In the past, I opened my presentations on offshore manufacturing and sourcing with a slide "The Global Economy is coming…"  Senseless.  I corrected myself by stating the obvious: the Global Economy is here, but the endless possibilities it presents us are only just becoming apparent.  We are limited only by our creativity and willingness to try new ideas.

Outsourcing is nothing new.  But now, more and more people, not just companies, are trying outsourcing on for size by sending a variety of tasks off to outsourcing firms and contractors across the globe.  I first came across this concept at the individual level in Tim Ferriss’ book, 4-Hour Work Week.  An intriguing book that offers a slew of thought-provoking tips on how to save time and energy from the author’s experience in outsourcing much of his life. 

And it’s not just data entry, graphic design, web design, phone receptionist tasks, product development and manufacturing sourcing/management (ahem…) and aspects that businesses either like to or ought to delegate to someone better suited for the job.  The idea can be extended to booking travel plans, haircut appointments, buying movie tickets, sending flowers to your wife, and even…dating?

I’ve tried this with a few business and personal tasks myself.  I found a few small firms on Elance in India as well as the U.S.  Firms and contractors range from $30/hour to $3/hour.  More often than not, you get what you pay for.  But, as is often the case with manufacturing, the nature of the Global Economy is that some tasks  are better completed by a hard-working person in another country, for a reduced cost.  After qualifying the firms for capabilities like the ability to write English, follow instructions, and checking references, I chose a small firm in India and sent off some relatively simple tasks that I preferred to have someone else spend their time on–data entry and the like. 

After seeing their competence, I decided to see what they were capable of.  I had the firm research the internet for specific kinds of companies and take down their contact info and a company description in an excel spreadsheet.  Once I approved the list, I had them email out a message, drafted by me, to these companies.  Half of the companies responded and I realized I had just completed hours of marketing research, data entry, and a small email marketing campaign in a matter of 20 minutes (the time it took me to draft the instructions and message for the Indian firm), for approximately $20-$30.

Just like offshore manufacturing, spending the time upfront to find competent groups and people you can outsource tasks to is a must.  But, once this is developed, the investment drops near to zero.  Keep the tasks you’re good at and outsource the rest.  Big companies, small companies, and now individuals, are learning how to do this and reaping the benefits.

For more on how to accomplish this effectively, I recommend starting here:

And this was just too good not to post:

Report: Many U.S. Parents Outsourcing Child Care Overseas

Kim Lavine, self-proclaimed Mommy Millionaire, has put out a book detailing her adventure in taking a crazy kitchen table idea into a company valued at $10 million. 

I’ll admit, I haven’t read the book from cover to cover yet.  But when I saw it in Barnes & Noble last weekend, I did sit down and read excerpts for about 30 minutes.  I was very impressed.  In looking at the contents of the book and the way Kim tells her story,
I can tell you that this seems to be a very detailed, no bs, road map
to building a company around a consumer product.

It’s very difficult for anyone, not just mom’s, to learn about the product commercialization and business start-up process.  People often only get the same dry information over and over.  It’s a rare occasion that a successful person turns around and spills the beans the way Kim Lavine has.  I would say the only other person out there I’ve seen do this is Barbara Carey.  Just take a look at these interviews here and here, if you haven’t yet.

Some notable topics in the book:

• A short section tackles sourcing in China.  She writes that doing this is not a matter of "if", but "when".  It seems she had a chance encounter with someone, dubbed "Chinese MBA" in the book, and eventually teamed up with this person to serve as her connection and manager of her manufacturing in China. 
• She discusses dealing with cash flow and a consistent lack thereof.   
• Finally, one quickly gets a sense for the persistence and work ethic that Kim used to make her dream a reality.   So many are convinced it’s all about the idea.  Well…it’s the idea + blood, sweat, and getting over the tears.

I can’t say that I agree with everything she espouses in the book, but I can say that if you are interested, or are currently trying to launch something from your kitchen table, this book is worth checking out.

   

Recently, at a seminar at Stanford University, I had the pleasure of listening to a presentation by Nick and Laura Udall about how they developed their product, the ZUCA, and got it to market.  Of course, I couldn’t help but approach them afterwards and remark that they have the same last name as I do.  I haven’t run into another Udall outside of my family in California.  As it turns out, we’re probably connected from many hundreds of years ago in England. 

But to be honest, far more fascinating for me, is their story of how, as a husband and wife team with three kids, they started from scratch with an idea for a product and built it into a company that now produces what is going to become a world class branded product.  The ZUCA.  You’ve got to see it and experience it to really understand all that the product is and does.   As their first venture into consumer products, Nick and Laura Udall have put in all the hard work, taken the chances, learned from the challenges, and created a product that is truly unique and a company that really stands for something. They graciously sat with me and chatted about it all in their office in Campbell, California.  I’ve broken up the interview into a few parts.  In this first section, Laura and Nick describe how they came up with the idea for the product, the power behind a meaningful brand, and begin to get into the thinking behind the features of the product. 

AU: ZUCA.  What is it?

ZUCA (Nick):  We’re a consumer products manufacturing and distribution company that produces a product that is an all-purpose gear carrier with an integrated seat.  It’s hard to talk to because usually when you explain something, you compare it to something else–"it’s similar to this".  We could try by saying, "well, it’s kind of like an all-purpose carry-on bag, configured so that you can sit on it, and had a protective frame that kept all your things inside it safe…", and pretty soon you are several paragraphs down in the description and people are still shaking their heads.  We’ve tried all kinds of elevator pitches, but our product is so unique that none of them do it justice.

AU: Right.  So what do you do?

ZUCA (Nick):  So, people just need to see and experience it for themselves to really understand what the concept is.  We take them to tradeshows…in fact I was just at a tradeshow for manufacturers the other day, and someone walked by, saw it and came right over to me to ask me about it.  We went through the dialogue and he says "so, you can sit on this?  I don’t think so!"  And he looked like a tool and die maker of some sort.  I said "Well, what do you weigh?"  He replied "240lbs".  I asked him to not just sit down on it, but sit down on it with a lot of force.  He did.  And, he looked around with a look of surprise and satisfaction on his face.  So until people really experience it, they don’t know everything that it can really do.

AU:  So it provides a solution for people.

ZUCA (Laura):  Well, my vision started out as "Let’s lighten the load of the world one bag at a time".  I originally got the idea when I watched my daughter, Rachel (who is now a fantastic professional Jazz singer), develop some back problems when she was in elementary school because she would carry so many books around in her backpack.  And that’s where we started.  We introduced it on the market as a bookbag.  But our customers came back to us and started saying "wait a minute, I can do this with it, or that with it…".  So it has blossomed from there into the most versatile bag out there on the market.  Now we’re moving into the luggage and travel space, and other spaces. 

AU:  So the market is leading you down the path of further product development and line extensions?

ZUCA (Laura):  It has.  The market has come to us which is really interesting.  It’s great, because there are so many possibilities and so much potential.  But it is also a challenge, because we’re a small company, so we need to really hunker down, decide, and focus on which directions present the best opportunities and proactively work to realize them.  The other areas will still come–because our customers have become our best marketers–they are a tremendous asset to us because they tell other people about our product.  In fact, just carrying or rolling ZUCA bags around, people will stop you and ask you "where did you get that?", "what can it do?". 

AU:  I can say for myself, I’ve never seen anything like the ZUCA until I saw the ZUCA.

ZUCA (Nick):  One of the things we needed to do was build a brand.  In consumer products, you are either cheap or you’re branded.  And we didn’t want to be in the cheap market and in the big box market.  We wanted to build something that was substantial.  So we made our branding on the products large.  We made it recognizable and easy to remember.  And our customers tote the bag and brand around to help us spread the message. 

AU:  You chose a name that had no previous meaning, and you could give meaning to it.  If my espanol still serves me, Zuca doesn’t mean anything in Spanish. 

ZUCA (Laura):  We say that it stands for "Z Ultimate Carry-All".  Our core design principles all stem from functionality in the product.  We build something that starts with meeting needs of function, and from that comes design and fashion.  Because of this, we need to give extreme attention to detail and quality. We put the fun in function.  It’s always interesting to see people experience our product.  They become passionate about it.  They’ve helped us protect our brand and our name.  For example, a few weeks ago, we experienced our first incidence of someone violating our patent.

AU:  Wow.  Congratulations.  It’s as if you have graduated to the level of admiration through intellectual property theft!  (I’m joking of course)

ZUCA (Laura):  Interestingly, the violator was a woman from Utah who promotes a very wholesome image of her company.  They contacted me and wanted to do a custom insert based on their product with us. But basically, she just took our product and created a cheap knock-off.  So we’re putting an end to it.  But it was one of our customers who tipped us off and called us and told us that "someone is ripping you off at Costco".  The customer who called us was from Seattle, and she was so helpful.  She said, "I got ZUCA’s for everyone in my family.  My son has two and uses them for different functions.  I bought one for my Mom and she uses it for travel and her teaching job to haul all her supplies.  My sister, me…  We love your product and appreciate it’s quality and I was so angry when I saw the knock-off in Costco". 

AU:  So tell me about some of the features that make people such ardent supporters and users.
 

ZUCA (Laura):  Take this for example, it’s a great product for anyone who has health issues or is health compromised conscious, because it’s so easy to roll.  It doesn’t take a lot of strength to pull it even if it’s filled with heavy items.  They can sit on it when they get tired.  We’re working with a group that runs a camp for kids with cancer.  And not only will it be a fun bag for them, but they can store their stuff in it and sit down on it when their tired, etc.
 

AU:  Right.  In developing a product, it can be difficult sometimes to identify those latent needs that users may have–needs that they didn’t know they had, but when alerted to them, they are very happy to see a solution.  So for instance, the second set of wheels just up on the back of the bag, which allows for easy traveling up stairs.  On other bags, the bottom wheels become useless in this scenario and you have to lug your bag up the stairs.  You guys saw that, and designed in the extra wheels so the bag just glides up the stairs. 

ZUCA (Laura):  Right!  The engineering types see that and get it right away.  But many people ask us "why do you have another set of wheels like that?"  And then you tell them or they try it and we get "Ohhh, that’s great"!

More to come…

 

Great interview posted at Guy Kawasaki’s How to Change the World blog.  Guy interviewed Tim Berry, President of Palo Alto Software, creator of Business Plan Pro, and the blogger behind Planning, Startups, Stories.  The interview was a great reminder that the business plan is not just a formality in business, but a tool used to push our critical thinking in terms of how we are going to accomplish what we are setting out to do.   It’s not something you do at the beginning and leave alone.  Consistent revision for established businesses is just as important. 

The entire interview, including many of the posts from Berry’s blog, are worth reading.  I’ve noted a few key points from the interview that struck me and offer my humble observations as they relate to manufacturing products offshore and business in general:

• Planning isn’t about the document; it’s about controlling your destiny,
  running your business better, setting goals and tracking progress, and
  keeping your eyes on the horizon while not tripping over potholes in
  front of you.

AU:  I often witness, when we begin stretching a business’ or startup’s operations offshore, many companies get tripped up by the unforeseen challenges.  That’s because things come up that we’ve never even needed to think about when we do business in the States.  It’s key to keep the overall goal in mind, and realize that the path to get there will probably not follow as clearly as was envisioned beforehand.  Take it from Gary Erickson, it’s an adventure.      

• First, a plan should set priorities with the understanding that you
  can’t do everything. After all the buzzwords and analysis, strategy is
  focus. What can you do better than anyone else? What’s your core
  competence?

AU:  Strategy is often something that becomes sidelined when a company begins looking at all the details of getting their product manufactured offshore and shipped here.  There are a lot of details to account for.  Generally, it’s natural for us to want everything.  We want the lowest cost with the highest quality with the speediest delivery.  Chances are–you aren’t going to get all three.  There are always tradeoffs.  So decide what you need to support your overall strategy (e.g. lowest cost, most durable product, or quickest turnaround), and focus on getting that. 

• What’s most important with this order of execution (the order in which we go about constructing the plan) is to understand
  that it will never be sequential. In whichever order you do it, you
  will always be doubling back. I’ve done it in every conceivable order,
  but I’ve never done a plan from step one to step N. Fleshing out the
  second step will almost always bring up reasons to revise what you did
  in the first step, and the third step will make you rethink the first
  two.

AU:  How I wish when I finished something relating to the planning behind my company, I never had to return to it.  Given that I learn something new everyday, some things that I did yesterday are important enough that I go back and apply my new knowledge and rework them so that they help me more tomorrow.    

• The worst (mistake in a business plan) by far is focusing on the plan instead of planning. This
  generates the idea that you create a plan as a document, and the
  related misunderstanding that the plan is for somebody else. You don’t
  postpone life while you’re developing a plan; you’re always developing
  the plan. In the meantime, “Get going.” Here are some other common
  mistakes:

• Blue-sky blurry: lots of strategic thinking without any hard facts.
  Planning requires specifics: dates, deadlines, responsibility
  assignments.
• Trying to do everything. I use the rule of displacement: everything you do rules out something else.
• Thinking that being the lowest price option is important. It
  isn’t. The price and volume thing they talk about in economics classes
  is for 200-year-old lumps of coal, not your business. Use price as a
  statement of quality. Leave the low-price strategies for Walmart and
  Costco.

AU: It’s hard to balance the "get going" with the "let me stop and critically think about how I can plan and execute this in the manner to most effectively achieve our goals".  It’s not an "either/or"–it’s a "get going" and "step back and think critically".  You may not balance it perfectly–but a valid attempt will get you much farther than none at all.  Planning for both will help.