business

Business is a state of mind

How the new heroes will make it happen!

Many of my friends from industry have asked for my opinion on the economic crisis and its impact on business. My answer to them is that a key problem is that companies simply do not internalise the proper actions to take in order to respond to such a situation.

Yes, I see companies cutting expenses, freezing investments, and releasing people and so forth because they are afraid that sales will fall.

My opinion is that if a company wants to, it can move through this time, without suffering awful consequences, simply by turning the opportunity of having something into prudent action. If companies take the right steps then I think they can come out of the crisis much stronger than when they entered it.

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“If you’re interested in finding out how to make deeper cuts in costs, without destabilising your business, as well as retaining and growing your share of the wallet with some creative strategic thinking in a difficult trading environment, I highly recommend Andrew Pearson’s workshop.” – - Andrew May, Managing Director, Mainland Marketing Ltd, for Isles of Scilly Producers

Over dinner on Sunday some one asked me; “What new course have you got for the times?”

Ah! The downturn discussion! I thought about this and chimed “something on concentrating on your core business and market your way forward with strong selling points and customer service”.

Somewhere in the back of my mind a lamp flickered and lit up the remarkable story of Andrew Cook who in the late 1970s early 80s transformed William Cook, a well established family manufacturer of steel castings, into a market leader when all was against him.

At that time the economy was dismal, dark and uninviting. Output in the industry had been falling for a number of years. But Cook on taking over the company went completely against the trend an invested in increased efficiency, quality and capacity in the least value segment – all at a time when capacity was double the amount of industry sales. Rivals thought he was mad. Indeed conventional thinking would have dictated that Cook milk the business and leave the industry or go into a higher value and differentiated niche.

Remember too that Cook’s didn’t have the image of a Mercedes or an IBM amongst its customers. Neither was it a technological leader, nor did it possess some secret process to guarantee extra income. Nonetheless, Andrew Cook backed his intuition. In a few months his efforts began to yield results.

His investment in a hostile environment transformed the business. Within a few years sales had risen 10% against industry losses. He was the first to invest in BS5750. Within a couple of years he had acquired two of his major competitors and by the ‘90s he had become the market leader.

“What did he do?” you ask. It’s really quite straightforward. He understood his customers. He recognised the value they wanted. His improvements saved customers money which naturally increased demand for his product. Thus Cook generated a double advantage – higher value and lower cost.

When others saw what he had achieved they changed too. They sought to catch up and invoked intense battles … but that’s another story.
For more on how to manage in difficult times why not check out our coaching and workshop programmes in Services

For further information download FREE “How to Create and Exploit a UNIQUE STRATEGIC POSITION for Your Business”

What allows strategic innovators to predict the future is their reliance on measures of BOTH ‘strategic’ health AND ‘financial’ health of their businesses.

By adding strategic measures people it’s possible to get a couple of really powerful indicators:

1. An early warning system that allows them to question things before a crisis occurs, AND
2. A means of identifying new unique strategic positions to sustain growth.

The list of strategic health measures is long, they may include; customer satisfaction, market share, changes in the industry and the company’s fit with the changing environment, distributor and supplier feedback, employees morale, strength of company culture, innovation and new products in the pipe line.

Now if we are in agreement that these pretty fundamental measures tell us a lot about business survival and success, a simple question remains to be answered, namely; what tools do we have that can help us do the job of finding superior strategies – and if we want to go further with this – how good are they anyway?

I’ll tell you in my next post

Best wishes

For further information download FREE “How to Create and Exploit a UNIQUE STRATEGIC POSITION for Your Business”

Everybody who is responsible for strategy formulation should be actively considering how to rejuvenate their businesses. In other words to seek out and be ready to allow their businesses to embark on another growth curve – and just when the new growth curve is about to peter out, find ways for their companies to rejuvenate themselves again and prepare to get on a new growth curve and so on.

Clearly, for this to happen, a company is required to adopt a questioning attitude; an approach that continually challenges the status quo – no matter how successful the business is. This would enable the business to fend off trouble before it arrives and would allow it to find address rejuvenation.

But as most managers see and follow only an upward trend line and are successful in achieving growth – and must certainly be doing something right – they are entitled to ask; “Why would we want to change? Surely no one can predict the future?” So justifying calls for action NOW on the basis of what may or may not happen now is a dangerous business?

Therefore, a related issue is for managers and business owners to identify their businesses’ position on the growth curve and hence pinpoint whether or not the moment for rejuvenation.

The difference between most people responsible for strategy formulation and strategic innovators seems to be that the latter have a window on the future, they seem to know a few years before a crisis impacts that they must circumvent it and indeed decide how to do just that!

Best wishes

May we wish you the best of new years in 2008! And welcome to the first of a series of posts on business strategy – starting with something that may have been a stocking-filler!

Why mention the iPhone?

Apple has said that it’s on the way to selling 1 Billion iPhones in the next few months. Judging by the news and hype (and the ecstasy I saw on a friend’s face who bought one recently) that quest seems to me to be distinctly achievable.

What’s also staggering is that Apple has muscled its way into one of the world’s most brutally competitive markets, rattling the mobile phone industry’s most dominant players by producing the No. 1 ‘must-have mobile phone on the market’.

Ever since Apple unveiled the Macintosh computer in 1984, it has become the standard-bearer of how to market consumer products.

It has transformed into an increasingly commanding force in the new digital universe by combining innovation and design in ‘got-to-have-it’ gadgets. Firstly with the iPod (which changed how we listen to music) and latterly with the iPhone (which has re-invented how use a mobile phone), Apple has achieved technological dominance.

For this reason Apple has shown us what a superior strategy based on a unique strategic position is all about.

The Secret?

What Apple shows us – and other businesses like it – is that strategy is as much about insight and vision as it is about being simultaneously in tune with customers and two steps ahead of competition.

Think about it for a moment. How many businesses do you know who have created and occupied a unique strategic position? And how many of them do you know who have actually gone on to find another one – and another – consistently offering their customers even more value?

A handful probably.

Yet such superior, and successful, strategies share the same underlying principles. Thus the principles behind Apple’s successful iPhone strategy are essentially the same as those that took Marks and Spencer to market leadership 100 years ago!!

What are these principles? Well that’s for next time. See you then.

Best wishes

There are two ways that work should be done inside your business: by SYSTEMS and PROCESSES.

Earlier we said that if your business depends on YOU, you don’t have a business you have a job! Well the solution is to be found in setting up systems and processes.

(1) Systems take the form of manuals, written scripts, standard forms, checklists, and standard letters and so on. For instance do you have systems for such things as identifying prospects, persistently chasing every prospect in a way that they are made to feel welcome, generating a continuous stream of referrals, recording and following up every single sales lead and much, much more?

Systems are so vitally important because…..anyone can …
• Operate them – so you can step away from working IN the business and concentrate more of your time working ON the business, and the other things that are important to you too.
• Run the system so the business is less dependent on any individual or group which means that you’ll never need to fear staff illnesses, retirements, defections and industrial disputes again.
• Replicate past success using the system.

The great thing about systems is that what you do, how you do it and the results you get all become more consistent and predictable – and you can achieve more – in less time!

Let’s move on…

(2) Processes One of the keys to making business more successful is to identify your most important processes, decide how they work and what they deliver and do everything possible to make improvements where necessary.

Processes are so vitally important because…they help to…
• Optimise the way you do things inside your business.
• Pin down the activities and responsibilities of your team, the links between team members and you, as well as the deliverables and timescales involved.
• Appreciate and understand the flow, the interactions, and the sub-processes and sub-activities that are constraining your performance.

It’s impossible to achieve optimum performance in your business with flawed processes. Most problems in business are due to faulty processes, not human problems, nor anything else. That’s why having a tool as powerful as a process is crucial to streamlining your business operation.

Points To Remember Are:

Concentrate on what you do best and outsource the rest so that you can get on and grow your business.

• Consider what your business does best, stick with it and recruit and outsource skills to help you achieve your goals!

• Many businesses deliver mediocre levels of performance because they fail to operate effective systems and processes.

A Valedictory Recommendation

I would like to wind up with a single deep-seated RECOMMENDATION, one that speaks of the character of the business owner. It is to be found in the tale of a great business leader, Andrew Cook, an individual that applied the skills we have covered in this Business Growth Series, but who in addition characterises what is best in human endeavour in the business world.

This factor we would suggest is the Ultimate Recommendation for Real Business Success!

But judge for yourself!

In the 1980s Andrew Cook, on taking over William Cook, a well established family owned engineering company, immediately invested in increased efficiency, quality and capacity in the industry’s least value segment – at a time when capacity was double the amount of industry sales– and industry output had been falling for a number of years.

Cook’s didn’t have the image of a Mercedes or an IBM amongst its customers. Neither was it a technological leader, nor did it possess secret processes to guarantee extra income. Conventional thinking would have suggested that Cook milks the business and leaves the industry, or goes into a higher value and differentiated niche. But no, Cook invested in capacity, capability and quality improvements.

Rivals thought he was mad… All seemed against him.

But his insight and efforts yielded results quickly. Within a few years sales had risen 10% against industry losses. He was the first to invest in BS5750. Within a couple of years he had acquired two of his major competitors and by the ‘90s he had become the market leader.

The recommendation we advocate here is concerned with one of the most admired human attributes of all – that of FORTITUDE.

William Cook’s own summing up of this ideology is to be found on the company’s web site;

“Press on. Nothing in the world can take the place of persistence. Talent will not; nothing is
more common than unsuccessful men with talent. Genius will not; unrewarded genius is
almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”

A Final Point To Remember Is:

He who is slow to anger is better than the mighty, and he who rules his spirit than he who takes a city. Proverbs 16:32

If your attempts to grow your business have met with sluggish results even though you have got the other result areas that are presented in this Business Growth Series in place – it’s almost certainly your MARKETING TACTICS that are holding you back and restricting you to lackluster results.

Let’s look at some of these tactics now.

Quite simply we can separate marketing tactics into two camps; “Front-End“ and “Back-End”.

You can think of “Front-End” as the first sale; the pipeline that brings new customers into the business. The “Back-End” is the product (or hopefully the series of products and services) that you sell to your customers after they have purchased your initial offering.

The question to ask now is what tactics you should use in each area? And here they are:

Clearly front-end marketing is vital for your long term business success. This is why it’s so important to inject the power of marketing into your business so that you can increase the number of customers that come to your business as a continuous flow…

I said previously that people buy for emotional needs and those emotional needs are never fulfilled. Your role as a marketer or as the business owner is to continue to exploit those needs because it’s the emotional void that creates the desire to buy that never gets fulfilled by the purchase of the product or service. Therefore, in order to do your job right, you need to have multiple products and premium offers on offer throughout the length of your pipeline – or at the back-end.

You’ll always make more money from back-end offers than from front-end ones. They offer a much higher conversion rate, they usually sell for more money and you can make a bigger percentage on the profits on them too. And it’s always easier to sell to a customer than a prospect.

But remember the long term; you must have customers coming into the business. You can’t just rely on your loyal customers. By the way, if you have competition then you can bet that most are competing at the front-end and trying to attack your front-end offers with their own so as to eventually weaken and erode the strength of your own USPs and offers.

The question I have for you is this; are you doing any type of marketing whatsoever, and if you are where is the focus of your efforts?

So once you have found your HUNGRY CROWD …WHAT next?

The trick is to find a distinguishing benefit that conveys the problem you will solve or the “want” you’re trying to satisfy that sets you apart from your competitors. This benefit – or unique selling point (usp) is the foundation for your business for it defines what you do or say. In short it helps you:

• Attract and keep customers
• Accelerate market diffusion
• Create a point of difference
• Fill a perceived gap in the market place
• Motivate prospects and customers to act

There are many examples of this type of ‘selling point.’ Only the other day I overheard a major financial institution marketing its high interest bearing ISAs with the message; ‘finding ideas for your money!”

How to come up with a winning offer
The challenge is to explain or to present in conversation and in literature, COMPELLINGLY, what you do to provide a major advantage to your customers that your competitors don’t, or can’t offer and turn this into a few words that offer the means to GRAB your prospects’ attention.

Here’s one way – a 5 step USP generator …

1. Find the problem people have most trouble with …
2. Identify the implications of the problem … ’which means …’
3. Define your solution … ’well, what we do is …’
4. Describe the benefit of your solution …
5. Distil the results down and find the few compelling words that make the difference.

So use the USP generator, it will help you find in a WORD; the solution customers want most and it will help you to stand your business head and shoulders above its rivals.

Points To Remember Are:

• Build a business around a HUNGRY CROWD for whom you offer value with a pipeline of products.

• Prospects and customers have got to see and understand why they should buy from you and how you are different from your competitors, so find the COMPELLING WORDS that will do this for you.

Every week new companies emerge selling their products and services, whatever the type of business. And there are also many successful companies out there looking to expand their businesses. Competition, both good and bad is rife!

So how can marketing help? Can you answer that one?

Simply stated the first rule of marketing is causing the market to desire your product. Peter Drucker puts it another way when he said that;

“… the aim of marketing is to make selling superfluous.”

In short both definitions add up to the same thing; marketing that attracts customers may be described as power marketing.

People have got tired of leaflets, flyers and sales letters. The reason why some product launches are successful is that the people managing them actually marketed them. Business owners that know about marketing try to find out the emotion that makes people want to buy – they realise that people just don’t buy products or services they buy solutions or benefits that will help them achieve a gain or reduce a problem.

So an early imperative is to find the market first by finding out what people want, and then…to let them buy what they’ve told you they want!

A ‘HUNGRY CROWD’ is an interesting and relevant concept in the context of finding a niche within a market…

At the end of the day a ‘HUNGRY CROWD’ – is a group of people, increasing in number, that really, really want what you have to offer – badly. It’s this that is going to guarantee the success of your business!

The point of all this is to urge you to start to concentrate on spotting your ‘HUNGRY CROWD’. Listen to what people ask for, dream or complain about. It’s not enough for you to sell to people who CAN benefit from what you sell; you need to market to people who WANT to benefit from the SOLUTION you offer. In fact you’ve got to find people who will CLAMOUR for your product, so that sales and marketing becomes a lot easier…

A related point is this. Once people have tried and accepted the benefit you offer, they will come back to you again and again seeking further products and services from you that meet and satisfy their emotionional needs – the fundamental reason for buying from you in the first place.

We examined the first of two really important tenets of successful strategy – creative insight and competence? Well it’s time to look at the second of these: what is it that you and your business are good at doing?

People tend to think that profit is purely to do with market opportunity. But this is to miss the truth. Great strategies are built on a clear appreciation of “what we’re good at doing” and converting this into competitive advantage. This core strength or competence is the driver for market penetration and development.

The importance of the question: ‘what are we good at doing?’ can not be overestimated. For what you – and your business – can do that’s of real value for your customers will help you differentiate your business. It then follows that if you concentrate on activities that leverage your strengths so that you can get the best output you are capable of, you can continually improve the strength until it becomes a world beater.

Producing ‘hearts and minds’ loyalty
You can also build on your business’ strength by turning it into a compelling vision that can often be more seductive than the product or service you offer. Most people in life haven’t really worked out their real purpose in life. This means that they’ll attach themselves to someone that has if given half the chance.

This is much bigger than finding a niche because if you want to win over the ‘hearts and minds’ of your prospects you’ve got to go beyond the product to a cause – your business strength lends itself to being that cause. And this applies to the people that work for you too. After all they are your ‘internal customers’.

The issue then is to be absolutely clear about the one thing that you are really good at doing or put another way; what distinctive competence makes your business special. It might be something to do with safety, or durability, or size.

Points To Remember
• So remember don’t underestimate the value of having a strategy.
• Creative insight and key strengths should be the true focus of business success and achievement.
• Concentrating on what you’re good at can win the ‘hearts and minds’ of your most important stakeholders.