Friday, 5 November 2010

Can Apple and Waitrose be Wrong?


Business School theory is great. Fascinating stuff. Intellectually intriguing but I am not quite sure what it has to do with reality and what people really do. Here are two quick examples

Steve Job's Strategy? "Get Rid of the Crappy Stuff" - a traditional management philosophy taught in business schools is to reduce risk by diversifying your product offerings.

Apple represents the anti-business school philosophy. Apple's approach is to put its resources behind a few products and commit to making those products exceptionally well. "Apple is a $30 billion company yet we've got less than 30 major products. I don't know if that's ever been done before," Steve Jobs told
Fortune magazine .

Apple clearly bucks the trend that endlessly focuses on diversifying risk, milking cash cows blah blah.

Can Waitrose Have It All? - Why on earth would a brand with an enviably distinctive premium positioning promise to match Tesco prices on 1,000 branded products?

Waitrose will no doubt assert that it is not competing on price, but simply addressing the perception that it is expensive. However, by choosing to match prices with Tesco, it is in danger of being drawn into a price war with the big three supermarkets by proxy.


With Waitrose I am not sure what is going on. Maybe they just haven't read the text books or maybe they went to a poor business school but I don't quite get why they are trying to compete on quality and on price in the same store.

With Apple it clearly works; with Waitrose I am not so sure..

Thursday, 28 October 2010

Entrepreneurs Refuse the Big Big Payouts


The first or second question discussed with any half-decent bankers, advisors, potential investors or board members is "What is the exit strategy?"

The assumption behind the whole growing business ethos is about incremental stages of growth:

  • have an idea (that you’re passionate about),
  • make and sell stuff (from your dining room),
  • employ some people,
  • get some premises,
  • create a model that works,
  • scale it up (probably with someone else’s money),
  • sell the whole thing on to someone who has the pockets to take it even further and make a load of money in the process.

All roads lead to the big payout. There are many businesses that simply chase the money, and that’s fine.


However, we currently have a number of clients who have turned their backs on the traditional ‘happy ending’ model, namely absolute financial security. Several have even walked away from the money at the last possible moment, on the day of signing the contract. This kind of behaviour challenges the logic of the growing business ‘ology’ of start-up, scale-up, sell-up.


Not such a happy ending


There is a growing breed of entrepreneur who realises that the haven of happiness they were chasing wouldn’t be so wonderful after all. And the baby that was so lovingly nurtured could well be pillaged by the new owners, despite what they promise.


If there’s a choice between becoming bigger (by selling out and losing independent ownership) or being greater, then there is a growing band of companies that have chosen to become great and remain independent – highlighted in Bo Burlingham’s book Small Giants.


They know that the new owner, especially if one of the ‘big giants’, will rip the soul out of the business to chase the only metric they care about: increased shareholder value year-on-year.


Mojo rising


These small giants are remarkable businesses – and I use the word ‘remarkable’ in a specific context. These companies are worth remarking on; these businesses have something special. It’s more than just DNA; more like a mojo; a magic that permeates the organisation.


Defining the mojo; describing something that is almost beyond description; putting a name to the unnameable, is very difficult to do, but that doesn’t mean we shouldn’t try to do it.


These businesses have recognised the full range of choices and have resisted the predictable/inevitable path of selling out. They have intense relationships inside the business and with their customers. As independent businesses they have chosen to use their own idiosyncratic management systems and processes. Above all, almost everyone is still unbelievably passionate about their product or service and how it works for their customers.


Burlingham’s book goes on to cite that strong community relationships are another fundamental of these companies’ mojos – and certainly the businesses I am thinking of have created close communities of suppliers, customers and staff. So, much more than just increasing shareholder value.


One example is an award-winning training company that’s 100% committed to growing and sustaining its staff and the local community.


Another is a building company unprepared to compromise its values and standards. Yes, it is harder to take the path less travelled, but that doesn’t mean it isn’t worth it.


So, the next time you are asked about your exit strategy, you can say that your business is too special to have one, while adding that you have a mojo and you’d rather be great than big. In essence, you want to be a small (and happy) giant!

Thursday, 7 October 2010

Richard Branson: Five Secrets to Business Success


Entrepreneur Magazine has an article by Sir Richard Branson: Five Secrets To Business Success where he says "I am often asked if I have found a secret - or at least a consistent answer - to successful business building over my career..."

  1. Enjoy What You Are Doing
  2. Create Something That Stands Out.
  3. Create Something That Everybody Who Works for You is Really Proud of.
  4. Be a Good Leader.
  5. Be Visible.
A pretty neat list.


RELATED LINKS


Thursday, 23 September 2010

The Bold "Pay-What-You-Want" Restaurant Experiment


The bold "pay-what-you-want" restaurant experiment

www.salon.com/food

After the fuss/comments/feedback from our 30 Day Business Growth Challenge, I thought I should post this (slightly pessimistic) view of "pay what you want".


A new dining trend allows customers to decide their own menu prices. An economist explains why it's a bad idea


I will copy and paste the best bits from the article:

In the last few weeks, a radical pricing strategy has been making waves in the restaurant world: establishments that allow diners to decide themselves what they'd like to pay for their meal.


Of course, the pay-what-you-can model has been attempted with some success in other businesses, most notably three years ago, when Radiohead put its "In Rainbows" album online and allowed fans to choose its worth.


To find out if the pay-what-you-can model could work for a restaurant, Salon spoke with Tyler Cowen, a professor of economics at George Mason University (and food writer), from Berlin, Germany.


Do you think this pay-what-you-can model could actually work for restaurants?


Do you think it could work on a small scale -- two or three restaurants in a city?


I'm not even sure it can in the long run.


But Radiohead's experiment was fairly succesful. What's the difference between it and a restaurant?


With Radiohead, there's a focal price of about $10, which is pretty cheap. If you download an album and send in $10, you feel you've done your bit, and it's not a question of repeat business. A restaurant has no other way to get that money back. They count on the people to pay for their food.


Is there anything that these restaurants can do to encourage people to pay more?


You have to feel like you're being watched. You have to feel that other people are paying. You have to feel like you're part of a cool experiment.


Are some sectors of the economy better suited to this kind of pay-what-you-can model?


It depends on what you mean by giving things away for free. There's plenty of stuff that gets given away for free, like NPR. But once NPR's content is produced, it doesn't cost them extra to have additional listeners.


Why are these restaurants popping up now?


I'm actually not surprised you see them in down economic times. You let some people pay less that can't pay more -- it's part of the charm.

Wednesday, 22 September 2010

Disrupt - extended 12" Mix


Being disruptive pays. Following the pack does not. At least not for most people.


Most marketing activity interrupts. It interrupts evenings in front of the TV, reading the newspaper, walking down the street. However, the interruptions get less effective as the consumer becomes immune to the endless messages.


Marketing has to get louder to continue to interrupt

Advertisers have to shock or surprise the consumer in a bid to have their full attention – but this is just a ‘louder’ form of interruption: louder TV ads, brighter colours, larger typefaces. Just because the consumer can’t avoid seeing or hearing a promotion doesn’t necessarily mean that it engages the consumer’s attention.


The ‘guerrilla marketing’ school of thought looks for devious ways of going under the radar, of reaching the consumer in ways that the competition has not thought of. This is relatively disruptive – it seeks to ‘bend the rules’ to do things differently, to get noticed. It messes with the rules of engagement.


Being Disruptive?

Disruption means the act of breaking the regular flow or continuity of something; disturbance; dislocation, especially an event resulting in dislocation or discontinuity.


So, to be disruptive you should shake up the market. It is not disruptive if no-one notices.


Disruptive Businesses

Starbucks – was a disruptor as it changed the habits of a generation (as did FaceBook, Google and so on). But what is new today becomes old tomorrow. Today’s revolutionaries are tomorrow’s Old Guard.


Whole Foods Market - all wholefood stores are (or rather, were) small, local affairs then along comes the real deal (in the same vein as Virgin Megastores)


The Flip Phone – as brainless as a video can be, and cheap, and high definition, and plugs into YouTube. Who would have thought of that?


A great disruptor doesn’t just do more than interrupt; it can change the face of the landscape.


The small record shops were pretty much destroyed by the arrival of the Virgin-type megastores, Starbucks changed how and where we socialise, Amazon…. So while we can quote the big disruptors I think that we can all disrupt if only on a smaller stage.


Dans Le Noir restaurant, where you are served by blind waiting staff in a pitch black room, is wonderfully disruptive. It disrupts every part of the standard process we call going to a restaurant. You don’t know where you are or what you are eating. You are lost. A truly memorable experience. Unforgettable. Changes how guests see food forever.


And then we have ‘Disruptive Marketing’

What I am calling ‘disruptive marketing’ is when we disrupt how things are done in the marketing world. We do things differently from the rest and so we stand out. But this is not about creating some cheap gimmick but actually challenging the way things are currently done and doing them differently.


Pretty much everything that Apple does is disruptive. And Innocent Drinks.

Hobbs House Bakery sells very expensive (and wonderfully delicious) bread on the internet – no-one else did it before and why not?


You can zig when they zag. Go against the traffic. Challenge the notion of “that’s how we do it around here”, a myth perpetuated by the majority who have lost the passion and excitement to try to create newer and better ways of doing things. Get innovative in every possible part of the process. Get noticed (but not for a gimmick but because you see a different world.)


Looking at your industry, what could be improved to give the client a significantly better deal? You could deliver quicker or higher quality or cheaper.


But what would be disruptive?


Depending on your marketplace, think what would happen if you:

  • Charged by ‘results only’
  • Let customers decide what to pay
  • Only work online or by phone
  • Charged per 5 minute slots…

I am sure you get where I am coming from.


Being disruptive certainly creates attention. Challenging the status quo normally does. In business this is a good thing.

You get noticed. But a gimmick will be seen for what it is. To disrupt effectively, change how people buy and give them the service they really deserve. No easy task.

Tuesday, 21 September 2010

Disrupt

Being disruptive pays. Following the pack does not. At least not for most people. (See Contrarian or Follower.)

Starbucks – was a disruptor as it changed the habits of a generation (as did FaceBook, Google and so on). But what is new today becomes old tomorrow. Today’s revolutionaries are tomorrow’s Old Guard.


A great disruptor doesn’t just do more than interrupt; it can change the face of the landscape. This is particular true of the customer experience.


Starbucks changed how and where we socialise, Amazon... So while we can quote the big disruptors I think that we can all disrupt, especially if on a smaller stage.


You can zig when they zag. Go against the traffic. Challenge the notion of “that’s how we do it around here”.


Depending on your marketplace, think what would happen if you:

  • Charged by ‘results only’
  • Let customers decide what to pay
  • Only work online or by phone
  • Charged per 5 minute slots…


I am sure you get where I am coming from.