Start With Why – Using PurposeTo Motivate Action

start with whySimon Sinek’s book “Start with why – “How great leaders inspire people to take action” is a must read for all business owners and marketers alike. Be prepared to be inspired and start asking yourself what is your WHY?

His seemingly simple concept of engaging people with your purpose or “cause” (the “Why”), before bombarding them with the how & what (the typical features benefit sale pitch) is so simple, yet powerful. It is easy to see how this can transform your customer engagement, beyond a simple transactional relationship into that Nevada of life time loyal customer.

By purpose he is not talking about making money, which is the result that comes from achieving your purpose. He is talking about the inner connecting thought that gets people engage in what you do. This core motivating purpose, is the same concept that Daniel Pink’s book Drive is all about. You can read more on Daniel Pink’s take on purpose in my blog post – “Forget about incentives for your staff”

Simon’s approach is a great tool for building that instant bond with your target customers , using the common ground of “a matter of principle”, before attempting to bait them into your product value proposition. Simon’s approach is well illustrated by using  Apple as an example. Compare the two sales messages below:

The What / How Sell: (how most companies sell)

  • We make great computers.
  • They’re beautifully designed, simple to use and user-friendly.
  • Wanna buy one?

The Why / How / What  Sell : (how apple sell)

  • Everything we do, we believe in challenging the status quo.
  • We believe in thinking differently.
  • The way we challenge the status quo is by making our products beautifully designed, simple to use and user-friendly.
  • And we happen to make great computers.
  • Wanna buy one?

Watch at least the first 8 mins of Simon Sinek’s 18 min TED Video (below)

Take the time to uncover your “Why” and get your customers appreciating the true value of your offering.

The “Start With Why” methodology is a quick way to qualify potential customers in or out. People who get your purpose, will quickly build powerful relationships with you.

If you do not connect on the “Why” with your customers,  be prepared for the typical transactional relationship that can quickly fall into the death spiral of price haggling.

Simon Sinek’s book is available on kindle and paper, well worth the investment.  You can read more about his methodology on his web site

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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.

A Strategy or a Goal? (Good Strategy / Bad Strategy)

A strategy is not a financial goal or a motivational slogan, it is a plan that has been developed to surmount a challenge, based on a considered choice, created from a thorough understanding of the environment you exist in.

What is the “rationale that says your business will be successful in the long term”  and “how will you exploit your competitive advantage”? 

 Your understanding of the environment that you exist in, to the point where you can attempt to predict the future, so you can see long term positions of strength will enable you to create effective strategy. Without undertaking this exercise you are operating without a key piece of “intel” you will stumble from one short term opportunity to another, missing out on long term profitable markets.

Wikipedia defines Strategy as:

A strategy is a plan of action designed to achieve a specific goal. Strategy is all about gaining (or being prepared to gain) a position of advantage over adversaries or best exploiting emerging possibilities. As there is always an element of uncertainty about the future, strategy is more about a set of options (“strategic choices”) than a fixed plan.

The problem with most entrepreneurs is their unwillingness to stop and analyse the market or the eco-system they exist in long enough to create multiple options to create an informed strategy.   A crucial step in creating good strategy is that you present multiple options and that you are forced to debate and create stronger arguments to support them.  To often we either go with the first option or just operate in committee mode and merge the options together. Powerful strategy often involves hurt – some one not getting their way and stopping pet projects.

Our impatience and desire to “just do it” – makes us jump directly to creating a plan, missing out on the great power of “true strategy”

There are two orders of power when looking at strategic planning.

  1.  Business Planning:- Operational Excellence: Gaining clarity in what you do and are good , deciding what to do and not.  BHAG (Big hairy audacious  goals), purpose, defining immediate goals and tactics to achieve those goals., basic competitor analysis.This business planning by itself does produce improved performance, but will not de risk the business in the long term.
  2. Strategic Market Analysis:  This higher order activity involves deeper understanding of what is going on in the market, where long term opportunities lie, maximising gains over industry trends and predicting trends.   Although this activity requires in depth market research and evaluation of multiple paths it will result in a simple statement.

In Richard Rumflet’s book  “Good Strategy Bad Strategy – the difference and why it matters” he makes a strong case for taking the time to do what I refer to as Strategic Market Analysis before business planning. He make brutal comments about what he calls bad strategy. He has brought a new clarity to me around business strategy or more importantly non strategy that will help me in my work. Below are few excerpts – learning’s from his book (available on kindle) …

  • Good strategy almost always looks this simple and obvious and does not take a thick deck of PowerPoint slides to explain. It does not pop out of some “strategic management” tool, matrix, chart, triangle, or fill-in-the-blanks scheme.
  • Unlike a stand-alone decision or a goal, a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stakes challenge.
  • The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors
  • If you fail to identify and analyze the obstacles and opportunities, you don’t have a strategy. Instead, you have a stretched goal, a budget, or a list of things you wish would happen.
  • The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action that respond to a high-stake challenge.
  1. Diagnosing the specific structure of the challenge or change rather than simply naming performance goals.
  2. Choosing an overall guiding policy for dealing with the situation that builds on or creates some type of leverage or advantage.
  3. The design of a configuration of actions and resource allocations that implement the chosen guiding policy.
  • Good strategy is not just “what” you are trying to do. It is also “why” and “how” you are doing it. Combining all three elements mentioned above.

Even after working out what needs to be done “Good Strategy” is explicit in how you will do it.  Steve Jobs’s guiding policy  is legendary: (1) imagine a product that is “insanely great,” (2) assemble a small team of the very best engineers and designers in the world, (3) make the product visually stunning and easy to use, pouring innovation into the user interface, (4) tell the world how cool and trendy the product is with innovative advertising.

My observation is that we are all jumping over step one in Richard’s process or simply restricting it to a basic SWOT and competitor analysis.  Explore more on this topic in another post called  finding new strategic opportunities or come along to one of our business dominoes strategy workshops

Take the time and watch Richard’s three minute video.

At very least challenge your strategy : is it a slogan or a goal or does it have some decent market intelligence behind it?
And more importantly have you had it challenged?

GMC Business Model Canvas V2

Clarity and definition of your business model is one way to give your business an instant steroid shot.  From a planning perspective it is also worthwhile exploring a range of “what if” scenario’s around applying different business models to your business. Prepare your Business as usual (BAU) canvas, then challenge yourself to look at new canvas mixes: different business models and make/buy combinations.

The business model canvas is a great way to brief new stakeholders who work with you including new staff, bankers, advisors and potential investors. Once developed it can be used with the GMC Guide to Saying No.

The original book “Business Model Generation” by Alexander Osterwalder & Yvess Pigneur provides great examples of how to document business models, along with methods to brainstorm innovative changes in business models for existing businesses.

I have been using my own variant of the business model canvas for some time. I  have recently remodeled my GMC  variant and thought it was time a shared this.

Its great to see the Business Model Canvas is gaining wider use, many of the universities are picking up on it, using it as tool in their entrepreneurial programmes. 

(Click image to download pdf template)

The GMC Canvas Components:

Value Proposition (VP):
The value proposition (VP) must be at the absolute core of any business. When defining your VP it is worth while to also clarify your “Customers Problem” that they will pay to solve and make sure that your VP definition include your Unique Selling Proposition (USP).

  • Is your value proposition unique to you, or would it work for any one else in your space?
  • Do you need to separate out the value proposition for the customer (the person paying the bill) from the end user of your product/ service?

 Market Segment (MS):
Define your market segment as tightly as you can. Often it pays to focus on your beachhead market  – i.e the market where you can make the most money the quickest.

If you have a planned phase approach to your go to market strategy list the markets separately.  Do not forget to include a psychographic (decision making priorities – traits) and behavioural definition if relevant.

  • Challenge yourself to narrow your definition so you can easily qualify out C grade customers (the ones you do not make much or any profit off)
  • Do these customers have budget to spend on solving your the problem you have identified?

Core Competencies:
What key skills and knowledge do you have? These will come from the strengths you have listed in your SWOT.

Have you listed the ones that enable you:

  • Create value for your customers
  • Acquire customers
  • Differentiate you
  • Generate profit
  • Sustain your competitive advantage

Assets:
Remember to include intellectual property, customer relationships, key contracts and brand if they are assets for you.

  • Don’t include items that can easily be replaced or that are low value

Key Partners:
List only KEY partners that help you build your product or service or reduce risk in your business.

  • If a partner competency is too crucial to your business highlight it perhaps and an arrow to internal competency list  (You may need to plan to bring in house or get a good contractual arrangement)
  • The make or buy decision will be represented by whether you list something in the key partners or competency box

Channel to Market:
 In this section include key pathways to acquiring customers and leads.

Cost Structure:
Split overheads and variables.  Explicitly list any major costs or contractual arrangements. List items from your P&L that equate for more than 20% of your overhead cost.  Show a reference metric eg % of cost.  Show raw cost (or margin) of and manufactured items that account for majority of your revenue.  Don’t forget to list any major debt.

Revenue:
Split revenue into major revenue streams – product lines/channels.

BHAG  (Big hairy audacious goal)
What is the BHAG that motivates people to join the cause. Refer BHAG post

  • Your BHAG needs to be more than a revenue target.

 Brand Essence / Values
What are the top 5 – descriptors of your brand essence and culture values.

  • Most HR issues stem from failure to adhere to core values. Makes sure they are explicit and all staff, understand how they apply to them.

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What’s Missing: 

If something is missing in your current canvas that should be there – eg your brand should be an asset but it isn’t add it to the canvas and highlight it in some way.

Create Multiple Canvases

Take the time to explore multiple canvases and then do a cost/benefit scenario analysis using a simple comparative matrix

Rapid Analysis of ‘What If’ Strategic Options

Too often we are stuck trying to evaluate a multitude of ‘what if’ options when it comes to strategic planning; trying to tabulate a massive matrix of all the variables.

Scenario Evaluation

A tool we use at Business Dominoes is to map out the different scenarios on a simple cost vs benefit matrix (click image below).   Simply referencing the centre point being business as usual (BAU) i.e what we are doing now. Then referencing the alternatives based on the relative cost and benefit.

Our brain has an amazing “gut calculator” that enables it to subjectively accumulate of all of the data to evaluate what does total cost and benefit accumulating a multitude of variables.

(click image for larger version)

This analysis will quickly highlight both quick wins and potential long term strategies, bearing in mind often you will need to adopt a couple of interim strategies to achieve your end goal.

Competitor Profiling

You can also use the same tool to compare your competitors. Remember it’s from your customers perception, not yours. The diagram below is an easy way to illustrate your market positioning.

(click image for larger version)

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 Seminars at Biz Expo
Monday 15th Oct 2pm

Creating Powerful Elevator Pitches

Tuesday 16th  Oct – 1pm
Funding Business Growth  – Tools and strategies to build a scalable business
Presenter  Mark Robotham

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.