Archive for March, 2011

Follow Your Dreams, But Chase The Money

Wednesday, March 23rd, 2011

Our first guest blogger is.………………Jeremy Miller, the President of Sticky Branding — a brand consultancy specialized in building brands that sell themselves online.

The best way to grow profits is to cut your own path. 

You never hear about companies who achieved immense success by doing what everyone else did.  No.  Successful companies challenge the status quo, and create new categories and sub-categories.

Companies that break the mold and create new categories create immense competitive advantage.  You can see these breakout businesses in almost every industry.  Wal-Mart rewrote the business model for discount retailers, and set the standard for big box retailers.  The Chrysler minivan went 16 years without a viable competitor.  And Apple epitomizes the creation of new categories with the iPod, iPhone and iPad – each product causing structural shifts in consumer electronics.

Every business owner has an opportunity to break the mold and find their own path.  It takes vision, commitment and quick reflexes.

New categories aren’t made in a vacuum

Innovative new categories are not created in isolation.  Thousands of brilliant business ideas have died on the vine, because there just wasn’t enough demand for them.  The entrepreneur saw a need that no one else cared about.

Successful companies challenge the status quo.  Steve Jobs said in a Fortune Magazine interview, “When we created the iTunes Music Store, we did that because we thought it would be great to be able to buy music electronically, not because we had plans to redefine the music industry.  I mean, it just seemed like writing on the wall.”

When forming a new category it’s always in comparison to the current alternatives.  Your customers already have solutions for their business challenges; they just might not be the most optimal.  Challenge those solutions head-on, and provide them a better option.

Constantly Tinker

Businesses rarely get it right the first time.  Wal-Mart’s dominance didn’t happen overnight.  It was Sam Walton’s life’s work, and came out of his constant tinkering and risk taking.

Walton was always on the hunt for fresh ideas he could implement in his own stores.  He said, “I probably have traveled and walked into more variety stores than anybody in America.  I am just trying to get ideas, any kind of ideas that will help our company.  Most of us don’t invent ideas.  We take the best ideas from someone else.”

Creating a new category is a work in progress.  It takes a significant commitment of time, resources and energy to give your customers a new alternative.

Nothing relieves pressure like sales

It always boils down to money.  If your customers don’t get it, they won’t pay for it.  Customer feedback is the best feedback.  It will tell you if you’re on the right track or not.

Chances are your first time to market may not be a whopping success.  So persist, tinker, reinvest and continue to push the bar forward.  It’s your vision and dreams that will help you find a new category, but it’s your customers that will form it and make it a reality.  When it does come together you will be on the path to immense profit growth.

For more information on Jeremy Miller and Sticky Branding visit http://www.StickyBranding.com

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6 Ways A Business Owner Can Influence Culture

Tuesday, March 22nd, 2011

The 6 Ways a Business Owner Can Shape Culture.

Communicate and publish the company’s values, vision and mission as widely as possible. This first assumes that they were identified during the strategic planning process. Repeat and discuss them at every opportunity; put them on mugs, t-shirts, mouse pads and baseball caps; reward everyone who can not only remember them – but who also know what they mean.

Be a role model for the values. Employees watch the owner and other leaders’ behaviour all the time. Inconsistencies between the written values and day-to-day action send loud messages about the real culture. For example, having “investing in employees” as a value and then not providing funding for training is inconsistent. So is saying that “being innovative” is a value while punishing employees who attempt to innovate but fail.

Tell stories and help create legends about people. Stories are a great way to reinforce the desired behaviour and culture. If, for example, an employee goes out of their way to help a customer, the owner and management team must repeat the story – and encourage others to do so – at every opportunity. That’s how legends are born. Richard Branson shows how here.

Ensure the organization chart supports the culture. A company’s organization chart is a major way in which they embed and send signals about the culture. It’s easy to be inconsistent. For example if the stated aim is to foster collaboration and teamwork, a flatter organizational structure will be much more effective than a very hierarchical one.

Design the work space appropriately. Much like the org. chart, the physical layout of an office, plant or warehouse can affect company culture. For example, an open environment with no walls creates a very different atmosphere than one in which everyone has their own office with floor to ceiling walls. Neither approach is wrong, but both can be really inappropriate and unsupportive of values and culture.

And number 6 is – The use of rewards and status symbols. Salespeople are usually compensated using reward based systems e.g. commissions, bonuses for being over quota for a quarter or year; trips to exotic destination. But the people on whom the company relies to make and deliver the products or services the sales force sell frequently aren’t rewarded in this way. This difference in approach to pay can damage the culture by creating divisiveness or, if left unaddressed, even bitterness. On the other hand, used effectively rewards and status symbols can build an achievement oriented culture.

In Summary

If a business owner isn’t pro-actively shaping the culture in the company, one will develop spontaneously. And while the culture can support the development and execution of great strategies, which get great results, if it is inconsistent with the strategy, it will dramatically reduce the odds of the strategy being successful.

Taking the initiative and developing a culture which will help increase operating profits and build shareholder value is simply another aspect – or even by-product – of good leadership.

Strategy, Culture and Leadership

Tuesday, March 15th, 2011

You may think I believe strategy exists in a vacuum because of the focus of my earlier posts. But that’s not true.

I do believe that strategy is a key driver (perhaps the key driver) for increasing both operating profits and the value of an owner’s equity in her/his company. I also firmly believe that strategy execution has a far greater impact on results than strategy development. However I know that in every business………..

There are 2 things at work that influence how well strategy is developed and executed – leadership and culture.

Every business, whether it has 1 employee or 1,000 employees, has a culture. Owners of companies, with e.g. less than 20 employees, often tell us their business doesn’t have a culture because it’s too small to have one. But it’s not.

Even if the owners aren’t pro-actively shaping the culture, one will develop spontaneously.

Every leader has a style. Individual styles can vary from very closed or controlling to very open or democratic. I believe a leader’s style becomes increasingly less effective the more it approaches either of those 2 extremes.

The more influence the position held by a leader has on the company, the more impact his/her style will have on the culture.

How leadership and culture combine to affect strategy development.

The owner’s leadership style determines how strategy development takes place. For example, the more open the style, the more consultative the approach; the more internal people involved; and the more external input sought.

Culture has its greatest impact on what is discussed – particularly around the company’s strengths and weaknesses – and the extent to which each topic is examined.

For example, assume the leaders have a track record of being open on some topics but not others (an aspect of their leadership style). Even if everyone who should be at the meeting is there, the attendees will not raise topics which past experience has shown to be off-limits, even if they believe those topics are critical to the development of an effective strategy.

How they combine to affect strategy execution.

Culture is apparent in the values (often published) that the company says are important and which are intended to guide everyone’s behaviour. The employees’ view of them is directly affected by the leaders’ style. If the leaders’ behaviour does not give life to the values, employees understandably become cynical.

One aspect of culture, the assumptions that employees come to learn and which influence their behaviour, is completely invisible. These assumptions are formed as a result of the leaders’ style/behaviour. Two examples are – customer satisfaction is more important than immediate profit; and your opinion isn’t wanted, just do what you’re told.

So what does all of this mean?

If the owner and other leaders have a relatively open style; hold positive values; and behave consistently, in line with those values, the culture will support the development and execution of great strategies, which get great results.

If the leaders don’t have or do all of those things then the quality of the strategy and the results achieved will be reduced, perhaps severely.

The impact of leadership and culture is greatest when there is a major change of strategy. This usually requires employees to change their behaviour to customers; to the way in which they work; or to both.

If the existing culture is inconsistent with the new strategy, the culture will dramatically reduce the odds of the strategy being successful. Some people believe that in this situation the culture will defeat the strategy completely or – as Peter Drucker put it – culture will eat strategy for breakfast.

What do you think?

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