Strategies for Growth

To get market traction – we need to choose ONE strategy and do it well…

Growth in a business comes from either selling more to our existing customers or getting more customers. Either way we need to gain a position of strength and differentiation to grow our business.

In the jungle economy, if we are not growing and taking some one else’s customers, they will take ours. Equally so we have finite resources, so must choose a small list of things to do and do them well.

How do you get to “own your customers” i.e be the supplier of choice?

Too many businesses attempt plans that are incompatible with their balance sheet, their personal circumstance or even reality or worst still a potpourri of every possible strategy. My recommendation is choose one.

 Strategy Primer Questions

Strategic planning is about exploring and debating options in an iterative loop.  Before working out how to win customer mindshare you need to define what is your target market. A key step in this iterative cycle is to decide where long-term opportunities exist.

• What is your long-term market opportunity?  Have you explored what’s going on in your industry ecosystem? What facts do you have that support your market will exist in 2 or 5 years time?
• What is you competitive advantage or point of difference?  Is it a truly sustainable competitive advantage?  Do you have the skills to deliver this?
• What is your strategy to maximise your competitive advantage?

Next you need to work out how you will get to “own your customers mind”, i.e begin your growth – to create a change in the market place.

 Unfortunately in the real world, we do not have unlimited resources – so despite ambitious intentions, we do need to make some choices of what do we do first and what takes priority. Most SME’s can only afford to invest (people & money) in one strategy at a time.

Strategic Priorities & Restraints:

• What is your key strength?   Product, operational excellence (process) or customer intimacy
• What is your no.1 priority? –  Market Share or Profit or Revenue (Prioritise these options)
• What market segments are you going to take on and in what order? (geography, demographic, etc)
• Have you got the make / buy split correct? Where do you add most value to your clients & yourself (who will you partner with).  Are some of your business activities a major distraction and not make you any money?

WIN THE RACE to OWN YOUR CUSTOMER’S MIND: – Choose one  

Strategy guru Michael Porter was of the belief that you only have two options to gain strength in a market Cost leadership or Differentiation.   

Winning market reach & share quick

• Freemium (give your product or a cut down product away for free)– do a land grab then start charging or kick in alternative revenue streams later eg trademe
• Partner with large organization – preferably corporate challengers rather than the giant that already has the customer, as they can up sell something “additional” to them (your product or service). Note Giants are typically too arrogant and do not need you
• Merge – with other small players to increase efficiency and customer reach

Win the technology/product innovation race

• Create products that others do not have and your customers will lust after – that have amazing customer pull eg killer apps
• You may need to use a strong IP strategy that can not be worked around (trade secret) and patents or simply just obsolete your own products with new ones so people can not copy  (eg Apple, Microsoft)
• In the services space this race is often influenced  with “thought leadership”

Create / Find a new market

• Legislation change
• Disruptive technology – new product paradigm eg MP3 players – ipod
• Use existing technologies in a new way

Win the cost race

• Make your product cheaper than all others. Organisational and cost efficiencies.
• Warning – making products cheaper does not mean start a price war. Price wars in most cases become a race on who can hold their breath the longest.

Win the heart – BRAND

• Build a brand experience people fall in love with – this may include service paradigm

What is your strategy to capture the mind of your customers?  – Is it one of the ones listed above or do you have another? Please share.

If you want a hand generating your strategy, how about coming along to a Business Dominoes workshop? We have just started running 3 day workshops that take in a weekend day, so you can have some tools to take on summer holiday.

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.

Breaking the owner – employee attitude gap

How do you get employees to operate as though they own the business?

This is an ongoing dilemma for all business owners.

I have just finished an enlightening book on creating performing teams in this modern age by Paul Marciano – “Carrots and Sticks Don’t Work”

 This book should be compulsory reading for anyone who has staff.

It’s amazing what people managing people, claim to know about leadership – but seldom practice.
Paul has a way of bringing this point home with some simple questions in each of the early chapters, clearly illustrating this point.

When was the last time you said an individual “thank you” to your staff?

I cringe when I hear executives say “people our most important asset” yet there is no evidence in their actions.

Paul like others, I have recently reviewed take an axe to reward and recognition programmes (carrots and sticks), stating that these only stimulate short-term change and never influence culture.  He gives numerous  (20) examples of the harm these programmes can bring into companies. In many cases all that happens is a culture of entitlement is formed.

Paul separates motivation from engagement.  “Employees who are motivated will work hard when there is something in it for them, engaged employees work hard for the sake of the organization and because it gives them fulfillment”

Another differentiation between engagement and not: “When I feel highly engaged with a project, I find myself thinking of it all the time-inside and outside work.; when I’m not engaged , I think about the project only when I am on the clock”

Engaged employees do things like: bring ideas to work, when did you last get an email in the weekend from an employee saying …”I’ve been thinking…”, or an employee informs you of problems solved, rather than bringing you dead bodies.

The interesting point he does make is that “it is all to do with the organization and manager and less to do with the employee”.

Motivation is what gets you started; habits are what keep you going.

Habits are persistent and resistant to change and do not go away because we are motivated.

Culture derives behavior and behavior reinforces culture

So given we accept carrots and sticks don’t work, what do we do about it. Paul’s model is based on an acronym RESPECT.

• Recognition (& acknowledgement)
• Empowerment (do your staff have the tools to succeed)
• Supportive feedback
• Partnering
• Expectations
• Considerations
• Trust

Building on Pink’s Drive purpose, Paul emphasizes the importance of people understanding the context of their role in the organisation and knowing that their efforts make a difference to others and the business.

Some other quick notes I made give you a taste of Paul’s approach:

• Giving effective Praise:  The winning formula Timing, specificity, proximity, enthusiasm.
• Lack of training and advancement are the 2 leading reasons for staff turnover
• “Your Job gives you authority, your behavior gives you respect”

This book is going on my top 10 list to recommend to owner managers who want break the employee – owner attitude gap.

Read more on Paul’s respect model on his web site:  http://www.paulmarciano.com/respect-model/

Paul was looking at coming to NZ in 2012, so keep an eye out for his name on the speaking circuit.

Kick Starting New Ventures

Many people are stuck in a deadly procrastination loop over whether to start a new business venture or not. Bending any ones ear that will listen, but never actioning it or getting into enough detail to hit the go button. Business is not a spectator sport.

My advice to people is that this activity is wasting your live away. My motto is – new ventures should “grow fast or fail fast”.

5 Steps to Kick Starting your new venture:

1: Find out what you don’t know – you don’t know
2: Create a brief business plan and get it challenged
3: Identify what’s in the way of getting started
4: Validate your market
5: Revise you plan and get it challenged again.

GMC in conjunction with Grow Wellington run the Activate – Jump Start boot camp. Taking  new ventures through steps 1-3 in 48 hours, helping all of them make significant progress in moving their businesses ahead.
Then following the weekend up with a support programme, including a post weekend strategic review and follow up mentoring.

Learning’s from the weekend included:

–   Peer review of your business model and plan is the quickest way to transform your thinking
–   Being away from home and the internet for a 2 days and nights can aid your thinking process and help you get clarity
–   The simple act of presenting your business model and plan to someone – will help you get clarity.

If you are sitting on the next big thing, or are stalled making the next big change to your business than would recommend signing up to one of the remaining jump start weekends for 2011  Wellington-Palmerston North 18- 23 Nov or Auckland 25 – 27 Nov.

If you have a GST registered business you may qualify for up to a 50% discount for events like this, contact me for more information.

Typical feedback from the weekend and follow up sessions:

“Relevant and to the point… with immediate and significant impact on my business.  It has paid for itself in the smart decisions I have made since.

The Activate weekend is different to all other business workshops I have been to, no hypothetical cases leaving you to interpret and apply to your business.

It was amazing what we all learnt from analysing each other’s business; I left having made some fundamental shifts in my business strategy.

The post weekend mentoring has been invaluable in accelerating the journey of my business.  

John Matsis – Founder Tonic Foodgroup Ltd

“Exhausting and inspirational in the same moment… this is gold.”

“Mark and Activate have transformed my business from a cool product, into a focused business with a clear strategy to market. ”

The ability to get clarity out of the chaos for my new venture is invaluable, the investment to participate paid for itself 10 times over in saved time.  

Rachel Hatch – Founder Mexis – Virtual Reality Devices

“Brutal and inspiring… don’t start a new venture without attending Activate.
It begins with a startup bootcamp weekend that exposes and plugs any gaps in your business model“.

“Mark has a great way of saying what needs to be said – even it’s not what we want to hear – and making us feel good about it.”

“We are operating at warp speed as a result of attending Activate The follow up support has been key in keeping me on track and focused on getting the important high value stuff done. I recommend any business owner, new or nearly new, attend this practical programme.”

Judith Eastgate – Founder, Perfect Accent

7 Stages of Developing a High Performance Team

Understanding Team Dynamics

Creating and building effective teams has got to be the biggest challenge facing business owners. I am yet to find a business that is successful without getting this “people” stuff sorted.  I recently  found a great model for describing how team dynamics work.

I had previously been aware of the work of the Grove guys from their work with “visual meetings” (good book btw),  but I was unaware of the fact that in the 1980’s David Sibbet and Allan Drexeller (founders of Grove) also developed a great model for creating and building teams.

Here’s a snippet from their web site…

Teams are more like athletes and artists than buildings, and are in a journey that fluctuates between freedom of aspirations and real-world constraints—seeking a resolution of the two in action. They pass through different stages of engagement and often go back and forth between these stages as the team coalesces. Drexler and Sibbet decided to visualize the Drexler/Sibbet Team Performance Model® as a bouncing ball. It starts with people “up in the air” imagining the purpose and bounces off the “ground” of current realities, regaining freedom of movement through mastery of the constraints.  Read more from their blog site here>

Their 7 stage model also works for new people joining a team. Noting that at any point you can revert back to the previous stage.

Rework your perspective on growing companies

Jason Friend & David Heinemeier Hansson are founders of 37signals – home of products such as base camp, high rise and creators of the “Ruby on rails” revolution. The 37signal’s team created software products that are used by millions of people, by doing stuff different.  

They provide simple tools for people like them, with basic problems. They have not designed a product with more feature s than their competitors.  They focus on delivering fewer features, in a simpler and easier product to use.

I have just finished reading their book “Rework”. I must say it’s is the most refreshing look at how to grow a business, that I have come across for some time.  It has gone on my top 5 books business owners must read. Every page is a gem.

What makes this book interesting is they challenge the norm e.g. you don’t need to employ heaps of people to grow a successful business. Their company is small, Frugal and profitable”, services millions of users worldwide and employees only 16 people.

So here is a taste of their magic:

• Workaholism is stupid – working more doesn’t mean you get more done, it just means you work more.
• Underdo your competition – focus on less than your competitors but better than them.
•  Start a business, not a startup: Let’s drop the word entrepreneur and startup it has become synonymous with: creating businesses that spend other people’s money that don’t focus on making real revenue with real profits. 
• Less is a good thing: it forces you to be smart with money. Only employ people who do stuff – no managers. – Hire when it hurts – resist the urge to over hire – teams are more productive when small.
• Build half a product, not a half assed product: focus on the basics and get them right, and get it out there. Hell they launched a product with no billing system; they figured they had until the end of the month to create the billing system.
• Make lots of small decisions: the consequences of failure are less and you build momentum.  Swap: let’s think about with, let’s decide- don’t waste time on long planning sessions – just do it.
• Pick a fight: – stand for something, take a stand against competitor
• Culture is by product of consistent behavior:  No policies – just tell people when they do wrong stuff

My favourite:

•     Nobody likes plastic flowers – imperfection is natural, seize it and don’t over fuss stuff. 
      Make a stand for something and be brave enough to defend it.

  “So those that know me well – those typos and spelling mistakes – that’s just me imperfect. I add value in other ways – not as an editor”

The book concludes with a great concept:

 Inspiration is NOW THING.
Inspiration is perishable – it has a use by date.
So when inspiration strikes, do not hold back. – that’s the time to do the all-nighter.  Not when you are late on something.

Get your own copy of this book, it’s truly inspirational.

Ten Steps to Business Success

1. Have clarity in how you add value to your clients – focus on that. Leverage your point of difference
2. Identify your target beachhead market – the people who you can make the most money from, in the easiest possible way (a list of list than 100 clients)
3. Ensure your business model is robust and sustainable – i.e you make money
4. Create a one page business plan.
5. Employee the smartest people you can afford, ideally smarter than you,  always hire based on values and personality first – skills second.
6. Define your culture and brand identity and stick to it – NO this is not a logo!
7. Adapt fast and act on failure – including firing non performing staff, killing projects that will not deliver a return to the business.
8. Set up an independent advisory group that will challenge the thinking from day one
9. Engage your clients and have fun – Perhaps explore Social Media Marketing
10. Have a goal and exit plan from day one.

Finding Your First Advisory Board Member

Selecting your first board member can be a challenge, so how do you go about it?

I always recommend business owners establish and work with and advisory board setup first, before committing to formal directorships. This can often be a good win-win situation for both business owner and board  member.

Work out what are your immediate needs?  Do not confuse specialist professional advice from what you want and will get from an advisory board member. They have two separate functions and purposes.

I personally believe that you need a generalist for your first non-executive board appointment. Someone who is going to challenge and support you and is capable of working across all disciplines from Finance to HR to Sales and Marketing.  See my earlier blog posts on this subject

Chosen correctly an advisory board member will be able to help you select and get the best out of specialist professionals such as lawyers and accountants.

As a side note: in many cases I have found as an non-exec advisory board member the first task often is to help companies review their current professional service providers (legal and financial services). To often companies have gone for “cheap” “rear vision looking” providers, who are great at documenting what has gone on in the past and ultimately deliver poor value.

All of your service providers need to add value well beyond their fee. As an example, accountants who do annual compliance accounts for $600 a year typically add no value other than recording history and ticking a box for the IRD.

So where do find a board member?

 If you are on a super tight budget (most SME’s are) and are looking at establishing an advisory board I would recommend:

1. Put the word out around your network. Ask around fellow business owners who you have respect for. They will have recommendations or if you are on a super tight budget – use a “quid pro quo” arrangement with them.
2. Springboard NZ – is a great network of “young” emerging directors, that has a pool of great executive experience and full of people looking to build board portfolios.  You can post your request directly on their linked-in group. Linked-in Networks are a great place to find talented people and aid with reference checking.
3. Ask your accountant – lawyer to recommend: while in most cases I would not recommend using a lawyer or accountant as your first board member they will have connections and networks of great people.

For those of you with a recruitment budget formal placement services such IOD and specialist placement services – may help you out if you do not have access to an established network. The IOD first boards web site is also worth a visit

Warnings:

• Make sure you create a wish list for the characteristics of your most wanted board member and be open to how you meet it.
• Make sure you select people who “get” businesses of your size and culture. Experience on the board of Telecom could well be a hindrance to your $2M a year turn over company.
• Personally I have a dislike for brand names, franchises etc – please reference check the actual person you are going to be dealing with.  See how they measure up and what real in business experience they have had.
• Don’t sign locked in contracts – if they do not work you need to be able to quickly exit them.
• Don’t pay by the hour – you need to feel comfortable the relationship is not being measured by the clock.

Other blog posts by Mark on Governance – Advisory Groups etc for SME’s

Desirable Personal Attributes Of Board Members

What characteristics do you look for in a potential board member?

To effectively address the needs of an emerging enterprise, the most effective board members will exhibit the following personal qualities:

• Emotional stability – with EGO in control
• Strong interpersonal communication skills
• Pattern recognition skills – “ability to sense trouble ahead of time”
• Ability to partner
• Investment and hands on operating experience
• A strong network of business contacts
• Ability to mentor the CEO
• Ability to view problems from multiple viewpoints include the “customer point of view”

This list came from a great paper I have just read from Levensohn Venture Partners (LVP)website entitled “After the Term Sheet : How venture boards influence technology companies” a link to the full paper is here, its worth a read.

Another great extract from this insightful document was a list of why boards fail.

10 Common Pitfalls of Boards

1. Complacency – Inability to confront difficult issues
2. In-Decisiveness
3. Distraction and over-commitment
4. Divisiveness on the Board
5. Paralysis over liability issues
6. Board Member role confusion
7. Leadership vacuum
8. Loss of trust –respect in the CEO or other board members
9. Resolution to fail
10. Misalignment of interests between Board Members and investors

 

They also have a great agenda item for your next board meeting : “what are the 3 top issues facing your business?”, often boards can fall into the trap of just ticking the boxes and following the standard agenda

LVP  have another great white paper on their web site  ”Rites of  passage: Managing CEO transition”. Both these papers come from the angle of a VC backed company but work for any emerging business and a worth a read.

Branded Culture – Burn the rule book – MORGO Diary Note 2

How often do we end up with policy and rule making , getting in the way of running our business?

How about  throwing away the rule and policy books and replacing these finite sets of rules with “branded culture” or philosophies. 

How often do we get  “ do we have a rule for this ?” ….  The trouble with rule books is you can never have a rule that covers ever instance.  

The issue with many company policies are they get out of control and just waste management time – what ever happened to common sense.
As an extreme example I heard of a company that got sick of time-wasting management time processing expenses so it adopted an expense policy of – all expense claims are published on the company intranet for all to see. If your’re ok with all other staff seeing that this is an expense you claimed on the company tab then it’s approved.   

Steve Baylis, Air NZ shared at MORGO shared some great ideas on using a simple set of guiding principles to help staff make decisions themselves and set Air NZ up as a stand out airline in a competitive landscape.

How about this for a guide set of principles for a business differentiating itself on customer service:

• Welcome as a friend
• Be Yourself
• Can Do
• Share your New Zealand

Air New use simple guiding  principles to help  break the need for fat rule books, and allow common sense to prevail. Their simple approach of making hero’s of the staff that follow, rather than spending time producing yet more rules.

By encouraging and supporting this culture you can shift from: Random Service –to Predictable Service to in character service.  It is this interwoven approach of Branded Cause, Brand Communication, branded culture, Brand renewal and Brand Experience that has enabled Air NZ to set itself apart as a true world-class airline.