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2015 TOCICO International Conference

Transforming Industries Track

Patrick Hoefsmit
The Transformation of a Trademark Service Provider into a Fast Growing Dynamic
Processing Machine
September 8, 2015

Merk-Echt is a small trademark agency, 18 people, providing legal advice for Trademarks and designs in the Benelux. Founded in 1999 servicing 8000 clients with over 13.000 trademark and design registrations in more then a hundred countries.

What needed to be changed?

  • The company’s growth was stalled after the economic downturn to the extend that Merk-Echt was barely surviving.
  • Marketing cost for new prospects where going through the roof.
  • A trademark application was a paper pushing process that took too much time to handle and too much time to learn.

The intended future state

An ever-flourishing company, that is attractive to the best intellectual property lawyers and is providing the best services in protecting Trademarks and Designs for original, innovative entrepreneurs.

How was the transformation accomplished?

  • Create a new way to attract enough leads/prospects.
    • We used to send paper mailings to S&M businesses to warn them for copy-cats and as a first step protect their company-, product- and/or service-name with a Trademark. The results of these mailings became so minimal that the price per new prospect was eating more then half of the throughput of a trademark registration. On the other end using Google Adwords to get enough leads was not cheap either and all our competitors where fishing in that same (red) ocean. It was apparent that we needed a good ROI measurement for each marketing campaign to know what the hell we where doing and knowing that the market was big enough. We guessed what a prospect would be looking for in a Trademark agency and build our website accordingly. Adwords with ROI measurements provided the security that we could attract more prospects then we could handle.
  • Build a measurement to monitor the (movement of the) internal constraint.
    • Now the constraint was internal we needed to increase the efficiency of our process to turn a lead into a paying customer. There are several steps in that process and we started using buffers and measure the process time to know two things: priority of work and where is our constraint now (and where will it probably be next).
    • Also we assumed that the response time on a request from a lead was inversely proportional to the chances of turning the lead into a customer. Therefore we are constantly shortening the response time from days to currently hours.
  • Create a system that is not based on automating pushing paper, but gives everybody in the chain a clear priority on his or her task load.
    • There is already enough said in the TOC community on transforming a bunch of paper pushers that work in batches and decide all on their own priorities to a synchronized team, so I will not try to add to that. The only remark I would like to make is that the design of our automation was that it should be the only tool people wanted to use and that it keeps track of the progress of tasks in the background. It should never ask what you have done on a case but you would handle the case with the system, therefore the system could register what has been done and what the status is of every case.
  • Automate the constraining processes.
    • With our weekly (lunch) meeting we discussed with the team what needed to be improved next. We kept track of the workload in the different stages to have a good indication where the constraint currently is residing.
  • Grow in a controlled way.
    • To be attractive for highly motivated people that want to work as IP lawyer or commercial person, we need to grow and become the best performer both in IP services and in Internet marketing. The market is not the constraint but with an average payment time of our clients of 55 days, before you know it cash becomes the constraint. Banks in the Netherlands are extremely cautious in lending money so we needed a breakthrough. We decided to ask payment upfront, unlike our competitors but not uncommon in legal services. This helped. The other growth constraint we encountered is training our people to become senior IP lawyers. By dividing the processes in smaller steps we now train people to learn the process step by step. This way they become productive in a matter of weeks instead of a year.

Lessons learned.

  • Personal:
    • The transition from advisor to owner and leader of a business
      • My role in this company was informal investor from the start up till the end of 2013 when I managed to acquire 100% of the shares. Why did I stop as a consultant, mainly working in TOC for Health implementations? The speed and consistency of the decision making process in that environment is too unhealthy for me. In my new role I started somewhat distant, but soon realized there wasn’t much that didn’t needed to be changed. I’m pretty good in developing a vision and convincing people, but I’m hopeless in micro management. So I assembled some bright people around me to dive into the details, focused on what can be done with TOC to improve the interactions among my people and started enjoying an incredible speed in changes, better teamwork and incredible motivation.
  • Successes:
    • Steady growth of 25%
    • Growth of T > growth of OE
    • Highly motivated team
    • Clear career path for personnel
  • Challenges:
    • Building a decisive competitive edge (and the capabilities to capitalize on it, on big enough markets without exhausting the Company's resources and without taking real risks.)
      • It is still a long way but I have a direction of a solution of building a decisive competitive edge: Become so good in catching copy cats, claiming and collecting their illegally obtained profits, that only a percentage of these claims if sufficient to pay for our services. This way innovative entrepreneurs with original Trademarks and designs will not have to pay us but get money through us from the copy cats we catch for them.
    • Average performers
      • Do not compromise on very motivated high potentials and/or keep experienced people on board.
    • Special treatment for most demanding clients.
      • With personalized services it is difficult to convince our lawyers to work in a standardized way for their bigger clients. This way there are always cases and tasks that are not handled with the system and therefore not tracked but also unknown in the work load, messing up priorities and locating the constraint. Constantly improving the system to the extend that it also satisfies the most demanding clients (read our lawyers) is the only way I know to solve this.
    • Centralized procedures for the ISO 9001 standards.
      • I would love to elaborate on this subject but will not say more then that we currently use a kind of Wikipedia for our procedures and ISO 9001 manuals. You can chat on every subject and people contribute out of their own to improve the instruction manual.
    • Measure personal performance or only company wide (team) performance.
      • This is still an unsolved conflict and maybe should not be discussed by me.
  • Obstacles:
    • Getting a loan from a bank for a MBO.
      • Boring subject, but it was a real obstacle.
    • Slow or never getting paid by some clients.
      • Stop spending time and money on people that do not value our services enough to pay us, unless you feel so frustrated or ripped off that you are willing to go all the way.
    • Changing too many things in a short time.
      • By participation of the whole team in deciding what to change next this obstacle becomes smaller. Nevertheless we used MBTI to make it clear to each other that some people like to work different, structured with planning and clear instructions or more like ‘John Wayne’. This added to value each other’s remarks and approaches to new initiatives.
    • Measurements
      • Again there is already enough said in the TOC community about this subject so I will only show our current dashboards.

PATRICK HOEFSMIT participated in the conception and birth of the TOC Marketing and Sales Application. IN the 90’s he was the owner of a printing company in the Netherlands and Dr. Eli Goldratt describes his success story in, "It’s Not Luck”. He repeated the process in an office supply company that he had bought. Patrick has experienced TOC in the boardroom side, experienced the pain and struggle that come with visionary leadership firsthand, and enjoyed the rewards. Patrick Hoefsmit became the personal friend of Eli Goldratt and was trained and coached by him for more than 20 years.

In 2000 Patrick was introduced to Alex Knight by Eli to help him start up Goldratt Group Consulting Ltd. As regional director for Europe, Israel ad Brazil, he developed the market, recruited consultants and successfully engaged Goldratt Consulting in numerous long-term assignments.

In 200t Patrick left Goldratt Consulting and joined forces with Alex Knight (QFI). HE managed one of the bigger TOC implementations I the Service Industry for the Dutch #1 insurance company. HE also was involved in specific TOC for Health implementations in Hospitals in the Netherlands.

In 2013 Patrick stopped his consulting career and acquired his own company that he is currently managing with enormous energy and joy.

Patrick has served as a TOCICO Board member and is a regular speaker at international conferences.

Patrick is a certified TOC implementer in Supply Chain Logistics, Project Management, and Finance & Measures. TOC Thinking Processes and Business Strategy.

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