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Iteration Is A Strategy July 1, 2013

Posted by David Dirks in business strategy, Dealing with change, Solving Business Problems, Strategy.
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David Dirks

David Dirks

Does the Facebook of today look like the Facebook when it was first launched in 2004?  Did Amazon perfect its business model of today in 1994 when Jeff Bezos founded it?  Is the IBM of today the same as the IBM of say 40 years ago?  Here’s another question for you: How many businesses hit a genuine business model home run where sales and profits start cranking out right from the start?

The answers to the above questions are “n0”, “no” and “once in a blue moon – if ever.”  To iterate is to keep trying – keep pushing your business model forward.  It’s tinkering with the engine until it sounds like all cylinders are working smoothly.  In some cases, it’s challenging the very dream we have hold so dear in our business – the very vision we have might not be the vision that produces the life blood of any business – greater sales, growing profits and cash flow.

Iteration is a process that should be integrated into the culture of most any organization but rarely is.  Here are some thoughts on the process of iteration:

  • Don’t get married to your vision or dream.  What? How can we achieve greatness without a vision we can steadfastly commit to?  It’s not easy – if it was then iteration would be a breeze and everyone would be doing it.  They aren’t – which is just one reason why many organizations fail within five years or less.
  • Business plans are like war plans.  Everything changes when the bullets start to fly.  Yes, I know you spent a ton of time working and toiling over your business plan and it’s a great starting point but…when the reality of the business environment hits it, it’s over.  Competitors don’t play nice or according to the plan.  Customers are more finicky than the business plan sales projections call for.  Things have to change when the bullets fly.
  • Not everything has to change.  Sometimes iteration means tweaking only what needs to be tweaked.  Keep testing, changing, moving forward – throwing out what isn’t working and keeping what does.
  • Challenge yourself to iterate on purpose.  When you realize that iteration is a part of your business life if you want to succeed for the long run.

When you build a business…it’s about the long run isn’t it?

Dave

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Seth Godin Gets It September 27, 2012

Posted by David Dirks in business strategy, Sales Strategy/Tactics, Strategy.
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As I write this post, I’m sitting in a classroom here at the Googleplex in NYC. Just heard Seth Godin (sethgodin.com) and as he was speaking, I wrote down several things (in paraphrase) that stuck with me. This is all in the context of how we become more successful in our business to help other businesses succeed:

What story are you telling?

Are you trusted?

The more you specialize, the more likely you are to solve problems.

What is your brand promise?

Shun non-believers

Are you selling scarcity or abundance?

———————————-

Get it? Think about it.

The Experience is the Marketing April 12, 2012

Posted by David Dirks in business strategy, Marketing Buzz.
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You want a great marketing strategy?  Create an incredible customer experience and you’ll have the greatest contributor to new and recurring business you could have.  Think about it.  Most business owners and managers think of marketing and promoting their business in the context of spending money on advertising.  While certainly advertising and other forms of marketing your business are key, creating a superior customer experience is the first worthy marketing investment you can make.

This is often a mistake made by new business start-ups who in the heat of battle forget that the experience they create for their customers is the most impressionable and lasting investments they can make.

And it doesn’t much matter that whether you provide a product or service either.  We all know how much Apple pays attention to the user or customer experience.  Every detail of the path their customer takes has been designed and engineered to provide a great and positive experience for the Apple customer.  And yes, Apple spends plenty on traditional advertising and marketing. But I’m willing to bet that the experience of buying from Apple and then working with their products sells more product than the advertising does.

Do you know of a local business where they have created a customer experience that has the impact to keep you going back time and again?

So, for those businesses that compete on price as their primary “marketing” strategy, take note: price is your race to the bottom.

Here are a few things to consider in developing a “marketing experience” for your business:

  • The customer experience begins at the point your prospect or returning customer enters your business – whether through your store or via your website.
  • The first few moments of contact and connection to your business are the most critical.  First impressions are important and immediate impressions are critical.  If the initial impression is negative, you probably have less than a 50% chance of redeeming yourself in front of your customer or prospect.
  • Customer experience has to be designed from end-to-end in order to ensure that the experience is engineered from the time they enter your online or offline store/office to the time they leave.  End-to-end.
  • Layout your customer experience on paper.  You need to be able to describe what positive emotions & attributes you want the customer to get impacted by.  You have to design a flow of experience that incorporates an impression that can be implanted into the customers brain.
  • People within your business provide the most critical impact on a customer.  Make sure that everyone is trained to provide the kind of customer experience that will delight.  If you’ve been to a place like Disney World, you know what I mean.
  • Be flexible and able to adjust your customer experience as you see/hear the reactions from customers. Be willing to test new ways to improve the customer experience.  Look for examples of excellent customer experiences outside of your industry.

Creating an exceptional customer experience is not easy.  If it was, everyone would be doing it and it’s pretty clear most businesses don’t.  A positive customer experience can create customers that stick with you and competitors who can’t follow you.

The Costs of Strategy March 6, 2012

Posted by David Dirks in business strategy, Strategy.
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It’s funny.  Not a day goes by when someone tells me they need some “strategy” to help them in their business.  Strategy?  Today the word “strategy” is used like a cheap, $2 dollar bill.  It must just sound good to say the work “strategy” in a sentence.  So what’s so funny about that?  Well, everybody wants a strategy until they find out that implementing it might actually cost them some money.  Perhaps having a “strategy” might mean you have to upgrade a system or process to gain a clear competitive edge.  Or it might mean investing in additional people resources to help you exploit a new marketing opportunity.  As soon as the “strategy” requires an investment of some kind, the next stage is, “How can we do this on a shoe string budget?” Well, you can’t.  So, business owners and managers will pick off the parts of the strategy that call for more investment than they are willing to make.  That usually means that what’s left are one or two tactics that are weakened greatly because they were part of an overall “strategy” that now only has a few pieces of structure to hold it up.

The result:  Strategy failure.

Couple of observations here:

  • Strategy may require investment in resources whether it be money, people, and time or any combination thereof.
  • “Strategy on the Cheap” is not a strategy.  That’s hoping that you’ll find enough “cheap” or “free” ways to implement the strategy to make it work.
  • Strategy is not a cure for a bad business model.  If your business model is broke, no amount of strategy will help you unless you are willing to make great changes and most likely a reallocation of resources.
  • Strategy is not designed to make you feel good.  Strategy and the implementation of it may require you and great parts of you business to change.
  • Strategy is not easy.  If it was, everyone would be doing it and doing with great competitive and business results.  Everyone in business isn’t.
  • Strategy without action is dead-on-arrival.  Nice to have but useless unless implemented.
  • Strategy changes the moment the bullets fly.  When the competition and markets keep moving forward, change is inevitable.  When the competitive battle begins, be ready to modify your strategy as conditions warrant.
  • Strategy cannot fix things tomorrow.  Impatience is the killer of many “strategies”.
  • Strategy development must be shared.  You cannot develop a strategy by sitting yourself in a room and hoping something comes out of your head.  Or perhaps what comes out of your head is not that good.  Share your ideas and challenges with others and let the vetting process begin.

You get the point.

Finding Winning Opportunities February 6, 2012

Posted by David Dirks in business strategy, Strategy.
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On the playing field in football or business, the winning team is the one who can find and create opportunities then convert them into a win.  Easier said than done when you consider you have to dig to find those opportunities that your competition isn’t already onto.  Knowing where to find opportunities on a continual basis is the road to business longevity.

So where do you look or hunt for those opportunities that offer potential for revenues and profitability?  Here are a few thoughts on where you might find a few.

  • Leverage your business assets for new markets, even if it’s outside your core business.  When Amazon needed reliable data infrastructure for its growing web business, it decided to build it on its own.  At some point, Amazon realized other companies who need the ability to build web-scale applications would want the same service.  Amazon Web Services was born and now powers large chunks of the internet for customers like Netflix, NASA, Virgin Atlantic and many others.
  • What about your business or industry that irritates your customers the most?  Netflix was born when founder Reed Hastings was charged a late fee notice from a video he rented.  A universal customer irritation founded a new business model for video distribution.
  •  Watch how customers adapt your product or service for new uses.  Customers who used Avon’s popular “Skin So Soft” oil discovered that if you mixed it with a 50/50 solution of alcohol, it became a very effective bug repellant.  It wasn’t long before Avon created an extension product with just that mix.
  • Look for inspiration from other industries outside your own.  It’s not uncommon to find clues for opportunities that can be transferred to your own business from a completely different industry.  For example, a bank could find inspiration for its web-based services by comparing them to web-services from other industries.  The common and easy approach is to compare yourself to those in your own industry.  That’s a one-dimensional approach that limits your ability to spot opportunities that could be applied to your business.  What are they doing that could give you a competitive advantage?

Creating a real difference in your market place takes hard work and well-tuned internal radar that is able to spot opportunities when they present themselves.  Being able to observe in detail the world around you and look for patterns that lead to fresh ideas and opportunities.

Businesses that have a knack for finding opportunities and the exploiting them aren’t lucky.  Remember, luck is where preparation meets opportunity.  The number of opportunities you find that can be leveraged for your business will be in direct proportion to the number of overlooked things your discover.

Fields of Failure: Build it and They Will Come January 1, 2012

Posted by David Dirks in business strategy, Uncategorized.
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Here’s a scenario I see played out more often than not:

Local business owner decides it’s time to make a capital investment into their business and expand it one one fashion or another.  The banker is called in and they evaluate the loan package.  The banker’s first pass: will they be able to pay us back for the loan?  Of course, this is a good question for any loan.  All the ratio’s are calculated and analyzed in depth.  Cash flow calculations are made and discussed throughly.  The numbers are crunched and the loan is deemed approved by the higher powers at the bank.  All’s good right?

In most cases the answer is no, things are not good.  Why?  I can’t tell you how many businesses have been loaned money only to see the expansion fail and the loan gone defunct.  What could go wrong when all the right ratio’s where calculated and the cash flows necessary to pay the loan back deemed appropriate?

Plenty.  First and foremost, how much of the loan was set aside for marketing and promotion for the new expansion?  In too many cases that I’ve observed, there was little or no appropriation for marketing and promotional expenses.

Build it and they will come?  Not.

You spend time, effort and money on expanding your capacity to conduct more business and no one will know about it.  So focused and intense was the effort to make sure the expansion gets built right that marketing and promotion is pretty much an afterthought.

If your banker isn’t hounding you about what your marketing and promotional plan is for your great expansion, they aren’t doing their job.  If you don’t dedicate a healthy amount of your loan proceeds for marketing, then you aren’t doing your job.

Here are two takeaways:

1.  Every project, expansion or new build, takes longer to build and usually costs more than we plan for.  We end up with a finished project but with little or no money for marketing and promoting it.

2.  As a  rule of thumb, look to allocate and reserve at least 15 to 20% of your capital investment for marketing and promotional expenses.  If you end up spending that allocation because of cost overruns, you’d better figure out how to get the promotion done on a shoe string.

3.  Develop your marketing and promotional plan before the project work for the expansion begins.

7 Steps to Social Media Marketing Success July 19, 2011

Posted by David Dirks in Digital Media Strategy, Social Media Marketing.
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There was a time not long ago when ‘going digital’ meant that your business had to have a website.  However, having a website presence is no longer enough.  To reach more prospects and keep current clients from wandering away, creating and leveraging social media marketing tools like Facebook or Twitter can be critical.

Social media marketing (SMM) is simply the process of creating and engaging both prospective and current customers using social networks, online communities, blogs, and other digital platforms.  The ‘social’ aspect social media marketing means that there is a two-way dialogue between you and your customers.

According to the 2011 Social Media Marketing Industry report, businesses noted three essential benefits of social media marketing.  First, it provides a way to stand out in an increasingly distracted world.  Secondly, SMM can help improve your search engine rankings over time.  And last but not least, SMM can generate qualified leads for your business.

Small business owners are already taxed for time trying to attend to daily business matters.  Now they find themselves trying to figure out how to create and leverage SMM.

Here are 7 key steps that should be considered as you establish a social media marketing strategy for your business.

1.  Have a goal for your social media strategy.  Social media without goals is aimless.   If you create a Facebook Fan page, you need to be clear about the type conversations you want to engage prospects and clients in and the results you expect.

The Orange County Business Accelerator, (www.facebook.com/OCAcelerator), for example, uses its Facebook page primarily to promote its latest workshops and forums.  Filling seats for their workshops is the goal.

Local author Gene Ladd (http://tinyurl.com/GeneLadd) uses his Facebook page to engage his readers and followers in discussions related to topics covered in his nutrition and spirituality books.  His goal is to grow his following with like-minded people who are also potential buyers of his books.

2.  Social media choices: less is more.  Focus on a few key social media platforms and excel on them.  With literally hundreds of digital platforms to choose from, start with one, say a blog, Facebook Fan Page, Twitter, or your own YouTube channel.  Once you establish a presence on that platform, then invest time in learning it inside and out before adding any other social media platforms.  The idea is to only take on what you have time to handle.

Stick with the basic and most popular social media sites like YouTube, Facebook, Twitter, WordPress, Linkedin, Blogger, and BlogTalkRadio.  In most cases, I highly recommend starting with a simple blog or at most, a Facebook Fan page at first.  Neither costs anything to start other than your investment of time.

3.  Social media marketing is a content beast.  You should be prepared to feed the beast on a regular and consistent basis.  The basic types of content are written (i.e. blog or Fan Page post), video (i.e. YouTube.com), and audio (i.e. BlogTalkRadio.com).

Develop & produce fresh, relevant, and compelling content as often as you can.   To take some of the pressure off of yourself, encourage your partners and/or employees to also provide relevant business content whenever possible.

Create content that can be distributed across multiple social media platforms.  For example, Manhattan-based immigration attorney Brad Bernstein video records his daily radio show and then uploads it to his web radio channel (www.blogtalkradio.com/sparbernstein) and his YouTube channel (www.youtube.com/sparandbernstein).

Bernstein’s YouTube channel gets an average of 4,000 views each week.  Since he created it in 2007, his channel has garnered over 526,000 views and translates into booked consultations with prospective clients every week.
4.  Make your social media easy to find and link everything together.  What good is a blog or a YouTube channel if no one can find it?  If you have a website, make sure to link every social media property you have to it.

5.  Promote your social media sites constantly.  Promoting your social media marketing platforms is a 24/7 task.  Add your social media addresses to your email signature, on your business stationary, and your website of course.  Most social media sites allow you to add links so you can cross-promote on every site you have.

6.  Engage your audience.  Ask questions or discuss key issues in the context of your industry and business.  Create an open loop that encourages people to respond back.  Remember, social media means you have to be ‘social’.
7.  Social media marketing for the long haul.  All too often I see businesses that start a blog, Facebook page or some other social media presence and then flounder with little follow-up.  Eventually their social media efforts dwindle in direct proportion to their flagging investment of time creating and posting content.

Keep in mind that when you first engage in social media marketing, it will seem to take forever to build a following.  Like top athletes, you’ll ‘hit the wall’ on social media effort.  Keep pushing forward until you get your ‘second wind’ to keep up your social media efforts.

Most social media sites cost little to establish your business presence on.  The real cost is in creating and then sharing content that is relevant and engages your prospective and current customers.

If you can consistently create and share content with your social media audience of prospects and customers, you’ll be that much farther ahead of your competition.  Be assured that most are still asleep at the wheel of the social media opportunity but not for long.

Just How Much Variety Do We Need? March 26, 2011

Posted by David Dirks in business strategy.
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The February 23, 2011 issue of the Wall Street Journal had an article entitled, “Whitens, Brightens and Confuses” and it noted the following:

In the toothpaste product world:

  • There were 69 new toothpaste varieties introduced in 2010
  • There are 352 distinct types of toothpaste sold today

That was enough to stop me right there.  The context the WSJ story was this:  Can brands confuse consumers?  If you look at the above data, you’d have to say ‘probably’.  But interestingly enough, brand loyalty to toothpaste is fierce.  I buy only Colgate toothpaste with baking soda (of one flavor or another) whenever I shop.  If I don’t find it, I find it somewhere else.  And that’s why many retailers are reluctant to winnow out the ones that don’t sell as well and focus on keeping the shelves stocked with those that do.

Both Colgate and Crest have long known how inelastic consumers are when it comes to trying another brand of toothpaste.  So, they merrily create the latest version of their branded toothpastes and keep them coming through product development and onto the shelves of retailers.

How much variety do we need?  As much as it takes to keep us brand-loyal.  In the meantime, retailers have little choice but to stock up on as many brands and sub-brands of toothpaste in the market as they can afford.  Confusing for us consumers?  Yes but a necessary evil.

About Business Incubators… November 29, 2010

Posted by David Dirks in business strategy, Solving Business Problems.
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Do business incubators really create jobs in a substantive way?  According to the National Business Incubation Association, the answer is a resounding ‘yes’.  According to the NBIA, nearly 87% of small businesses using a business incubator survive to their fifth year in business versus only 44% of small businesses who didn’t use an incubator.  Business incubators are once again a hot topic in economic development circles around the country. According to the NBIA, there are about 1,200 active business incubators in the U.S. today.  Conceptually, small business incubators make all the sense in the world.  By providing low operational costs during the early stages of business development, incubators are placing a bet that by subsidizing some of the operational costs of doing business, these start-ups will have a better chance for survival.

Recently, Syracuse University published an extensive research project that focused on the performance of incubators.  Their research tells a different story.

“The findings reveal that the effects of incubation are potentially deleterious to the long-term survival and performance of new ventures. Incubated firms outperform their peers in terms of employment and sales growth but fail sooner…claims that incubators are highly successful and serve a significant number of businesses are overstated.  The comprehensive process used in this study to identify the largest possible sample of incubated firms uncovered a fraction of the number of incubated ventures that supporters of incubation claim exist.  While improvements are likely possible to the methods used in this study, this study roundly refutes the poorly documented and unpublished studies that cite much larger numbers of incubated firms and much higher levels of performance.  The methods and findings of this study showcase that more research is necessary to fully understand the effectiveness of incubation programs. Until then, these findings are instructive in helping and motivating business incubators to improve their past performance.”

The truth is, there isn’t a lot of substantive and unbiased research on the long term results of small business incubators.  If you don’t believe me, just look for yourself.  Lots of claims of success from the likes of the NBIA, which has an obviously biased interested in promoting the concept of incubation and others.

Are incubators important to economic development (since it’s reported that nearly 94% of them are non-profit and sponsored for local economic development)?  The short answer is yes.  There are certainly success stories of small businesses who have survived the early years and have grown out of incubation.  And we know that small business is the engine of job creation in the U.S.

Is public/private subsidized incubation an good long term investment?  Here are my thoughts on this based on my own research so far.

1.  Tighter vetting of potential applicants for an incubation program is a must. There is no amount of incubation that can fix a badly designed business model.  The failure rate of small business is high mostly because people start a business that has an inherent flaw.  Like starting a cash-intensive business without proper funding for the first 3-5 years or starting a business because it sounds like a neat idea until we found out that few people are willing to purchase the goods or services.  Having a business plan in hand means little if it isn’t vetted against the same kind of tough questioning and criteria a venture capitalist would use.  You don’t just let any business who can show you that they can pay for the incubation services in unless their business plan and model have been deeply vetted.  Many incubators are funded with public money and what I’m proposing helps insure that taxpayer dollars are invested in only the best of the start-ups.

2. Even after vetting the best small business opportunities, failure is part of the process. You have to expect to fail to some degree in order to succeed in the long run.  If you study the vetting process used by venture capitalists, you find that despite their best efforts, a percentage of their investments will fail.  That doesn’t mean you should run from the idea of either using or creating a incubator.  This just means that failure is an expectation in the early start-up phase.

The key question is: what have we learned from the failures that we can successfully transfer to new participants?

3.  Targeted versus generic incubator? Most incubators are general purpose in focus, which means they will entertain any type of start-up for admission into their programs after meeting their criteria.  My business sense is that a focused, industry-specific incubator program has the best chance of impacting economic development.  For example, if an area was focusing on solar power panels, then creating an incubator program to attract and retain those kinds of firms would be inherently a powerful way to have real impact in business attraction.  A industry-focused incubator program would operate on a triad of providing 1) specifically designed space suited to that industry, 2) Access to research & development available in that industry, and 3) access to investment capital be it private angel networks or other investment programs.

For an area that wants to put a stake in the ground that targets a specific industry, having an incubator program that has industry-specific expertise is a winning differentiator.

4. Intellectual capital is just as important as investment capital. The incubator subsidy is surely helpful to a start-up but I believe the quality of the intellectual capital that is made available to these incubator start-ups is even more vital.  There is no substitute, especially in the early stages, for providing seasoned and unbiased business professionals who can ask the right questions in their field of expertise.  Asking the right questions leads to helping the business owner/manager in their own learning process and education.  I believe an incubator has to have only the best available expert talent available to its participants.  Those that serve as the intellectual base for an incubator need to be vetted as well. 

5.  Regular and intensive business reviews of all participants is required. Incubation participants should be prepared to go through an intensive business review process based on performance benchmarks that have been set up as a part of the business plan/model.  If a business wants to participate and receive subsidized business services (especially from public money), it should be prepared to undergo a rigorous business review process that does a deep dive on current business performance.  This process allows the incubator leadership to assess and help identify resources for areas that need immediate attention…and before they become a real threat to long term success.

6.  An incubation program takes long-term vision. Community leadership, both public and private have to have a clear vision for the long-term effort required to create enough success stories to offset the public and/or private investment required for organic business growth. 

7.  Equity in participating start-ups should be explored. Today, most incubators look to break-even on the services they subsidize to start-up companies in return for the potential for new job creation and tax base expansion.  However, I would argue that to qualify for access to a powerful incubator program, start-ups would be required to give a percentage of equity to the incubator.  It might be a small percentage (perhaps between 5-10%) but it would at least provide an additional possibility of the incubator program generating more capital to invest back into the program when their equity position was sold.  The incubator equity would be in exchange for the subsidy received by the business.  In this scenario, incubators would not have to provide any additional funding other than their current program offerings to receive an equity slice.  I think that’s a fair proposition, especially for incubators that receive funding from public tax dollars.

8.  Organic business growth is a key differentiator for economic development. Traditional economic development relies primarily on new business acquisition and current business expansion as a measurement of performance.  Developing the infrastructure for becoming a magnet for new start-up business is a way for regions or counties to differentiate themselves from their competitors.  A high-performing, fully funded, and well-equipped start-up program tells other potential businesses looking to relocate that the area is truly committed to business expansion and job growth.

Business incubators I believe can play a critical role in long-term organic business growth.  The key to incubator success starts with engineering the program to run itself like a for-profit business.  An incubator with a strong, well vetted intake process along with a substantive and ongoing business performance/review process, and the best business support resources stands the best chance of creating lasting jobs for any region.

Shifting Your Business Strategy – 5 September 11, 2009

Posted by David Dirks in business strategy.
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David DirksShifting a business strategy doesn’t always mean that it will be successful.  However, business is about risk and making investments in strategy options that seemed to show the most promise.  Often times the need to shift business strategy is driven by events outside the span of control that a company normally exercises.  Then again, prior business strategy decisions that didn’t pan out with the necessary results will require you to re-adjust.

IBM has long been known for its huge investment and consistent commitment to research & development, the incubator for innovative products and services the feed revenues and profitability.  In the September 7 issue of BusinessWeek, there was a story on how IBM is making some significant changes in how it manages its R & D process.  One change that is particularly eye-opening is how IBM is shifting how it shares and partners with others in R & D efforts.

Traditionally, IBM research was in locked-down mode; a closely guarded and very secretive organization.  Now, IBM is cutting deals with corporations and research universities across the globe to collaborate on research.  Intellectual property issues aside (and that is no small issue by the way), this shift in business strategy gives IBM several key advantages:

1.  By sharing the cost of R & D with key partners, IBM gets more bang for its research budget than ever before.

2.  The collaborative process allows IBM to get viewpoints and insights to research that it normally wouldn’t get access to and thereby exposes its researchers to potentially more ideas.

3.  Globalization of IBM research by collaborating with foreign governments and major research universities gives IBM a leg-up on competitors when it comes time to start selling products and services.  If you have a critical relationship with someone like IBM that is working, why wouldn’t you consider buying their products and services?  This strategy allows IBM to develop key customer relationships in places that it had not considered before in the context of sharing research.

Will this R & D strategy shift work?  The jury is still out on that and it will take some time to see the full measure and benefit of the new open collaboration on research.  IBM is willing to make a real investment in this strategy primarily because it has so many positive outcomes for the company if it executes it effectively.