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Showing posts with label LIFESTYLE. Show all posts
Showing posts with label LIFESTYLE. Show all posts
Thursday, February 11, 2016
How To Make $100 Per Month With Google AdSense

How To Make $100 Per Month With Google AdSense

What is: Passive income? 

 It is the kind of income that comes from a source that requires little effort on your side and which you get on a regular basis (monthly, quarterly, etc). These could be Rents, bank interest, or a royalty from a published book. But in the online world, it could also be an Adsense income from your Website or Blog that you can also collect on a regular basis. When a Blog is established, all you need to do is maintain the traffic by adding quality content and keep giving value to your site. How to start earning money from Adsense: Many people think that earning from Adsense more than $100, $200 or even $500 per day is impossible because they look at their own numbers and they get discouraged by the miserable 10 bucks that they receive per month for their blogs. However, there are thousands of Bloggers that are achieving the above numbers and they earn from $2000 to $10,000 per month, or even more. How do they get do these numbers with Adsense? Their secret is: determination, effort, blog planning, passion for their niche, and patience (specially at the beginning). Before explaining how to earn 10,000$ per month, let’s revise all the definitions involved in the earning calculations so you have a better understanding of the procedure. AdSense: It is an affiliate program created by Google that let us use their ads in our blog and earn money when people click on them. They are contextual ads that are related to the content of your site. For example: if your site relates to finance, your ads will show finance related products or services. How does it work? Google Adsense acts like an intermediate between the advertiser and the publisher, and they profit from the difference(pays less to publishers than what they charge the advertisers). The click-through rate of an advertisement is defined as the number of clicks on an ad divided by the number of times the ad is shown (impressions), expressed as a percentage.[2][3][4][5][6][7] For example, if a banner ad is delivered 100 times (100 impressions) and receives one click, then the click-through rate for the advertisement would be 1%. CTR = {Clicks \over Impressions} Source: wikipedia Example: Consider that you get 2 clicks of 1000 impressions. The CTR calculation: 2 clicks/1000 impressions= 0.02 = 2%. Cost Per Click (CPC): A website that uses CPCs would bill by the number of times a visitor clicks on a banner instead of by the number of impressions. Cost per click is often used when advertisers have a set daily budget. When the advertiser’s budget is hit, the ad is removed from the rotation for the remainder of the period. Investopedia explains ‘Cost Per Click – CPC’: For example, a website that has a CPC rate of $0.10 and provides 1,000 click-throughs would bill $100 ($0.10 x 1000). Source: Investopedia CPM: CPM means “Cost Per 1000 Impressions.”

Now let’s start to make $10,000 Every Month With Google AdSense…
Suppose your CTR is 1% and your CPC is $0.3 (this CPC is not difficult to meet unless your niche has no advertisers such as arcade, recipes, Free Music Downloads, wallpapers. Stay away from these niches and opt for finance, marketing, insurance, health, etc). You can change these parameters with your own so your calculations are more accurate.
  • In order to make $10,000 per month, we need $333.33 per day.
  • We need to get to $333.33 per day. Consider you receive 100,000/day Page Views,  1000 Clicks a day with 1% CTR. 0.3 CPC. Let’s do the math: 1000 clicks x 0.3$  x 30 days = 9000$ Really close!!!
  • In order to Get 100,000 Page Views we need to make at least 1,000 awesome Blog articles to attract at least 100 page views / post per day.
  • You will also earn from the CPM impressions. Regardless of the niche, the average CPM earning is $1 per 1,000 impressions. You can make $100 per day easily from those  100,000 page views per day. $100 per day means another $3000 per month.
  • Other alternatives to get more income: Clickbank products, BuysellAds, and other affiliate products you may find in other affiliate networks such as warriorforum(related to marketing), comissionjuction, etc. You may get another $100 per day with each of these programs easily with the kind of traffic we are getting.
Let’s now add every earning and put them altogether:
$300 Adsense cpc +
$100   Adsense CPM +
$100 Buysellads +
$100 from clickbank +
$100 other affiliate program(Warriorplus, jvzoo, commissionjunction)
= $ 500 per day x 30 Days
$ 15,000 Per Month
Is this not enough for you? Well, many bloggers are earning this much or even more, but they know that to get results they need to work hard, stay focused and be passionate about what they are writing about.
To conclude:
The results we are showing in this article can be achieved if you are in a competitive niche with a CPC of $0.3 and if you make 1,000 great articles in 2-3 years.  Consider that you can make $15,000 with 100,000 Page views per day, so to make $10,000 you need 50% less Page views per day!
Tuesday, January 12, 2016
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How Much Traffic Do You Need To Make $100,000 With Google AdSense




How Much Traffic Do You Need To Make $100,000 With Google AdSense


Google AdSense
Is it really possible to make $100,000 a year from Google AdSense (or by selling ads on your website/blog)? If so, then the real question is how much traffic do you really need to make big bucks with Google AdSense?
While it’s true that we can’t predict the Google AdSense income exactly, we can optimize the ads in different ways so as to make the most out of it.
Also, you must make sure that your website category is advertising friendly because your AdSense income depends a lot upon the category of your website. You can use Google AdWords Keyword Planner tool to find out the competition in your industry.
If there is enough competition (i.e. if the suggested bid by AdWords for keywords in your niche is high) then we can assume that Google will fill your ad spaces with high paying ads (see how AdSense works).
For example, if you Google search “loans” then you’ll see a lot of ads so it means that if you have a blog related to personal finance then there will be enough competition for your ad space.
Now I’ve randomly added few keywords to Keyword Planner to find out its suggested bid by AdWords. Here they are:
Google AdWords Keyword Planner
As you can see, the competition for keywords related to “finance” is very high compared to keywords related to “food”. Of course, the suggested bid is just an estimate and the real cost-per-click varies a lot.
But still, even if it’s $5 then it means a lot. Why? It’s because the cost per click to advertise on Google is very high compared to cost per click on Google Display Network. So if an advertiser is paying $0.50/click on Google then he may be paying only $0.10/click on Google Display Network.

How Much Traffic Do You Need To Make Money With AdSense

Let’s say you want to make $100,000 a year from Google AdSense and/or Google AdSense alternatives.
$100,000 divided by 365 = $274 a day.
So, you have to create either: 274 pages that earn $1 a day OR 548 pages that earn 50 cents a day OR 1,096 pages that earn 25 cents a day (which sounds reasonable, right?). Let’s say you have 1,096 high quality blog posts and you earn $0.25 per click from AdSense.
I have analyzed the traffic and AdSense stats (using Google Image Search) of several websites including my own blogs and websites.
Google AdSense Earnings
From my analysis, I found that the average Page CTRis around 1% (or it’s something that we can achieve easily). But it really depends upon your niche, web site design and other factors.
In fact I have achieved a Page CTR of over 20% in 2007 for a niche website and was making $100+ a day from Google AdSense alone.

Let’s Do The Math To Make $100,000 A Year With Google AdSense

Let’s assume that you have a Page CTR of 1% and your average CPC is $0.25 (I believe it’s quite an achievable target unless your keywords have no advertiser competition – e.g. a recipe blog).
Some of the top paying AdSense niches are Finance, Internet Marketing, Technology, Web Hosting, Internet & Computers, Software, Health etc. and some of the lowest paying AdSense niches are Entertainment, Arts, Movies, Celebrity Gossips, News blog, Jokes, Wallpapers, Quotes, Recipes, Photo blogs etc.
As mentioned earlier $100,000 a year means you have to earn $274 a day. If your average CPC is $0.25 then you need 100,000/0.25 = 400,000 clicks a year (or approximately 1,000 clicks a day) to earn $100,000 a year from Google AdSense. Assuming that your Page CTR is 1% you need approximately 100,000 page views a day.
Now, let’s say your “Bounce Rate” (it is the estimated percentage of visits to your website that consist of a single page view) is 100%. It means that you need 100,000 unique visitors a day itself to generate 100,000 page views a day.
In a nutshell, you need 100,000 visitors a day to make $100,000 a year from Google AdSense alone (with a CTR of 1% and CPC of $0.25).

Google AdSense Glossary

Page Views
A page view is what Google counts in your reports every time a user views a page displaying Google ads. We will count one page view regardless of the number of ads displayed on that page.
For example, if you have a page displaying three ad units and it is viewed twice, you will generate two page views.
Clicks
For standard content ads, Google counts a click when a user clicks on an ad.
For link units, Google counts a click when a user clicks on an ad on the page of ads, after selecting a link in the link unit.
Page Click Through Rate (Page CTR)
The Page Click Through Rate (CTR) is the number of ad clicks divided by the number of impressions or page views that you have received.
Page CTR = Clicks / Page Views
For example, if you received 5 Clicks from 100 Page Views, then your Page CTR would be 5%. (5/100*100=5%)
Cost Per Click (CPC)
The Cost Per Click (CPC) is the amount you earn each time a user clicks on your ad. The CPC for any ad is determined by the advertiser; some advertisers may be willing to pay more per click than others, depending on what they’re advertising.
Page Revenue Per Thousand Impressions (Page RPM)
Page Revenue Per Thousand Impressions (RPM) is calculated by dividing your estimated earnings by the number of page views you received, then multiplying by 1000.
Page RPM = (Estimated Earnings / Number of Page Views) * 1,000
For example, if you earned an estimated $0.15 from 25 page views, then your page RPM would equal ($0.15 / 25) * 1000, or $6.00.
Estimated Earnings
Your account balance (or earnings) for the time period selected.
But you are not using AdSense alone to monetize your website, right? You can make more money by selling direct banner ads, in-text ads, CPM ads, sponsored links, affiliate marketing, etc.

Cost Per Impression (CPM) Ads

So let’s say you’re selling direct banner ads and is also selling CPM advertising which is again an effective way to monetize your website.
What are CPM ads?
CPM (Cost Per Mille) stands for Cost Per 1,000 Impressions. CPM networks pays for every 1,000 impressions you generate. If a CPM ad network is paying you $1 CPM then it means that they’re paying you $1 for every 1,000 page views you generate.
Advertising.
CPM Network earnings totally depend upon your traffic quality but you can expect anywhere between $1 – $3 per 1,000 impressions. So, if you generate 100,000 page views a day then you can make $100 – $300 a day from CPM Networks. Again, you can earn $100 – $300 (or maybe even more) a day by selling banner ads directly to advertisers.
Now, you can split the traffic into three as you’re earning $300 each from 3 advertising networks. It means that you need 100,000/3=33,333 unique visitors a day (with a bounce rate of 100%) to make approximately $274/day.
Again, if you have an authority blog then your bounce rate will never be 100%. In that case you can expect an average page view of 1.5 per user. It means that 50% of your visitors exit from the landing page and others visit more than one page on your website.
All in all, you need approximately 20,000 visitors a day to generate 30,000+ page views and it can earn $274 a day which translates to $100,000 a year in advertising revenues.
Need a little more help reaching that $100,000/year goal? Add commissions from Affiliate Programs as well into the equation and you can hit that $100,000 goal with much less traffic.
In fact, in 2008 I was averaging $200+ a day from less than 200 daily unique visitors with affiliate marketing. It was possible because when it comes to affiliate marketing it’s all about traffic quality and not traffic quantity.

How To Optimize Google AdSense

Google AdSense A/B Testing
You can optimize your AdSense ads in several ways. For example, you can try text ads only, image ads only, text & image ads to find out which ad format is performing better.
Google recommends wide ad formats like 728 x 90, 336 x 280, 300 x 250, and 160 x 600 as they’re more advertiser friendly.
When you use the recommended ad formats, your AdSense ads should perform well because of increased competition. Why? Because the recommended ad formats by AdSense are the most popular ad formats and hence almost all advertisers must be targeting those ad formats.
So it increases the competition naturally and Google will be showing the highest paying ads on your website. But it’s also a good idea to try different ad formats as Google is now offering a variety of ad formats (including responsive ad units).
I would recommend A/B testing on your website to find out the best performing ad formats. Like, you can do A/B testing by trying different ad types, ad formats, ad colors, and then by placing your ads at different sections on your website (above and below the fold) to find out which position is offering the best CTR).
But what if your AdSense earnings are low even though you have good a CTR? In that case, I would recommend ad controls though Google mentioned that blocking any ad will reduce our potential earnings.
Google says:
It’s a myth that filtering ads can prevent ‘low-paying ads’ from appearing, so as always, we recommend blocking only those ads that you feel are unsuitable for your users.
Finally, you can tweak the AdSense click-through-rate by using an AdSense friendly template for your website/blog. But make sure that your website is not ad heavy as it will impact the user experience in a negative way.
And as always, you can focus on creating awesome content and driving more traffic so that it increases your Google AdSense earnings (and your advertising revenues) naturally.
BONUS
I have recently published a blog post that was essentially a reverse of this topic. It’s basically about what it takes to hit your traffic and income goal (assuming a traffic goal of 1,000,000 pageviews and an income goal of $3,000 per month).
I have subcategorized the topic into:
  • How Much Traffic Does Your Blog Need To Make $36,000 Per Year In Ad Revenue— tells you how many pageviews are required to generate $36,000 (that is, $3,000 x 12) in advertising revenue (affiliate income will be a bonus for you) per year based on real case studies and examples.
  • How Many Blog Posts Do You Need To Generate A Million Pageviews Per Month— tells you how many blog posts your website might need to generate one million pageviews per month.
  • How Much Money Should You Invest In Content Marketing To Generate A Million Pageviews Per Month — tells you how much money should you invest in content creation to hit your traffic goal although it differs on a case-by-case basis.
  • How Long Does It Take To Reach Your Traffic Goal — tells you how much time your website will take to hit your traffic goal using my own blog as a case study.
In other words, it’s written to decode:
How Much Money Should You Invest In Content Marketing To Generate 1,000,000 Pageviews And $3,000 Per Month
Here you go:
It’s the result of a homework that I did with a goal to increase the traffic of my blog 5x from here. So, it’s written purely based on my own traffic insights plus few case studies and traffic numbers of different blogs in different niches.
There’s every chance that the actual figures applicable for your own blog could be a lot different from mine. Needless to say, it ultimately depends upon your website’s niche, authority, and marketing efforts.
Also, your final income levels could be a lot higher or lower than the figures that I have mentioned as again, it depends upon your website and its different metrics.
Happy Blogging and Happy New Year! :)
Monday, January 11, 2016
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Online Jobs Scam – How to Find if a Website Provides Fake Online Job

Are you searching for some online jobs that can make you money? Don’t pay anything or register anywhere, until you read this article.
This article will educate you to understand about various internet jobs scams & how to identify them even before you pay any registration fee for any CD package.
online jobs
So you have seen some website, read about the various home based online jobs they are providing. The website say, you can make this much money or that much income by working on these simple programs & that is very easy etc. etc.
You are excited, want to start as soon as possible but suddenly you came to know, that the website is asking money for registration. And because you are needy for online jobs, you pay the website.
After you pay the  registration fee, they will send you some username & password to access the member area or send some CD or DVD package. To make you more comfortable, these sites even has the facility to send you their kit on ‘cash on delivery’ basis so that you can pay, at the time of receiving the material.
Everything looked good!
You paid the money!!
You want to start the work & earn money through their kit, package or member area (whatever), but even after 1 month, 2 month or a complete year, you did not earn anything.
You called them or email them. No proper answer or even no reply. And you thought everything on internet is scam.
No! No!!
Everything is not scam. It was your mistake!
You did not educate yourself before buying anything.
The website said ‘we provide simple & easy online jobs’ and you accepted. That was your mistake. You will get thousands of scammers & they will fool you again & again until you have the ability to identify them.
So do you want to know how to identify about these scam websites who provide fake online jobs?

Exposing Online Jobs Scam

Before giving you the idea to identify a fake site, I just want to tell you that-
  1. There are genuine programs as well on internet, that can earn you good income. You can readour story of online jobs to check how & how much money I am making.
  2. There are very few sites who provide genuine information & you have to work hard to find these sites.
  3. Not all sites who ask money are fake. I will explain you that also.

Identify a fake internet jobs site in just 10 minutes

So before paying anything on fake sites, can you spend your 10 minutes to check the following points to know how to identify a scam site.
If not, then you have to spend hours understanding what you have to do with their kits/package or in their member area. And I am sure, even after spending months, you will not make any money.
So get ready to check these 7 points in every site.

1. Have you seen any real person on the site

Yes, you are paying your hard earned money but you don’t know whom you are paying to. You must know the name of the website owner & his face.
Here are 2 simple points to get sure yourself-
  • Check the ‘About’ or ‘About us’ page on the website just like we have given on our website ‘MoneyConnexion.com’. He must have name, real image of him, with their Facebook or Google+ profile link.
  • If you check the website name in Google then it must display the name & image of the Google+ profile in the result. e.g. If you check my website name in Google, you can see my name ‘Priya N’ & my Google+ profile.
Even if one of the 2 is missing, it means their package is fake. But if you don’t see owner name in About page or Google search result, then its a clear indication of online job scam.

2. They provide live training for their online jobs

This is also one of the easiest way to identify, if a website is providing a fake & useless online job.
Call them and tell them that you are interested in live training. I am sure, a fake site will never provide training because they don’t know what to teach you in the training.
Live training means either they provide the training in their office or through Skype.

3. The owner of the site himself makes money online

I find it very funny about the scammers. They have never earned anything from any internet program but they teach the world how to make money online.
I am making full time income on internet from the last 9 years & I developed one of the best training package for online jobs but still I am giving this absolutely free (signup here) but these fake sites does not have idea of online income & they sell useless things to the world.
So if you are interested in some sites, tell the owner to meet you personally & show their online accounts where they are making money.
You can yourself judge from this factor.

4. You must have the phone number of the owner

There is nothing like a company on internet when it comes to ‘make money online’. Its purely run by a single owner or two. Your money goes in their pockets only.
Then why don’t they give their phone number to you. It means they know, they are providing fake internet job & what will they explain when you don’t understand something from their package or member’s area.

5. Check review of the website to find complaints

Scam sites can’t escape from this. If they have unsatisfied customers, they can find their complaints on various forums or consumer complaint sites.
e.g. if you check the review of Bharat Online Work, you will lots of complaints & scams related to BharatOnlineWork.com.
So how do you check their review & complaints?
Its simple. just open Google.co.in & type the following keywords-
  • ‘Name of the site’ review (e.g.  BharatOnlineWork Review)
  • ‘Name of the site’ complaints
  • ‘Name of the site’ fake
  • ‘Name of the site’ scam
e.g. If you want to check the review of my site, then replace ‘Name of the site’ with either MoneyConnexion or MoneyConnexion.com.
Don’t limit your research to first page only. Search each & every result on next pages as well.
Don’t get fooled by the positive comments on any compliant site because they fake comment written by the site themselves. Because if user is satisfied, he will not go to any complaint site & write good comments & if he does, he will surely leave his phone number.
If you find complaints, it means their online jobs package is useless.

6. Proper ‘contact details on the site

Their ‘contact us’ page on the site itself can tell you, if you are going to deal with a fake site or trusted site.
Most of the scammers who provide useless online jobs don’t want to reveal their contact details but still you will find a ‘contact us’ page on their site to look their site as genuine.
But if you check the address on ‘contact us’ page properly, you will find that the address is incomplete.
They do it purposely so that nobody can reach their office.
So how to check if the address is incomplete?
If you read the address properly, you will notice 1 thing that they don’t have either ‘office number’ or ‘building name’ or the ‘street name’ in their address. Only 1 thing will be missing from their address.
Another way, you can confirm their address is by sending a courier or a postcard to their address. Write your mobile number & email in the letter & just ask them to reply by email or SMS to confirm if the courier is delivered & address is right.

7. Check if they provide support for online jobs

Its not a surprise if you find some contact number on the website. They provide this to increase their sells. They know, if people see the contact numbers, they trust the website.
There is no big deal to mention a phone number on the site. They provide this to handle enquiry & not ‘after sales support’.
So you need to get sure that, they will provide support after paying them for online jobs.
So how can you be sure before paying money?
Its simple, just note down their phone numbers & call them. Try to pretend yourself as an existing customer ask the question like, “I received their package/kit & trying to understand but not getting anything”.
Ask for guidance & explanation on “how to work” on phone. And I am sure, they will not.
I tried this with 1-2 websites & I got the answer that send your query to the email ID. And it takes around 2-3 days to get the useless reply.

Conclusion

I am sure, if a website fulfills all the above 7 points, then they are a genuine website & you will learn something from their package or whatever.
But if the website does not satisfy 1 or more points, then the chances of ite being fake are more. Beware of the scam run by these online jobs provider!
Wednesday, December 9, 2015
IF YOU DON’T KNOW WHERE YOU ARE, A MAP WON’T HELP - THE CAPABILITY MATURITY MODEL

IF YOU DON’T KNOW WHERE YOU ARE, A MAP WON’T HELP - THE CAPABILITY MATURITY MODEL

http://ideastartup9.blogspot.jp/
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IN CONTEXT FOCUSBusiness processes KEY DATES1899 US engineer and management consultant Henry Gantt develops the Gantt chart to illustrate a project schedule. 1970s Data-flow diagrams are developed to allow structured analysis of how data moves from one process to another. 1979 Philip B. Crosby develops a quality-management maturity grid in his book Quality is Free. 1988 The Capability Maturity Model (CMM) is described by Watts S. Humphrey in an article published in the journal IEEE Software. 2003 In Business Process Management is a Team Sport, Andrew Spanyi claims that strategy should drive business process design, which, in turn, should drive organizational design. Business processes are a series of actions taken to achieve an outcome. The objective might be to produce a product, to pay an invoice, or to serve a customer, for example. Adam Smith was one of the first people to describe business processes, when he dissected the many manufacturing processes used in an 18th-century pin factory. From describing the different actions, he developed the idea of division of labor, where work can be divided into a set of simple tasks performed by specialized workers, in sequence. Continuous improvement The sequence of steps in a process can often be visualized as a flow chart. As Watts Humphrey, inventor of the capability maturity model (CMM), pointed out, it is always “good to know where you are” in the process. Humphrey developed the idea that continuous process improvement is based on many small evolutionary steps, rather than large, revolutionary innovations. His CMM provides a framework for organizing these evolutionary steps into five levels of development, each of which prepares the way for the next. The CMM was developed Adam Smith observed workers making pins in a pin factory and realized that if the process were split into separate, specialized steps, productivity would increase by 240 to 4,800 times. See also: Keep evolving business practice 48–51 ■ Reinventing and adapting 52–57 ■ Simplify processes 296–99 ■ Kaizen 302–09 ■ Critical path analysis 328–29 ■ Benchmarking 330–31WORKING WITH A VISIONwith funding from the US Air Force, and was used as a model for the military to evaluate software subcontractors. The model’s original goal was to improve software-development processes, but it is now applied as a general model of the maturity of processes. It is often used in evaluating IT service management, for example, or more widely across organizational systems. The CMM describes five levels of increasing maturity through which an organization or team manages its processes: in the first level, work is conducted in a chaotic and illdefined way; in the second level, processes are put in place and adhered to with some discipline, and previous successes can be repeated; in the third level, processes are defined, standardized, and can be proactively implemented; in the fourth level, they are managed and monitored; and in the fifth level, they undergo regular improvement through monitoring and feedback. Comparing industries The CMM can be used to compare different organizations in similar industries. For example, two companies could be compared on the basis of their softwaredevelopment processes. Increasingly, IT projects, which involve complex software development and new system implementation, can impact a company’s operation and profitability, as they affect all of the company’s departments. The strength of CMM is its effective measurement of the standardization of an organization’s processes. This is why the model moved from being used to assess software development, to applications in project management, risk management, personnel management, and systems engineering. It provides a starting point for managers looking to improve a company’s processes and a framework for prioritizing actions. It also offers a way of defining what “improvement” might really mean.BSc and MSc in physics before completing an MBA in manufacturing at the University of Chicago Graduate School of Business. After graduating, he joined the Software Engineering Institute (SEI) at Carnegie Mellon University, Pennsylvania, where he founded the Software Process Program, which focused on understanding and managing the software engineering process. 
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This work resulted in the development of the Capability Maturity Model (CMM), for which he is best known, and inspired the subsequent development of the Personal Software Process (PSP) and the Team Software Process (TSP), which was later adopted by IT companies Adobe, Intuit, and Oracle. Humphrey was awarded a National Medal of Technology in 2003 for his work in software engineering. With his wife, Barbara, he had seven children, and died at his home in Florida on October 28, 2010, at 83. Key works 1995 A Discipline for Software Engineering 1999 Introduction to the Team Software Process 2005 PSP, A Self-Improvement Process for Software Engineers


■ Watts S. Humphrey Software engineer Watts S. Humphrey, known as the “father of software quality,” was born in 1927 in Michigan, US. He credited his father with his approach to problem solving. After high school, where he struggled with dyslexia, he joined the US Navy to serve during World War II. Humphrey then studied for a
Sunday, September 13, 2015
Synergy and other lies

Synergy and other lies

in context foc us Mergers and takeovers Key Dates 1890–1905 The first “takeover wave” occurs in the US and Europe, triggered by an economic depression and new legislation. 1960s Abraham Maslow applies the idea of “synergy” to the way that employees in organizations work together. 2001 US companies AOL and Time Warner merge in a deal worth $182 billion. It does not work out, and in 2009 the companies become separate entities. 2007 In the US alone, 144 takeover deals worth more than $1 billion take place. 2009 Only 35 takeover deals worth more than $1 billion take place in the US . Companies have to grow in order to survive. One way to make an organization bigger is to buy (acquire) another and make it part of the original company. Alternatively, two businesses can agree to merge, forming another organization with an entirely new identity. The purpose of an acquisition or merger is often to increase shareholder value beyond the sum of the two companies. These benefits are known as “synergy”; the concept being that one plus one equals three. The reasons for two businesses joining together might seem compelling. The new, combined company increases sales, market share, and revenue. It should also be a more efficient operation. Bigger companies also enjoy economies of scale: overhead costs are shared and money can be saved from increased buying power. Fixed costs can also be reduced because the combined business needs less staff in functions such as finance, human resources, and marketing, than the two separate entities. Companies’ also buy businesses to acquire new technology, reach new markets, or increase distribution. Corporate divorce In practice, takeovers and mergers are rarely marriages made in heaven, a fact underlined by Harold Geneen in the books he co-authored in 1997 and 1999 on the pretence of synergy. Mergers can fail to deliver the value promised, with one plus one often equaling less than two. There are many reasons for failure. Hidden Synergy is the additional value that is created when two business units are joined. A holy grail in business circles, academics Campbell and Goold concluded that “synergy initiatives often fall short of management’s expectations”.
problems might be discovered after the deal is done because of the limitations on sharing commercially sensitive information prior to common ownership. The focus at the time of the deal is often on the event of joining together rather than planning what will happen next. Effective integration requires quick, courageous decision making so that time and momentum are not lost. However, the most common reason for failure is that the two organizations have different approaches and lack synergy. In 1998, German car producer Daimler-Benz bought US automotive business Chrysler for $38 billion. The logic seemed obvious: create a trans-Atlantic powerhouse that would dominate motor markets. The new company, DaimlerChrysler, was dubbed a “merger of equals.” But the reality was a classic culture clash. Daimler was a formal, hierarchical organization, while Chrysler favored a more team-oriented approach. Chrysler operated in a market where low price and catchy design were important; high-end Daimler was focused on quality and luxury. Chrysler executives felt undermined in the new alliance because Daimler tried to dictate the terms on which the new business should work and to place its people in key positions. The result was a costly corporate divorce with Daimler-Benz selling Chrysler to a private-equity firm for a mere $7 billion in 2007.


Harold Geneen Harold Geneen was born in Dorset, UK, in 1910, but his parents emigrated soon after his birth and he was raised in the US. He studied accounting at NYU (New York University) and went on to become a highly successful businessman in the US. He is best known as the father of the conglomerate concept, where a large corporation is created from seemingly unrelated businesses. In 1959 he became president and CEO of International Telephone and Telegraph Corporation (ITT), and grew the company from a medium-sized business to a multinational conglomerate. His 18-year tenure included 350 acquisitions and mergers in more than 80 different countries, including Sheraton Hotels in the US, and telecommunications companies in Europe and Brazil. Despite his success and wealth, he was known for his no-nonsense values and plain talking. He died in 1997. Key works 1997 The Synergy Myth (with Brent Bowers) 1999 Synergy and Other Lies (with Brent Bowers)
Friday, September 11, 2015
THE ESSENCE OF STRATEGY IS CHOOSING WHAT NOT TO DO

THE ESSENCE OF STRATEGY IS CHOOSING WHAT NOT TO DO

IN CONTEXT FOCUS Strategic thinking KEY DATES 1960s Strategic planning grows in popularity, and is enthusiastically adopted in the new field of management consultancy. 1962 Alfred Chandler’s Strategy and Structure sets out a model in which a company’s structure matches its strategy, not vice versa. 1985 Michael Porter’s Competitive Advantage redefines business thinking on competition, repopularizing the ailing field of strategic thinking in the process. 1990s/2000s Strategy is increasingly practiced as a continuous process by all in a business, not just by those at boardroom level. Nokia says that strategy should be “a daily part of a manager’s activity.” Strategy is a concept with its roots in military history, when army generals planned campaigns of war. Today, it is an overused and often misunderstood word in business theory. Put simply, strategy is the way a business gets from where it is to where it wants to be; it involves identifying the choices that must be made to overcome the obstacles that lie in the way. Often, choosing what not to do is as important as what to do. Strategy guru Michael Porter first drew attention to this in 1985, then specifically explored it in his 1996 article “What is Strategy?” For businesses, it is just as possible to follow bad strategy as good. Richard Rumelt’s Good Strategy/Bad Strategy (2012) explained that good strategy should emerge out of an analysis of the company itself, and its goals. SWOT analysis (strengths, weaknesses, opportunities, and threats) is one of the most popular systems for such audits, and to be effective it should be conducted among middle managers and people across the organization, not just those at the top. Good strategy requires analysis of the competition and any threats to the organization, and may involve painful decisions. It should result in a strategy based on clear goals that capitalizes on the company’s strengths and can be flexible if external factors change. Bad strategy often goes hand in hand with setting a simplistic goal or vision. Leaders in organizations may use powerful rhetoric about “winning” to motivate staff, but empty goals are easy to set— formulating the strategy required to achieve them is much more difficult. Executives bent on pursuing a bad strategy will ignore problems and be blinded to the choices available. Rather than making tough decisions, they will try to accommodate a multitude of conflicting demands and interests to stick to a plan. Managers in these circumstances risk following old ideas and paths that no longer work, rather than leading with new ones. Film is dead The demise of Kodak is a prime example of a company following bad strategy. Founded in 1890, by the 1970s Kodak was the US market leader in the photographic sector, with nearly 90 percent of the film and camera market. It was rated as one of the world’s top brands. In 1975 Kodak engineers invented the digital camera, but the senior management of Kodak ignored the opportunity presented by this new technology. They believed they were in the chemistry-based film business and were not prepared to “kill the golden goose.” Executives failed to see that digital photography would make film redundant and challenge their near-monopoly business. Japanese company Fujifilm, however, recognized the threat and diversified successfully. Kodak began its shift to digital cameras too late, as smartphones and tablets replaced cameras. The senior executives’ inability to make the tough decision to change course led to the company being declared bankrupt in 2012. ■
Saturday, August 29, 2015
BE FIRST OR BE BETTER GAINING AN EDGE

BE FIRST OR BE BETTER GAINING AN EDGE

IN CONTEXT FOCUS


Competitive advantage KEY DATES1988 US scholars David Montgomery and Marvin Lieberman write “First-Mover Advantage,” outlining the competitive advantages of being first to market. 1995 Amazon.com launches, the first of a new breed of online retailers. 1997–2000 Adopting the “be first” mantra, dot-com companies race to market; many fail when the promised advantages do not materialize. 1998 Montgomery and Lieberman question their original findings in their paper, “First-Mover (Dis)Advantages.” 2001 Amazon.com returns its first profit. The company’s first-mover advantages were significant, but a good business model mattered more.
business to enter the online retail market, establishing its brand name, and building a loyal customer base. Google, by contrast, was by no means first. When Google launched in 1998, the market was already dominated by several large players; Google’s edge came from offering a superior product—not only was it faster, but it produced more accurate search results than any of its competitors. Getting into a market first has significant advantages, but there are also benefits to being second. The key is that in order to gain a If you need to buy a book online, which website do you visit first? If you want to research the author of the book, which search engine do you use? The answers, most probably, are Amazon and Google, respectively. Such is the dominance of these two Internet giants that their names define their respective markets. Both organizations have a significant edge in the markets they lead, but they achieved that dominance by different means. Amazon, launched in 1995, gained its advantage by being the first competitive edge in the market, a business needs either to be first, or it needs to be better. Market pioneers The benefits of being first into a market are known as “first-mover advantage,” a term popularized in 1988 by Stanford Business School professor David Montgomery and his co-author, Marvin Lieberman. Although introduced a decade previously, Montgomery and Lieberman’s idea took particular hold during the dot-com bubble between 1997 and 2000. Spurred on by the example of Amazon, businesses spent millions pitching themselves headlong into new online markets. Conventional wisdom was that being first ensured that the company’s brand name became synonymous with that segment, and that early market dominance would create barriers to entry for subsequent competition. In the end, however, overspending, overhype, and overreaching into markets where little demand existed was the downfall of many fledgling dot-coms. With notable exceptions, businesses found that promised returns were not being realized and funds quickly ran short—and for many of these first-movers, failure followed. First-mover advantage Being first out of the block undoubtedly has its advantages, and in the case of the dot-coms, those advantages were exaggerated to the extreme. First-movers often enjoy premium prices, capture significant market share, and have a brand name strongly linked to the market itself. First-movers also have more time than later entrants to perfect processes and systems, and to accumulate market knowledge. They can also secure advantageous physical locations (a prime location on a main street of a city, for example), secure the employment of talented staff, or Amazon.com was a first-mover in the online retail market. It has dominated the industry since its launch in 1995, creating strong brand recognition and a loyal customer base. access beneficial terms with key suppliers (who may also be eager to enter the new market). Additionally, first-movers may be able to build switching costs into their product, making it expensive or inconvenient for customers to switch to a rival offering once an initial purchase has been made. Gillette, for example, having invented the safety razor in 1901, has consistently leveraged its first-mover advantage to create new products, such as a “shaving system” that combines cheap handles with expensive razor blades. Market strategies In the case of Amazon.com, firstmover advantage consisted of a combination of factors. In the newly emerging e-commerce market, customers were eager to try online purchasing, and Amazon was well placed to exploit this growing curiosity. Books represented a small and safe initial purchase, and Amazon’s simple web design made buying easy and enjoyable. Early sales enabled the organization to adapt and perfect its systems, and to adjust its website to match customer needs—adding, for example, its OneClick ordering system to enable purchases without entering payment details. Amazon was also able to build distribution systems that ensured quick and reliable delivery of its products. Although competitors could replicate these systems, customers already trusted Amazon, and the brand loyalty ❯❯ 



THE SECRET OF BUSINESS IS TO KNOW SOMETHING THAT NOBODY ELSE KNOWS STAND OUT IN THE MARKET

THE SECRET OF BUSINESS IS TO KNOW SOMETHING THAT NOBODY ELSE KNOWS STAND OUT IN THE MARKET



IN CONTEXT FOCUSDifferentiation KEY DATES 1933 US economist Edward Chamberlin’s Theory of Monopolistic Competition describes differentiation as a means for a company to charge more for its products or services by distinguishing them from the competition. 1940s The concept of the Unique Selling Proposition (USP) is put forward by Rosser Reeves, advertising executive at New York advertising agency Ted Bates, Inc. 2003 US marketing professor Philip Kotler outlines the need for USPs to be superseded by Emotional Selling Propositions (ESPs) in his book Marketing Insights from A to Z.

Few businesses enjoy the privileges of monopoly power in their chosen fields of operation. Most markets are increasingly global, increasingly crowded and, therefore, increasingly competitive. In order to achieve commercial success companies need to do something different—as Greek shipping magnate Aristotle Onassis recommended, they need to “know something that nobody else knows” in order to stand out from the competition. Unique Selling Propositions Faced with competition, the strategy for most companies is to differentiate. This involves offering  customers something that the competition cannot or does not offer—a Unique Selling Proposition (USP). The concept was developed by US advertising executive Rosser Reeves in the 1940s to represent the key point of dramatic difference that makes a product salable at a price higher than rival products. Tangible USPs are hard to acquire and hard to copy, which is what makes them unique. Companies must distinguish their product or service from the competition at every stage of production—from raw material extraction to after-sales service. Products such as Nespresso coffeemakers and Crocs footwear, and service providers such as majority Asian-owned hotel group Tune Hotels, are all heavily differentiated, each having a strong USP. The primary benefit of uniqueness, however it is achieved, is greater customer loyalty and increased flexibility in pricing. Differentiation guards products and services from low-priced competition; it justifies higher prices and protects profitability; and it can give businesses the competitive advantage needed to stand out in the market. The challenge of difference By definition, not all products can be unique. Differentiation is costly, time consuming, and difficult to achieve, and functional differences are quickly copied—“me-too” strategies are commonplace. Touchscreen technology was introduced to the cell-phone market as a point of differentiation for Apple’s iPhone, but is now a feature of most smartphones. Differentiation often does not remain a point of difference for long. With functional uniqueness being so elusive, marketing guru Philip Kotler suggested that companies focus instead on an Emotional Selling Proposition (ESP). In other words, that the task of marketing is to generate an emotional connection to the brand that is so strong that customers perceive difference from the competition. For example, while the design and functionality of Nike and Adidas sneakers are distinct, the differences are so small that they amount to only a marginal difference in performance. The products’ differences are, however, magnified in the perception of the consumer through marketing and the power of branding—uniqueness is achieved through brand imagery, promotion, and sponsorship. Apple achieved differentiation in the fledgling digital-music market by combining easy-to-use software ❯❯


with well-designed hardware and a user interface that integrated the two. The product itself—the iPod portable music device—was functionally little different than existing MP3 players, but combined with the iTunes software to create a unique customer experience. This experience is Apple’s ESP, which the company promoted with its “Think Different” advertising campaign. Standing out One company that has achieved uniqueness is the British fashion label Superdry, which has grown to include more than 300 stores in Europe, Asia, North and South America, and South Africa. Drawing a novel, international influence from Japanese graphics and vintage Americana, combined with the values of British tailoring, Superdry quickly established a strong position in the hypercompetitive clothing market from its launch in 2004. The business started life in university towns across the UK, a positioning that gave the brand a youthful appeal. Despite limited advertising and abstaining from celebrity endorsements, Superdry’s popularity rapidly grew. The company’s distinctive look quickly caught the eye of celebrities (a jacket worn by soccer player David Beckham became one of its best-selling products, and Beckham himself became an unoffical talisman of the brand), providing free publicity. Superdry focused on offering clothing with a fashionably tailored fit and attention to detail (even down to garment stitching). Worn by offduty office workers, students, sports stars, and celebrities alike, the brand was able to appeal to a broad customer base. Most differentiation strategies involve targeting one segment of the market; Superdry chose to target them all. The brand’s unique blend of fashion with ease of wear, comfort with style, and the presence of mysterious but meaningless Japanese writing, has proved a difficult mix for competitors to replicate. Maintaining uniqueness As many companies discover, popularity can be the enemy of difference. While Superdry clothing has become increasingly ubiquitous around the world, its uniqueness and difference have declined. The challenge for Superdry, like all companies, is to protect its uniqueness while also expanding its reach—to stand out from the crowd, while welcoming those crowds into its stores. Differentiation can occur at any point in the value chain. Standing out is not limited to products or services—it can occur in any number of internal processes that translate into an improved customer experience. Swedish furniture retailer IKEA, for example, differentiates itself not only through contemporary design and low prices, but through the entire customer retail experience. The company’s low prices are achieved, in part, through its selfpicking and self-assembly retail model—the customer experience involves picking products from the company’s vast showrooms and warehouses and then, once they have transported the goods home, assembling the furniture. Even the way IKEA “guides” shoppers on a one-way, defined route through its showrooms is unique. While this tactic encourages spontaneous purchases, it also helps to reinforce IKEA’s points of difference—customers are exposed to predesigned rooms and furniture layouts that emphasize the brand’s contemporary style. Price is kept low since fewer store assistants are required to direct customers around the store. Different but the same Paradoxically, familiarity can also be a source of differentiation. The entire McDonald’s organization revolves around providing almost identical fast-food products, with the same service, in identical Fashion label Superdry is a young company that has successfully carved out market share. Rapid growth since its founding in 2004 is thanks in part to a highly differentiated, faux-vintage look. Differentiation is not so important when a company’s products match the desires of the customer and do not overlap with the competition. Although the risks might be high, differentiation is most effective when your products are popular, but overlap with those of the competition. restaurants the world over. This familiarity differentiates McDonald’s from unknown local offerings, and from other global competitors who cannot maintain the same degree of consistency across their operating territories. In a market in which rival companies promote the uniqueness of their products in ever-louder and more complex ways, consumers have become increasingly savvy when it comes to distinguishing reality from rhetoric. While differences do not have to be tangible—the evidence shows that an Emotional Selling Proposition (ESP) is often enough—the challenge for businesses is that points of differentiation do have to be genuine and believable. Developing an emotional connection with the customer requires that the differentiation is understood and consistently delivered throughout the organization. Well-defined core principles that celebrate a company’s uniqueness should inform the customer experience at every point of contact—difference has to be believable, and it is only believable if it is dependable. Sustaining differentiation Once established, uniqueness— whether functional or emotional— requires nurturing and protecting. Standing out from the crowd is a constant battle that is fought in the hearts and minds of the company’s staff, as well as customers. As legal clashes between rivals—such as Apple and Samsung—demonstrate, uniqueness might also have to be contested in the courtroom. Every industry has leaders and followers—what separates them is that the leaders are usually those with the most defensible points of differentiation. Whether in features and functionality, brand image, service, process, speed, or convenience, uniqueness must be established and communicated for a company and its offerings to stand out in the market. The key to longlasting success is making that differentiation sustainable. ■

Rosser Reeves

US advertising executive Rosser Reeves (1910–84) held the maxim that an advertisement should show off the value of a product, not the cleverness of the copywriter. After a brief spell at the University of Virginia, from where he was expelled for drunken misconduct, Reeves worked as a journalist and then copywriter before joining advertising agency Ted Bates, Inc. in New York in 1940. His exceptional talent saw him rise to become Chairman of the company in 1955. He is credited with redefining television advertising and, among many others, for formulating slogans such as “It melts in your mouth, not in your hand” for chocolate confectionary brand M&Ms. Reeves’s Unique Selling Proposition, first outlined in the 1940s, was described in his 1961 book Reality of Advertising. Such was his impact on the advertising industry that his legacy lives on long after his death—his pioneering style of leadership was the inspiration for the lead character in US television series Mad Men.
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