Management Division Newsletter

In this issue:Director’s Corner 1Bringing a New Product to Market: 4The Legal ImplicationsFour Organic Growth Strategies 10Creating and Leveraging Equity 11in your Service OrganizationStrategic Planning: 13Some Review and Some InsightMarketing and Sales Insider 15Blast from the Past BB 16

Director’s Corner Can you believe it? The year 2006 is gone! It’sa new year! As I reflect on all that has hap-pened to me personally and in our division lastyear, I am extremely proud to have been a partof the ISA Management Division; and I amgrateful to all of you for your dedication andwork. It is because of your efforts that ourdivision has been successful. In case you haveforgotten, let me remind you of some of the outstandingaccomplishments we have made thus far. • We started the year as the Most Improved Division for 2005,

an award we received at the ISA EXPO 2005. • We published over 8 newsletters with articles from experts

(you and your peers) on topics that spanned a wide breadthof management material addressing issues around the globe.

• We began our ISA Student Membership Sponsorship• We expanded our Management Division Board to include

national and international industry experts• We began involvement in an International Management

Board with participation by our own K.K. Siew of Singapore• We successfully merged ISA’s Marketing & Sales group into

the Management Division, with Shari Worthington assumingthe role of Marketing & Sales Chair on the ManagementDivision Board

• We increased our membership to over 1,000 strong• We expanded our newsletter to include two new feature

columns: The Marketing & Sales Insider and Vision 20/20 • We held our first Marketing & Sales Summit in Austin, Texas

in September 2006 and it was a huge success

And that’s not all! Each of you contributed to our success as adivision. ISA recognized your contributions by presentingus with the 2006 Most Improved Division Award and the2006 Communication Award at the Joint I&S and A&TLuncheon in October at the ISA Technical Conference &ISA EXPO 2006 in Houston. And I was given the honor andprivilege of accepting those awards on your behalf.

Yes, I am truly grateful to ISA and to all of you for all that wehave accomplished. I am also grateful for the leadership andmentorship that I received from the likes of Jerry Clemmonsand Ted Gibbon. Because of their tireless efforts and support,we were able to get the flywheel in motion to set and achievewildly important goals. And I appreciate the enormousamount of support that was received from Rodney Jones and

January 2007

Setting the Standard for Automation™

Peggie W. Koon, Ph.D.

the ISA staff, who provided the support we needed to get allthese things done.

An integral part of our successful efforts has been the enhance-ment of our newsletter. Like those of previous months, thismonth’s issue is full of valuable management information. Here’sa glimpse of the articles featured this month……

In his first in a series of 2 articles, “Strategic Planning: SomeReview and Some Insights,” Wally Stommes talks about howwe, as managers are “continually creating, revising, and execut-ing plans.” In this article (and the next) he provides an insight-ful review of the strategic planning process along with a discus-sion of how strategic planning can be conducted at a companyin a way that keeps it fresh and meaningful.

In his article, “Four Organic Growth Strategies,” Mike Nager ofPhoenix Contact writes: “Industrial controls is a collection of$50 - $100 million specialized niches that serve vertical end-userindustries. Each has their own needs, value-propositions, andrequirements. Success in any one niche does not ensure successin another – it’s very difficult to successfully sell a seeminglyidentical application from one industry to another.” In this arti-cle, Mike helps us to understand the 4 organic marketingstrategies so that we can determine which strategy works bestin your market to ensure growth.

Which would you prefer? A service organization that is a neces-sary but problematic drain on resources or a service organiza-tion that provides a positive and healthy ROI? Want to knowwhat the experts say? Then you won’t want to miss RoySequeira and Gary Patterson’s article, “Creating & LeveragingEquity in Your Service Organization©.” In the article, Roy andGary share the seven steps to transforming your service func-tion into a more profitable resource that achieves your corpo-rate objectives.

Planning on bringing a new product to market? According toJohn Simmons and Dennis Butler, “Before patenting and/or dis-closure of a new product or service, other considerations shouldbe given to protect your personal and your company’s potentialintellectual property rights.” Be sure to read the article“Bringing a new product to Market: The Legal Implications.”to find out more.

According to K.K. Siew, “In today’s highly competitive businessenvironment, a project regardless of its scale and complexity

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can no longer be delivered without a detailed work plan, due tothe shortening project life cycle.” In his article, “Project NetworkPlan: An Effective Project Management Tool for Planning andControl,” K.K. Siew shares how an effective project work plancan be developed.

Michel Ruel and Claude Gosselin are no strangers to ISAManagement Division. They have submitted many interestingarticles on performance of industrial processes. In their article onthe “Advantages of Monitoring the Performance of IndustrialProcesses,” Michel & Claude provide the first in a series of 4 arti-cles focused on four vectors that are essential for managinginformation in an industrial environment.

This month’s Marketing and Sales Insider is all about“Increasing Trade Show Booth Traffic: Quantity andQuality”. In this article, Shari Worthington shares tips ondeveloping a high-impact trade show strategy and more.

Finally, you won’t want to miss Nick Sands’ review of DickMorley’s book, Out of the Barn.

Yes, 2006 has been an exciting year for the Management Divisionand 2007 promises to be even more exciting. You do not want tomiss our upcoming Marketing and Sales Summit this year! Thisyear’s event will be held in Chicago on 6-7 September, 2007.You’ll want to save the date and be sure to attend. As always,you’ll find a wealth of information on management topics in ournewsletters. And be sure to watch your Section newsletters forfeatured speaking engagements by Members of yourManagement Division Board.

In the coming year, I challenge you to join us as we strive toachieve even more lofty no, wildly important goals. If you’re notactively involved in your Division, get on board! The flywheel isturning! “Hey, if we just keep doing this, look at where wecan go!”

Happy New Year,

Peggie W. Koon, Ph.D.Director, ISA Management Division

Project Network Plan — An Effective Project Management Tool forPlanning and ControlKwek Keong SiewPresidentEPMP Consulting

In today’s highly competitive business environment, a projectregardless of its scale and complexity can no longer be deliv-ered without a detailed work plan, due to the shortening proj-ect life cycle. A high rise block that took four years to build sev-eral years ago is expected to complete in just three years withthe current construction technologies. An automation projectwhich took one year to finish a decade ago is required to handover in nine months time, based on the equal amount of I/Ocounts. Projects need to be accelerated against time, primarilydue to commercial reasons and contractual obligations of proj-

ect owners. In the absence of an effective project planning andcontrol methodology, cost overrun and schedule slippage areinevitable. Although Gantt Chart or Bar Chart is by far the mostcommonly adopted project planning tool because of the easeof use and ease of comprehension by project stakeholders, thisprimitive tool falls short in reflecting the interdependencies ofWork Breakdown Structure (WBS). Project Network Plan on theother hand is far more effective as its network diagrams can bedeveloped systematically by converting WBS into the forms ofnodes and arrows represented in graphical flowcharts.

The two building blocks of a project network plan embody theWBS as input, and project network diagrams as output that arerepresented by nodes (boxes) and arrows for a work package.The nodes depict activities whereas arrows show dependenciesand project flows. Based on the required work, the work pack-age consists of a series of WBS; a detailed project schedule canbe defined with the use of project network diagrams for theentire project. There are two approaches to which project net-work diagrams can be developed, namely the activity-on-node(AON), and activity-on-arrow (AOA). In this paper we will onlyillustrate the AON methodology.

Developing an effective project network plan entails a concert-ed effort from project team members, project manager, engi-neers, and other project stake holders who are the subjectexperts and the knowledge of the required time taken for therespective WBS of work package with reference to contractedscope and technical complexity. The basic rules of building aproject network diagram include:

1. Project network flow typically starts from left to right.

2. A WBS cannot start until all preceding connected WBS have been completed.

3. Arrows on networks indicate precedence and flow. Arrows can cross over each other.

4. Each WBS should have a unique identification number.

5. A WBS identification number must be larger than that of any WBS that precedes it.

6. No looping is allowed.

7. No conditional statements are allowed.

8. A common start node can be used to indicate a clear projectbeginning on the network. Likewise, a single project end node can be used to indicate a clear ending.

Having completed the network diagrams, the total projectduration can be computed for a work package based onForward Pass and Backward Pass Methodologies as shownbelow. Assuming that we are working on a large scaleI&C/Automation project as our case example, but for illustra-tion purposes only part of the WBS as work package is shownfrom the kick off meeting and ended at design freeze stage,this computational process can be extended to formulate totalproject duration and WBS interdependencies; hence a total proj-ect schedule.

Forward Pass Method Earliest TimesThe forward pass starts from the first project activity A and traceseach path (chain of sequential activities) through the networkto reach the last project activity. When tracing along the path,

Director’s Corner, continued from page 1

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activity F with its LS of 11 workdays. Activities B and C are burstactivities tied to activities E and F. The LF for activity B is con-trolled by the LS of activities E and F, as a result the LS for activityE is 9 workdays; hence LF for activity B and C are having 9 work-days. We can now determine for activity A, the LF is 3 workdaysand LS is 0 workdays (3 -3 = 0).

For the backward pass, you need to remember three things:

1. Subtract activity times along each path starting with the project end activity (LF-Dur=LS).

2. Carry the LS to the next preceding activity to establish its LF, unless

3. The next preceding activity is a burst activity; in this case you select the smallest LS of all its immediate successor activities to establish its LF.

With the backward pass method of calculation, it verifies andconfirms this work package can be completed in 21 workdaysfrom the kick off meeting until design freeze stage. Thus, back-ward pass method is useful in a situation where a project dead-line is given, but to ascertain if WBS must be adjusted to meetthe required deadline.

The Project Network Plan is also useful for busy executives whointend to make a business trip for an extended period at variousdestinations to see their complete itinerary in a graphical form as“A picture paints a thousand words.” To read the full report, youmay log on to the ISA website to download my paper under the“System Integration Track” of the ISA Expo 2006 TechnicalConference or contact me directly at epmskk@singnet.com.sg

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:Kwek Keong SiewPresidentEPMP ConsultingEpmskk@singnet.com.sqkksiew@epmpconsulting.com

About the AuthorKwek Keong SIEW brings with him of more than 24 years of industrial experi-ence. After serving global organizations like Mobil Oil, Shell, Honeywell andABB Singapore as a project manager and engineering manager for 13 years;supporting automation projects across the Asia Pacific region - predominantlyfor oil & gas, petrochemical, and chemical industries; K.K. is currently the

activity times are added gradually. The longest path that denotesthe project completion time for the plan is called the critical path(CP). As shown in Fig 1) the early start (ES) time for activity A iszero. The early finish (EF) for activity A is (ES + Dur = EF or 0 + 3 =3). Activity A is also the predecessor for activities B, C, and D; thusthe earliest these activities can begin is upon completing activityA after 3 workdays which is also the ES times for activities B, C,and D. The EF times for activities B, C, and D are 8, 9, and 6workdays respectively. The ES for activity E, a merge activity is 9workdays as all preceding activities of B and C must be complet-ed before activity E. Since activity C finishes in 9 workdays andalso controls the ES for activity F. The ES for activity G can also bedetermined accordingly. The EF of 18 workdays for activity E isalso the ES for activity H, which adds up the duration of 3 work-days to become 21 workdays to complete the work package

from kick off meeting to design freeze stage.

It must be noted that Forward Pass requires three things whencomputing early activity times:1.Add activity times along each path in the network (ES + Dur =

EF)2.Carry the early finish (EF) to the next activity where it becomes

its early start (ES) unless3.Next succeeding activity is a merge activity. In this case, one

must select the largest early finish number (EF) of all its imme-diate predecessor activities.

In this work package, project network diagrams can help trackand monitor work progress more readily based on individualnodes, albeit attention must be directed on software definition,which is the critical path in this case example, to ensure thedesign freeze package can be completed in time for designfreeze meeting. Forward pass method is normally used to deter-mine time taken to complete a work package, if deadline for theproject is not given.

Backward Pass Method Latest TimesThe backward pass begins with the last project activity andtraces each path (chain of sequential activities) in a reversedorder through the network to reach the first project activity A.When tracing along the path, activity times are subtractedgradually until it reaches zero as late start (LS) for activity A. Asshown in Fig 2), the late finish (LF) for activity H is 21 workdaysand LS of 18 workdays (LF - Dur = LS or 21-3 = 18). The LS foractivity H becomes the LF for activities E; hence G. The LS foractivities E and G becomes 9 workdays (18 - 9 = 9) and 13 work-days (18 - 5 = 13) respectively. The LS for activity G is the LF for

President of EPMP Consulting, which provides international management andproject management consultancy and the Managing Director of PACTechnologies dealing with industrial wireless sensors solutions.

K.K graduated with an MBA in International Business and MEngM inEngineering Project Management from Australia; attended a project manage-ment program at Boston University, USA. He is a member of PMI (USA) andIPMA (Europe); honorary member and invited speaker of CPMC (China) underChina’s Ministry of Construction; associate director for management divisionand chairs international management of ISA America. He has had conductedin-house PM talks, published papers and delivered conference presentations inEnglish and Chinese on contemporary PM topics in Singapore, China, Taiwan,Korea, Malaysia, Indonesia, India, and USA. Recently, he spoke at the ISA 2004and 2005 Technical Conference .

EPMP Consulting provides international business management and projectmanagement coaching, consultancy, and training for companies that areintending or conducting businesses in the Asia Pacific region. Coaching coversthe business strategies and project management for senior executives; consul-tancy encompasses business and project management process definition, opti-mization, and audit for organizations; training includes courses in total projectmanagement, risk management and cross-cultural management. Website:www.epmpconsulting.com

Bringing A New Product To Market:The Legal Implications

John D. Simmons, Associate Akin Gump Strauss Hauer & Feld LLP Dennis J. Butler, Associate Akin Gump Strauss Hauer & Feld LLP

Before patenting and/or disclosure of a new product or serv-ice, other considerations should be given to protect your per-sonal and your company’s potential intellectual propertyrights. Companies need to ensure that there are necessaryagreements in place with employees and/or sub-contractors toproperly outline ownership rights in inventions and otherintellectual property developed on behalf of the company.Additionally, companies should ensure that they have theauthority to execute papers on behalf of an employee or thatthe employee agrees to do everything necessary to completeformal paperwork in the event an employee is no longer avail-able or has left employment with the company.

Further, maintaining secrecy of the product or service, atleast during development, often provides market advan-tages. The ability to provide a fully tested and developedfinal version of a product or service gives a company a headstart on any competitors who may wish to enter the market-place, provides time for a patent application to progressthrough the lengthy examination process of governmentpatent offices, and maintains the possibility that the product,process or components of the product or process may bemaintained as a trade secret. Documenting the detaileddevelopment process, at least in the United States – a first toinvent country – can assist in avoiding prior art referencesduring patent prosecution, and in future litigation by helpingto prove who was first to invent.Employment AgreementsAn Employment Agreement is a contract between the employerand the employee that sets forth the terms of employment,scope of the duties, and also outlines the rights of both the par-ties regarding certain events. Any professional employee, especially executives and those who are hired for developing

protectable intellectual property, should be engaged with anemployment agreement to reduce confusion and litigation later.Since employment agreements are contracts, they are generallygoverned by state law, which can vary in what will be foundenforceable;1 however, reasonable agreements that are limitedin time and scope generally meet the test for many states.Contracts and orders with sub-contractors can include similarcontract terms as those that follow, and are likely to be givenmore latitude because of the right to contract, unless the sub-contractor is really treated like an employee and not a separatebusiness entity.

The Employment Agreement should clearly set forth that theemployee/sub-contractor assigns and agrees to assign to theemployer his/her entire right, title and interest in and to all intel-lectual property, which has been developed during employmenton company time or is related to the company’s business and/orresearch and development.2 Compensation for each assignmentor all assignments may be included to ensure that there is mutu-al consideration for the agreement to assign. During the initialengagement of employment, this may seem like an unnecessaryrequirement. But after years of employment and various stagesof development, an employee may leave on bad terms, refuse tosign or may simply have not returned executed assignments,and/or become unavailable due to employment elsewhere suchas an overseas location. Having a global assignment in theemployment agreement can serve as evidence of ownership oflater developed patents and copyrighted works, even without anindividual assignment document.

A research employee, who already has patents and/or has madepatent applications, should be requested to identify all prior in-ventions in an appendix to the employment agreement, so as toprotect the employee’s rights and prevent future disputes overownership. Additionally, if the employee will be developing im-provements to his/her prior inventions, there should be a licenseclause which explicitly grants the company a worldwide, royalty-based or royalty-free, irrevocable worldwide license, so that thecompany can practice the improvement patent without fear oflawsuit or injunction based on the earlier dominant or basepatent. An incorporation clause to the prior inventions requiresthe employee to notify the company and get the company’s con-sent, before incorporating any of the employee’s previously iden-tified prior inventions into an invention developed on behalf ofthe company, in order to protect both the employee and thecompany.

A formality of perfection clause is a general agreement that anemployee agrees to perform, during and after employment, allacts that are necessary permit and/or assist the company, at thecompany’s expense, in obtaining and enforcing intellectual prop-erty throughout the world. This includes signing assignments anddeclarations, assisting patent counsel during prosecution, draft-ing affidavits, appearing for depositions, and testifying in court.The formality of perfection should irrevocably designate and ap-point the company and its authorized officers to act as the em-ployee’s agent and attorney to execute and file any applicationsand further prosecution of patents, copyrights, mask rights, orthe like.Companies should also ensure that they have the authority to

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1Companies should engage contract and/or labor legal counsel licensed in the particular state where the employee is

based to ensure compliance with applicable state laws and regulations.2

An assignment transfers a claim, right, interest, or property from one to another – orally or in writing. For patents, anassignment needs to be a written instrument. 35 U.S.C. § 261.

execute papers on behalf of an employee, or that the employ-ee agrees to do everything necessary to complete formalpaperwork in the event an employee is no longer available, orhas left employment with the company. There are proceduresin the U.S. Patent and Trademark Office regulations for anassignee or for the other inventors to be able to sign formalpapers on behalf of an unavailable inventor or for an inventorwho refuses to sign; however a limited power of attorney in anemployment can simplify the petitioning process.

Confidentiality/Non-Disclosure AgreementsDespite the advantages of maintaining a product or process insecrecy during early development, practical considerationsoften result in the need to disclose the product or process toindividuals outside of the direct control of the company. Forexample, disclosing the designs to manufacturers for the pur-poses of mass production, to investors for evaluation purposes,to partners for potential joint venture opportunities, or to con-tractors for specific component development is often necessary.It is highly recommended that confidentiality/non-disclosureagreements are executed by your company and these outsideparties, prior to disclosing the secret product or process informa-tion, and each party understands their responsibilities under theagreement and consequences for breaching the agreement.

Confidentiality or non-disclosure agreements are contractsentered into, between parties who want to exchange confiden-tial or secret information and restrict the disclosure of theexchanged information, typically in order to restrict public orother disclosure of the information. The confidentiality agree-ment in its most basic form should identify the parties to theagreement, define the confidential materials that the partieswish to exchange, describe the purpose for the exchange ofinformation, identify restrictions on the use of the confidentialmaterials, and set forth additional terms including informationnot covered by the agreement, term of the agreement, etc.Confidentiality agreements are particularly important whenexchanging potential trade secrets or patentable subject matterduring product development.

Maintaining the secrecy of product or process information inearly development is important in order to retain intellectualproperty rights in the information. Specifically, trade secret pro-tection for product or process information is only available ifthe information is maintained in secrecy, and is lost as soon asthe information becomes generally or publicly known. In addi-tion, patent protection for a product or process is available fora limited amount of time following initial publication, publicuse or public disclosure, sale or offer for sale in most countries,and may be compromised upon an initial public use, publica-tion, sale or offer for sale, if a patent application has not beenfiled. Accordingly, trade secret and secret, potentiallypatentable products or processes of a company should be cov-ered by a confidentiality/non-disclosure agreement before theinformation is disclosed outside of the company.

Confidentiality or non-disclosure agreements are particularlyimportant when disclosing secret company information to amanufacturer who is a potential future competitor, or a man-ufacturer who also manufactures products for your directcompetitors. In certain foreign jurisdictions, manufacturershave been known to utilize all information for all customers,regardless of whether certain of their clients are direct com-petitors. These foreign manufacturers have also been knownto produce two lines of products including those manufac-

tured for and sold by your company, and a manufacturerbrand that exits the facility out the back door for independ-ent sales. Such products are difficult to compete against onquality and cost grounds, as the products have an identicalquality and typically a lower cost. In addition, foreign manu-facturers have been known to utilize information receivedfor clients to file patent applications in their home country,which could result in your company being shut-out of animportant market by the patent rights of a manufacturer towhom you provided the secret product or process informa-tion. Execution of a confidentiality or non-disclosure agree-ment may aid in providing a remedy, discourage foreignmanufacturers from engaging in such activities, or eliminatesuch problems with foreign manufacturers. Foreign counselor counsel familiar with the particular forms and customs ofconfidentiality or non-disclosure agreements in the specificjurisdiction should be consulted to prepare the agreement.Remedies for breach of a confidentiality or non-disclosureagreement are awarded under contract law and typical con-tract law. The object of remedies in contract law is to put theinjured party in the same position it would have been in, hadthe contract been performed, i.e., to give the injured party itsexpectation damages. Such damages are extremely difficult tocalculate when a party to a confidentiality or non-disclosureagreement breaches and discloses the secret information. Aswas described above, such disclosures may result in permanentloss of intellectual property rights in the information that havelong reaching consequences. However, breach of a confidential-ity or non-disclosure agreement provides at least some type ofremedy and may discourage parties from carelessly handlingcompany secrets.

Inventors NotebooksDocumenting development of research is also an important taskin protecting both the employer and employee during patentprosecution, and in future litigation by helping to prove whowas first to invent in order to avoid certain potential prior artreferences. If a reference was patented or described in a printedpublication anywhere in the world, or in public use, or on sale inUnited States, more than one year prior to the date of theapplication for patent in the United States,3 the application isstatutorily barred and therefore an invention notebook and/orprior invention is not helpful. However, if an invention wasdescribed in a published application for patent by another filedin the United States before the invention by the applicant, or apatent granted on an application for patent by another filed inthe United States before the invention by the applicant forpatent,4 the present inventor may be able to demonstrate thatthe present inventor was the first to invent, through documen-tation shown, conception prior to the reference and diligentreduction to practice after the filing date of the reference;thereby removing the reference as prior art. Similarly, if the ref-erence published less than a year before the filing date of thepresent application,5 the applicant may be able to demonstrateconception prior to the publication date and diligent reductionto practice thereafter; thereby removing the reference as priorart. Affidavit or declaration of prior invention6 can be filed withthe Patent Office to “swear behind” the reference.

Proof establishing conception and reduction to practice can be

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335 U.S.C. § 102(b).

435 U.S.C. § 102(e).

535 U.S.C. § 102(a).

more easily corroborated with an inventor’s notebook that doc-uments the steps of development. Typically a hardbound note-book which is witnessed by other employees from time to timecan satisfy the burden of proof. The inventor(s) should try tokeep a daily log of development including test data, drawingsand graphs since the rules require7 that the inventor(s) includeoriginal exhibits of drawings or records.

The next article in this series discusses the state of intellectualproperty rights in China and various matters to consider for U.S.companies and individuals.

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:John D. SimmonsTel: 215.965.1268jsimmons@akingump.com

About the AuthorsJohn D. Simmons, PE, Esq. is an associate with Akin Gump Strauss Hauer &Feld LLP, where he focuses on the preparation and prosecution of patent appli-cations related to the electrical arts, as well as new product clearance, due dili-gence, patentability analyses and litigation support. He is experienced in theareas of telecommunications, computer control, electronics, electrical circuits,power systems, power supplies, electrical protection, home electronics, comput-ers and computer hardware, semiconductor manufacturing, semiconductordevices, ionization systems, instrumentation, games, gaming, amusements, toys,appliances, medical devices, surgical scanning and imaging systems, electro-sur-gical devices and general mechanical/electro-mechanical devices, andsoftware/programming. Mr. Simmons received his B.S. in 1992 in electrical engi-neering from Drexel University, and his J.D. from Temple University, BeasleySchool of Law in 2006, Magna Cum Laude. Prior to joining Akin Gump, Mr.Simmons was Manager of Process Controls at Roberts Services, Inc., where heled control systems engineering and R&D in the instrumentation arts. He wasalso a process control engineer at John Brown Engineering & Construction. Mr.Simmons is an inventor and holds two patents related to instrumentation forwater & wastewater treatment. Mr. Simmons is registered to practice before theUnited States Patent and Trademark Office and is a member of the PennsylvaniaBar. He is a licensed professional engineer in Pennsylvania, New Jersey andMaryland, and is a member of the Philadelphia Intellectual Property LawAssociation, IEEE and ISA. He has presented technical papers to the ISA and theAmerican Water Works Association, among others.Tel: (215) 965-1268 fax: (215) 965-1210 e-mail: jsimmons@akingump.com

Dennis J. Butler, Esq. is an associate with Akin Gump Strauss Hauer & Feld LLP.Mr. Butler’s practice focuses on the preparation and prosecution of patent appli-cations in the United States Patent and Trademark Office and foreign patentoffices, as well as new product clearance, patentability analysis, patent litigationsupport, patent licensing, and due diligence. Mr. Butler concentrates primarily onthe mechanical arts, including appliances, medical devices, composite materials,toys, games, heat exchange systems, landscaping machinery, manufactured poly-meric components, and automotive accessories. Mr. Butler received his A.S.M.E.T.in 1991, his B.S.M.E.T. in 1993, and his M.S. in Engineering Mechanics in 1995from the Pennsylvania State University. He received his J.D. in 2003 from TempleUniversity, where he was an editor of the Temple Environmental and TechnologyJournal. Prior to joining Akin Gump, Mr. Butler was a senior structural engineerat the Boeing Defense and Space Group – Helicopters Division, where he per-formed structural design and analysis for the V-22 and CV-22 Osprey, CH-47Chinook and AH-64 Apache helicopter. He began his engineering career as amethods engineer at United Technologies Corporation – Pratt & Whitney, where

he developed, designed and tested structural composite components for militaryand large commercial aircraft engines. Mr. Butler is registered to practice beforethe United States Patent and Trademark Office, and is a member of thePennsylvania Bar, the Philadelphia Intellectual Property Law Association, and theBenjamin Franklin American Inn of Courts–Intellectual Property Law Section.Tele: (215) 965-1292 fax (215) 965-1210 e-mail: dbutler@akingump.com

ADVANTAGES OF MONITORING The Performance Of Industrial Process

Claude Gosselin, Compagnie Minière Québec Cartier, Port-Cartier,Québec, CanadaMichel Ruel, Top Control, Québec, Canada and Hartland WI, USA

SummaryMany industries experience difficulties in managing theirinformation efficiently. Even the most modern companies canstruggle with their instrumentation measures. However, toremain competitive in today’s global market, the industrialworld should adopt methodologies that enable controlling ofthe strategic process variables, as well as optimizing theusage of human resources.

In this series of four articles, we will focus on four vectorsthat are essential for managing information within an indus-trial environment. We will cover the following topics:

1. Understanding the importance of using available information2. Regrouping different business units to optimize resources3. Setting a feasibility structure based on training, learning,

interactive support, and durable development4. Performance monitoring on the short run, middle run and

long run: calculating payback

IntroductionAs many other industries, the mining industry capitalizes oneconomic variables and benefits from a favorable marketcycle. To remain competitive, managers try to leverage humanand strategic resources. They adopt “best practices” and setperformance incentives, while complying with security, health,and environmental norms.

In this context, information is a critical resource: if used and man-aged properly, it can become a solid competitive advantage.Thanks to network protocols, information is ever more accessi-ble. However, companies often lack resources and processesneeded to exploit the available information at its full potential.

This article presents the case of Québec Cartier, a companythat excels in all its spheres of business, and which decidedthat wasting information was unacceptable. Québec Cartierwanted to adopt a global approach based on a long-termvision. To im-prove its processes and profitability, Québecestablished a modern and efficient structure to manage andprocess information.

HistoryLa Compagnie Minière Québec Cartier began its operationsat Lac Jeannine (Quebec, Canada) in 1957. Since almost 40years, the company has evolved in an increasingly competi-tive global market that is strongly influenced by Australia

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637 C.F.R. § 1.131.

7 37 C.F.R. § 1.131(b) “[o]riginal exhibits of drawings or records, or photocopies thereof, must accompany and form part

of the affidavit or declaration or their absence must be satisfactorily explained.”

and Brazil, the two main producers.

Québec Cartier has always attached great importance to techno-logical development for its mining, railway, and port activities.

Originally, Québec Cartier used to produce three types of prod-ucts: acid balls, melting balls, and low silica content balls fordirect reduction. Through the years, demand for new specializedproducts forced Québec Cartier to innovate and keep abreast ofmarket trends; today, the company has a very strong capacity ofadaptation.

The balling plant produces over nine million tones annually; orig-inally, the plant was designed to produce 6 million tones. In fact,the exact production capacity is unknown: in that context, theemployee’s objective is to increase the production constantly.

Through the last twenty years, Québec Cartier has modernizedits control systems by investing on industrial data processing.This implied major changes with regards to human resources,processes, management and organizational culture.

Control strategiesQuébec Cartier has adopted a structured approach to takedecisions with regards to control strategies. Even if the plantprocesses are very complex, the company opts for simple androbust control strategies, which enables it to reach optimalproduction objectives. Instrumentation is constantly adaptedto needs; new measures and advanced strategies can be cho-sen when performance objectives increase.

PartnershipsThrough the years, Québec Cartier made partnerships withresearch centers, universities, and specialized consultants.Various initiatives allowed developing efficient, profitableand visionary practices such as information managementtools and performance monitoring systems.For a company like Québec Cartier, consultant services havemany advantages. Consultants are experimented and canbring a new vision of the company’s processes which enablesthem to identify problems and propose innovative solutions.Working with consultants is also a good opportunity to mobi-lize employees, make different departments work togetherand adopt long-term approaches.

Choice of tools and consultantsQuébec Cartier has developed rigorous approaches to chooseits tools and consultants. To implement the monitoring per-formance system, the following strategy has been adopted:

ObjectiveTo implement a monitoring performance system that detects,with pertinent indicators, any performance deviation of loopsor sectors (according to the pre-set reference) and that propos-es actions to correct deviations. The system must detect allproblems related to control loops, process equipment, opera-tion, and production.

Steps1. Test various tools and consultants during 6 months2. Choose a plant sector to evaluate tools3. Buy and install the two tools selected for evaluation4. Prepare an evaluation grid5. Evaluate the two selected products

ScopeFor the evaluation, 100 loops from different plant sectors areselected. The two systems will analyze the same loops. For thefinal roll-out, 500 loops will be supervised by the selected system.

Set-up and roll-outA time frame will be prepared for evaluation and roll-out: train-ing, meetings (to discuss performance indexes), installation, andset-up will be planned.

An appropriate structure will be set up to enable various users towork together (management, maintenance, process, production).

Training, supportQuébec Cartier has always attached great importance to train-ing. To ensure the project’s success, process control training hasbeen planned for technicians and engineers from production,process development, maintenance and engineering. To focuson team work, both groups will be combined for the training.In addition, there will be training on performance measures,optimization tools, and performance monitoring tools.

Four criteria selected for the evaluation grid: 1. Management2. Specifications3. Use4. Perspectives

Quantitative and qualitative analyses have been made for thefour criteria.1. MANAGEMENT

• Product installation• Maintenance/configuration

2. SPECIFICATIONS• Accessibility• Operation performances• Parameterization • Integration with other systems• Historian• Additional options• Cost

3. USE• Browsing• Link with optimization tool• Report and results

4. PERSPECTIVES• Supplier’s potential• Product evolution

ExecutionA 6 month evaluation was made in spring of 2005. The selectedconsultant was Top Control; the selected tool was PlanTriagefrom ExperTune. The evaluation grid results clearly designedthem as the winners.

The system set-up was executed in less than 3 weeks. After, per-formance indexes and the system’s structure were adapted andrefined through successive steps, in collaboration with variousplant departments. The complete process was supervised by TopControl.

A work team is set up since September 2005; it is composed ofengineers and technicians from different plant departments, andtwo specialists from Top Control. Their efforts ensure that tools

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meet objectives. The team prepared a roadmap to note mile-stones.

Follow-up, coaching Top Control constantly follows-up (from its office and fromQuebec Cartier’s plant).• Weekly follow-up using:

• Securized remote access• Information sharing via web• Phone communication (and also web communication)

• Monthly follow-up: visit to the plant by Top Control’s specialist• Quarterly follow-up: visit to the plant and training by Top

Control’s specialist

Precise milestones must be reached at each step. The follow-upbegan in January 2006 and will end in December 2006.

Quebec Cartier and Top Control have a partnership relation-ship; they meet on a regular basis. To ensure good communica-tion among Québec Cartier, presentations have been made tomanagers and all concerned parties.

Some employees have visited other plants where PlantTriagesystems have been installed by Top Control. These visits allowedfor interesting exchanges between the different teams – plantshave different processes, but they all have high performancestandards.

ConclusionThanks to employee commitment and management’s involve-ment, Québec Cartier’s rigorous approach, and Top Control’sexpertise, the project was a success.

The next article will explain how regrouping different businessunits can optimize resources. The third article will focus on theroll-out, resources allocation and follow-up. Finally, the fourtharticle will present some pay-back considerations – both from aneconomic and a human resources point of view.

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:Claude GosselinMichel Ruelgosselin.claude@qcmines.commruel@topcontrol.com(418) 766-2000 x 2602(877) 867-6473

Four Organic Growth StrategiesMike Nager (United States)Manager of Industry Marketing, Phoenix Contact

IntroductionAt first glance, the industrial market seems huge with guaran-teed success . The thinking is, “We only need a tiny fraction ofthe $94 billion market to make some real money!” How couldwe not grow?

Of course, those that have been in the field for a while knowthe answer. The market is large but it’s really not one industry.Even if you break it into its two main historic segments, Processand Automation (which don’t describe the industry very wellanymore), it’s still not close to describing the myriad of individ-ual markets that exist.

“Industrial controls” is a collection of $50 - $100 million special-ized niches that serve vertical end-user industries. Each hastheir own needs, value-propositions, and requirements. Successin any one niche does not ensure success in another – it’s verydifficult to successfully sell a seemingly identical applicationfrom one industry to another.

Also keep in mind that it usually takes companies in our indus-try 12 to 36 months to successfully develop and sell a new tech-nology. So it’s pretty important to do everything right the firsttime; and this is where understanding your marketing strategycan really help.

If you really boil it down, growing a company organically (i.e.without buying other companies to increase market share) ispossible in only four different ways. While the concept isexceedingly simple, it’s a powerful tool in helping you under-stand how to spend your resources in the best possible manner.

The Four Strategies to Organic GrowthFor simplicity, I’ll refer to our revenue generator as a product,although it could be a service. The four ways to grow are:

1.Sell more existing products to existing customers2. Sell new products to existing customers3. Sell existing products to new customers4. Sell new products to new customers

Each strategy therefore represents a unique Growth Strategywith advantages and disadvantages. Successful companiesoften employ all four strategies, but with a different emphasisat different times.

It’s a simple but powerful tool to help you determine how tobest leverage your core competencies and capabilities toachieve growth. My follow-up article will address how to findthe best potential customers in a sub-segmented market, onceyou decide on your internal strategy.

Service Providers

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Existing Products, New Products,New Customers New Customers

Existing Products, New Products,Existing Customers Existing Customers

Existing Products, New Products,New Customers New Customers

Service Providers New Products,

Existing Products, Existing Customers

Existing Customers

We’ll start with the Quadrant that I like to refer to as theService Quadrant. It’s an area that generates a lot of activity(and consumes a lot of resources) at many companies.

Operating in the Service Quadrant means you have a viableproduct and you know exactly who buys it – now it’s a matter ofgetting them to buy more. In using this approach, it is usuallynecessary to demonstrate that your solution is the one with thelowest total cost of ownership and the best value-proposition.

This is an excellent strategy if your customers’ business is grow-ing at a rate that exceeds your growth expectations. For exam-ple, if you sell fiber optic cable to telephone companies, andthey are forecasting 4000% growth per year for the next tenyears, you may just have enough to worry about satisfying thecustomer demands and don’t have to look any further.

Operating in the Service Quadrant is especially powerful if youhave low market share but a good product. Logically youractivities revolve around how to get that business. There areoodles of sales techniques that can be employed to gain mar-ket share – rebates, mutual action plans, discounts, bundling,incentives, game tickets, etc.However, there are at least three serious drawbacks to relyingtoo heavily upon this strategy:

1. One, excessive reliance on servicing the same customers can lead to complacency within your own company (i.e. “We’ve always been a supplier to XYZ Corporation and we

always will be…”).

2. Two, an increasing percentage of business gets tied up in a few accounts. During good times, sales will be very good. During bad times though, sales can get really bad, really fast.

3.Three, existing customers buying existing products over a long period of time, become extraordinarily skilled at reduc-ing their cost. And often the targeted cost is your margin. If you don’t have a plan to deal with this margin erosion (i.e. continually lowering your costs of producing the prod-uct) then you can get into trouble.

It’s prudent to consider some of the other strategies to reduceyour risk of too many eggs in too few baskets.

Customer Cultivators or Product Innovators – Which isBest for Me?

If it isn’t prudent to depend solely on servicing old accounts forgrowth and security, you can either cultivate new customers foryour existing products or create new products for your existingcustomers. Which do you think would be most effective? Both quadrants demand a different type of focus than those wediscussed with the Service Quadrant, but for different reasons. Ibelieve that most companies gravitate towards one quadrant oranother. In theory neither is better or more difficult than the

other but one will usually be easier to implement at any onecompany. I’ll explain:

Being a Product Innovator will look ‘easier’ to companies found-ed on manufacturing, engineering or other sort of technicalexpertise. Perhaps it was started by an engineer, researcher, orother ‘inventor’ type that saw opportunities to bring productsmarket and founded a company to do so. Because these compa-nies tend to look for new opportunities to design things, theynaturally look for ideas at existing customers. A motto for acompany operating this way might be “We’ll Build It For You.”Essentially they are in the business of creating solutions for theircustomers – many system integrators operate in this quadrant.

Relying on a steady stream of product innovation has theadvantage of working with known customers, so the ‘peoplefactor’ is less risky and sales/marketing costs are pretty lowtoo. Addition-ally, a close relationship with a key customerwill help you design better products. A possible downside isthat best existing customers may not be your best bet forincreasing business; i.e. Past performance is no guarantee offuture success.

On the other hand, Cultivating Customers looks easier tocompanies that were founded as sales or distribution organi-zations. They see their opportunities to sell products betterthan their competition and fine-tune their selling tactics to arazor sharp focus. Their strength isn’t in engineering, prod-uct design, and the requirements needed to produce qualityproducts – it’s in their ability to move product out the door.A motto for them might be “We’ll Sell What We’ve Got.”

Low product development costs can help the bottom linenumbers look good, although companies operating here usu-ally have significantly higher marketing and sales budgets asa percentage of sales. A possible downside is that growththrough an expanded customer base may mask the problemswith existing solutions. What I mean by that is, if your com-pany is growing by gobbling up market share, be sure thatit’s through your hard work, and not because the competi-tion has already left the market for a better opportunity.Long term growth is hard to maintain in a falling market.

The important thing to keep in mind is that either approachwill diversify your risk by increasing the customer base orsolution set you can offer.

Entrepreneurial – Too Risky?There’s a good reason Entrepreneurs are revered in our society – they take gutsy risks and they have no safety cush-ion of familiarity to fall back upon. Similarly, working in theEntrepreneurial quadrant, requires a certain confidence tosucceed. In fact, some people state that it’s so difficult tosucceed as an Entrepreneur, that it’s best not attempted. Thechance to become the envied ‘Disruptive Force’ and the tre-mendous upside potential drives us there anyway.

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Customer CultivatorsOld Products,New Customers

Service Providers Product InnovatorsOld Products, New Products,Old Customers Old Customers

New Products,New Customers

Customer CultivatorsOld Products,New Customers

Service Providers Product InnovatorsOld Products, New Products,Old Customers Old Customers

The EntrepreneursNew Products,New Customers

The difficulties are caused because you are developing bothproducts and customers at the same time. You may notknow how those customers’ supply chains work, or how tohave the right distribution channel for them. You may notbe aware of their key needs. Likewise the products you aredesigning may require approvals and may have to meet stan-dards of which you are unaware. It takes time to sort theseobstacles out, but you have to do so very quickly to maintainan income stream.

One way of mitigating the risk associated with being entre-preneurial is to have a plan that allows you to move fromeither the product innovator quadrant up, or from the cus-tomer cultivating quadrant over. In that way, you gain expe-rience with either the customer base, or the nuances of yourown product design, without trying to juggle both at thesame time.

In my next article, I will discuss how to sub-segment targetindustries.Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:Mike NagerTel: (717) 944-1300mnager@phoenixcon.com

About the AuthorMike Nager has 18 years of experience with manufacturers of industrial con-trols, including Moore Products and Leeds & Northrop. He has been publishedin several trade magazines and has held leadership positions in both ISA andMHIA. Mike is the Manager of Industry Marketing at Phoenix Contact andlives with his family and pet fish near Hershey PA. He can be reached atmnager@phoenixcon.com.

Creating & Leveraging Equity InYour Sevice Organization©

Roy Sequeira, President Sequeira ConsultingGary Patterson, President FiscalDoctor

Which would you prefer?Your Service organization is a necessary but problematic drainon resources?OrYour Service organization provides a positive and healthy ROIWe have seen both situations and firmly believe you wouldprefer the positive equity building version. This capitalizes ontotal potential, and leverages all resources to capture the fulleffectiveness and productivity gains resulting from a properlypositioned and structured service function. The good news isthat getting started on this path, or moving forward is easierthan you may have thought.

There are seven steps to transforming your service function intoa more profitable resource that achieves your corporate objec-tives. You can implement these steps individually as yourresources allow. Being mutually synergistic, they will give thebest results when all are in place. You will be pleased to findsteps already in place which provide better results as othersteps are implemented.

1. Many companies commit the majority of their investment ina new product to the design and product manufacturing

functions early in the product’s life cycle. Drawing Service into planning and design as soon as possible helps you design maintainability into your products. (Maintainability, often known as reparability, is that property in a product that facilitates bringing a “failed” unit back into customer use as expeditiously as possible.) Designing maintainability into your products improves not only service effectiveness, but often improves ease-of-use as well, and makes them more attractive to potential customers; all of which result inincreased sales.

Often, unfortunately, service is the last function brought on board during development. At this stage, any service prob-lems are seen as “spoilers” that disrupt the smooth progressto product release. Because of time-to-market and cost considerations, service is over-ruled and we, once again, release a product with known “features” unless the problems are serious enough to derail the release schedule.

This lapse in planning can be very expensive as last minute or post-release changes to product design, cost many times more than they would have were they made before design finalization.

2. Extend management focus beyond the period when the product is on the price list and available for sale. Instead, focus on total Life Cycle Management (LCM) which covers the product from when it is merely a concept to when the last unit is removed from use by a customer. LCM has immediate benefits across the entire organization, particularly during the new product introduction process. However, benefits continue over the entire working life of the prod-uct. So, all functions profit:

• Development benefits by knowing up front the needs of all constituencies. Reduced scope creep helps bring products on schedule and often reduces or eliminates expensive design changes that have to be incorporated into products, already in the field

• Manufacturing can better plan and optimize its buying and scheduling, resulting in lower product cost

• Service can maintain products through end-of-life with optimal resource use and at lower cost

• Administrative functions have time to prepare their staff to ensure sales orders are recorded accurately, handed off to manufacturing, and delivered to customers as per their needs

• Marketing and sales benefit because these positive changes enable better margins at better prices

In short, LCM helps every single group participating across theorganization.

3. How much is it worth to free middle and upper manage-ment from those “cat and dog” fights? Create newer budgeting and strategic decision support tools that look at business and product drivers including design, manufacturing, and service parameters, so that your staff understands how decisions affect profitability over the entire life cycle. A simple business model, that can be usedover and over again, enables all functions to understand how decisions affect one another. Better up-front under

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standing often reduces internal bickering and dissension, allows rational decision making, and optimizes the corporate bottom line. Keeping Service out of this loop adversely affects every one else.

4. We continue to be amazed by how few companies accurate-ly know their most profitable customers and business lines. Structuring cost, accounting, and control processes, to enable reporting each function’s performance at customer and product levels, as well as at geographic and unit levels, gives a much-improved perspective. (If you think Develop-ment and Manufacturing wish they better understood someof the costs allocated for a particular product, Service often has an even fuzzier picture.) Service usually gets an aggre-gate number that lets management know how things are atthe top level. This aggregation prevents service from focus-ing on areas where small improvements could result in greatly improved margin contributions. Until service level agreement (SLA) penalties become meaningful, resources often are not allocated to determine cost drivers.

5. Best practices companies use their service organizations as part of monitoring customer feedback. Recognize the fact that Service generally has more contact with and knowledge of your customer base than any other function, includ-ing sales or account management. Tap into this valuable resource. Service can provide invaluable insight about wherethe customer needs additional products - these may be upgrades, replacements, or additional products for increased capacity. Sales costs for existing customers are much lower than for other sales, further improving profit margins.

6. Give Service a role in the decision making process, including meetings with other vital functions like development, man-ufacturing, marketing, and sales. This allows the executive level to hear and understand Service and receive timely information on your customer base. Quite often, service reports to operations, sales, or marketing. This increased layer of reporting often results in vital service perspectives being lost or filtered through other criteria. The executive team thus loses a vital source of information, making it less knowledgeable of and sensitive to customer needs and perspectives.

7. Some service organizations feel like they illustrate “the mushroom syndrome” where they are “kept in the dark andfed manure.” Physical availability and proximity matter. Positioning senior service and support personnel closer to the development organization encourages and enables the interchange of ideas between the organizations. This simplestratagem often improves product maintainability for no additional associated cost and improves product design and ease-of-use, as well. It also reduces schedule disruptions when a critical service need arises, since engineering staff can quickly collaborate with support staff in recreating fail-ures and creating a work-around or permanent resolution.

Most of these options can be implemented with minimal capitalto produce impressive and improved ROI. None should requiremajor resource allocation and associated costs. All can be imple-mented using mainly internal resources, augmented at criticalperiods by knowledgeable consultants. The company’s increasedeffectiveness in responding to customers more than compensates

for the (usually minor) associated costs. Improved synergiesbetween cooperating functions are easy to observe, butharder to quantify. Implementing several steps concurrentlyor on a coordinated basis often yields impressive results.

Although we understand such things would never happen atyour company, here are two actual examples to illustrate theprinciples we have spoken of.

Does Product Development ever release a product before its time? At an annual company-wide meeting, the VP of ProductDevelopment spoke with great pride of how his team hadreleased a new top-end system on time and under budget.The applause that followed was deafening. The next speakerwas the VP of Customer Service. Everyone present knew thatService had underperformed that year and wondered howthe VP of Service would explain his abysmal performance.

After leading off with a number of initiatives that had beenvery productive and profitable, he went on to explain someof the major hits his function had taken. Topping the list wasa charge for $6,500,000 for implementing 3 major FieldChange Orders to fix the new top end system that had beenreleased on schedule and under budget. He noted that ifthese charges had been allocated to Development instead ofService, Service would have been the top producing functionwithin the company.

Having a solid reason for raising this issue caused a manage-ment policy review on service costs on new products. The com-pany subsequently changed its accounting practice to allocateall field change orders within one year of product release backto Development. Although some will ask if accounting wasasleep at the switch on this issue, a more appropriate conclu-sion is that this is what happens when Development has a seatat the table and Service does not.

Could doing the “logical” thing be bad for you? On another occasion, Manufacturing, following good designpractice of minimizing the number of separate parts, wasada-mantly opposed to adding 9 versions of a keyboard to anew terminal designed for international use. Service pointedout that the firmware supported nine languages, and inter-national customers needed suitable keyboards.

Manufacturing then negotiated with the supplier to add apackage of all available keycaps so that customers could suit-ably modify keyboard layouts. By their standards, theyassumed that changing keycaps was a “trivial” task.

Service requested six keyboards with their additional keycapsfor testing the key-replacement process under realistic fieldconditions. Various senior executives and office personnelwere asked to replace keycaps; every single attempt resultedin a broken keycap or a broken keyboard. This meant Servicewould have to train field engineers to replace keycaps andsend a field engineer to customer site whenever a keyboardfailed. Accepted business models forecast this would costService $4,900,000 over a five year period. It was pointed outthat the cost of stocking sufficient numbers of 9 versions ofkeyboards for 5 years was less than $200,000.

Needless to say, the company opted for stocking 9 versions of

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the keyboard.

Those with a financial background will say this is why any func-tional area can benefit from understanding the basics ofaccounting. Problems that might appear unimportant to onegroup might have a devastating impact on another.

Your comments and questions about areas you would like us toexplore, or that you would like clarified, expanded, rebutted …will help us tailor future articles to best meet your needs.

And, yes, truth is stranger than fiction – you really can notmake these stories up.

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to the Service and FinanceDuo:Roy SequeiraGary PattersonTel: (508) 510-1302(781) 237-3637roy@sequeiraconsulting.comGary@FiscalDoctor.com

About the AuthorsFrom the Service and Finance DuoRoy Sequeira, President of Sequeira Consulting, creates the right combinationof analysis, tools, and process to improve the effectiveness and profitability ofservice organizations.Gary Patterson, President of FiscalDoctor, helps you traverse that often murkypathway to achieve growth, profitability, and executive visions.

Strategic Planning Some Review and Some Insights

Wally StommesPresident & CofounderStoneL

As managers we are continually creating, revising, and executingplans. Thus I believe strategic planning is always a relevant topic.In the next two articles, I’ll provide some review of the strategicplanning process, and discuss how we carry it out at our compa-ny in a way that keeps it fresh and meaningful. In doing so Ihope you might gain a few new insights into an age old topicthat is so vital to what we do as managers every day.

The Nature of Strategic PlanningStrategic planning had its beginnings in planning and directinglarge-scale military operations in order to achieve a specificobjective. In the process, the objectives usually were accom-plished by maneuvering resources in a way to annihilate theenemy (the competition). Of course in civilized society, weevolved that system to a much more benevolent process.

Now, the process has taken on new meaning as a mechanismfor marshalling and motivating our resources and activities in amanner that creates long term success for our enterprise. Thekey word here is process. There may be periods when we aremore focused on creating and revising the plan than we are onimplementing the action oriented activities, or measuring theresults. But if you’re performing as a manager you should beengaged in the process, to some extent, every day.

The specific steps in the process are:

1. Having a Mission Statement and envisioning where your enterprise is going. (A vision statement regarding what the organization hopes to become may also be useful here.)

2. Adhering to a set of values that defines how you carry out your mission.

3. Developing specific objectives and targets that need to be met in order to work towards your mission.

4. Defining action plans for achieving the objectives.

5. Activities 3-4 could be referred to as strategy development.

6. Creating metrics to determine how you’re tracking towards your objectives.

Building the Strategic PlanThe mission and values are long term in nature with the objec-tives/targets and action plans (strategies) being more closelydefined in the short term. I’d like to explore each of these stepsand describe how they can be brought to life.

“Our objective is to land a man on the moon and return himhome safely again in this decade.”John F. Kennedy

A great mission statement is very specific and complex, yet ele-gantly simple. It tells us where we are going. It may be anongoing process or have a specific time frame. Of course if youhave a specific end point for the mission — you’d better planon rejuvenating or revising it on completion.

“We will put a computer on every desk top in the world.”Bill Gates

“Every family in America will be able to own our automobile.”Henry Ford

Great mission statements stir our emotions and call us to action.They may actually encompass a vision within the statement or aseparate vision statement may be created that provides someunderstanding of how the enterprise will materialize as itaccomplishes its mission. The statements above are broad, bold,specific and simple. And, they compel those in the enterprise todrive towards achieving them.

If you create a solid values statement, it should be fairly consis-tent over time. This is the glue that holds your enterprisetogether and gives each of us specific directives on how tocarry out our daily activities. These “social principles” or stan-dards should encourage us to be at our best and provide guid-ance in the activities we undertake. • I will make my customers’ success as important as my own.

• I will earn others trust by carrying out my responsibilities and honoring all of my commitments.

• I will express myself candidly and tactfully even when it requires taking a personal risk.

Each of these values statements is personal, has meaning inhow I carry out my day-to-day activities and is non-obsolescent.There may be instances where some values are left unsaid with-out consequence. However, in the case of the last value state-ment, for example it may need to be called out if there is a par-

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ticular propensity in an organization to clam up or not shareideas and concerns.

Creating Effective StrategiesIf you’ve done your homework on the mission statement, creat-ing strategy will become more manageable. However, none ofthese activities can be done in a vacuum including the cre-ation/refinement of the organization’s mission.

A well-respected tool for putting together an effective strategyis performing a SWOT (Strengths, Weaknesses, Opportunities &Threats) analysis. This will provide a framework for evaluatingyour company and your market environment. Of course, wecan’t forget about those organizations that have similar objec-tives and whose interests lie in capturing the same customers’dollars (commonly known as competitors). However, I wouldargue that, unlike the older notion of competitors being hin-drances or blocking our ability to achieve our objectives, theymay actually be helping in solidifying our market (more aboutthis in part 2)

There are three core elements that drive our thinking regard-ing strategy development:

1. Customers’ known and unanticipated desires

2. Product excellence through technological development & innovation

3. Organizational alignment and operational excellence

As with most enterprises, our first focus is on making sure whatwe’re planning to do actually has some useful purpose — satis-fies customers’ needs. I also contend that many highly success-ful organizations begin producing a product or service that cus-tomers don’t know they needed, until they were offered thechance to buy it (for the right price!). In other words, we needto have an active value system that enables us to understandour customers so well that we can meet both their known and“unanticipated needs”.

Technology and innovation are the key engines driving thepotential for wealth creation and getting us over the hurdlesto accomplish our mission. By the way creative, innovativeproblem solving can be taught! There are a number of tech-niques (most are quite entertaining) that enable us to rethinkand take new approaches to achieving our objectives. Oneexcellent source is “Fanning the Creative Spirit” by Maria andCharlie Girsch.

Not only can technology and innovation be brought to bear tocreate exceptional novel products and services, but it can beharnessed to achieve operational excellence. Conventional wis-dom dictates that you can have two of the three strategic ele-ments (Product excellence, close to customer, and operationalexcellence) working effectively, but not all three. I reject thatnotion. Numerous examples can be cited from the DisneyCorporation to Toyota, where they can coexist. In fact accom-plishing all three may be the key to truly successful companies!

Strategic Planning Metrics“Potential is interesting, performance is everything.”UnknownThe beauty of our free market system is its ability to providedirect measurable feedback on whether we are efficiently cre-ating value. I know of no better performance measurements,

than solid long term sales growth and strong profitability todetermine if we are doing so. Of course intermediate metricsare also needed to measure whether our customers are delight-ed with our products, and if there are adjustments we need tobe making.

Since most of us are engineers, we are probably living by theaxiom to measure twice and cut once. Course corrections areessential to tuning in our action plans on a regular basis andwe need to have a healthy sense of insecurity in making surewe have solid information on what is happening. It is also criti-cal for being close to the customer to be continually striving forfeedback.

More in the Next NewsletterIn this first part, I’ve reviewed some of the fundamental princi-ples of strategic planning and a number of techniques for doingso. In part two, I’ll discuss some ideas on how you can keep yourplans fresh; foster an entrepreneurial spirit, the value of “good”competitors in achieving your mission, and more.

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:Wally StommesPresident StonelPhone: (218) 739-5774Email: wstommes@Stonel.com URL: www.stonel.com

About the AuthorWally Stommes is the president and cofounder of StoneL and serves on theMetso Automation Field Systems North American operating committee. Hehas been involved in process industry instrumentation manufacturing since’84 in product, sales and general management. Holder of several patents indiscrete valve monitoring he has authored and presented numerous paperson device communication networks and hazardous area compliance. He holdsan AA in fluid power technology, a BS in electrical engineering and an MBA.StoneL Corporation, a Metso owned company, is a leading supplier of discretevalve communication devices and bus networking solutions for the processindustries.

Marketing & Sales InsiderIncreasing Trade Show Booth Traffic: Quanity andQuality

By Shari Worthington (United States)President, Telesian TechnologyManagement Division Director-Elect

Research by the Center for Exhibition Industry Research (CEIR)found that 76% of business buyers use information theyobtained prior to trade shows to plan their show schedules.That’s a lot of prior planning. Unfortunately, CEIR also foundthat marketers spend a mere 6% of their entire trade showbudgets on promotion. Given the fact that most exhibitors’ sin-gle biggest trade shows complaint is that they don’t getenough of the right visitors, this is quite the mismatch.

The reality is that exhibitors should be spending closer to 15%of the show budgets on promotions: pre-show, post-show, ful-fillment, and follow-up.

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To develop a high-impact trade show promotions strategy, youmust start with your objectives. What do you want to accom-plish? Are you looking to generate sales leads, recruit newchannel partners, create buzz? Your promotions strategy willbe a direct outgrowth of your goals. Consider the followingpossible objectives.

• Generate Sales Leads

• Goal: Generate sales leads.

• Strategy: Attract qualified prospects to the booth and introduce your new, leading edge products to prospects.

• Implementation: Create a special offer that can only be redeemed at the booth, such as register for special drawing, or redeem a coupon for a gift. Promote the special offer in a pre-show mailing to pre-registered show attendees (from current year and maybe even prior year, if available). Also promote the offer to your in-house database of customers and prospects.

• Measurement: Measure your success based on the number of qualified leads, and the cost per qualified lead.

• Generate Publicity

• Goal: Generate publicity within the industry.

• Strategy: Attract industry editors and analysts to the booth, meet with CEO or CTO, and introduce your new, leading edge products.

• Implementation: Time a new product or service introduction for the upcoming trade show. Individually contact relevant industry press, and invite them for a personal demo and inside look at the new product.

• Measurement: Measure your success based on the number of qualified press attendees, number of personal demos, number of product pickups in trade press and analyst reports.

Whatever your goals, make sure you plan far enough ahead toput your budget to good use. Start your planning at least 3-4months prior to the show. Trade shows often make mail listsavailable 4-6 weeks prior to the event. Develop your offer,order your mail lists, and get your creative in place. If you’regoing after a particularly tough market, consider a dimensionalmailer to a smaller, more targeted segment of the list to ensurethat your offer gets through.

Questions or comments pertaining to this article are welcome,and can be forwarded by e-mail to:Shari WorthingtonPresidentTelesian Technologysharilee@telesian.com

Blast from the Past BB (Boring)Out of the Barn by Dick Morley

Reviewed by Nick Sands

Down memory lane, that is the journey DickMorley takes us on in his book Out of theBarn. The book is a compilation of columnswritten for Manufacturing Systems magazinefrom 1992 to 1997. Morley, who is credited bysome with inventing the programmable con-troller or PLC, is a genius and a self-pro-claimed futurist. But after reading all 69 arti-cles, I still do not understand how his favorite

emergent technologies will impact instrumentation andautomation.

The articles take the reader, at least those of us who workedthrough the 90’s, back to a time when there was a warbetween PCs and MACs, and VAXs ruled the earth. Morleyadvocates the cutting edge technologies of the day, like neuralnetworks and fuzzy logic. His favorite topics are chaos theoryand autonomous agents, which were going to revolutionizemanufacturing, and are mentioned in almost every column.Curiously enough, ladder logic and PLCs were also part of theadvanced future of manufacturing.

The articles are divided in to topical sections; floor level controlsystems, industrial computing, software, managing manufactur-ing, enhancing corporate wealth, global reports, evaluatingentrepreneurship, and “we have met the enemy; they is us”.The difference in the focus of the articles is subtle enough tobe lost on this reader. It is clear that Morely has rules for proj-ects, rules for investing, and rules for managing. He is also abeliever in skunk works for development.

Morley is certainly an interesting character and ahead of histime, like every good futurist. But the future he predicted is notour reality. That makes Out of the Barn mostly of historicalvalue. Even at the low price of $25 from ISA, unless you enjoyreliving the 90’s, this book could be a bit boring (BB).

Questions or comments pertaining to this review are welcome,and can be forwarded by e-mail to:Nick Sandsnicholas.p.sands@usa.dupont.com

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Dr. Peggie Koon (US)Director & Chair, Process ITMorris Digital Workspeggie.koon@morris.com

Shari Worthington (US)Director-Elect & Chair,Marketing & SalesTelesian Technologysharilee@telesian.com

Jim Dawson (Canada)Chair, Human Resources, FieldEngineeringConsultantjim.dawson@usa.net

Paresh Dawalla (US)Chair, Mfg. OperationManagement SystemsOptebizpdalwalla@optebiz.com

Randy Down (US)Chair, Forensic EngineeringConsultantrdown@forensic-analysis.com

Alex Habib (US)Chair, Plant ModernizationConsultantalex-habib@msn.com

Jan Jekielek (Canada)Chair, Education &PerformanceNutshell Modelsjekielej@aol.com

Deboleena Majumdar(India)Newsletter Editor & WebMasterConvergys, Indiadeboleenam@rediffmail.com

Steve Prettyman (US)Honors & Awards, Chair,Supply Chain ManagementRohm & Haassprettym@rohmhaas.com

Michel Ruel (US)Chair, Process OptimizationTopControlmruel@topcontrol.com

Nick Sands (US)Chair Programs & Symposiums,Plant SafetyDuPontnicholas.p.sands@usa.dupont.com

K.K. Siew (Singapore)Chair, InternationalManagementEPMP Consultingepmskk@singnet.com.sg

Michael St. Angelo (US)Chair, Plant AssessmentNeurametricsmstangelo@neurametrics.com

Bhawani Srivastava (India)Chair, Student MembershipConvergys, Indiabhawanibs@gmail.com

Vernon Trevathan (US)Chair, Project Management,CAP LeaderConsultantvtrevathan@msn.com

Ted Gibbon (US)FacilitatorGlobal Support Solutions tgibbon@msn.com

OpenMaintenance Information &Management

OpenQuality Management &Systems

Rodney Jones (US)ISA Staff ISA Headquartersrjones@isa.org

Management Division Board

Standards

Certification

Education & Training

Publishing

Conferences & Exhibits

ISA’s Second Annual Marketing & Sales Summit:

A Who’s Whofor Our Industry!

Executives with knowledge and expertise of themarketing and sales industries will be gathered inChicago this September…will you be there?

5-7 September 2007Chicago, ILSponsored by ISA’s Management Division

5-7 September 2007Hyatt Regency O’Hare

We look forward to seeing you in

Chicago!

To find out more about sponsorships, to exhibit, orto register, simply go to www.isa.org/dvsp/10 or call (919) 549-8411.

Price:ISA Member .......................$295Nonmember .......................$345