No Value Proposition – No Business.

Yet another “Me too” or “a solution looking for a problem” – Ideas that fly or not ?

What says your idea, product or business is going to fly or not? In the capital raising business we get plenty of chance to evaluate new business ideas and products. It is amazing how many mad inventors we come across in contrast to entrepreneurs or business people. So what’s the difference: inventors have ideas – entrepreneurs have validated value propositions and business models that work.

 Recently at MORGO Steve Bayliss tabled a great approach to marketing and new product definition. Here is Steve’s test that he applies to new product ideas:

  • ‘Genuine innovation solves a customer problem more delightfully and accessibly than existing alternatives. And as importantly, innovation isn’t a novelty, nor a response to a competitor move, nor a line extension the core brand has no right to make’.

The key point  here is the significant difference between current solution and yours. 

If you can not articulate a good value proposition,  then fix it or give up!

Fundamentally you do not have a business unless you can offer your customers something of value. I strongly advocate if you can not quantify the gain of your client, as a result of using your product or service, then sales will be hard work.

If you are not adding measurable value to your customers, you are going to become, at best, a discretionary spend for the few people who get it,  rather than being a must buy.
Fundamental to your pitch, is the succinct story that describes your value proposition in a palatable way.

If your sales have plateaued – more than likely you are selling technology or ideas, rather than business solutions – your pitch is wrong.  Spend time uncovering your true value proposition – change your pitch and your approach to business focusing on areas that customers will pay for as a top priority.  A starting point, go ask your existing or potential customers how their business will be different as a result of using your product or service.

It blows me away how many companies describe themselves by their craft  … “we’re a software company”  …well no CFO or CEO the ones with cheque books wakes up at 3am wanting to by software. I know software people wake up dreaming of new software platforms…but people don’t need software platforms they need “solutions to real business problems”.

In the business to business environment if you can not quantify commercial gain for your customers you do not have a sustainable business. 

As far as assessing whether your company will make it or not a value proposition that has been validated by the market is the first step – fail on this count and no savvy investor will touch you.

Grow or Die – M&A the Answer to Export Success

Failure to get critical mass is burning out NZ exporters – adopt a M&A plan  

NZ business people have a great ability to create world-beating products and solutions, yet our track record of building long-term sustainable high growth businesses is poor, why?   We  are “failing to build companies of suitable critical mass to conquer international markets”. 

We are suffering  the curse of our own “DIY – control mentality”. This is getting in the way of our businesses attaining the critical mass required to master the real game on the global stage. The very stuff that helps us get started is getting in the way of long-term sustainability.  

Let’s take the example of a fertile niche industry like Baby products:  

  • The opportunity is prime – a market where globally people are having fewer children, later in life and spending more on the children. Given this backdrop you would think business would boom. But we have numerous small players operating in the baby market in NZ (turnovers sub $5M), all with great innovation selling single products to international distribution chains.  You can just imagine a Sunday night in Auckland Koru lounge; in there we have a bunch of eager solo operators selling non competing products all heading to the same market, talking to the same distributors.
  • These export road warriors are simply going to burn themselves out before they achieve success.

  

Typical day at the office for an exporter

In any other culture I would suggest that these small businesses collaborate. However kiwi business owners do not have the desire  to collaborate. Perhaps it is the fear losing control that gets in the way or the feeling that someone else will screw it up or perhaps just a plain overdose of “not invented here syndrome”.  

Another very evident cultural hang up is failure to talk to competitors or fellow industry players; learn to talk about your business without giving away the “secret sauce”.  

Looking ahead I believe that NZ has yet to feel the true impact of the global financial crisis. In order to turn our economy around we need to adopt a new game plan.  

My advice to business owners is to forget collaboration, adopt a new game plan of Merger and Acquisition (M&A). Use the leverage of the true commitment , that can only be gained by joint ownership. I often quote the bacon and eggs story: The hen is involved, the pigs committed!  

An M&A strategy is just as valid for small business as the corporate giants.  When doing these deals it’s important to focus on the long-term game and huge opportunity cost of not doing the deal. There are plenty of ways to structure deals without the need for cash now.  

Hunt down other aligned small businesses and explore the opportunities for complete integration of your businesses. The synergistic benefits of M&A for SME’s are numerous:  

  • Shared commitment – no longer the need to sweat the hard stuff alone as owners.
  • The volume to justify hiring of specialist skills in the business e.g. channel (distributor) management, Sales etc.
  • With a broader product offering the ability to increase averages sale price with resulting lower cost of sale

Yes the M&A process will take some effort. Do not forget the important process of post deal integration, it will need careful planning and support.  The bottom line is that overall your probability of success will improve along with a M&A strategy.

Not Convinced That Social Media Is Right For Your Business?

Social Media is all the talk, many business owners still have their heads in the sand and still think it’s just Facebook, Twitter..blah, blah. Nothing to do with real business.

If you’re a business owner or marketing manager, then add Erik Qualman’s book, Socialnomics, to your must read list before it’s too late.

My take after exploring this new phenomena , Social Media in business,  is it’s a new way of leading and managing a company, a new culture of total customer engagement that will guarantee success.

Warning: this is not about setting up a Facebook page … see my other blog posts to come…

Social Media is so disruptive, that Socialnomics author Erik Qualman states it simply as: The ROI of social media is that your business will still exist in 5 years”

If you’re still stuck in denial (and you are not alone) – a non-believer in social media, then do yourself a favour: view the two great Socialnomics.com  YouTube clips – Media Revolution 2 (Refresh) 4min:26sec  and Social Media ROI 4min:15sec.  (see below), then go buy their book. www.socialnomics.com 

“I found the book a great and easy read. One hotel night and a flight back from Sydney, had this inspirational  book read.We are entering a new world and way of doing business, this is not about applying old business models to new tools its a new way of thinking.At its heart is a philosophy and culture that embraces customer feedback in this instantaneous world. Done properly = instant market intelligence”

 It was so good I have added it to my must read business book list.

Here are a few of the many facts –opinions that Socialnomics promote:  

Epidemic adoption rates: Years to Reach 50 million users:  Radio (38 Years), TV (13 Years), Internet (4 Years), iPod (3 Years)…Facebook added over 200 million users in less than a year,

Power of endorsement:  78% of consumers trust peer recommendations. Only 14% trust advertisements. Only 18% of traditional TV campaigns generate a positive ROI

25% of search results for the World’s Top 20 largest brands are links to user-generated content, 34% of bloggers post opinions about products & brands, Do you like what they are saying about your brand? You better!

To get the full list of facts mentioned in the video clips g to the Socialnomics site links below:
http://socialnomics.net/2010/05/05/social-media-revolution-2-refresh/
http://socialnomics.net/2009/11/12/social-media-roi-examples-video/

So is this applicable to your business ? –  Yes .
Of course we care about what people say about our brand or people. So how do we participate then, because it appears that we do not have a choice?

@MRobotham #socialmedia

Winning Culture’s: Don’t blame the staff – who’s running the show

I listen with interest to many CEO’s  complain about the performance, accountability and attitude of their staff.
In most cases these CEO’s are so focused on being busy and doing it all themselves, that they are missing out on some basics. 

Here are 4 quick tips to fix general performance issues:

  1. Get clarity around what success looks like for you and your customers, eg  “we make the car go faster”.
  2. Define and manage to a culture set. Call it values or call it a manifesto but define it, lead by example and act when it’s not lived up to. Hire and fire based on this culture set. Otherwise your good staff will run away.
  3. Lead rather than manage: Start with hiring smarter people than your self and then delegate.
  4. Set up an advisory group to help challenge and keep you on course and be accountable to your own plans. Too many people get hung up with titles and labels Governance, Boards, advisory groups, compliance just get started.

Two companies that have experienced explosive growth: Tradme and Atlassian have clear culture sets (shown below).
How would you describe the culture of your team? 
If you do not define it and live it – it will evolve to the lowest common form.

The Trade Me Manifesto   –Follow the links to Rowan Simpson’s blog  for more detail

#1: Create great websites and people will tell their friends
#2: Be like electricity
#3: Let the server run the business
#4: Empathise
#5: Make people feel safe
#6: Talk straight
#7: Hire people smarter than you
#8: Be informal but serious
#9: Measure everything
#10: Just try stuff

Atlassian’s Values   – more on Atlassian

     Purpose:   
        Create useful products people lust after

     Values:

           #1      Open company, no bullshit
           #2      Build with heart and balance
           #3     Don’t fuck the customer
           #4     Play as a team
           #5     Be the change you seek