Wayne Wilson on Companies in Transition

Positioning, like timing, is everything

Positioning is the other side of the timing coin. If timing is critical to success, then being in the right Place at the right time is equally important.

Take the recent New York Knicks phenomenon Jeremy Lin. He's smart, but he played basketball at Harvard, was not drafted by any NBA team, had been cut by two other NBA teams and was at risk of being cut by the Knicks when the confluence of Knicks player injuries and absences created an opportunity for Lin to show what he could do. He was in the right place at the right time.

So how do you position yourself to be in the right place?

Some of it is frequently attributed to luck, but if you subscribe to the belief of many that you create your own luck, then positioning becomes everything.

One of the greatest marketing books ever written, Positioning: The Battle for Your Mind, is all about how to position your product or service for success.

• Who are the potential customers?
• Where are they?
• What are there needs?
• How do you ensure that your prospective customers can find your product or service when the need arises?

Positioning is a classic still very much worth reading and re-reading.

Does your product or service "spell relief"?

Remember the old television commercials for Rolaids? The tag line was "Rolaids spells relief." The man or woman in the ad had a real problem - serious heartburn pain, which could be alleviated by eating some Rolaids. And with 10's of millions of heartburn sufferers, the makers of Rolaids had a large market opportunity.

Some time ago, I pitched what I thought would be a hot new web-based service. One of the people whom I believed would be a natural user and booster of the service failed to see the value. His response? "Sounds like a hammer in search of a nail." I had an idea in search of a market rather than a real market opportunity.

The success of Rolaids illustrates some important principles about product and service development:

1. Utilize market research to uncover unmet customers needs, i.e. real problems which cause real pain and therefore need real solutions (which people will pay for).

2. Determine the size of the market opportunity. How else can you determine whether the costs of developing the product or service will be justified by the likely sales?

3. Focus your efforts on problems which have large market opportunities. That's where the profits are.

4. Be disciplined. Finding large market opportunities takes some work. Don't settle for the first Idea that comes along. Look for the real winners.

Taking social media seriously

Since we last wrote about social media for business, the social media universe has exploded. According to USAToday¹, there are now:

• 800 million users on Facebook
• 150 million on LinkedIn
• 100 million on twitter, and
• 15 million using location service FourSquare

Who would have thought it?!

With legions of businesses of all sizes plowing time and money into social media, every business owner/CEO needs to think about what social media means to his or her business - both threats and opportunities.

Advertising ROI models have been emerging but each company still must determine how social media fits into its business model. FourSquare may be great for Starbucks but it's not likely to do much for a professional services firm where blogs and active discussion sites remain important thought-leadership building tools.

On the other side, social media has the ability to become a large (useless) time sink if committed to indiscriminately. Unless you're Jeremy Lin, it still takes time to build a following.

Consider your:

• Business model
• Marketing plan
• Available marketing tools
• Social media's place/niches among those tools
• If you decide to use social media in your marketing mix, which platform(s) are appropriate?
• What approaches to use?
• Who will do it?
• How much will it cost?
• What results should be expected?

The same principles used for other major business initiatives should be applied to social media:

• Plan
• Execute
• Monitor
• Evaluate
• Revise

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¹ USA Today, February 17, 2012, p 3B

When failure is not failure

“A failure is not always a mistake, it may simply be the best one can do under the circumstances. The real mistake is to stop trying." -- B.F. Skinner, American psychologist, inventor and author

Failure is often the one thing people try to avoid – sometimes to their detriment. But should they? I prefer to think of failures in three varieties:

• “Bet the ranch” failures – generally to be avoided, they should only be undertaken in dire circumstances and with the full knowledge of owners or boards of directors. In the recent financial crisis many financial firms were “betting the ranch” without knowing or explicitly acknowledging the gravity of the business risks being undertaken.

• Costly failures – these business failures occur frequently and systemically have much in common with the first group: all of the risks of a given course of action have often not been properly recognized, evaluated, and/or communicated to the relevant owners or boards. Anticipating risks and planning for their mitigation is an integral part of minimizing costly failures.

• Learning failures – these are or should be the most common and should be encouraged in most organizations. Sometimes, we simply cannot know what will work until we try something. A great example of encouraging “learning failure” risk taking occurs in direct marketing where the mantra is “test, test, test” before rolling out a major marketing campaign. The goal is to incur lots of small failures while working out the campaign details before risking large amounts of money.

Maybe we should change the conversation – instead of “try and fail”, let’s call it “test, test, test.”

The yin and yang of social media

Everyone below the age of xx (pick a number) is raving about some form of social media these days. Twitter is big and facebook is massive, supposedly, and they are going to change the world.

In today's Lost in a digital world, Seth Godin talks about how easy it is to hide. We think we're networking, building relationships, developing business, etc., but if we lose all human contact, all we're doing is hiding.

Owner/CEOs know that businesses are built by building relationships. And building those relationships requires a certain minimum amount of face to face contact. A lot can be accomplished from a distance electronically once you've established that eyeball-to-eyeball substantive contact.

Deal making is a great example. Teams can strategize by conference call and email, but due diligence requires your team to be on the ground touring facilities and talking to people face to face. And while document exchanges and haggling over contract language have been greatly facilitated by email and electronic document rooms, hard negotiations on difficult subjects almost always require physical meetings.

Web-based retail and internet marketing might at first appear to be different. Just look at the success of amazon.com and other online businesses. But amazon's business development officers are likely not meeting with publishers on facebook. They're in New York, or wherever, pitching them in person.

Once all the hype dies down, social media will be like all the great, but now mundane, business tools which came before (think telegraph, telephone, email - you get the idea).

By all means, experiment, test, and incorporate social media tools in your business wherever they make sense. But don't get carried away. You still have to sell stuff and make a profit to create real long-term value.

Banking on banks?

Banking on banks could be hazardous to your health. A recent article in The Economist [1] reports new data indicating that small businesses are a drag on the employment rebound from the recession. Large firms have resumed hiring but small firms continue to shed jobs.

The culprit? According to The Economist, one of the biggest causes is tight credit. With banks still skittish about bad debts, only the most credit-worthy companies can qualify for new loans to expand their businesses – and hire more employees.

While lack of credit is a likely cause, subdued confidence in the future is also at work here. Entrepreneurs and other business owners are almost by definition optimists – who else would take the risks? But investing for the future also requires confidence in a stable business and economic environment. Such confidence has been in short supply.

Continuing upheaval in global financial markets, impending increases in government healthcare mandates, business regulation, and tax rates do little to inspire confidence that investments made today will result in reasonable prospects of returns on those investments in the future.

In this environment business owners must:

• Carefully evaluate current and future market opportunities

• Develop business plans based on conservative financial assumptions

• Establish and guard rainy day funds and backup lines of credit as if there business lives depended on them (which they might)
  

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[1] May 15, 2010, p. 38

KISS* applies to more than sales

Most sales professionals are familiar with the KISS formula - “Keep it Simple, Stupid!” New sales professionals have a tendency to want to tell a prospect everything they know about the product or service they are selling without regard to the prospect’s knowledge, needs, or interest, and the sales manager or trainer must continually remind them to dial back on all the technical stuff.

Josh Cunningham’s recent post about his web philosophy on joshcanhelp.com reminded me that the KISS formula could add value to most business activities, not just sales. Here is my take on Josh’s version of the KISS formula:

1.      Look for the path of least resistance.

How often do we struggle to solve a problem with a big, complex (“impressive”) solution when a much simpler option is readily available if only we will open our eyes and look around? Sometimes that means asking others for advice, sometimes just doing a bit more research.

I once had a neighbor who seemed to always have the answer for everything from appliances, to TVs, to lawnmowers. After the first two times, I just called Jim when I needed to buy something. He already knew what and where the best deals were.

2.      Have a goal in mind

Remember the distress call from Apollo 13? “Houston, we have a problem.” Clearly, the goal for the Apollo 13 crew was to get home safely. Not every business challenge has such a straightforward desired outcome.

What do you do with the customer who constantly demands special privileges every time he calls? What about the brilliant scientist in R&D whom no one wants to work with?

Thinking carefully about your desired outcome will help you better weigh the available options.

3.      Always consider performance

Everyone wants improved performance. But like goals, performance monitoring requires that metrics be defined and agreed upon before the task or process begins. Only then can performance be objectively assessed.

Cunningham was referring to web page performance – how quick does a page load? How long does it take to refresh? Customers and prospects are impatient: keep them waiting for very long and they will go somewhere else.

Investors think the same way. Managers work for investors, not the other way around. What do investors want? Usually, dividends and share appreciation. Figure out how to do it and give it to them.

4.      Put your best foot forward

In the modern globally interconnected world, we, as individuals, as well as our companies, are always on display. There is virtually no room to hide on the Internet. Misbehave or treat a customer shabbily and sooner or later it will come out thanks to YouTube, twitter, and Facebook.

There’s enough foolishness and nonsense in the world. Just do it because it’s the right thing to do. The rest will take care of itself.

6 Critical Areas of Business Management

Here are 6 critical areas that every business owner must constantly monitor and manage:

Business Planning – Business planning involves a regular review of your strategies and tactics for achieving your business’ goals. How is the new store location doing? Is your web site producing a steady stream of sales leads? Are the Friday specials attracting new customers?

Financial Management – Is the business profitable and generating sufficient cash to pay bills, salaries and needed capital improvements? How strong is your banking relationship? What is your backup plan if sales slow down?

Project Management – Major projects and initiatives such as marketing campaigns tend to work out better if carried out on the basis of a well thought out and executed project plan. What are the tasks to be accomplished? Who is responsible for each? What resources are required? When will the tasks be accomplished?

Ownership Transition Planning – Every business needs a succession plan to address continuity in the event of illness, disability or retirement of the owner and other key managers. Lack of a transition plan may result in the business losing value or being unable to continue as a going concern.

Human Resources Management – Your people are your most important asset. Without your associates, who would service your customers and support your business? What types of associates does your business need? Where will you find them? How will you attract and retain them? Despite the recession, good people are always in demand.

Marketing/Business Development – Marketing is about finding, attracting, and connecting with customers. Business development is usually taken to mean developing new markets or major business partner (vendor or customer) relationships. Both are important components of a successful business strategy, but don’t forget about sales. Your sales activities are the one which actually close transactions with customers, move product and bring in the cash.

Rate your performance in each of these areas with a simple one-page, two-column analysis for each area. Label one column "What's working well" and label the other column "What's NOT working well". List 5 or 6 positives in the first column and 5 or 6 negatives in the other. Then at the bottom of each page, list the three most important actions which you could take to improve your performance in that area.

After completing this process for all six areas, summarize and prioritize all of the potential action items, and resolve to work on the top three or four items over the next three months.

You will be amazed at what you can accomplish!

Where there's a will, there's a way (or two or three)

Entrepreneurial success in business is often driven by the combination of three forces:

1. Opportunity - someone has an unmet product or service need

2. Ingenuity - an entrepreneur figures out how to address that need and make a profit doing it

3. Hard work - the entrepreneur stays the course, doing whatever is necessary to make the product successful

And sometimes, the entrepreneur must overcome additional or unusual obstacles to reach his / her goals. Here's an example from Smartbrief on Entretreneurs about Doing business the old-fashioned way:

"Miller Farm, a Pennsylvania producer of nutrient-rich foods, has more than doubled its sales to $1.8 million in just four years -- without the benefit of cell phones, Web access or office machines. The Amish-run family business relies on snail mail and a single landline telephone to maintain connections with the outside world. The company also uses trade show appearances to help bring more foodies into the fold." (Read the full article at BusinessWeek )

The Amish farmer in the story is a classic entrepreneur - he saw an opportunity, figured out how to meet the customer need while staying faithful to the Amish community's constraints and way of life. And he did it with a farm!

Maybe some of our best business opportunities are just outside our windows.

Riding the roller coaster

Coming to another year-end always reminds me of the roller coaster. You know the one: it’s the one you ride every day.

Running a business is like riding a roller coaster. You work, work, huff and puff climbing that big hill to get your business going (or get it out of the ditch). Finally, one day, you reach the top, and with a great sigh of satisfaction, you start to relax to enjoy the view for a bit. But, while the car has slowed to a crawl, it has not stopped moving, and then…

Flying down the other side you go fighting the next crisis, competitor, or just the next quarter’s numbers. And they call this fun? And here’s the best part – as long as you stay on the ride, it never ends. Round and round you go…

What are some of the lessons here?

• Life, nature and business run in cycles / seasons – get used to it unless you have a craving to be road kill.

• Different strategies work best at different points in the cycle. Think about approaching a sharp curve in the road. You slow down, or even brake, a bit as you enter the curve, and then you re-accelerate coming out the other side. This maneuver lessens the chance of a crash while maintaining your overall momentum.

• Anticipating change works better than reacting to it. Recognizing your approach to the top of the ride allows you time to grab the rails anew and take a few deep breaths before going over the top, thereby reducing the chance of losing your hat, your wallet or your lunch.

Facing a sudden challenge or crisis with a calm demeanor works a lot better than wide-eyed panic. Trust me on this.