Tag: business

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How does Your Business Grow?

Written by Dora Cheatham, Program Manager, Emerging Enterprise Center

 

INNOVATE OR DIE has become a 21st century mantra, and rightly so. Today’s globe is smaller than ever, communications are instantaneous, competition is fierce and market expectations are high and ever-changing. Innovation is therefore a prerequisite for survival.

But what is this seeming “answer to all ills” that we call innovation? How do we make it succeed? And how do we do so while simultaneously meeting various business and ROI criteria that may be imposed upon us and are often at odds with a long term innovation strategy?

When we speak of innovation, many people immediately think of breakthrough developments that changed the course of the marketplace, industry or even history: the automobile, the telephone, the microchip, iTunes. However, innovation can be as simple as changing packaging, repositioning a product, or moving into an adjacent business space. Just yesterday, we saw the release of the 6th version of the iPhone together with the Apple watch: earth shattering? Maybe not, but people were standing in line for the new version of the phone and analysts are expecting a bullish next few months for Apple.

Some may think that this dilutes the concept of innovation, but a successful – and cost-effective – innovation strategy should incorporate a range of development projects that not only works towards breakthrough products and technologies, but also allocates resources to the improvement of existing products, the expansion of existing products into new markets, and the development of existing technologies into new products.

One of the best illustrations of this concept is Bansi Nagji and Geoff Tuff’s “Innovation Ambition Matrix”. Following a review of a number of high performing firms, Nagji and Tuff noted that on average, these firms allocated investments in similar ratios: 70% on the improvement of existing products or core, 20% on the expansion or existing products into new areas, 10% on breakthrough innovation. Their findings also showed that the return ratios were the direct inverse to the investment percentages. While breakthrough innovations yielded a greater return, core innovations required less time and money to develop, and as a rule were more readily accepted by the end user.

By understanding and defining innovation in terms of all of these elements – and not just breakthrough products – creating a growth strategy and implementing a new product development process that fits in with a firm’s core competences makes the entire concept of innovation, while no less daunting, certainly far more manageable and sustainable.

This also makes the concept of innovation far easier to disseminate throughout the organization so that it becomes a part of the organizational culture. When employees understand that innovation need not necessarily be limited to R&D or Engineering, they are more likely to contribute ideas that – while they may not lead to breakthrough products – could certainly lead to product improvements or cost reductions.

Redefining Profit Drivers

Additional routes to growth and innovation should also involve taking an objective view of your business model to clearly understand your profit drivers as they relate to your customers’ needs. This can prove a valuable tool and may lead to a reassessment of your market metrics and a redefinition of how you position your product and/or services and better align your offering to customer needs. We are seeing this more and more as businesses strive to offer insights and solutions rather than individual products.

 Free up Resources by Controlling Hidden Costs

While all of this is going on, there is one more important element that should be incorporated in the innovation process – and that is the regular and consistent review and maintenance of the existing product portfolio. Are the products still relevant and in demand? Are there any weak or inefficient products that could or should be repositioned, improved, or even removed to make way for newer products? Maintenance of inefficient products is a hidden cost and resource drain in many organizations. To allow innovation to function at its most effective, these resources should be freed up in order to be allocated to efforts that add greater long term value.

Strategy x Execution = Success

 

Of course – as with all strategies and my own personal mantra – it’s not just about the strategy but about the implementation and execution of that strategy. Often strategies fail – be they innovation, business, market or product strategies – not necessarily because the strategy itself is flawed but because the implementation and execution is flawed. As the entrepreneur Naveen Jain once said

“Success doesn’t necessarily come from breakthrough innovation but from flawless execution. A great strategy alone won’t win a game or battle; the win comes from basic blocking and tackling.”

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13 Lessons Verne Harnish Taught Me

Written by Cheryl Beth Kuchler, CEO Think Tank

It’s been almost a decade since I first heard Verne Harnish speak at a two-day “Mastering the Rockefeller Habits” workshop in Washington D.C. about “Scaling Up” a small business. It was, to put it bluntly, engrossing, overwhelming and life-changing.

Listening to Verne Harnish is like drinking from a fire hose. More illustratively, as one of my fellow Lehigh alums would say, listening to him is like drinking from the beer bong of business learning.

There’s so much to absorb, it’s nearly impossible to keep up. And if you’re not quick enough, you could drown. Six or seven hours into his workshop, as my head was going under water for the umpteenth time, I decided I needed a life vest.

So I started to capture the “highlights” from my learning to help me remember as well as focus. Two days later, I had thirteen points that summarized my key insights, my takeaways, which in turn would guide my behaviors in the years to come – in my own consulting business – which I was working to grow as well as with my clients who were working to grow their businesses.

As pertinent today as they were ten years ago, I offer them to you to consider for your own 2018 planning.  My favorite? #3 – If you have a problem or an opportunity ask yourself, “Who’s already doing this and how are they doing it?” Verne taught me that most business problems have been solved by someone else. We spend way too much time re-inventing the wheel. You just have to figure out who that resource is, and reach out. (See Lesson #2 for your next step.)

And click here to read my complete list of Verne’s 13 Lessons. Which one will you be focusing on for the coming year?

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Market Segmentation: Understanding Your Customers

Written by Dora Cheatham, Program Manager, Emerging Enterprise Center

“Any color-so long as it’s black.”  Why Henry Ford’s famous quote is no longer relevant.

When we utter Ford’s words today, they are often said in jest. Ford lived in a time of limited competition and his goal was straightforward:  minimize costs through mass production.  And the consumer was more than happy with the deal.  Today’s consumer is different:  he wants choice, lots of it, and with the proliferation of brands and channels, it’s there for the taking.  Whether you are a business or non-profit organization, selling a product or a service,  by segmenting  your market and customers into groups with similar needs and buying criteria, then adjusting your marketing mix to meet the needs of each group,  you enhance 

THE 5 CRITERIA FOR EFFECTIVE SEGMENTATION

  1. HOMOGENOUS—the needs within each segment should be               homogeneous within the segment and different from the other        segments.
  2. IDENTIFIABLE– the customers within the segment must be identifiable and specific.
  3. PROFITABLE—The more segments identified, the greater the opportunity to offer a targeted high value offer.  However, the number of segments identified should be balanced against the cost to serve those segments.
  4. ACCESSIBLE—the customers in the segments should be readily accessible in order to be able to serve effectively.
  5. ACTIONABLE—the segmentation should be such that the company can act on the segmentation to implement appropriate programs for each segment.

Once segmented, the business can then determine its business and marketing strategy on the segments themselves—their size, growth and profitability—the competition and the capabilities of the business.  Which segment(s) will you focus on?  Which segment(s) offer the greatest growth/profitability/maximum barriers to entry? Will your marketing mix (product, price, distribution, marketing message, processes, people) be the same for each segment or will they differ? The chart below shows the various marketing strategy options for business development based on market segmentation.

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Green Grazer Goats wins this year’s Swim with the Sharks Video Pitch Competition.

Written by Dora Cheatham, Program Manager, Emerging Enterprise Center.

Beating out ten other startup companies, and despite tough competition, Green Grazer Goats grazed into the no. 1 position to win the Emerging Enterprise Center’s Swim with the Sharks Video Pitch Competition—now in its 5th year and with a Grand Prize totaling over $22,000 in cash and services.

Green Grazer Goats is an eco-friendly farming operation that works hard to turn problem areas into manageable property, efficiently clearing areas of noxious weeds and brush without the need for human labor, heavy equipment, dangerous chemicals – and all at about half the cost.  With their clear vision and plan, Kalyn Butt and Kevin Connor convinced the judges that they had a viable business.

For the first time this year, the Emerging Enterprise Center, Delaware’s first small business incubator partnered with New Castle County Government, as well as multiple sponsors, to offer its largest ever prize package which included:

The competition required participants to submit a 3-minute video pitch showcasing their company and describing how their prize package will be used to grow their business.  The three finalists pitched live before a jury composed of judges from the entrepreneurial and business community.  Judging was based on multiple criteria, including clarity of message and vision, value proposition and feasibility of business concept.

The two other finalists:  DEact Medical Solutions and Drone Workforce Solutions, both of which also impressed the judges with their forward thinking innovations.  All three finalists received prize packages. Videos of all the submissions can be seen on Emerging Enterprise Center Website.

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Creating and Selling Value: Creating Value: Sales & The Value Pyramid

By Dora Cheatham, Emerging Enterprise Center

Going from supplying a product that meets basic customer expectations to contributing to a client’s organization can be hard to establish and even harder to maintain, but is an invaluable strategy for long term profitability. Keeping a customer requires the creation of a relationship of mutual trust and partnership that goes beyond supplying a quality product.

Seeking to create value and a sustainable competitive advantage is increasingly difficult in today’s data-filled environment. Buyers today are educated and savvy. In the B2B world, the buyer can be 60-65% through the purchase process before he or she even makes contact with an incumbent or potential vendor. They know what’s out there and what it costs so if all you have to offer is a product that meets specifications, then you have effectively created a situation where your only option is to sell on price—and the lowest price invariably wins. That also means that as soon as a competitor emerges with the same option at a lower price, then chances are that customer is lost to the newcomer. So how can you ensure that your customer remains loyal to your product and business?

Smart Buyers Seek Value

A truly smart buyer understands the value of a vendor that contributes to the smooth running of his or her business. If you can deliver a flawless product, on-time, every time, with excellent customer service, then it behoves him to use your product—because spending time dealing with vendor-related problems and quality issues costs money and impacts his own customer service and bottom line (think about the UPS “I’m happy” ads where department managers and customers are happy thanks to UPS Logistics).

By supplying a quality product with excellent customer service you have already established some level of competitive advantage. And many companies today provide good products with good service – it is a prerequisite to staying in business. To sustain that advantage however you need to continually climb the value pyramid and add to your product in terms of additional service and knowledge, eventually making a quantum leap to the peak of the value pyramid to establish yourself as more than a vendor, but a trusted strategic partner.

Can you help lower your customers’ costs or improve their productivity? Can you help them identify new products or markets? At an even broader level, can your customers call on you for advice on operational systems and processes or strategic direction? In other words, does your customer consider you a supplier or a partner?

Schematic adapted from Doyle P. and Stern P., Marketing Management & Strategy, 4th ed., Prentice Hall

 

As you climb the value pyramid, commoditization decreases and company and product value increases, with fewer competitors able to compete at the same level. The fundamental difference between the lower and upper levels of the pyramid is distinct: to be good at the former, the salesperson and business needs to have a top quality product to sell and needs to understand his product and his own business well.

To be good at the latter, the salesperson and business needs to have an understanding not only of his own product and business, but of his customer’s business as well. He needs to understand his customer’s individual and industry needs and must excel at consultative selling, offering solutions that are of mutual benefit to both organizations. Only then can you hope to ensure an enduring partnership and long term rewards.

You don’t close a sale; you open a relationship if you want to build a long-term, successful enterprise. Patricia Fripp.

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Why To-Do Lists Are Killing Your Productivity

Written by Brooke Miles, Delaware ShoutOut

Do you start out each week—or each day—with a to-do list? Before I wised up to the dangers of to-do lists, I wrote them all the time. A typical one looked like this:

  1. Write blog article
  2. Craft proposal for new client
  3. Throw out orphan socks from sock drawer—or repurpose into puppets
  4. Develop PowerPoint for social media seminar
  5. Pull new gray hairs from top of head
  6. Make sales calls
  7. Memorize lyrics to Queen’s Bohemian Rhapsody. Consider singing with sock puppets.

You know what happened? I’d do the irrelevant stuff first (sock puppets, gray hairs, and Queen), because they were more fun and easier to check off. Wow, I was getting stuff done, I thought! Sure, I might work on less-pleasant-yet-critical business tasks…if there was enough time afterwards. But usually I found more tempting ways to fill the time.

Maybe you can relate. Okay, maybe you’re not lured by sock puppets, gray hairs, and Queen. But your tendency to check off simpler tasks—pay a bill, make a quick phone call, etc.—may be preventing you from accomplishing tasks that could make a huge, positive impact on your business.

Here are more problems with to-do lists:

  1. They don’t factor in the duration of each task. Some tasks might take two minutes—others might take two hours!
  2. They don’t say when you will tackle each task (i.e. no real commitment).
  3. They don’t distinguish between urgent and important. Urgent and important aren’t always the same thing.
  4. They rarely get completed in full. Did you know that, on average, 41% of to-do items never get done?

Imagine what your business would look like if you consistently accomplished your big-picture tasks every week.

My business transformed—with revenues quadrupling in one year—when I stopped writing to-do lists and started putting important tasks in a calendar. (I use Google Calendar, but any calendar will do.) Why a calendar? Because it forces you to block out time for the stuff that matters. In other words, you’re making regular business appointments with yourself. Using a calendar also helps you see what your day truly looks like, so you don’t end up over-committing to less important tasks.

Do I still crave a life with sock puppets, gray-hair pulling, and Queen? Absolutely. But now I can visualize what little time I have for it, at least during the workday. (Besides, I’ve found it’s easier to work on gray hairs at night, when my teenage son can help pull the ones I can’t see on the back of my head. Awkward for him, but great for me.)

I’d love to learn what productivity strategies work for you. Block out 15 minutes in your calendar to email me your thoughts. I look forward to hearing from you!

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Marketing for Small Businesses – 3 Steps to Success

Written by Dora Cheatham, Program Manager, Emerging Enterprise Center

We often hear of the failure rates of start-ups and new businesses, or even longer term firms going out of business for one reason or another.The US Census Bureau’s statistics certainly bear this out, with as many as 44% of businesses failing by their 3rd year and 71% failing by Year 10.

While this depends greatly on the industry, the chart below from Statistic Brain, shows just how fragile some industries can be:

While the final cause of death is usually financial collapse, the symptoms most likely started much earlier with failed strategies and operational inefficiencies. While no-one has a crystal ball into the future, you can certainly try to preempt as many obstacles as possible with careful planning and preparation; as Alan Lakein once said “failing to plan, is planning to fail”.

So if you’re thinking of starting your own business, or you’re beginning to see fissures in your business, there are definitely steps you can take ahead of time. Here are a few from a marketing perspective to ensure that your business survives and succeeds.

  1. MARKET ANALYSIS │ THE LAY OF THE LAND

Understanding the lay of the land is critical in helping you determine what actions you will need to take to grow—or in some cases—survive. An excellent tool for establishing the lay of the land is Michael Porter’s Five Forces Model. This popular model forces you to look at your industry within a specific framework that takes into consideration competition between existing firms, the threat of new entrants, the strength of buyers and suppliers and the threat of substitute products. Another simple but frequently used framework: the SWOT analysis that assesses strengths, weaknesses, opportunities and threats—use it to assess not only your own business but also that of your competition.

How do you fit in these frameworks? What are your core competences? What are your weaknesses? How can you leverage your strengths and improve on your weaknesses? It’s not enough to know and believe in your own product: you need to understand how it fits within the industry and among other like products in that industry. You also need to have a clear understanding of your customers’ (existing and/or potential) needs and wants.

But don’t be fooled into thinking that this is a one time exercise—external forces and world events can impact the lay of the land, change the balance of power in these forces and overturn the positions in these frameworks within a matter of weeks! A catastrophic event – think 9/11 and its impact not only on the aviation industry but also the industry’s suppliers, travel, tourism and beyond – can and will result in a need to re-assess your business strategy in short order.  

  1. MARKET STRATEGY │ START WITH THE END IN SIGHT

Once you have a clear understanding of the lay of the land, the business then needs to determine its focus: What is your differential advantage or value proposition as a business? What are your growth objectives? Which products and markets offer the best opportunities to achieve your growth objectives? How will you achieve these objectives? Will it be through market penetration? Product development? Market development? Diversification? How will you position the business and your products to meet these objectives? Which core competences do you need to develop to achieve your targeted growth and create a sustainable competitive advantage? What will the investment be in time, talent and treasure to develop these core competences and what will your return on that investment be? 

  1. MARKETING MIX │ THE ROAD MAP

The Marketing Mix is generally referred to as the 4Ps (or 5Ps depending on the source!) and encompasses decisions surrounding your Products (performance, features, design, presentations, name, etc), Pricing (direct, distributor, geographical, etc), Promotion (PR, marketing collateral, advertising), Place (distribution channels), and People (tasks, sales, support). In other words, you know your market and you know your customers. You now need to ensure that you have the correct products, that they are correctly positioned and that your communications correctly reflect that positioning. Do you have the right distribution channels set up? Do you have effective and efficient processes in place?

A common fallacy to avoid is that marketing is the same as sales, particularly on a B2B level. The two are very different and – while they work hand in hand – they perform different functions. Marketing creates the value, the visibility and the lead; it can also provide the tools to make the sales process more effective, but it is an ongoing process and does not preclude the need for a sales strategy to leverage and capitalize on the value created through the marketing process (check out the posts on Creating & Selling Value and What’s In A Brand?).

 

STRATEGY X EXECUTION = SUCCESS

As I’ve mentioned in previous posts, it’s not just about the strategy but about implementation and execution of that strategy. Once the lay of the land and the road map have been laid out, specific tactical and action plans, budgets and measurement criteria can be put into place to guide that execution and implementation. One of my favorite quotes is from the entrepreneur Naveen Jain. “A great strategy alone won’t win a game or battle; the win comes from basic blocking and tackling.”

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Why Do Passionate Entrepreneurs Fail?

Written by Frank DeSantis, Certified Growth Wheel Trainer, Former Emerging Enterprise Center Program Director

The link below is to a great article in HBR on Passion vs. Preparedness, and reflects what I believe is the approach the Emerging Enterprise Center tries to take with their Incubator companies.

An entrepreneur has to have passion. It’s entirely too hard to start and run a business if you don’t absolutely love what you are doing! Apparently, according to this research, passion is a key ingredient to attracting attention of investors, especially novice investors, those typically found on crowdfunding sites.

Long term success, however, depends upon your ability to be prepared to scale the business. For that you need to have a vision (what do you want to be when you grow up), a game plan (strategy or business plan), and the processes and procedures to replicate what you do and how you sell. For more experienced investors, the passion and the concept may attract them initially, but they move quickly to determining how prepared they are for success; what is the experience of the management team; have they started a business before; is there a market; have they proved the concept?

At the Emerging Enterprise Center, they try to help you focus first on DRIVING YOUR BUSINESS (sales), while in parallel, developing the business skills and the policies/procedures to enable you to take advantage of opportunities that help you achieve your vision.

I believe you can have and, in fact, need both: PASSION AND PREPAREDNESS!

https://hbr.org/2015/07/for-founders-preparation-trumps-passion