Personas & Zero-Based Strategic Thinking

Incremental change is dangerous, particularly come planning time for your business. Left unchallenged you can suffer a slow death, or be taken out by a gorilla in your market. Here are two ways to break your normal incremental thinking.

Personas at the Boardroom Table:

What would Steve Jobs, Richard Branson, or John Key be saying in your strategy day if they were on the board of your company? This is the power of personas.

Edward de Bono first popularised this method with his “Six Thinking Hats”. User experience design people adopt a similar approach to ensuring real users can utilise modern software applications. There is a great article on “The Power of Personas” for user design in the MSDN Magazine.

Create some imaginary board members to your company, they come cheap, and give them a seat at your boardroom table. Then listen to what they would be saying if they were in the room.  To balance the big thinking of a Jobs or Branson, you may want someone else at your board table to balance out their big budget thinking.

If you are known to dream big, perhaps you need the conservative ‘black hat’ thinker at your table to question the reality of your plans.  This is a great way to break with conservative limited thinking, beliefs that exist in many boardrooms, whether your problem is not dreaming big enough or you need a hand break. Do not invite too many imaginary friends too frequently or your friends and family may think you are going nuts!

Zero-Based Thinking:

Accountants often refer to zero-based budgeting. This is the method of creating your budget from a clean sheet of paper, rather than simply modifying last year’s budget by X%.

The same goes for business planning: take the stance if you were starting your business over again, but with the resources and capabilities that you have now – what would you do? Invite your new board members (personas) to the table as well to help you with this exercise.

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 markets.  Will someone actually buy this product once it is created?
• Access to channels to market – smart go-to market strategies and distribution agreements that are workable and will not conflict with potential company exit strategies.
• Return on Investment – working 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.

9 Traits to Excite an Investor and Prosper…

Will your company get investor interest and, more importantly, will it prosper?

Too many companies I see pitching for investment pitch a product or a technology, not a company.  Fixing the product pitch is a relatively easy task in comparison to fixing the business pitch, mainly because most businesses don’t have a strategy or even a plan. Sorry, “build it and they will come” doesn’t count. 

Test your company against this list to see if you are investment ready:

1. A product that we understand –  the problem and the solution – no matter how complex the science is behind your company, it must have a simple explanationof the problem you solve for customers and the value you give your customers and end users.
2. Validated market demand for the product – if it’s a new venture what third party proof do you have (eg. market research, etc) that people will buy your product at a price, you can make money from it. If it’s in the market already, excite us about your sales growth story.
3. A trend driving increased demand – creating the “perfect storm” – what is going on in your target market that says this demand will continue and ideally increase?
4. A sustainable competitive advantage –how are you going to defend yourself against the competition when it wakes up?
5. Clear, quantified metrics as to how the business makes money – how well defined is you business – finance model? Can you model your sales process (eg. x dollars spent on Google ad words = y dollars sales)? At least understand the financial model and your capacity constraints.
6. A clear and easily communicated business plan/strategy – including go-to market –  a clear and concisestrategy and plan is a long way towards achieving greatness. Give us confidence you have a tangible way to reach customers and meet demand.
7. An experienced team – Nothing happens without a committed and well-equipped team. What relevant experience does your team have? Remember always employ people smarter than you.
8. Clear return for investor – is your valuation set at a point where the investor can actually make a return? Remember no exit plan = no investment.
9. Fun people working on cool stuff – fun and cool mean different things to different people – but like pornography it is obvious when it is, or isn’t. 

I consistently see in the New Zealand market place, time and time again, businesses get caught up with the product, technology or science and are wasting their efforts because they failed to stop and look at the bigger picture of a full go-to market plan and strategy.

Debbie Humphrey and I have launched a new investment ready programme called Business Dominoes to help business owners both recognise this strategy gap and fill it. All of our clients from the first intake are raving about the transformation their business stimulated from this programme. Debbie and I believe you are expert at driving your company, you just need a hand as to where to drive to and who you should take with you.

Technician, Manager or Entrepreneur – E-Myth Revisited

Do you experience Exhilaration or Exhaustion daily?

What are you? Technician, Manager or Entrepreneur?

Too often people start businesses with great enthusiasm, then before you know it, the passion is gone and its just hard work.

Michael Gerber’s “The E-Myth Revisited” book makes the point that to be successful in business we need to be master juggler of three functions Technician, Manager and Entrepreneur.

• Technicians – live in the present: Experts in doing stuff, craftsman at their trade. Their ethos is captured by the statement “you want it done right, do it yourself”.
• Managers – live in the past: Pragmatic in nature, planning order, creating predictability
• Entrepreneurs – live in the future:  They turn a trivial condition into exceptional opportunity, true visionaries and catalysts for change. They are focused on the bigger picture continually questioning the business and its place as opposed to operating it.

The E-myth refers to the Entrepreneurial Myth that businesses are started and lead by entrepreneurs, rather than the truth, most businesses fail because the founders are technicians. Their entrepreneurial traits only appearing for a small moment in time at inception, to be quickly replaced by the dominant behaviour of a technician.

The acts of a technician lead businesses, inevitably lead to what Gerber describes as “entrepreneurial seizure, that point when the business has enslaved the owner”.

 The classic sign or precursor to this “seizure” being when the technicians abdicate tasks they dislike or do not have skills in, rather than delegating. Typically this plays out as employing someone for a while to do all the stuff they dislike. Slowly they become disconnected from the business they started and after a while the new manager they employed gets pissed off and leaves them in the poo (poo being my technical word not Gerber’s).

 “Too many entrepreneurs start out with passion and drive, to only find themselves with a lousy job a few years later, working their butts off for little or no reward.”

 The e-Myth Revisited is a great read and is available on Kindle well worth an afternoon on your deck chair.

More wisdom from Gerber … “A mature business knows how it got to be where it is and what it must do to get where it wants to go”. Shifting from adolescence to maturity as a business usually coincides with a crisis or getting outside help, you choose.

 The fact that these technicians (craftsman) are not strategists or skilled in some basic business skills, is very evident in the NZ landscape.

 How do you balance the technician, manager and entrepreneur hats?

Coincidentally, or not, I have recently just re-enthused a couple of businesses owners, who had lost their way, just as Gerber describes in his book.

Fixing this type of dilemma takes two steps best done with outside help:

1. The Awakening – some form of strategic review and tool kit, where you can see your business from the outside looking in.
2. Getting Clarity around how to best take advantage of this new strategic view point with a new simple strategy and mode of operation that recaptures motivation, clear direction and business opportunity. Rather than doing lots of more technical stuff.

So for pragmatists – some tips:

• Work on obsoleting yourself from your business – “if your business depends on you, you don’t own a business you own a job”
• Be conscious of your natural tendencies or biases towards being a technician, manager or entrepreneur. Challenge yourself to perform the two roles you do not have a natural affinity for. When was the last time you revisited your strategy? Who are you being today?
• Delegate don’t abdicate: Do not abdicate tasks that you should have accountability for e.g. finance just because you don’t like it or don’t understand it.  Can you lay your hands on an up to date (end of last month) P&L and balance sheet within the next 10 mins? If not you have abdicated.
• Learn some more business skills to complement your skills so you can delegate with full knowledge and respect for specific technical skills specialists provide. E.g. basic finance is not hard to learn.

PS:  I am on the hunt for a final year student to come work part time at GMC AKL to help me “delegate” and grow GMC. Apply here

Oh and I would be remiss to not mention

• Read or re-read “E-Myth Revisited” www.e-myth.com
• Book to attend Business Dominoes Investment Ready Programme it’s a great way to “awaken” your business
• If you are ready for new clarity, call your favourite business consultant in this area

Milestone Map-Plan

Need to communicate your business plan to attention deficit stakeholders? … or perhaps just get smart feedback on your plan.

Creating a one-page milestone map-plan on a chart is a great way to keep you, your team and advisors focused. With a small list of tactics and key measures you have a far greater chance of achieving your desired end result.

Many business growth strategies fall apart at the transition point between creating key strategic themes and establishing a set of measurable tactical tasks and goals.  Too many businesses end up with huge lists of tactics, most of which will only get token attention, with the end result being  the plan never being executed.

This technique will force you up front, to prioritise and rationalise your tactical list of things to do. The milestone map-plan is a great way to succinctly communicate your business plan both past, present and future to all stakeholders of your business. Particularly when you are seeking intelligent feedback and buy-in from potential investors and staff whose attention spans are limited.

A fictitious example of a web company is shown below to illustrate the technique. (click the chart image for larger view)

Tips on using the milestone map-plan:

• Limit yourself to max of 10 milestones per year – prioritise the top 10 that will influence or measure success
• Split your milestones across different functional areas.  Add rows to suit your business but make sure you include at least finance, market, process and people.
• List the last 1-2 years to help provide flow
• Include additional boxes on key risks and your competitor’s response, both historic and forecast.
• Do not fill the chart with activities that will naturally happen unless they help with the understanding of the plan
• This is not a product roadmap –list only major product releases/events
• Put it up on the wall by your desk for daily review
  

The milestone map-plan is great for helping all staff members focus on tasks that will help you achieve your goals, as well as showing the dependencies of tasks.

If you find yourself or your staff overtime not executing tasks on the plan then its time to challenge the map-plan and test out whether “the plan is still relevant”. If not change the map-plan otherwise re prioritise your work.

Put your plan up for continual challenge with advisors and staff. Do not be afraid to throw it out when the environment changes. Do not fall into the trap of “the law of committees”

“If a committee is allowed to discuss something long enough, it will inevitably vote to implement their idea, simply because so much work has already been done on it.”

If the plan is no good say so and do something about it.

Succinct visual tools like this and the business model canvas, create powerful discussions very quickly and maximise interaction time.
More importantly they increase the probability of success.

Creating Powerful Succinct Messages That Sell

Succinct communication wins every time in this instant time poor world – whether the end game is selling a business, an idea, a product or service or just communicating a plan of action.

“It’s not what you say, it’s what they remember and can be bothered to pass on”

The best material delivered in the wrong manner will go nowhere. Most people make their pitches too vague, too long and too boring. Hence they never get passed onto target audiences and never go viral.

Below are my top 5 communication tips for sales and investment pitches – whether it’s an elevator pitch, full blown sales proposal or coffee with a potential investor.

1: Earn your audience’s attention (be engaging)

Open with something that gets their attention. Remember that only 7% of a message’s impact comes from the words, the rest comes from body language 55%, and tone of voice at 38%. Passion and confidence cannot be faked, equally so the format of the written word matters.

Don’t forget to excite the sensors – Props (physical things) are great memory hooks. Smell and taste are often forgotten.

2: Be Succinct

Use sound bites (10-30 second statements) and headline concepts.

Think like a journalist – what would be your grabbing headline and how can you compact the main message into the first min of your presentation?

Use the inverted pyramid of information – basic journalistic tool.  The power of a message is inversely proportional to its length (less is more).

 

In creating effective messages you need to decide what not to say.

Changing the order of your sound bites is the easiest way to improve it’s impact and effectiveness.

3: Contrast is the best conversion tool (life before and after)

Illustrate your value proposition by contrasting what the customer’s life will be like before and after they have purchased, or with and without your product/service.

Make it simple black and white, not a million shades of grey.

4: Always quantify gain (be specific)

Be specific in what you say, if it’s faster – how much faster? Use this with contrast. Likewise do not use vague descriptions eg “a customer…”, name them, be specific it has greater impact.

5: Customer stories win minds and get results

Short relevant and concise, quantified customer stories using contrast provide the most efficient way to give others a message they will empathise with, process and pass on.

Research by the “sales brain team” showed the following results to the effectiveness (probability of closing a sale) of 4 different proofs of value:

1: Customer Case (80%)
2: Demonstration (60 – 100%)
3: Data (20 – 60%)
4: Vision (10-40%)

Read the Book “Neuromarketing”– “Selling to the old brain” …. Best book I have ever read on sales.  http://www.salesbrain.com/

“WIFM  – What’s in it for me”

The golden rule for all communication is: “always use your audience’s language of success”, not yours. Work out what is the highest gain for your target audience (financial, strategic or personal gain)

Your first goal is always to excite interest in the outcome (the WHAT). When the audience get the relevance of the outcome they will ask the HOW questions. At this point you have them baited. The How (the technology or process) is your domain, not your customers, they just want a result.

Too often business people attempt to sell their business by talking about their product or craft rather than the “true value/outcome” the client is seeking. This is your language not theirs.

Avoid “The curse of knowledge”

Insiders are the worst at reviewing messages for external audiences, they are handicapped by knowing too much, assuming.  Use an experienced external advisor to help extract your core messages and test their impact for first time listeners.

More on this topic: see other www.succinct.co.nz blog posts on this topics in the GMC top tips:

–       “Link between simple strategy pitch and success”
–       “Value propositions revisited”
–        ” 90 sec Elevator Pitch“

Check out www.Succcinct-Stories.com we can help you prepare your next marcoms brief, test your sales or investment proposal or just help you get your elevator pitch sorted.  This also holds true to how you communicate your business strategy and plan to your stakeholders and team to get engagement.

Link between simple strategy pitch and success

Link between simple strategy pitch and success

Can you easily articulate your business strategy less than 60 secs?

Most business owners get that they need a product elevator pitch for sales, but have you considered whether you have a strategy pitch for your stakeholders?

Strategy without execution is just a waste of time. If your staff fail to “get” what your strategy is all about, how are they going to engage with it, think out of the box and work as a team to achieve the goals set out in it? Do not expect your team to read that strategy document you diligently prepared or mind read. How many of your staff could tell you what the company’s growth strategy is?

“A business plan is a document that investors ask for but never read” whether you are raising capital or inspiring your team – you are responsible for creating the interest in your strategy and delivering it in a manner that people will engage with and act on.

After helping many business owners over the years with their investment pitch I have come to the conclusion that: the leaders who fail in the ability to deliver a succinct version of their business strategy, will fail to grow beyond where they are now – irrespective of investment or not.  This is evident when I see companies year after year going nowwhere – failing to achieve the growth talked about but never delivered.

Too many businesses suffer from the lack of clarity, wasting time with a team not empowered to say no to stray activities “off strategy”, basically letting fate decide what they should be focusing on. In many of these cases the business owner has it all in his head but fails to communicate it. Or worst still a non- connected or busy management team that have parts of it but are not aligned.

High growth businesses live in a chaotic world, most staff living on the edge chasing tails. Failure to articulate your business strategy to your stakeholders (team, board, investors) is just as bad as not having a strategy at all.

My advice is take your business plan / strategy and condense it down to less than five key statements – themes that people get.   Eg Market share is king, more important than profits.  The power of the message is inversely proportional to the number of words used.

This condensing could even be considered as a bolt-on-phase to your existing planning technique.

Creating and expressing your business strategy as an elevator pitch is a mind bender, but the resulting clarity is empowering.  The conversations that you and your team will have around condensing your strategy is a worthwhile exercise in its self.

Some tips:

• Have a go at presenting your business strategy verbally: no props or power point, can you do it? Have your strategy challenged by someone fresh outside your business or a new employee.
• Use an external facilitator who excels at this to help accelerate the extraction of the core strategy and listen with fresh ears – BTW this is GMC’s speciality 🙂
• Use diagrams and pictures to focus thinking, business model canvas, balanced score card diagrams
• Engage specialist graphical recording – facilitation techniques to record and stimulate complex enterprise strategies and problems. This powerful technique is relatively rare in NZ. Here is a link to one of the many you tube clips explaining this technique.  Two NZ providers GMC work with are: www.motive8.co.nz/ and  www.martincoates.com contact GMC if you want to give it a go.
• Everything can be simplified, strategy does not need to be complex

Irrespective of whether you are thinking of raising capital or not, creating clarity and simplicity in your business strategy is key to getting staff, board and potential investors engaged and actually achieving goals.

If you can clearly and succinctly articulate your strategy you have a far higher chance of actually executing it.