanding of what
it means to create value for customers.

The more a firm is information-based (e.g. banks, travel agents,
stock brokers, telecommunications), the sooner this transition will
occur. Conversely, the more a firm relies on physical assets (cement,
power generation, airlines), produces physical goods (furniture, food,
integrated circuits), or physical services (e.g. car repair), the
longer this transition will take.

In either case, the winner must address how to create value for
customers in ways that apply the enabling technologies. Since the
technology solution to value creation relies on both technical and
customer insights, the winner could either be an Old Economy firm
that adopts technology successfully or a New Economy firm that
manages to understand its selected customers and markets with-
out much previous experience in serving them.

Successful firms will use networks to coordinate information flows
across traditional boundaries both within and between firms. In the
extreme, we can expect "virtual integration" in which suppliers and
customers work together closely without the common ownership
of assets that characterize vertically or horizontally integrated
enterprises.

Will Your Business Lose to a Dot Com?

The travel industry highlights the potential transformation of the
economy by the internet. Traditional travel agencies face falling
revenue and profitability. Many are losing money and going out of
business. Those that are trying to survive are pursuing additional
sources of revenue such as per-ticket fees in addition to airfare.
One presumes that they provide some services that one cannot get
from on-line sources such as the airlines themselves and Preview
Travel.

And while travel agents are losing money, do not forget that their
internet based competitors are, too. So it goes with much of the
dot-com economy. Dot-coms have some great advantages, but
traditional companies have some powerful advantages of their own.

The case for the dot-coms is built on these strengths:

  Knowledge of technology
  Focus & zeal
  Glamour - "ability to monetize investor ignorance" - W. Buffett
  Access to cash - for now

However, dot-coms have to take on the not-coms whose advantages
include:
  Customer relationships
  Knowledge of the market
  "Bricks and mortar" or "the last mile" - efficient facilities and
     operations
  Cash flow
  Strategic competencies other than networked computing expertise
    that create value for customers

Case study: Merck-Medco vs. Drugstore.com

Who should win the battle to fill the most mail/e-mail/telephone
prescriptions - stodgy old Merck or Drugstore.com with backing
from Amazon? This market segment is about ten percent of the
total market for prescription drugs in the United States and it is
growing at more than twenty percent per year.

Filling prescriptions is traditionally a paper intensive business; it
appears well suited to an internet business solution. But Merck-
Medco appears to be winning. Its advantages include all those
listed above: existing relationships with customers, the ability to
fill prescriptions in all states amid a confusing morass of reimburse-
ment rules, high enough volume to justify state-of-the-art automated
operations, and enough cash flow to invest aggressively in its own
internet technology. It has not spent large sums promoting its web
site - it can include promotional material in its shipments that were
ordered via traditional channels.

Meanwhile, Drugstore.com spends millions just trying to get traffic
to its web site. And when the traffic comes, the company is far from
an efficient operator. It has high cost fulfillment operations and
small enough volume that its costs for drugs are high, as well.

The Wall Street Journal reports that Drugstore.com has a long way
to go. It has much higher traffic but it remains way behind in trans-
actions and revenues. Merck-Medco books about eight times the
sales on one fourth as much site traffic. In addition, Merck's
internet business is profitable while Drugstore.com is losing
millions.

And some predictions...

The more an industry is characterized by information rather than
physical properties, the sooner it will be transformed. However,
many so-called Old Economy firms can transform themselves before
being displaced and have numerous advantages over their dot-com
attackers. Bricks and mortar and similar assets do matter - some-
body has to make/service/deliver things. Today's manufacturers and
providers of physical services are the logical winners as long as
they apply networked computing to the parts of their businesses for
which it makes sense.

The biggest advantages of existing businesses are their customer
relationships and knowledge of their markets. Incumbents should
focus on continuing to provide value in their existing market segments
while leveraging new technology.

Distribution channels and supplier relationships will change.
There will be new alliances, many of which will replace traditional
integrated firms with new "virtually integrated" teams.

The internet creates opportunities for new forms of physical assets.
We will still need the last mile of delivery - whether of physical
goods or over a wire. Firms that can provide new infrastructure of
this kind but for a networked world have a great opportunity.

The author thanks Joe Giglierano of San Jose State University and
Eric Schmidt of Centerpoint Broadband Technologies for stimulating
and helpful discussions on these topics.

About the Author...
Paul Minton is a business strategy consultant with the Center for
Simplified Strategic Planning.  He held executive positions in several
firms before committing himself to strategy consulting a decade ago.
Paul's consulting practice puts him at the convergence of the "old"
with the "new" economy.  His "new" economy clients include Cisco
Systems Capital and several semiconductor and software firms. He
also works with numerous mechanical and industrial manufacturers
and a variety of firms in the food industry.

For more information, check out www.cssp.com
Click on http://www.cssp.com/newsletter/index.asp for a free
subscription to the Center's quarterly publication Compass Points,
in which this article originally appeared.

Copyright, Center for Simplified Strategic Planning, Inc.,
Southport, CT, 2001". Reprinted with permission of the Center
for Simplified Strategic Planning, Inc., www.cssp.com


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        RESOURCES  for CEOs
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    Resources For Your Success - www.CEOSuccess.com

We now have our own website for CEO Success.

Our specialty is Increasing the Effectiveness and Enhancing the
Lives of CEOs and business owners. See the website for more
information on CEO Peer Groups as well as the archive of past
issues of the CEO Success Report.

Check it out at        http://www.CEOSuccess.com/


>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
      QUOTES to use in your staff meeting this month
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


     Seventy percent of success in life is showing up.
                 Woody Allen

     I don't have any solution but I certainly admire the problem.
                 Ashleigh Brilliant

     To be sure of hitting the target, shoot first and whatever you
     hit, call it the target.

     Kites rise highest against the wind -- not with it.
                 Winston Churchill

     The only way to discover the limits of the possible is to go
     beyond them into the impossible.
                 Arthur C. Clarke

     You don't drown by falling in the water; you drown by staying
     there.
                Edwin Louis Cole

     Success is the sum of small efforts, repeated day in and day out.
                 Robert Collier


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      HUMOR to lighten up the executive suite
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

 DUMPED
 ---------

 The soldier serving overseas and far from home was annoyed
 and upset when his girl wrote breaking off their engagement
 and asking for her photograph back.

 He went out and collected from his friends all the unwanted
 photographs of women that he could find, bundled them all
 together and sent them to her with a note stating the
 following:

 "Regret can not remember which one is you ... please keep
 your photo and return the others."

 DEFYING GRAVITY
 ---------------

 Panting and sweating, two men on a tandem bicycle finally made
 it to the top of a steep hill.

 "That was a tough climb," said the front rider.

 "Sure was," replied the second.  "And if I hadn't kept the brake
 on, we would have slid down backward."

A GOOD IDEA FOR ACTORS
 ----------------------

 Dustin Farnum, a talented but conceited actor, once droned
 on to his dinner host, writer Oliver Herford, about a play
 he was doing at the time.  "Why, yesterday," boasted Farnum,
 "I had the audience glued to their seats."

 To which Herford replied, "How clever of you to think to do
 that!!"

                    ***excerpts from: http://www.joker.org/  ***


>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
       CONTACT CEO Success
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Gary Lockwood is the publisher of the CEO Success Report.
   Email:  mailto:Gary@CEOSuccess.com
   Office: (800) 272-1575 (USA) *  (909) 984-3344
   Fax: (815) 361-3041

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
         Your Comments, please?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I appreciate feedback, corrections, and comments about the
CEO Success Report. Please send your thoughts to:
  Gary@CEOSuccess.com <mailto:Gary@CEOSuccess.com>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
      Subscribe  and unsubscribe  instructions
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Copyright © 2001  CEO Success  All rights reserved.