Category Archives: Business Strategy

Business Consulting Suggestion: Make The Small Modules Work First

I knew a man who made a living with complicated mathematical models that he would provide for large companies. He was a professor at the Stanford Business School, but kept his business consulting on the side.

“One thing you want to look for, always, is the simple easy-to-understand model to use at the start,” he said.

“Never propose a big job as a whole package. Instead, always propose a small piece of it as a first step. Assure the clients they can abandon the whole thing if they want after that first step. Make it like a tenth of the whole job.

“Make it something they can see, touch, feel. Make it simple to understand. Make it as visual as possible.”

If that first piece doesn’t work, then you’re better off without the rest of the job.”

I’ve used this tip a lot over the years. That’s with my business consulting, mainly business planning and market research, and with some of the product development I’ve done or supervised. It’s very important.

This applies as well to a lot of business situations. Start with something you can show fairly easily.  Look for something that will make your clients understand the benefit of going on.

If Your Idea is Any Good It Will Be Copied

Good ideas get copied.

Yes, you can read all over the web how to protect your idea. And people are recommending patents, trademarks, copyright, all of which you should do whenever you can. People also recommend contract-like non-disclosure and non-compete agreements too, which is sometimes good advice, sometimes impractical. But eventually all good ideas get copied. Yours will be too. You’re going to have to deal with it.

As I write this I’m wearing a sweatshirt with University of Oregon colors that says “Oregon” on it and also “UO.” But it doesn’t have the logo of the university on it, or the words and fonts that the university copyrighted. And you can’t copyright the name of the state, or the letters U or O. So the university gets no royalties, and the manufacturer owes none.

I should make this clear: I am not saying don’t bother to protect your intellectual property properly. Please don’t misunderstand. Yes, register, apply, take all the steps your attorney recommends. Do what you can. It will help hold competition off and protect your secret sauce for a while. I’m just saying you shouldn’t think you are really protecting from copying, no matter how good your protection is. Smart competitors will get around your intellectual property, even if you manage it correctly and make that as hard as possible. It will still happen eventually.

And here’s my favorite example.

Volkswagen’s new beetle…

Volkswagen Beetle

Volkswagen introduced its new beetle in 1997. What a cool idea that was. It took its looks from the traditional beetle that was immensely popular a few decades earlier, but created a brand new car. What a great idea. And it was commercially successful.

Followed by the new Mini-Cooper…

Mini-Cooper

Not long after Volkswagen’s new beetle, BMW came up with the new Mini-Cooper in 2000. If the old VW was the classic small car success of the 1960s in the U.S. the Mini Cooper S was the darling of the racing magazines at about the same time. It was a tiny British economy car jazzed by John Cooper, famous for formula one racing. BMW bought the British manufacturer and introduced the new Mini.

And then the new Fiat 500

New Fiat 500

So by the time the old VW and the Mini-Cooper had been reborn successfully, Fiat, the Italian auto maker, came up with the same idea for its iconic Fiat 500, which had been the Italian version of the VW during the 1950s and 1960s. That one was released in 2007. It was basically the same idea – take an old standard, a past success, and redesign it for a new car. Buyers like that, and branding is almost automatic. Ride on its history.

The Point is That Copying is Everywhere and All the Time

If you’re successful, people will copy you. You can hold them back with registered patents, trademarks, and copyright, but that’s a delay, not a wall. Volkswagen did not sue BMW for copying its idea, and neither Volkswagen nor BMW sued Fiat. This kind of copying is legal.

In almost any kind of business, from high tech to classic, good ideas get copied. It’s like in fiction, movies, television, fashion, and so many human endeavors. It’s part of life. Laws only protect you so far.

To avoid being run out of time by competitors, you have to stay on top of the business, assume you will be copied, and keep doing what you do well.

(Images from Wikipedia)

 

You Need to Understand the Business Principle of Displacement

DisplacementImagine a bucket of water full to the brim, on a table, right next to a phone and a computer. Now take a brick and drop it into that bucket. Imagine what happens. Water splashes out, right? And that’s probably bad for that phone and computer next to it.

Business Principle of Displacement

That simple story is how I explain the business principle of displacement, in small business, startups, and entrepreneurship. I write it out as:

Principle of displacement: everything you do rules out something else that you don’t do.

The reason this matters so much is that we can’t do everything. So we have to do the most important things. We can’t please everybody. So we have to please the most important, biggest volume groups.

When you decide to add outlier features – used by a few, requested by a few – to a product you are also distracting your team and your product from the main function. And displacement is a legitimate concern as you deal with strategy. Can we expand into schools, from mainly offices? Can we sell to consultants as well as users? In normal growth strategy you have to sort through lots of questions, many possibilities, all with the awareness that you can’t do everything.

Paradox and Strategy

There’s a lot of paradox in managing focus, displacement, and growth.

On the one hand, if you don’t change, you suffer. You can’t just stay focused on the main thing. You have to deal with new possibilities, which sometimes means new products, or new markets.

On the other hand, if you are constantly after the latest shiny new thing, you risk losing focus on what matters most. You don’t want to lose your core while you’re looking to expand.

What I like about real-world business strategy, for startups and small business, is that there is always an other hand.

Stories as Business Strategy

Stories are the oldest and probably the best way to communicate ideas, truth, and beliefs. Stories as business strategy can be extremely powerful. Think of the key stories that are foundational in the great religions. Or think about the stories behind the phrases “sour grapes,” “the fox in the henhouse,” and “the emperor’s new clothes.” They all have power because they communicate. They resonate. We recognize their truths.

“All human beings have an innate need to hear and tell stories and to have a story to live by.”

– Harvey Cox

business stories

Stories are a great way to define and communicate business strategy. A strategy that can’t be told as a story is doomed. And a strategy could be laid out as a story that includes the main factors, for example. And  it could be as simple as a story defining the problem your customers have, the solution your business offers, and the factors that make your business especially suited to offer the solution. In this method the problem is also called need, or want, or, if you like jargon, the so-called “why to buy.” Strategy should be flexible. And a lot of successful presentations start with the problem and its solution.

Your Essential Business Story

Strategy starts with an essential business story. Imagine a moment of purchase. Somebody is buying what you sell. It happens with every business. For example:

  • A group walks into your restaurant.
  • A web browser subscribes to your membership site.
  • A customer in your store picks up one or more products, puts them into a basket, and walks to the checkout counter.
  • A potential client decides to take on your management consulting or social media marketing.

In every case, there is a story. Think it through. Who is this person? How did he or she find you, your store, your restaurant, or your website? Was it by answering an email, looking at an ad, talking to a friend, or maybe searching in a Yelp app on a mobile device?

Every transaction is a solution to somebody’s problem. Understand what problem – need, want, or why-to-buy – you’re solving. Marketing author Theodore Levitt used to point out that people don’t want to buy a quarter-inch drill, they want a quarter-inch hole.

So you don’t invite somebody to a sushi restaurant just because you’re both hungry. You want an interesting meal; you want to sit down together for a while and talk. It’s an event, an activity, with hunger satisfaction far from the top of the list.

You also need to understand what business you’re in. The restaurant business is often about occasions, not meals. The drive-through fast food business is about convenience. Starbucks is about affordable luxury, not just coffee; and in some cases, a place to meet, or a place to work.

So the solution has to match the problem, but it should demonstrate what’s different about one company when compared to all its competitors. For example, to make a restaurant story based on fine food credible, you need to add in how this restaurant’s owners and team can credibly deliver fine food. And in the software company example, there must be a sense of this company being qualified to deliver useful content in this topic area. That takes us back to the Identity component of the IMO framework; but it could also be called simply the secret sauce, or why we’re different, and presumably better.

A Real Example

Let’s return to a social media consulting company: HavePresence.com. Here’s its essential business story:

Terry loves her business, puts her heart and soul into it, and is successful. Her sales are growing, her customers are happy, and her employees are happy and productive.

She’s worried about social media. She knows it’s important for her business’ future. She knows her business should be on Twitter, Facebook, and the other major platforms. Experts seem to agree that business owners should engage. However, she’s already busy running a business, and she doesn’t have time to do meaningful social media as well. When she’s not running the business, she wants to be with her family, not on the computer.

Terry tried having an employee handle the social media, but it was still taking too much time. She made inquiries with some consultants, but they are expensive.

Finally, on the web, Terry finds Have Presence, a small business like her own, run by three co-owners who love social media, understand small business, and do only thoughtful, strategic social media updates for clients they know and represent well. They aren’t selling expensive consulting, telling Terry what and how to do it. Instead, they do the work, manage the social media, and give Terry’s business social media presence, for a monthly fee that’s considerably less than a half-time employee, without the long-term commitment.

That story defines three important factors. Identity is there in the phrase that begins “the three co-owners love social media and understand small business.” Target market is there in Terry, the business owner, and her problem with social media. And offering is there in the sentence that begins with “They aren’t selling expensive consulting.”

Stories can describe some important visions of truth better than, say, statistics. The real market isn’t a number on a chart or in a table; it’s that collection of people. Sure, the number is nice, once you know the people, but first you have to feel like these people actually exist, and the reason to buy exists, and that the people and the reason match up.

The Story Your Customer Tells

Imagine how your customer found you. What did he think was good or interesting or remarkable about you or your business? Why does she go back for repeat business? What do you want that story to be, and how can you influence that story? This is where the story leads to better business planning as alignment of all the elements of the business with your ideal story.

Your most powerful branding, like it or not, is the story that the customer tells her friends. Imagine your customer explaining your business to a friend. How would she describe your business? What can you do to influence that story?

Even before social media, there was viral marketing, and before that, referral marketing, guerilla marketing, and going back even further, word of mouth. John Jantsch, author of Duct Tape Marketing, calls it getting people to know, like and trust you. Seth Godin, author of All Marketers are Liars, calls it being remarkable.

And now, with social media, Jim Blasingame, author of Age of the Customer, says your customers control your brand. Your business depends on collective opinions published in tweets and Facebook updates, Google+, Pinterest, and LinkedIn. It’s amplified word of mouth, and it’s in the hands of the world at large, independent of your advertising budget, signage, and tag lines.

Know the story. Create the story. Plan in useful steps how to make it true.

Management, Done Well, is a Collection of Stories

Your business revolves around the story of your history and your values and your team as it grows.

With business planning, you don’t just tell the stories of the past, you also create and develop the stories of your future. Look ahead with your plan, control your destiny, and drive it in the right direction. Go from vision to imagination to focus and step-by-step concrete measurable activities.

(Ed note: this is taken from a section of Lean Business Planning)

Experts, Experts Everywhere, and Not a Pause to Think

My title for this post is taken (slightly modified, but better known as shown here than in the original) from Coleridge’s The Rhyme of the Ancient Mariner:

“Water, water, everywhere, and not a drop to drink.”

I’m worried that one downside of our amazingly connected world, in relation to small business and entrepreneurship, is that business experts are everywhere, falling over themselves to offer answers and expertise. It’s tough to criticize, especially since I’m as guilty as anybody. But still … is it possible that we use ask an expert hoping for a right or correct answer when the real question is not write or correct, but gut feel? Is it possible we give to much credence to the outside expert and not enough to doing the hard guessing ourselves?

Let me explain.

Seeking the right answer

I take questions on my ask-me form at timberry.com. Here’s one I received.

Worn ShoesI own an Irish pub [US place omitted]. I do not know what is going on, but my day business is not doing well. The staff has remained the same, the atmosphere is the same, but the number of clients has dropped. Is this just due to tougher economic times? I know that other bars in our area feel the same, but we cannot figure out what is going on. Could you please give me some advice.

Don’t get me wrong, please; I’m not advocating ignorance. And I like smart people and admire experts. But I worry that in many real-world business situations, asking some expert, via email, about the nuts and bolts of your specific situation. It gets in the way. It clouds your thinking. You should be asking that question, yes, but also, wear out your shoes finding the answer for yourself, first. Ask experts the big general questions. Not the specifics of your own business.

Nobody can answer that question from afar, with just a general description. That’s totally impossible. There’s no useful answer without getting into that bar, and into that neighborhood, and talking to people. Which is, in my expression, wearing out your shoes.

Wear out your shoes

The question, and the situation, cries out for taking a fresh look.

Don’t just ask an expert, get out there. This is urgent. Talk to people. Ask them. Walk the streets looking for the faces you recognize, stop them, politely, and ask them what’s changed.

Watch some other nearby bars and count their customers. How many people go into the place in an hour, how many exit. Have a drink at other bars and talk to their customers. Look at their prices.

Call some other Irish bars a few towns away and talk to the owners. Ask them if they’re having the same problem. Ask them why or why not.

This is your business, and asking experts it good, but don’t be sitting around waiting for experts … wear down your shoes. Is there a trade association? How about blogs and online sites for bar owners? Call the blogs you read, specialized for bar owners, and ask the online editor if something’s up in the industry. You might get some good attention out of it, and the writers sometimes (sad that it’s not always) know what’s going on better than anybody else.

Displacement Principle in Startups and Small Business

It’s really pretty simple. Intuitive. I didn’t learn about it in business school; I learned about it while building and running a real business. I decided to call it the displacement principle.

Displacement Principle: In the real world of small business, everything you do rules out something else you can’t do.

Displacement

My favorite metaphor is dropping a brick into a full bucket of water. What happens? Displacement happens. Water splashes out of the bucket.

I’ve seen the same thing happen as people try to grow their businesses. It’s easy to add lots of new items to the lists of what else ought to be done. As you do, ask yourself:

Do we have the resources? Will this idea generate those resources? And, if not, what are we not doing when we start doing this.

Everything you do displaces something else that you can’t do. Learn to live with this and you’ll do better planning your business, and, particularly, growing your business.

Do Big Tech Companies Become Too Big Not to Fail?

culture-eats-strategyI caught this one yesterday on Medium: Culture Eats Strategy for Breakfast. It’s by Dare Obasanjo on Hacker Daily (great title, by the way). It’s a well-thought-out discussion of how Google and Facebook culture achieved a substantial shift of strategy in a way that others (Blockbuster facing Netflix, and Blackberry facing iPhone) couldn’t. Here’s the summary.

“when your strategy changes then your entire organizational culture will have to change as well. Your organizational culture is defined by what positive behaviors you encourage and what negative behaviors you tolerate. Blackberry couldn’t compete with Apple when teams were still motivated & rewarded for keeping corporate CIOs happy and there was no way Blockbuster could compete with Netflix when they fundamentally saw themselves as a classic retail video rental store and ignored the power of online experiences.”

That’s a good read. Dare collected details and presents them very well. There are some stories of interest there.

And it challenges an assumption that I’ve made for decades now, which is that large businesses are doomed to fail eventually because they become like big ships, unable to turn quickly, unable to react. I’ve seen IBM fall from the “Big Blue” industry giant of the 1970s, 1980s, and 1990s to another also-ran today (no offense, IBM). I’ve seen Microsoft fall from the king of the world in the middle-to-late 1990s to struggling to keep up today.

It seems so hard for big tech companies to sustain growth rates when sales run into the billions. Although this post argues against it, I would have thought that Google, Apple, and Facebook will eventually slow down because they are so big. But maybe not.

I’ve never been an employee of a big (thousands of employees, maybe tens of thousands) company but I’ve deal with them as consulting clients. What I thought I saw was that as they grew, middle managers and office politics took over, regardless of what top management wanted. Decision making slowed to a crawl, and the friction through the chains of management became impossible. The culture changed in ways top management couldn’t prevent. Go to an exciting startup and people are working at all hours. Go to a big company and they left at five. Or so it seemed to me.

Can Google, Apple, or Facebook buck that history? Are big tech companies doomed to decline. Live by tech, die by tech? Do they become too big not to fail?

Business Strategy Is Useless Without Execution

amex-trending.jpg

In the last two weeks I’ve posted a three-part series on I’ve posted a series on setting and executing business strategy on the Amex OPEN forum in the last two weeks. I’m happy to see the first of these showing up on top of the trending list there. Here’s a summary:

Start with Strategy

The post is How a Simple Story can Improve Your Business. Here’s the main idea:

It’s simple. Just imagine the story of somebody who has a problem or wants something, finds your business and buys from you. Pretend for a moment that you’re writing a story or talking to a friend about your company. Don’t sweat writing or editing, just make it a simple story you can tell. Go ahead, be creative and let go.

Set Specific Goals and Metrics

The second post in the series is Use Specific Goals to Get Your Business Ahead.

To develop your own useful milestones for your business strategy, think of how an artist squints to see the features of a landscape, and (metaphorically) squint as you look at where you want your business to go. Look for points along the way, moving in the right direction, that you can fix on.

Then Steer. Manage. Stay on Course.

The third post is Steer Your Business on a Steady Course.

The idea of steering applies to real business strategy management in the need for frequent small corrections. It’s hard to make daily details match the big strategy. Even with strategy in place, and milestones and metrics laid out, it still takes regular review and revisions to make sure the focus and priorities in the strategy flow down into the daily details.

To my mind, strategy without execution is useless; and good business planning is nine parts execution for every one part strategy. And execution means setting the goals and then managing them, day by day.

Acronyms: Does BS Stand for Business Strategy?

What do you think of when you see the acronym “BS?” Do you think of business strategy? Maybe you should.

I have nothing against real business strategy. I’ve posted on strategy often here. My favorites include 3 stories your business strategy depends on and defining small business strategy. My sense of it, boiling down three decades of small business — plus a fancy MBA degree — is that good strategy always looks, after the fact, like it was always obvious.

Strategy is focus, business strategy, small business strategy

Real business strategy is mostly just focus. It’s about what you don’t do, sort of like how a marble sculpture is formed what’s removed from the original block. Focus on what you and your business do best, what you do better and different, and then focus on a specific set of potential customers and focus again on building exactly what they want or need.

For example, a consultant who responds to an inquiry with “no, that’s not what I do” is executing strategy. A restaurant that doesn’t offer take-out or drive-through service is executing strategy. A gym catering especially to women is executing strategy.

But I do object to strategy as business buzzword, off-putting, arrogant pomp and positioning, a series of meetings, excuses not to get things done, or it’s obvious. Strategy frameworks are cool sometimes, and can make for good meetings; but real business doesn’t have a lot of time to sit around cooking up strategy.

Many years ago, when I was a vice president of a consulting firm named Creative Strategies, I realized that consulting on strategy is as hard to sell as consulting on sex or driving, because those are things most adults are sure they’re innately good at. And if you see strategy as logical focus, maybe that’s true.

One of the perks of having the MBA degree is license to be cynical about business jargon that .     So if I say that strategy is mostly either obvious — which is good — or useless; you can’t just dismiss that as ignorance. Well, okay, you can; but I hope you don’t.

I really enjoyed working for Creative Strategies, the consulting firm, and I still think strategy exists in a series of paradoxes. It can be wildly creative, seeing ahead of time what will seem obvious to all after it’s been executed. But success is one part strategy for every 99 parts execution; and that one part will seem like it was always obvious as soon as it’s been executed.

(image: istockphoto.com)

Strategist? No, Please; not Me

I don’t want to be a strategist. Yeah, like you, I like to be a thinker. I like analysis. And strategy sounds cool. But the term strategist is too much pomp, arrogance, a relative of using utilize instead of use, or at that point of time instead of then

Social Media Strategy, business social media

What reminded me was The Difference Between a Social Media Strategist and a Person Who is Just Good on Social, over on on Business 2 Community blog. I like the post and it’s core content, but I hate the way they label strategist as good and just good on social media as bad. They’ve got their labels reversed.  They say: 

A social media person will get your ball rolling, a strategist figures out how that ball plays into every aspect of your business and gives you tools and training to deliver. They lay the groundwork to be ready to respond, and deliver. A social strategist doesn’t just focus on marketing, they focus on the big picture and help you put actionable items into place to support your long term goals.

I disagree. They’re using the words wrong. Here’s what I tweeted after I read that post. 

What’s up with that? What’s my problem? I don’t like the way people push up the vocabulary that makes  business seem more remote, higher up the ivory tower. 

One of the nicest perks of having a fancy MBA degree is being able to call out the business speak for what it is. And my advice is beware of people calling themselves strategists. Look for people promising to get things  done, not to analyze and define. 

And I suppose I have to explain that the phrase “just good on social media” might be the underlying problem. What does that mean to you? To me “good on social media” in business context means understanding that business social media needs business purpose, target market, and curation that serves the business purpose by offering what the target market wants. To me, “getting the ball rolling” doesn’t mean social media clutter. It means building a business presence. It’s extending the strategy that should be obvious.