Finding New Strategic Opportunities

 Take yourself out of your business and explore the industry view

 We all suffer tunnel vision when it comes to running our businesses. Even worse, when it comes to finding time to do some true “blue oceans” strategic thinking.

Too often our thinking is constrained by looking at our world from our own perspective rather than that of the customers and the industry eco-system we exist in.

We all got a great reminder of this when Kodak got into major financial trouble in Jan 2012. How could such a giant with 1000+ patents in digital photography screw it up so bad.  My take, they failed to adapt the culture (attitude) of the business to the new value chain and eco-system that emerged into the new digital age.

Real Strategy

Strategy is most probably the most miss used word in business. Strategy is about understanding the lie of the land, understanding the geography you are about to do battle in, assessing the enemies strengths and weaknesses looking for gaps and opportunities to capture a market.  Its not about what to do every day operating your business – alah business planning and execution.

Mine your external value chain for opportunities

If you are looking for investment, market or channel partners the best place to start is looking at your customers and end users. Then map all of their suppliers, customers and their influencers out on a huge mind mapped value chain. Documenting suppliers, to suppliers, to customers and so on. By reviewing all the players on this map e.g. who holds the power of influence, who owns critical scarce resources and who is making the profit etc you will uncover a raft of possibilities.

Include in your thinking competitors as well, most NZ business shy away from conversations with their competitors let alone doing deals with them to collaborate in the global marketplace.

Look for market trends that will uncover future change in your industry

Take the time to look for current trends across your complete value chain so you can spot hot spots or market opportunities to take advantage of.

 Business Dominoes – Strategic Development Programme

If you are after some fresh thinking around how to handle some major strategic decisions for your business and avoid being blind-sided by some giant guerrillas in the market I would suggest attending the Business Dominoes Programme. It’s a 4 day intensive boot camp, where you will be armed with and use a variety of tools to aid you strategic thought processes, make decisions and chart a lower risk path to success.

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Free Entry to MyBizExpo:

The My Biz Expo is running from 14-16 October, ASB show grounds, Auckland.  Business Dominoes will be on stand 2023Register online now at www.mybizexpo.co.nz and save yourself the $20 entry fee.

 Free 1 hr Seminar at Biz Expo – Tuesday 16th  Oct – 1pm
Funding Business Growth  – Tools and strategies to build a scalable business
Presenter Business Dominoes – Mark Robotham

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7 Ways to Stop Wasting Time

Is your business focused on your Value Proposition?

How much of your business activity is focused around adding value to your clients – i.e delivering your value proposition. The base logic behind  Kaizen is removing waste, while optimising value to your clients.

Prior to commencing the valuable process of eliminating waste I suggest getting great clarity around your core value proposition and what target market you are taking on as well as your strategy to maximise it.

Kaizen or “Lean” has been popular in large business for some years now. Most of the evangelists like John Cook from Stainless Design in Waikato all come from the larger end of SME or big corporates.   After attending an inspirational seminar with Julie Hazelhurst (Kaizen guru), she has got me thinking about the implications of this thinking to the smaller end of SME.

Waste (Muda) comes in 7 forms

  • Motion – people movement, searching
  • Waiting – stalled customer processes
  • Transport – Information and material
  • Storage – Information and material
  • Defects – rework
  • Over producing – doing more than client pays for
  • Over processing – over engineering, more precision

Julie’s premise was “if you’re running short on time and money in your business perhaps you should tackle your waste first and maximise the value out of your talent in your team, before looking at taking on more staff”. She took us through the basic process of mapping your internal value chain and observing the “waste” processes  typically interleaved with the activities that your client values.

Its interesting that in Business Dominoes we use a similar focus on value chains to spot new market opportunities and strategic alliance partners outside the business, where Kaizen uses the internal value chain to focus process improvement.

7 common waste areas that I continually see SME’s wasting time on:

  1. Potential & current clients not in your target market Get clear about what is and isn’t an ideal profitable customer. Create a bullet list of their characteristics : eg revenue, location, ability to “get” your value etc
  2. Distractions of activities off “piste” Get clear about your business competencies and larger goals, then “stick to your knitting”. Too many businesses never achieve anything because their visionary leader is always chasing the next big idea. Put some structure around your business and then say NO to stuff that will not achieve your goal.
  3. Poor performing staff. Failure to deal with non performing staff will scare off the bets performers. Despite the hassles of our employment law – act now.
  4. Over engineering products and services, rather than selling Get the balance between engineering and marketing spend right. Know when you have that minimum viable product and then go sell, sell, sell. Craftsmen are never satisfied and continue to tinker with the machine when they should be bringing in revenue. If you have zero sales stop everything and validate your market before progressing.
  5. False economy of not having or having  a low performing professional service providers  Get some great outside help to challenge you on your big decisions and to have a shoulder to cry on as well as celebrate success with. If you have zero budget start with a fellow entrepreneur and meet them for a coffee once a fortnight.
  6. Inefficient accounting systems If you are not using auto bank feeds to avoid entering transactions – try Xero with bank feeds –use bank accounts that auto feed transactions into your accounting system -link your credit card as well. Learn how to do your own GST return, it takes minutes and you get a  great check point on your business.
  7. Outdated IT systems If technology is not helping your business you are doing it wrong – get a new IT supplier.  If you have less than 50 staff throw out your email server and replace it with office 365 (a great cloud computing service). Share electronic contacts and calendars around your organisation and embrace smartphone technology.

What’s your biggest area of waste?

Add a comment below with the big saving areas that you have made in your business.

Good planning = Asking the right questions (Bisvision Toolkit)

“A clever man gives the right answers” … “A wise man asks the right questions”

One of the big conundrums facing business leaders is what they don’t know, they don’t know.  Damian D’Cruz  has gone a long way to helping business people ask the right questions with his business planning tool kit called BisVision.

This great kit uses 5 decks of cards to ask probing questions around SWOT’s, Vision, Planning, and Execution.  You can use the kit to take you through a structured planning approach.

I have used the kit for a number of years and have found it great in its simplest use of – “what have I not considered in developing my business plan?”

Damian has produced two versions of the kit one for Businesses and one for the Not-For-Profit sector.

Asking the Right Questions

The opening quote, regarding asking the right questions, is so true. I have now come to the belief that any professional service provider can best be measured by the quality of those questions.  As a consultant myself, I have realised it is not the tools we use, but the way in which we use the tools that produces the best result. 

“I can give you the paint brush, but it will not make you an artist”. It’s on this basis I believe that by passing on as many tools and techniques I can, I will help people, but if they want true art give me a call 🙂 Happy reading.

For those who like DiY planning, this kit will be invaluable. Support this local company and  purchase it on the Bisvision Website

Foolproof: De-Risking New Ventures

Whether it’s a start-up or a product line extension, next to having the right team on board, validating your market prior to developing your product is the best way to increase the probability of your success.

Often I hear the cry “oh, this doesn’t apply to us”…. “We do disruptive technology like Steve Jobs… “our customers don’t know what they need till we show them”.

Truly successful disruptive technologists use research to back up and tune their visionary thoughts. They study their target audience’s behaviour to the point where they can create powerful product insights based on a combination of research and creativity to de-risk their investments. Without this behavioural research you are simply guessing.

It’s no wonder we have such a high failure rate with companies in this country when you hear facts like – “only 20% of companies approaching MOVAC for investment have completed market validation, which is a perquisite for us to invest” – Dion Mortensen

85% of those completing market validation will fundamentally change the functionality of their product, ultimately creating a product that will be more profitable and actually sell!

Jenny Douché has just released her latest book Fool Proof – How to find and test great business opportunities”.

“This easy to read book is full of great tips and guides, it should be compulsory reading for all new ventures and product managers”.

Jenny has included some insights from New Zealand entrepreneurs (Rode Drury’s Xero, Campbell Gower, Phil & Teds buggies, etc) and a few local investors who have experienced the fruitful outcome of performing market validation.

Foolproof is an easy light read, designed for entrepreneurs – 2 aeroplane trips should have it read with no bullshit or big theories. It will be one of those books that you will refer back to.

Unlike other books on this topic, Jenny actually gives you plenty of actionable content, rather than just theory, including lists of questions for all participants of market validation including: target end users, distributors, market influences and enablers. She covers both desk research and engaging with stakeholder groups, including how to talk when interviewing and surveying.

Too many entrepreneurs  fail to look at the wider macroeconomic factors that will influence their business both now and in the future. It’s amazing what insights you can gain from mapping and studying your market place’s value and supply chains along with current trends. (Note: value chain mapping is one of the key activities we do in Business Dominoes – strategy programme). By performing this type of research, you can save yourself the embarrassment of being blind sided down the track, or worst still investing in the world’s best mouse trap that no one will ever buy.

Just because what we have created is faster or better than the existing market alternative, it is not a right of passage to easy sales. As creators of new products, we easily forget the life of a consumer; where we are faced with better and newer products and services, yet we choose to ignore them and use what we consider easy, safe and predictable.

Clearly getting there is a balance between “no market validation” and “doing so much research you never do anything”. Either extreme is going to be a recipe for failure.

Some takeaways on Market Validation:

  1. Market validation before undertaking any major investment is an essential risk mitigation tactic
  2. If you are seeking investment, doing market research will put you ahead of the pack
  3. Do both desk and personal research – yes, talk to potential customers
  4. Map out your market place (value chain and trends), make sure you are not missing any opportunity or trend merging – a lot of this can be done by desk research and validated by contacting key industry commentators
  5. Engaging key stakeholders in the industry in market validation often builds loyal evangelists for you and your new business
  6. A quick prototype or sketch can help discussions
  7. Market validation is not a one-off exercise, it is a crucial part of improving your business and product over its life
  8. If you are developing disruptive technology then you need to be doubly sure of your target audience’s “pain” and more importantly motivation to change behaviour to adopt your new product. Do some behavioural research.
  9. Be warned if you have been in the industry or are a target user – you do not know enough.
  10. Doing market validation will often open your eyes to a better product than the one you have conceived by yourself.
  11. Buy Jenny’s book

I have already purchased 10 copies of the book and are handing them out to clients as compulsory reading.

Test your BHAG

What is the uniting force in your business? Running and working in high growth companies is hard work and we are often losing sight of what we are all about.

Daniel Pink in his book Drive he outlined three core drivers for people: Autonomy, Mastery, and Purpose.  (Note:  For those who have not read this great book watch the 10 minute animated summary)

Nothing binds a business like a clear and succinct BHAG (Big Hairy Audacious Goal) and a clear purpose.  I am not talking about the traditional boring mission statements that lime the walls of corporate offices, full of: Corporate blah blah… typically lots of words taken from a corporate speak bingo competition.

What I am talking about is a mantra or Big Hairy Audacious Goal (BHAG) that is worth waking up for in the morning and going the extra mile.

Ingredients of BHAGs that work are:

  • Compelling and gripping: people understand straight away
  • Action orientated
  • Bold: bordering on arrogant and unattainable
  • Clear: who, what, where, by when
  • Types: target, common foe, role model, internal transformation
  • SUCCINCT: The power of message is inversely proportional to its length

Have a look at some of the founding BHAGs for some of industries great companies noting this is what they started with…

  • Microsoft: “A computer on every desk and in every home”
  • Amazon: “Every book, ever printed, in any language, all available in less than 60 seconds. Also: Earth’s most customer centric company”
  • Ford: “Democratize the automobile”  (1900’s)
  • Twitter:  “To become “the pulse” of the planet”
  • Giro Sport Design: “Become the Nike of the cycling industry”
  • Nike: “Crush Adidas” (1960’s)

Brian Gaynor spoke at Springboard this month citing “New Zealand  business owners, in comparison to Australian counterparts, lacked ambition”.  Check your BHAG against the above list. Do not fall into the trap of being another conservative Kiwi company without big ambition.

Here are a few ideas from local examples (note: not their actual BHAG)

  • Biomatters:  “Tools on every biologist’s desktop”
  • E-spatial : “THE location intelligence behind all major New Zealand enterprise solutions”
  • Sale finder: “New Zealand’s ultimate consumer research tool”

When it comes to purpose statements – these are just clear concise versions of your value proposition in the language of your clients. More on this later – a topic for another blog post.  In the meantime, you can read value propositions revisited, creating succinct messages, No value proposition = No business from old posts.

Example Purpose: Spike mail: “Building qualified and engaged buyers versus creating lists”  – note no reference to their core craft of email marketing.

Product Marketing – the missing discipline…

An effective Product Marketing team is most probably the best insurance policy for any new venture.   For a trading company the Sales team and CEO’s all have tunnel vision on next quarter’s revenue.  The role of product marketing is to build next year’s revenue and ensure that any investment in product development produces a measurable return. 

The finite definition of product marketing’s function is variable, but it unanimously does include the full range of marketing activities, rather than just promotion activities. Noting that for too many business people, marketing is just a promotion activity.

Key activities of pure product marketing that are often absent in businesses include:

  • Assessment and validation of marketsWill someone actually buy this product once it is created?
  • Access to channels to marketsmart go-to market strategies and distribution agreements that are workable and will not conflict with potential company exit strategies.
  • Return on Investmentworking out if this is the best use of the company’s capital and when and how will it get a return.
  • Development of effective sales collateral and messaging – that communicates what is relevant to customers, rather than a feature or technology list.

Check your company’s marketing activities against this great list from www.pragmaticmarketing.com

This is one area we have a lot to learn from American technology companies. New Zealand technology companies often make the first move of appointing product managers, to manage product road maps, product requirements definitions, and act as the referee between sales and development teams.

My suggestion following on from my recent  Rule of 10’s post is, at the very least, budget an equivalent amount of money in the complete list of marketing activities as you do in product development. Likewise, balance your marketing spend between strategic and tactical activities.

I would encourage CEO’s of companies, Crown Research Institutes and universities to explore this missing discipline. I would also welcome the Ministry of Science and Innovation to begin to invest in this crucial area of commercialisation, rather than just the science part.

Don’t spend all your money on development

The process of selling costs and it takes time…
A company without sales and a go-to market plan is a science project, not a business.

It blows me away every time I come across yet another business that has a product all finished, patents applied for, accounts done, but no go-to market strategy or any sales to speak of – AND NO CASH LEFT.

Worst still, licensing deals that have not taken into consideration cash flow and go-to market issues – AND STILL NO CASH LEFT.

It disgusts me that all the lawyers and accounts that the business spent money with never encouraged the business to save some money for sales and market.

Whether it’s science, technology, or products, too many businesses are running at Death’s door, because they have failed to budget for and spend appropriately on marketing of their products.

 

Rule of 10’s

One of the most basic rules any new product based venture should take into consideration is the Rule of 10’s.  If it takes $1 to create a business concept, it will take $10 to build a product, $100 to market it, $1000 to build a brand, and $10,000 for an international brand.

Please make sure you have some time, energy, and money left for taking your product to market.

As an ex-engineer I get it guys, you want it finished and perfect before you go sell it – but get over yourselves, go sell vaporware. Trust me, the sales cycle will take 10 times as long as you think and cost you 10 times as much.

STOP spending on technology and products. START spending on marketing and sales NOW.  It appears that most professional out their patent attorneys, accountants and the like have no knowledge of product commercialisation – otherwise they would be advising businesses to save some cash for this crucial activity.

At very least, consider how you are going to sell and market your product and budget for it now.