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Think Past Product when You Think about Disruptive Innovation

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Author: Dermott Dowling @Creatovate (2016).

Now more than ever we need to think past new products and improved product performance when we think of truly ‘#disruptive innovation’ that upsets incumbents in industries and creates sustainable competitive advantage for the disruptive innovators.

How many types of innovation can you think of?  Have a go…write them down below as many as you can…can you see 10 or more distinct types of innovation examples?

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Often, when we think about innovation all we think about is new products or improving existing product performance.  This is very important, but one of the increasing challenges we face in a hyper-competitive fast-pace modern business world is the ability of low-cost fast-to-market competitors copying your innovation and reducing your margin on new products and improved product performance as quickly as you can bring these new products to market.

Take this comment from a former Australian PepsiCo® R&D manager – is it symptomatic of your industry as well?

We knew Smith’s Popped Chips was going to be a success as Popped Chips was doing very well in the US and our early prototypes tested very well with consumers and retailers.  What we didn’t expect was 3 other competitor brands and a private label retail brand launching at exactly the same time as we did!” PepsiCo® R&D & Innovation Manager, AIFST Innovation Reloaded Conference, Sydney, 2014.

The following extracts from articles and sources follow to help you think of multiple types of innovation so the next time you come up with a great idea for your business you might also think of some additional types of innovation to build on that great idea and ask your peers and customers and networks inside and outside your business for their ideas to help build a truly ‘disruptive innovation’.

Whatever your company hopes to do in terms of innovation, we suggest that the answer involves innovating within the following 10 distinct innovation areas, classified by the Doblin model:

  1. profit model,
  2. company network,
  3. company structure,
  4. company process,
  5. product,
  6. product performance,
  7. customer service,
  8. customer channel,
  9. innovative branding and
  10. customer engagement.

Let’s take a look at each of the 10 distinct types of innovation and an example of a company using that type of innovation as a key distinct advantage in their industry.  Note that you need to aim for at least 3 and ideally 5 or more different types of innovation to create a truly ‘disruptive innovation’ that can be sustained for a decent period of time in a highly competitive industry (Keeley, 2015).

Profit Model

How you make money | Innovative profit models find fresh ways to convert your offerings and other sources of value into cash. Great ones reflect a deep understanding of what customers and users actually cherish and where new revenue or pricing opportunities might lie. Innovative profit models often challenge an industry’s tired old assumptions about what to offer, what to charge or how to collect revenues. This is a big part of their power: in most industries the dominant profit model often goes unquestioned for decades. (Doblin, Deloitte Development LLC.)

Examples of companies that successfully altered profit models in established industries to include:

  • Gillette – the ‘razor and blades’ profit model has been celebrated for years and adapted to countless other industries from ‘printers & cartridges’ to ‘coffee makers & capsules’
  • Dell – reengineered the go-to-market delivery system when it first launched selling direct causing large share loss for competitors with traditional reseller business models.

Network

How you connect with others to create value | In today’s hyper-commercial world, no company can or should do everything alone. Network innovations provide a way for firms to take advantage of other companies’ processes, technologies, offerings, channels and brands — pretty much any and every component of a business. These innovations mean a firm can capitalize on its own strengths while harnessing the capabilities and assets of others. Network innovations also help executives to share risk in developing new offers and ventures. These collaborations can be brief or enduring, and they can be formed between close allies or even staunch competitors. (Doblin, Deloitte Development LLC.)

Examples of companies that have successfully created value through network include:

  • Target (US) – work with product designers and world-renowned fashion designers to create items only available at Target, other retailers to create Pop-Up stores for limited times only.
  • P&G – Connect + Develop – P&G connects with external innovators and companies who submit innovations to P&G’s Connect + Develop. Connect + Develop is P&G’s program for encouraging open innovation, also known as crowdsourcing.

Structure

How you organize and align your talent and assets | Structure innovations are focused on organizing company assets — hard, human or intangible — in unique ways that create value. They can include everything from superior talent management systems to ingenious configurations of heavy capital equipment. An enterprise’s fixed costs and corporate functions can also be improved through Structure innovations, including departments such as Human Resources, R&D and IT. (Doblin, Deloitte Development LLC.)

Some companies that have created value through network innovation include:

  • Whole Foods Market – is a ‘high trust organization’ where teams are everything from hiring which requires 2/3 team approval to P&L management, transparency is everything and decentralized innovations are amplified quickly instead of achingly slowly (if at all) (Keeley, et al, 2013, p. 28).
  • L. Gore – has used a ‘flat lattice’ organisation model where teams are deliberately kept small and every employee becomes a shareholder after 1 year of service.

Process

How you use signature or superior methods to do your work | Process innovations involve the activities and operations that produce an enterprise’s primary offerings. Innovating here requires a dramatic change from “business as usual” that enables the company to use unique capabilities, function efficiently, adapt quickly and build market-leading margins. Process innovations often form the core competency of an enterprise, and may include patented or proprietary approaches that yield advantages for years or even decades. Ideally, they are the “special sauce” you use that competitors simply can’t replicate. (Doblin, Deloitte Development LLC.)

Examples of companies that have created value through process innovation include:

  • Zara – using fast fashion trends and supply chain optimisation Zara can move from the sketchpad or fashion runways of this world to the shop floor in just 3 weeks, the clothes will hang from Barcelona to Berlin to Beirut (Helft, 2002).
  • Toyota – ‘lean’ production system reduced waste and excess, driving astonishing efficiency and continual product and process improvement across the business.
  • IKEA – ‘flat-pack’ furniture with no variation by region or country with the same hardware and instructions regardless of where bought or sold streamline internal production processes.

 

Product Performance

How you develop distinguishing features and functionality | Product Performance innovations address the value, features and quality of a company’s offering. This type of innovation involves both entirely new products as well as updates and line extensions that add substantial value. Too often, people mistake Product Performance for the sum of innovation. It’s certainly important, but it’s always worth remembering that it is only one of the Ten Types of Innovation, and it’s often the easiest for competitors to copy. Think about any product or feature war you’ve witnessed — whether torque and toughness in trucks, toothbrushes that are easier to hold and use, even with baby strollers. Too quickly, it all devolves into an expensive mad dash to parity. Product Performance innovations that deliver long-term competitive advantage are the exception rather than the rule. (Doblin, Deloitte Development LLC.)

Examples of companies that have used Product Performance innovation include:

  • Dyson – from vacuum cleaners to hand-dryers to fans Dyson continuously innovates on ways to deconstruct what is not working well in existing industries and then rebuild products on platforms that offer customers superior product performance and charge premium prices for the privilege of use of these products.
  • Mars – with My M&Ms people are able to add their own messages, logos, or images to specific colour M&M candies – personalising product and opening up new uses. Ferrero has done similarly innovative things to reinvent Nutella and put it back on the table at home or out and about in cafes and shopping malls.

Product System

How you create complementary products and services | Product System innovations are rooted in how individual products and services connect or bundle together to create a robust and scalable system. This is fostered through interoperability, modularity, integration, and other ways of creating valuable connections between otherwise distinct and disparate offerings. Product System innovations help you build ecosystems that captivate and delight customers and defend against competitors. (Doblin, Deloitte Development LLC.)

Companies that create product system innovations include:

  • Microsoft – Office – initially the products that went into MS Office like Word, PowerPoint and Excel were sold as individual products, now bundled together with Outlook and more they create an integrated system that is used as a productivity suite globally.
  • Scion by Toyota® – Scion allows consumers to build their own car choosing from a selection of models and colours, paint and tyre trim modifications, radio, and more.

Service

How you support and amplify the value of your offerings | Service innovations ensure and enhance the utility, performance and apparent value of an offering. They make a product easier to try, use and enjoy; they reveal features and functionality customers might otherwise overlook; and they fix problems and smooth rough patches in the customer journey. Done well, they elevate even bland and average products into compelling experiences that customers come back for again and again. (Doblin, Deloitte Development LLC.)

Some companies doing the obvious great are:

  • Zappos – who would of thought buying a pair of shoes could be so much fun and so rewarding for the founders – Zappos sold to Amazon for US$1.1billion in 2009. ‘Deliver ‘WOW’ through service’ is the first of Zappos 10 core values.
  • Sysco – one of the largest food distributors in North America with $43b in revenues, to elevate service in a relatively commoditized industry, Sysco created ‘Business Reviews’, a FREE consulting service helping clients to design menus or plan back-of-the-house logistics.

Channel

How you deliver your offerings to customers and users | Channel innovations encompass all the ways that you connect your company’s offerings with your customers and users. While e-commerce has emerged as a dominant force in recent years, traditional channels such as physical stores are still important — particularly when it comes to creating immersive experiences. Skilled innovators in this type often find multiple but complementary ways to bring their products and services to customers. Their goal is to ensure that users can buy what they want, when and how they want it, with minimal friction and cost and maximum delight. (Doblin, Deloitte Development LLC.)

An example of a company who connected their offer to customers in new and innovative way:

  • Xiameter® from Dow Corning is a web-based sales channel first launched in 2002 that assists customers with a new way to buy silicone. Cost conscious buyers without the need for technical support or advice were able to select from 1,000s of product options, choose pricing and terms that suit them and lock in price and volume commitments in a simple but effective no frills business model that ran alongside the mother company.
  • Nespresso® has retail stores and coffee shops worldwide, operates concessions inside department stores, online club for ordering capsules and machines, retail resellers for machines, partnerships with hotels like Ritz-Carlton & Hyatt, Airports and a Chefs and Sommelier program for harmonizing coffee with food and wine. Multiple channels are used to engage customers and consumers.

Brand

How you represent your offerings and business | Brand innovations help to ensure that customers and users recognize, remember and prefer your offerings to those of competitors or substitutes. Great ones distil “a promise” that attracts buyers and conveys a distinct identity. They are typically the result of carefully crafted strategies that are implemented across many touch points between your company and your customers, including communications, advertising, service interactions, channel environments, and employee and business partner conduct. Brand innovations can transform commodities into prized products, and confer meaning, intent and value to your offerings and your enterprise. (Doblin, Deloitte Development LLC.)

Companies that have used ‘brand innovation’ successfully to date include:

  • Virgin – starting as a mail order record business and now involved in planes, trains, rockets, telecoms, wealth and health management and more! Virgin is the elastic band of ‘brand’!
  • Aldi – have innovated using brand ‘exclusive’ or ‘destination’ branding that cuts out the middleman and goes direct to suppliers to find unique food products, beverages, and houseware.

Customer Engagement

How you foster compelling interactions | Customer Engagement innovations are all about understanding the deep-seated aspirations of customers and users, and using those insights to develop meaningful connections between them and your company. Great Customer Engagement innovations provide broad avenues for exploration, and help people find ways to make parts of their lives more memorable, fulfilling, delightful — even magical. (Doblin, Deloitte Development LLC.)

Companies using customer engagement innovation to excite and delight customers include:

  • Blizzard Entertainment – World of Warcraft has more than 11million subscribers worldwide who are actively encouraged to engage with each other using a multitude of technology and techniques and ‘team up’ to achieve higher rewards.
  • Apple – shows off its new hardware and software first to its developers and affiliates at its World Wide Developers Conference (WWDC) where tickets are distributed in a lottery system with prices of $1,599 a ticket for WWDC2015.

Winning innovations typically use multiple types of innovation – if you can get 3 or more that’s great and if you can get 5 or more in your next big bet that’s even better!  You are much more likely to create a sustainable innovation that endures when you innovate across multiple types of innovation.

An example of a truly transformational business and industry innovation that transcend many types of innovation follows:

Nespresso

  1. Profit Model – machines were first available widely across multiple channels and retailers at low prices but pods were only available direct from the club.
  2. Network – machine manufacturers were engaged to create truly great coffee and growers were engaged to source elite top quality coffee and retailers were engaged to get the machines out there far and wide.
  3. Structure – Nespresso did not start out as an idea from the inside the mothership Nestle but rather the opposite it was ‘incubated’ across the road from head office in a distinct and different building with a dedicated team set about to disrupt their existing instant coffee business
  4. Process – Nespresso® licensed a unique technology from the Battelle Institute that made coffee in an instant using an entirely new process (Silberzahneng, 2010).
  5. Product Performance – we all can remember the first time we had a good Nespresso and could not believe how good the taste was for a homemade coffee.
  6. Product System – build into the Nespresso club was the unique pods system with multiple types of coffee to suit different palates and desires.
  7. Service – with Nespresso® club and direct engagement of end consumers through the stores, direct mail, social media, etc. Nespresso® took delivery of a staple to a whole new level.
  8. Channel – Machines – sold everywhere Pods – direct from Nespresso®.
  9. Brand – Nespresso did not choose George Clooney as their ambassador – the 2 million friends on Facebook decided he was the ultimate spokesman for their most adored brand.
  10. Customer Engagement – from online to telephone to direct mail to Nespresso shops and stalls in busy hubs like airports, hotels, etc

Systematically determining what needs to be changed inside and outside your company to create innovation that transcends multiple types of innovation typically involves the following steps according to Keeley (2015).

Understand the beliefs, practices and truths. Start by just listing the unchallenged assumptions about rules, tools, techniques and ingrained habits about the industry.  Now think about ways to challenge these orthodoxies.

Starbucks sought to challenge its industry orthodoxies, the first one it faced was the assumption coffee was a commodity for which Americans wouldn’t pay premium prices.

What are your inclinations or predispositions towards doing business in a particular way today?

Imagine life without those assumptions. Consider a customer group that would not behave the way your customers typically behave.  Imagine a business that specifically does the opposite to what you are doing right now?  What would be some of the likely and unlikely outcomes?

Now think about different ways to rebuild the platform.

Now that assumptions are stated, think of all the ways to challenge them, from a new profit model to different customer-engagement tactics. Most companies stop at trying to do product innovation that marginally alters the offering. The big returns come from multiple approaches, (Keeley, 2015).

Think about Starbucks again. The company flipped its industry’s profit model orthodoxy by creating a premium experience. People may not pay more for coffee, but they certainly do pay more for a different atmosphere in which to drink it.

Start with one of the 10 types of innovation you find most interesting, start thinking of different ways you could innovate under that configuration on your business / category / customer today.

Ask questions. ‘how might we?….’ ‘what if?….’ ‘what’s frustrating you right now? ‘what’s frustrating your customers right now?’ ‘If you had a magic wand, what would you change?….’ Answers to the right questions can lead to an idea, an overview sketch of a new strategy, something to share and build upon.

Once you pick the areas you want to tinker with, how will you explain this new way of doing things to your mother? Where will you concentrate first, and then next? What does the new idea add that is fresh and valuable? What should be prototyped to help customers, users, insiders and partners?

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

References:

James Janega, (2014), April 2 Larry Keeley, Doblin and the 10 categories of innovation  http://bluesky.chicagotribune.com/originals/chi-larry-keeley-doblin-innovation-strategy-bsi-20140401,0,0.story retrieved 12/04/2016.

Larry Keely, Ryan Pikkel, Brian Quinn, Helen Waters (2013) Ten Types of Innovation: The Discipline of Building Breakthroughs, John Wiley & Sons, New Jersey.

Business Today, (2011), Dec 11 Cover Story: A Happy Marriage http://www.businesstoday.in/magazine/cover-story/innovation-toshiba-ups/story/20185.html Business Today online viewed on 12/04/2016.

Charles Fischman (1996) April 30, Whole Foods is all Teams http://www.fastcompany.com/26671/whole-foods-all-teams viewed on 13/04/2016

W.L. Gore http://www.gore.com/en_xx/aboutus/culture/ viewed on 13/04/2016

Helft, Miguel (2002) May, Fast Fashion Forward Business 2.0

Philippe Silberzahneng (2010) March 18, https://philippesilberzahneng.wordpress.com/2010/03/18/nespresso-complexity-innovation-process/ viewed on 15/04/2016


Take your business off the Road to Nowhere into Lands of Opportunity

Road to Nowhere
How to use Upfront Strategic Thinking to Drive Profitable International Business Growth

Authors: Dermott Dowling @Creatovate & Kevin O’Reilly @Radar Insight

Five Factors to consider with your head, before following your heart into international markets.

International Business market choice is often based on ‘gut instinct’ decision making, retrofitted later with logic that backs up your initial assumptions. This can lead to costly mistakes and valuable scarce resource waste when wrong choices are made.
How do most businesses find themselves offshore? In one word: Dragged, and usually the result of a direct approach from either existing customers or a potential overseas trade partner. We believe one of the 3 keys to successful international business is use of deliberate, upfront rigorous strategic thinking, planning and risk analysis before deciding “Where to Go” first, second or third as you take your business offshore.
We know that any business growth journey starts with defining the challenge and mapping a journey before you set sail. That is why we are championing a new approach to driving profitable expansion into international markets. Following the 5 key factors outlined in this report have helped and will continue to help our clients use ‘more head and a little less heart’ initially in their market choice decision making.
This report outlines the data and decisions required to understand the five factors at play. We were able to build the Creatovate Market Opportunity Index© decision tool through our work with our clients, and wanted to share our learning with the business community.

Partnering with a consumer goods client, we undertook the challenge to help facilitate their Asian export strategy in terms of decision making “Where to go? First, Second, Third, etc” using a pure data approach, before we facilitated and encouraged the overlay of their own subjective lens and ‘gut instinct’. This mix of slow and fast thinking is vital to getting a balanced and aligned strategic choice on ‘Where to go?’ Our goal was to rank countries analysed based on their performance across 5 key factors (each broken into client specific indicators or markers. Using independent research data, extrapolated across attractiveness rating scales we were able to compare and contrast the opportunity presented by targeting China (huge population, low average wage, less international brands on shelf) to that of Singapore (geographically closer, smaller population, higher disposable income, free trade, etc).
This report will walk you through that thinking process, step by step. We hope you will see similarities to your own international business challenge and see opportunity to utilise or adapt the learning to your own context and International Business growth challenge.

Factor 1: Market Attractiveness

country attractiveness

The most common starting ground for any business looking at which overseas country to sell their products and services is going to be the usual market research sourced through global data services providers like Euromonitor, Marketline, Nielsen, Canadean, etc. You could populate the indicators under Market Attractiveness with literally dozens of sub indicators but in the interests of clarity and not confusion we picked 5 key sub indicators to give us a sense of absolute size of market opportunity and attractiveness in terms of market growth. It has been noted before you are often better to enter a small but fast growing market as opposed to a large and static one.
I. Volume – what is the absolute volume of your business products/services sold in the country?
II. Value – what is the absolute value of the market in terms of retail sales for category?
III. $/Kg or $/L – this is an important measure for a consumer goods product especially for Australian consumer goods manufacturers. In our case our lenses were focus on Asia and it was important we identified markets that had high enough retail prices per Kg or L of product sold to justify a high cost of goods Australian made food so there is sufficient margin in the value chain for all participants.
IV. Consumption per capita – are we looking at a market with a ready and available appetite for your food or beverage or a market that is currently no/low consumption and will require education as to the products benefits from consumption?
V. CAGR or cumulative aggregate growth rates – in our case we took a CAGR average of the past 4 years market value growth rate to determine if there was a rising tide that would float all boats including new market entrants or a static or even worse in decline market opportunity.

Factor 2: Sociodemographics

sociodemographics

Population and demographic information is vitally important in your decision making on which markets to focus on when considering international business. China might be a great market opportunity from a first glance at the absolute population and yet further probing and understanding of sub-indicator factors like the one child policy and an aging population vs. say India by comparison might suggest it is more attractive to the cruise line business than say children’s food products. In our case we were conscious to also look at ability to pay and buy premium imported foods in our markets under study. For this reason we included other sub indicators to give a more rounded view on the absolute numbers of mouths and pockets that can afford our clients products.
I. Population – absolute numbers are hard to ignore but feel free to use filters over the core consumer target age group for your business products or services.
II. PPP per capita – widely regarded as a better and fairer indicator or relative wealth by a nation than the more tradition GDP per capita this is again a fast indicator for overall wealth.
III. Disposable income per capita – we were fortunate to be working with a data set that included this level of detail which helps in the sense of what available funds do consumers in the country have to spend outside their daily necessities to live?
IV. Food expenditure per capita – a key indicator in our client project as they are selling food is the amount spent per household or able to be spent on weekly food purchases. This sub-indicator could be adapted to your own business category of products or services.

Factor 3: Open to trade

international_trade

Our client first consideration was immediate opportunity to export/import their products into the region of study. As such a key factor for us was the local markets or countries openness and willingness to trade with the country of origin – in our case Australia. Our focus needed to search and discover data from international and domestic data sources on volumes of international trade and imports in the food category (open to trade), volumes of the category currently exported into the region and to what countries (follow the leader) and last but not least any visible or unforeseen barriers to entry. This factor became complex rather quickly requiring a mix of sub indicators that contributed to an overall factor score in terms of attractiveness.
I. Volume of Imports – MT, $/Kg and $m – this was the sub-indicator of the country openness and scale of trade both in absolute volume, value and $ per weight/volume measure.
II. Volume of Exports – sourcing data from the local industry association we were able to determine the absolute volume of the client’s category of products exported to each country in the region. This is a ready sub-indicator to open to Austrade in the sense open acceptance of imported goods from Australia in those countries.
III. Barriers to Entry – a mix of quantitative and qualitative judgements or indicators we utilise the apparent barriers like Tariffs, Quota restrictions, and some ‘behind the border’ barriers like Product registration requirements and estimated time to register or local labelling laws.

Factor 4: Dispersion

dispersion

Working in the Fast Moving Consumer Packaged Goods industry where the majority of products sold are through retailers and increasing modern retailers like supermarkets, hypermarkets and convenience stores it was important we believed to include some country analysis and understanding on concentration of power of buyers (retailers), suppliers (local manufacturers) and penetration of private label products in that country. For this reason we used 3 key sub-indicators to get a sense of dispersion in the country which would suggest competition is less intense and more room for a new entrant vs. highly concentrated and difficult to penetrate the new market.
I. Concentration of Retailers – what is the combined market share of the top 5 retailers? In markets like Australia where we have a highly concentrated retail landscape with two retailers dominating 70% of available market share the trading terms and margin requirements with those retailers is understandably high relative to a highly dispersed retail market.
II. Private Label Penetration – if Private Label has penetrated the category and to a high % of total category share the correlating thinking is that there will be less willingness by customers to range new lines/brands/products in the category as they concentrate on incumbent market leaders and building their own exclusive or private label brands.
III. Concentration of Manufacturers – what is the combined market share of the top 5 local food manufacturers in the category you have entered? If that market share is high there will be higher profitability with those manufacturers and a willingness to go above and beyond to stop new entrants getting a food hold in their category.

Factor 5: Innovation Intensity

innovation intensity

Factor number 5 we wanted to check was the relative level of innovation intensity in the country and category under examination. Whilst a higher level of innovation intensity would indicate consumer and customer willingness to trial new products and brands it might also suggest a higher level of competitive intensity and greater need for our client to continuously refresh their product offer both at home and off-shore. We selected three sub-indicators here to give us an overall sense and impression of which markets are open to new ideas, products, allow functional or nutritional health claims for foods and what % of total turnover in their country and category is from New Products launched in the past 3 years.
I. New Products launched in the past 3 years as a % of total value of sales in the category
II. Claims permissible – in your category space. Are the claims you can make on your products at home where they are successful allowed in the new country you are about to enter?
III. Health claims premium – if you are selling products that make beneficial health or functional claims how much of a price premium are similarly claiming products getting in the market under study?
Working through the above 5 factors and their 3-5 sub indicators across a mix of independent data sources enabled us and our clients to take a step back unbiased independent look at the region and rank the markets. We also developed a subjective scorecard that could be used to align key leaders in the client business around discussing which markets will be a focus for entry in the short, medium and longer term horizons so that preparation, planning and time critical steps could be taken across the board to manage a phased approach to international business growth. Heart is good and if the Head matches up with the heart or the slow thinking matches the fast thinking gut reaction you know you are onto a winner and ready to take that next step forward to answer our next question: “How to enter?” the new market and what market entry model to use? More on that front in our next post. We trust this critical thinking approach to the Where? Question will give you some data and knowledge to think about in your context and the ability to turn that learning into wisdom. Please do not hesitate to get in touch with us if you would like to do something similar or different relevant to your context and challenge as you create, innovate and grow your business internationally.

About the Authors:

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create innovate and grow through innovation and spreading their wings outside their home base. Contact Dermott if you and your business needs help improving your innovation processes or expanding your business internationally.

Kevin O’Reilly launched Radar Insight after seeing too many products launch without the insight or clarity required to be successful. Contact Kevin to hear how consumer research & product evaluation can help tailor your product to your target market.

 


Sail the 7Cs and Grow your International Business

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Sail the Seven Cs

Dermott Dowling, Founding Director @Creatovate and Patrick Tully, Partner @Fusion Learning share some insight into their 7Cs ‘critical thinking’ framework to break down the challenge of where, when and how to create, grow and sustain an International Business.

INTRODUCTION

For many businesses and business owners change can feel both exciting and challenging, and for some it feels downright daunting. However, what is universally true is that business growth without change is impossible to achieve and for many businesses the most effective form of growth and change is expansion into new markets or geographies.

The journey to extend into other markets can, in its infancy, seem overwhelming particularly for small and medium sized businesses that are highly dependent on their domestic success. However, like any journey, the provision of a route-map and a travel guide can both shed light on the destination and map out the pathway to getting there. This is the purpose of our 7Cs framework, is to help structure, plan and build a rock solid foundations for a strategy of expansion into Asia and beyond.  Think of it like planning a journey across the Seven Seas from the safety and security of your home port before setting sail into the unknown beyond your borders.

1.     Challenge

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The 7Cs framework includes a wide range of processes and tools that enable us to strive for the extra-ordinary. Our ability to deliver, however, is founded on the first, critical step – setting ourselves an extra-ordinary challenge.

The purpose of the challenge statement is to help us set course for the journey ahead, in essence the challenge must act as our compass – providing direction without forcing a path on us.  Ultimately the challenge statement set’s out the end in mind, what are you specifically trying to achieve? It helps provide us with a clear purpose around which to focus our data and information search and around which to align the entire organisation.

Experience shows that there are 3 crucial characteristics of a great challenge statement. These challenges are:

Prioritised: They focus on something that has significant implications for the people on the team and decision makers MUST care about what’s at stake if the outcomes are to come alive.

Provocative: If the solution is easy or obvious, just do it. What we need are unreasonable challenges we can rise to and measure.

Precise: they spell out very clearly what it is that the team need to do to create the future we want.

There is one final aspects to creating the perfect challenge.  The first is getting the scope right. Too narrow a challenge is constraining and leads to obvious, well-trodden territories. Too wide a challenge can be dizzying and disorientating and leads to generalised thoughts that lack depth or profoundness

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2.     Country

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Once you have set your business challenge and aligned your company and leaders internally around the opportunity to internationalise your business your attention immediately turns to the where? question.  Where? to go first.  Most businesses by default enter international markets through either a direct approach from an overseas based importer or a locally based consolidator.  Some also are taken internationally by their existing customers as they grow and spread their wings across the Seven Seas.  Whilst others may be dragged into International Business through the people in their businesses, from past experience, networks and explorer mindsets.  Smart businesses start by creating a strategy with “Where?” front and centre in their minds and rank and decide which Countries are best to go to first, second and third…for their business.  A practical and easy to use Country sorting tool is the PESTEL for macro-country data.

■        Political situation – stability, trade agreements?

■        Economic situation – present & future wealth of consumers?

■        Socio-cultural – business culture adaptability?

■        Technology – Infrastructure considerations, transfer of technology issues?

■        Environmental – considerations?

■        Legal? Regulatory environment? IP protection? Claims & Registration requirements?

One way to do a quick sort and ranking might be through use of a scorecard on each dimension using forced choice 0, 4, 7 or 10 with 0 being No, 4 is Low, 7 is good and 10 is High for attractiveness on each dimension of the PESTEL giving and overall score out of 60 enabling fast sorting and ranking of countries for market entry.

A quick and easy to use matrix like the one below can be used by a food company to sort 5 different countries in Asia for possible market entry using P.E.S.T.E.L analysis and available country data to hand.

PESTEL Japan China Malaysia Singapore Indonesia
Political (0,4,7,10)
Economic
Sociodemographics
Technology
Environmental
Legal
Total  (out of 60)
Ranking (1-5)

Additional market data maybe built into your Country ranking and prioritisation files including market attractiveness, competitive intensity or dispersion, barriers and openness to trade and innovation intensity.  Creatovate & Fusion Learning have a suite of tools they use to help their clients make these seemingly ‘massive’ tasks logical swift and easy to understand.

3.     Category

Having decided on the country or countries we are aiming to enter we need to understand the category or categories from which we want to source our business.  The category is the consumer’s understanding of the group of products or brands with which ours competes.  In other words, its competitive set. To help define it we ask:  what is our product one of? Or what could it be a replacement for?

  1. Needless to see that categories vary significantly by geography and although in your mind your product may be very clearly defined in its domestic market you can be assured that it may well sit in quite a different space in a new geography.  There are several fundamental reasons for building a clear understanding of the category in which you want to play, which are:The category will have certain product and pack codes that will be expected and challenging these can sometimes be disastrous
  2. The category you target will have a significant impact on the benefits you communicated and the competitive advantage you choose to leverage. Imagine you’re the producers of premium dried fruits. If you chose to target fresh fruit you’d probably leverage your convenience or perhaps sweetness. If, on the other hand, you targeted confectionery you’d be likely to major on your naturalness or heath properties

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3. In most markets data is available around the size and growth trajectories for categories – so making choices around category can help you understand the potential for your product today and in the future

4. Finally, most categories have clearly defined barriers and drivers. Understanding what these are can provide you with both a clear point of difference and competitive advantage based on either addressing a barrier or amplifying a driver – see below

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4.     Competition or Collaboration

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Competition in the new market(s) your business enters is highly likely to be different to your home market.  There maybe a few of the multinational companies you see at home but there is also most likely to be local or regional players to consider.  With their local knowledge, networks and understanding local and regional players can be formidable competitors.  Understanding your own external Threats and Weaknesses and your internal Strengths and Weaknesses can help you work out where to compete and where to collaborate.  SWOT analyses of the Competition will also help understand if their Weaknesses are your Threats and whether this might throw up opportunities to collaborate or compete.  Likewise similar SWOT analyses of competitors at home might highlight the opportunity to collaborate internationally.  This is commonly done in some industries like brewing where fierce competitors in one market collaborate in other markets by brewing, marketing and selling each other’s brands under licence at another brewery abroad.

Our suggestion is to pick the top 2-3 competitors in your Category and do a fast and simple SWOT on each of them in your new market.  Do not ignore pulling out SWOTs on your home market competition as well in this exercise.   TOWS matrix analysis on your own business can also be used in to see what opportunities are presented to ‘work together’ or ‘partner’ with businesses that need you as much as you need them.

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Tools that might help in these exercises are shared below and an abundance of useful templates and how to… guide exist in textbooks, online or in your own business to assist this process.  An excellent source article on SWOT and TOWS analysis can be found at:

http://www.mindtools.com/pages/article/newSTR_89.htm

Clients find the exercise is easy to do when facilitated by good partners like Creatovate and Fusion Learning taking ‘what you know’ and addressing ‘what you don’t know’ with concrete actions and go forward plans to communicate and possibly collaborate with competition in new markets before entry.

5.     Consumer

The ultimate custodian of success or failure in any geography is the consumer of our product or service – if they don’t connect with and continue to consumer our offer then we are doomed to failure.  The importance of deeply understanding who you want to target and why they should be interested in your offer is a crucial stage on the journey to successful expansion.

THE WHO

The first thing we must establish is who do we believe our offer will appeal. Although this may seem obvious it is all too often left at the level of unhelpful generalities such as MGBs (Main Grocery Buyers) or Mums with young families! As we become more globalised and categories become ever more fragmented the need to deeply understand your target becomes ever more important and this is very difficult to do unless we have a clear handle on who they are.  For most brands and businesses the sentiment should be target narrow, yet reach deep.  The point being that the more specific you are in your targeting the more likely you are to build an enduring relationship with your consumers.

Fusion Learning have developed a fingerprinting© tool that aims to help develop an improved understanding of the people in our market by searching for patterns and discordances between key communities of consumers. Fingerprinting© is particularly useful when drilling for insights and understanding in seemingly divergent targets. It is also a powerful way to ‘walk in the shoes’ of your
consumers.

It achieves this by focusing on the key questions that help us segment our consumer base – see below:

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THE WHY

Having understood who we want to target the challenge is now to dig below the surface of their behaviours to understand the beliefs and attitudes that are driving them – in others words consumer insight. Fundamental to delivering this level of understanding is the thought that true insights are rarely found lying on the surface – they are all about what lies below.

There is a clear relationship between a human’s observable behaviour and the deep-seated belief system which has been developed over time in both the conscious and unconscious mind. In other words, behaviours unlock potential but beliefs are often key.

Behaviours are the things we can observe, interrogate, compare, model and measure. They are also ultimately what we want to influence.

Beliefs force us not to take the obvious for granted. They allow us to link apparently different behaviours and help us find emotional and functional levers to change behaviours.

As insight hunters, a key part of our role is to observe consumer behaviour – what they say and do – but then to dig down below to understand why they do it. What are the beliefs and attitudes that make them respond the way they do?

The importance of leverage

The world is full of exciting facts and understanding how humans’ brains work can be fascinating, but often that’s the trap.

Consumer information in its own right has no value – unless it is analysed, manipulated, interrogated and extrapolated it remains simply a pile of facts, judgements and observations. Our role is to search for the right information, develop a deep understanding of the consumer and then to turn it into leverage or active insights.

We need our insight to be leverage in 2 senses:

  1. Fit to challenge – does it create opportunities we can use for our challenge?
  2. Fit to brand – are the insights and resulting opportunities appropriate for our brand?

Falling in love with an elegantly articulated insight that has no bearing on your brand or business is an all too common trap to fall into. We call these insights FASCINATORS, they’re often deeply interesting and astoundingly astute but exceedingly difficult to attach a commercial or brand opportunity to.

The insights we want are LIBERATORS, these have a depth of belief-based understanding that’s matched by their relevance to our challenge or brand.  Based on these key dimensions, we will define an insight as:

“A profound understanding of consumer beliefs and behaviours that provide inspiring springboards for exciting new brand building opportunities.”

6.     Customer

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Overlooked in so many case studies in the race to understand the preceding 5Cs and get your product or service out the door, many businesses miss the opportunity to get an early ‘Voice of the Customer’ in their International Business strategy creation and implementation.   Rather than leave this to importers or people in the new market, our recommendation is to prepare a plan for a constructive conversation with your new potential customers (retailers) who will be the gateway to your consumers.    Without an engaged customer (retail partner) supporting your products, services and proposition you cannot delight consumers of your finished goods.  Customers have needs and a wealth of information and learning at their fingertips that more often than not they are only too happy to share with new market entrants.  Time and time again we read, hear and sometimes see businesses waltz into a new market only to find out at the eleventh hour that the Customer is not aligned with the launch plan, has other priorities or is simply upset that they were not consulted before arrival in the new market.  Early conversations with customers build relationships, engage them more and empowers them to share what they know to your advantage.

Constructive conversations start with a fast preparation and we recommend a simple plan is put together before you visit the customer based on the following checklists as a guide, including some simple Stop! Start J Go… traffic light symbols or colours if more attention is needed in any areas:

Relevance

Does our Category opportunity and impact, reflect our

  • “Customer’s agenda”
  • Customer’s level of sophistication
  • Channel thinking
  • Customer’s data
  • Resources available to support customers’ needs

Credible

Is our offer to the customer based on a sound?

  • Consumer and shopper insight
  • Consumer and shopper proposition
  • Customer commercial proposition with evidence and assumptions

Simple

Is our first Customer conversation

  • Easy to understand? Try it on someone from another country in the office or a customer at home first.
  • Easy to implement? Can we talk with/out technology as an aid? Language?
  • Simple, clear actions? What do we need to take away as a Must, Intent or Wish from our first meeting with potential customers?
  • 4Ps considered for the category & customer (not just your products)

Take note that not all customers and channels in your new market of choice will be appropriate for your product or service.  One of the most important outcomes of your “Voice of Customer” excursions will be making a choice on where to focus your effort and where not to go initially on market entry.  The last thing you want to do is spread your efforts too broadly and thinly not satisfying any customers or engaging shoppers.  Do make the tough choices and focus on a key channel and customers in that channel before your spread your efforts too broadly.

An example output of a simple Channel/Customer Choice template for a consumer good into Indonesia from a Voice of Customer exercise might look like the following chart:

7.     Competencies

Having spent time looking at the external context in the preceding 6Cs the time has now come to start looking inwardly to identify the strengths and opportunities you can leverage to guarantee your success. Having clearly understood all the external context you will be in an excellent position to understand the competencies you have that may enable you to deliver a compelling competitive advantage. The first thing to do is to start by listing all the tangible and intangible competencies you might have.

This process starts by identifying what we can excel in from a brand, product and technology / manufacturing perspective – what can we do better than anyone else. By understanding all our tangible and intangible assets can provide platforms for opportunity and competitive advantage. Having listed our competencies we should rank them based on:

  1. what can we own
  2. what do we own

  3. what do we own exclusively

     

If we can focus on what we own exclusively we are able to:

  • play to our strengths and thereby
  • reinforces brand or product credibility
  • minimises risk
  • provides benefit or to RTB for our consumer
  • leverage what made us famous in the first place

There are many sources of competency from the tangible (like unique ingredients) to the intangible (like a brand personality trait) but to kick you off here is a list of some places you van start to look:

Brand asset – an element of the brand like the colour purple for Cadbury

Ingredient – a unique ingredient or an ingredient you’ve become famous for like Cherry Ripe
Technology – this can be product or pack based like high pressure processing or steam technology
Target – this is about owning a specific audience or expert segment like Tresemme (salons)
Packaging – this could be a shape or type of packaging like Absolut or Orangina
Manufacturing – a unique way of making your product like Cadbury Bubbly
Feature – something you offer that others might not (natural energy Boca Lupo)
Benefit – something that you do for the consumer better than others (Olay: 7 signs of aging)
Occasion – own an occasion like Easter: Cadbury Crème Eggs

Critical thinking frameworks like the 7Cs above help you break down seemingly overwhelmingly complex challenges and business opportunities into a sequence of manageable steps and processes where your team take heart as they see concrete go forward actions to implement.  The 7Cs do not need to be executed in sequence and you may find you start with one C before moving back to another or jumping forward a few steps.  We recommend an alignment on Challenge is fundamental to guiding your business through the 7Cs framework.  Our recommendation is that you also partner with outside experts like Fusion Learning and / or Creatovate to hold yourselves accountable to a project timeline, participate in the process rather than facilitate it and get the benefits of continuous learning from past and future clients doing this process.

7Cs Model

7Cs Model

Dermott Dowling is founding Director @Creatovate, International Business & Innovation consultancy. Creatovate help businesses grow through spreading their wings outside their home base.

Patrick Tully is Partner @Fusion LearningFusion Learning is a global marketing capability consultancy that unleashes the potential of brands and businesses by unleashing the potential of the people that look after them.

Patrick & Dermott can help you and your business grow internationally using the 7Cs critical thinking tools.  If you are interested to build both your capability and dive deep into each C using action learning and critical thinking, please register your interest in the form below for further information.


A case study on reinvention and growth: Swisse is not selling vitamins, its selling wellness.

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Published on anthillonline September 12, 2013 By Dermott Dowling

http://anthillonline.com/a-case-study-on-reinvention-and-growth-swisse-is-not-selling-vitamins-its-selling-wellness/

We have all heard of the 4Ps of marketing but at Swisse they are different.

At Swisse, the 4Ps stand for in order of priority:
1) People,
2) Passion, and
3) Products before 4) Profits

Putting values first and Strategy second, Radek Sali and his co-owners at Swisse Wellness, set about revolutionising the Wellness industry and taking it out of traditional health stores and pharmacies into the mainstream mass market.

In just under five years, revenues have increased from $15 million to a forecast $250 million for FY2013. The brand has been taken into 30,000 stores in the US. And, the company has created an army of celebrity ambassadors, all hitting different target markets.

All of this has helped propel Swisse from a “vitamins only brand” into the mainstream “wellness” market. The result is a lift in brand awareness from 20 per cent to 95 per cent.

All this in just under five years.

Radek Sali, smart dressing and constantly smiling CEO of Swisse Wellness recently shared some insights and lessons about creating exceptional growth to a packed VECCI luncheon.

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1. Building strategic partnerships

Without a doubt, the strategic partnerships the company built in the 1990s helped build credibility that underpinned the company’s growth.

Most doctors will only spend one day in their University course on wellness. Yet, there are already over 15,000 published studies on the benefits of healthy life and diet on maintaining and prolonging your health and wellbeing.

To concentrate on the promotion of wellness in the market, Swisse created a host of partnerships. It invested one per cent of revenue ($7 million over the past 3 years) into R&D in this area. This R&D investment was more than the company profits during that period.

These partnerships have helped to build Swisse credentials in an industry previously tarnished with the ‘alternative’ medicine tag, a categorisation which Radek prefers to call ‘complementary medicine’.  Sali also noted that this category now accounts for 14 per cent of consumers spending on health and wellness.

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2. Ambassadors

Today, it is very hard to avoid the constant barrage of Swisse celebrities selling new remedies to a healthy life, wellbeing and happiness. There is the original ambassador Ricky Ponting, other sports stars and now, more recently, the heavy hitters of Ellen DeGeneres and Nicole Kidman who were a key part of the US market launch.

Sali pointed out that Ponting had been a long time Swisse advocate and user of their products during his playing career. He explained that asking if people would become an ambassador often costs less or, no more, than hiring an actor for their commercials.

But, it hasn’t been all epic wins. In the case of Geoff Huegill, Swisse were approached when he was 139kg and committed to reinventing himself as a medal winning swimmer. Sali turned him down. But, he ate some humble pie later when the company went back to Huegill to ask him on board after his gold medal haul at the Commonwealth Games.

Sali considers it a “learn, grow and improve” moment, which underpins the next fundamental lesson.

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3. Values and positive culture

We have seen and heard it several times before in successful businesses: the importance of creating a positive culture and having core values for guiding the company.

Sali noted his own personal ‘reinvention’ from that of the standard Aussie bloke with three suits on rotation, to forcing himself to ‘dress up different’ every day, to be more creative, to consciously smile, say hello to everyone and, create a positive ‘can do’ attitude at Swisse.

An example of how this culture has materialised at Swisse is the “health & happiness” day for employees to take an extra day off anytime in the year to ‘recharge’. This immediately resulted in reduced sick leave and absenteeism.

Another example was the ‘gift’ of ‘feedback’ and embracing the ‘thanks’ that goes with receiving feedback when there is opportunity to improve. Using a sports analogy, Sali pointed out you should not be surprised, or hurt, to receive feedback to improve, just as a coach goes on at quarter and half time giving players advice to lift their game on field.

Some of the perks of working as Swisse include having access to a personal trainer, a masseuse, free organic breakfasts and lunches and, a healthy workplace lifestyle. These elements of the work culture were noted and commented on by Ellen DeGeneres when she visited their Collingwood offices.

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4. Use cash flow forecasts rather than ROI for innovation

Last but not least, Sali spoke about his preference to forecast with cash flows. He believes you should only ‘bet what you are willing and can afford to lose’, rather than chasing illusive ROIs. This is especially true when it comes to innovating in terms of new products, new categories and new markets.

Sali believes it is human nature is to make the numbers work and hit the hurdle rate ROI. However, if you can take the approach of determining what are you prepared and able to bet (and possibly lose) and deciding how bold to be, a business is going to achieve a different outcome.

Sali and the Swisse team have serious and lofty ambition: $1.5 billion in sales in five years’ time. This translates into a massive lift from the $250 million in sales today.

The company has plans to expand into more countries, including Europe and Asia, to create a truly global brand with Aussie roots.

Sali knows it is ambitious and, not without its challenges.

He admits, like everyone he has his ‘oh S**T’ moments and fears but, pointed to the fact everyone is in control of their own destiny and, without asking you will never receive.

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Sali’s six tips to grow your business

In closing Sali, shared the following tips to creating exceptional business growth:

  1. Create a positive culture & values
  2. Work out the ad formula for how to make an impact
  3. Grow into new areas
  4. Get the best team and keep them
  5. Innovate, reinvent and change as needed
  6. You are in control of your destiny

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create,  innovate and grow through sustainable innovation processes and spreading their wings outside their home base.


Global Food Challenge = Australian International Business Opportunity

Guest lecture to International Business students on global food challenge and opportunity for Australian International Food Businesses including a case study on Berri Indonesia.

The future is “uncertain” and certain

By 2050 9.5 billion of us will be hungry! However, by 2030 2 billion of us will be overweight and 1 billion obese.

Consolidation of manufacturers and retailers will continue at faster rates.

Expect a significant step up from the competition in your home market when you go international.

<div style=”margin-bottom:5px”> <strong> <a href=”http://www.slideshare.net/dowlmott/global-food-challenge-australian-international-business-opportunity” title=”Global food challenge Australian international business opportunity” target=”_blank”>Global food challenge Australian international business opportunity</a> </strong> from <strong><a href=”http://www.slideshare.net/dowlmott” target=”_blank”>Creatovate</a></strong> </div>


How to start a beautiful organisation

Lessons and confessions of a serial innovator @EvanThornley #ACBC12

The 4 sides to a Beautiful Organisation

Evan Thornley, former CEO of Better Place Australia is a successful entrepreneur who has also served in public office.  Prior to that, Evan co-founded and served as chairman and CEO of Look Smart Ltd. (NASD: LOOK), an Internet search advertising company that remains one of the few Australian technology companies to be taken public on the NASDAQ  and to have delivered a 100x return to venture capital investors.   Evan was also a Founding Director of GetUp!, Online activist network with over 400,000 members.

Evan shared some of his wisdom with the readers of Anthill post his address to the Australian Chambers Business Congress titled ‘confessions of a serial innovator’.  In opening his address Evan noted how the first 6 years of a child’s life are fundamental to his/her success as an adult, not unlike a Start-up!  Here is some of the key out-takes from Evan’s address that hopefully help you start a beautiful organisation or continue to build a beautiful organisation.

Great Idea

Great Idea

Long Side #1: Great Idea

Every business starts with a ‘great idea however, Evan shared too many entrepreneurs rush to execution without thoroughly thinking through that idea, testing it, sharing it with others for builds and feedback and miss the two fundamental determinants of a good idea.  Does your idea meet a core set of unmet needs for a group of customers, or solve some problems they never knew they had?  Does your idea measure up on fundamental economics?  It is not enough to have great technology and hope that customers and profitability comes post commercialisation of the idea.  Technology is important but it is only a means to an end and the fundamentals of your idea must stand up to the two tests of a great idea.  Evan shared the example of Better Place founder Shai Agassi who spent two years thinking through, working on his idea and sharing it in a white paper for builds from his government, businesses, investors and the community.  Sir Michael Young who founded the Open University and many other social businesses noted that the true test of a ‘great idea’ is whether it can sustain a team and organisation around itself within the first few years.

Team

Team

Long Side #2: Team

Great ideas that are good from a business and social sense will attract a team.  Evan noted he is approached frequently by passionate creative entrepreneurs’ who he described as ‘lone rangers’.  Great creativity and passion for their idea but without a team around them they will not go onto great success.   Evan’s feedback to these ‘lone ranger’s’ is ‘go away and come back when you have a team of 3 or 4 people around you’.  In filling your team the tips are look for people with strengths and skills that complement the founder.  How good are they?  How passionate are they about bringing your now ‘shared’ idea to reality?  When asked how do you recruit people from paid secure employment into your start-up Evan was quick to point out entrepreneurs have a responsibility not to take people out of paid employment and put them in a high risk start up without explaining the risks associated with a start-up.  People need to self-select if they want to leave the safety net of secure employment for the risk and rewards of a start-up.  Evan also pointed out the only thing worse than not having a great team member join your team is having them join and then freak out when the going gets tough and have them worrying about meeting the mortgage or paying the kids school fees.

Culture & Values

Culture & Values

Short Side #3: Culture & Values

The first of two short sides to a beautiful organisation Culture & Values are the important ‘glue’ or ‘anchor’ that will hold the start-up together and guide it through troubled waters.  The beauty of a start-up is that the founder(s) get to set the culture and values for the organisation.  How those founders treat their people will be fundamental to how that start up performs and is perceived by its customers and stakeholders.  For more on the importance of culture and values in start-ups and organisations see Lesson #3 and Bonus Tip #2 in Are you a winner or a loser?

Governance

Governance

Short Side #4: Governance

The second of the two long sides of a beautiful organisation Governance is often overlooked by founders early in their ventures to their detriment down the line.  Second only to running out of financial runway in terms of problems for start-ups and entrepreneurs’ are problems caused by a lack of Governance.  Fights between founders, between founders and investors, and issues of Governance only get worse the more successful a business becomes as everyone seeks to claim ownership of the entity.  A clear shareholders agreement, a Board of Advisors and if possible a Board of Directors are some of the Governance tools an entrepreneur should not gloss over or leave to later on down the track when starting a beautiful organisation.

For a short video share on the 4 sides to a beautiful organisation go to…

For an in-depth insight from serial innovator and entrepreneur Evan Thornley you can watch his Tedx Talk linked to here…

Dermott Dowling is founding Director @Creatovate Innovation & International Business Consultancy.  Dermott is a strategic, innovative, business professional with a passion for building great brands, businesses and teams with experience and achievements across companies, countries and cultures.


How to… think differently to solve problems and capture opportunity

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Lessons shared from serial innovator Evan Thornley @ACBC12

Did you know that the first 6 years of a child’s life are fundamental to its social outcomes and achievements in life? Have you heard of the politics of the radical centre?  How can you and your business look at problems differently and think differently to solve problems and capture opportunity?  These are some of the lessons shared from serial innovator and entrepreneur Evan Thornley at the Australian Chambers Business Congress 2012.

Even-Thornley-picture

Evan Thornley was appointed Chief Executive of Better Place Australia in January 2009.  Evan is a successful technology entrepreneur who has also served in public office.  Prior to that, Evan co-founded and served as chairman and CEO of Look Smart Ltd. (NASD: LOOK), an Internet search advertising company that remains one of the few Australian technology companies to be taken public on the NASDAQ Stock Market and to have delivered a 100x return to venture capital investors.  Evan was also the founding Chair of the Board of Per Capita, a public policy think tank and served on the board of the Brotherhood of St. Laurence, and was a Founding Director of GetUp!, an online activist network with 400,000 members.

There is now an overwhelming amount of evidence that the first 6 years of a child’s life are by far the most important to his/her adult success.  Medical professionals and economists agree that an investment in early childhood health, education and development have an overwhelmingly positive influence on a nation and provide a very healthy return on investment.  This seems like general knowledge to us all but what may not be so general knowledge is that Australia’s investment in early childhood is one of the lowest levels in the OECD.  While debates raged on private vs. public funding of education and the decline of tertiary education, Eddy Groves and ABC Learning borrowed billions to roll up a host of child care centres with less than optimum outcomes for the children and staff in those centres that resulted in a collapse into voluntary liquidation in the midst of the GFC.

Good Start

What may be less well known is what happened to those child care centres after the liquidation and how a consortium on Not-For-Profit businesses, The Benevolent Society, Mission Australia, The Brotherhood of St Lawrence and Social Ventures Australia rallied together to resurrect the business from the ashes paying two times earnings and beating off private equity for a vital piece of Australia’s human capital economy and have been doing a vastly better job of giving Australian children the Good Start they deserve investing all of the earnings back into early learning initiatives, for the benefit of every child.

Why should this matter to you and your business?  For two simple reasons; firstly, if your business is not set up right from the start similar to a young child you will not overcome the inevitable challenges and grow sustainably.  Secondly, it is an excellent example of how to solve problems, by looking at them differently and coming up with creative solutions to uncommon challenges.  Thornley, calls it ‘the politics of the radical centre’ or using an ‘AND’ thinking approach, to overcome challenges or capture opportunity.

No Thinking

So what is the ‘politics of the radical centre’ or how do we think differently to solve problems and capture opportunity?  To understand how… you need to understand the different thinking styles used and the pitfalls of some of the most common used in business today.  The simplest and most common thinking style all too often encountered in the business context or boardroom is the “NO” thinking style.   ‘Thanks for your idea, but we tried that one before,’ or ‘NO thanks as great as your idea or opportunity is for our business it simply will not work for these reasons….’  NO thinking is a common all too easy default style of thinking to fall into and it comes out very early in a group setting as it’s a common human behaviour to see risks, cautions, red flags before it is to naturally build on a person’s input or seek clarification to understand why they have suggested a change in the way we do business around here.

Or Thinking

The second thinking style is “OR” thinking.  This is binary thinking or two-dimensional thinking.  It’s better than “NO” thinking but it’s very black or white and as we know the world and the challenges and opportunities we face are never black or white.  An example, shared by Thornley of classical binary “OR” thinking is the traditional view of Industrial Relations in Australia of ‘bosses’ v workers’.  Another classic example of “OR” thinking is ‘profits’ vs. ‘the planet’.  OR thinking dictates it is EITHER profit OR environmental protection when in fact the two are not mutually exclusive and Better Place is a good example of a business pursing both profits AND an environmental benefit.

When Thinking

The third thinking style is “WHEN” thinking.  It is better than “OR” thinking in that it requires knowledge, wisdom and intelligent judgement to come up with a conditioned response to a problem or opportunity.  For example, “WHEN” worker X does ABC, boss Y responds with actions DEF.  This type of thinking presupposes some knowledge and experience by those taking the action ‘WHEN’ the problem or opportunity arises.  It also presupposes that what worked last time will work again.  WHEN thinking has some pitfalls in that we are constantly confronted with new and different problems than previously experienced and it can be dangerous to expect that past solutions work for today’s problems.

Grameen Bank

The forth thinking style is “AND” thinking.  This is the most powerful type of thinking to solve problems and capture opportunity because it is inclusive in creating innovative solutions to problems.  Why choose between ‘profit’ and the ‘planet’ or ‘public’ vs. ‘private’ business models, when you can have both.  Some of the organisations that Evan has been involved with like Better Place and Good Start are good examples of organisations that have used ‘AND” thinking to solve a problem and capture an opportunity.  Likewise, Grameen Bank , founded in Bangladesh used ‘AND’ thinking to come up with creative solutions to systemic issues and problems, using unconventional and highly effective social business models.  Thornley would describe the Grameen Bank as an example of the ‘politics of the radical centre’.

There was no radical ideology, “OR” thinking or “NO” thinking.  There was “AND” thinking and “How can we…” questioning to come up with creative solutions to making microcredit available to the people who needed it most to start their own businesses and lift their standard of living.  An example closer to home that Thornley sited was the Australian road toll which used to be one of the world’s worst 30 years ago and is not one of the world’s best.  There were no protests, radical rules and regulations but a concerted “How can we….” approach across the public, private and community sectors to bring the road toll carnage down.

Whilst, Thornley opened his talk with the profound need to ‘confess’ why he has taken the turns in life he has that seemed ‘unconventional’ or strange to others around him at the time but completely natural to him in his professional career he shared with the audience a simple and effective way to approach problems and capture opportunities.  There was NO ‘radical ideology’ AND there was some ‘politics of the radical centre’ AND there were demonstrable examples of businesses starting and growing sustainably that are achieving great commercial and social outcomes.

NoOrWhenAnd

You can see a short video summary of these thinking styles here…

Dermott Dowling is founding Director @Creatovate Innovation & International Business Consultancy.  He is passionate about building great businesses, brands and teams with extensive experience across cultures, countries and companies.


Opportunity Knocks for Postman Pat & You?

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Australia Post is innovating to realise its vision ‘that connects the digital economy and the physical world’

 

The iPhone 5 launch last year was not the only thing happening in the global digital economy and being talked about last year.  At a VECCI luncheon on 9-11-12, Ahmed Fahour, Managing Director & CEO at Australia Post shared a few innovations from Australia’s own Postman Pat and his hologram friend in the digital economy who we are going to get a lot more familiar with in years to come.  Ahmed shared a few statistics that made me go “Wow” like that 400 billion emails are sent per annum, 98% of which are spam.  It’s hard to fathom that the iPhone was only released 4 years ago in 2008 and already 6 out of 10 adult Aussies have a smart phone, or that the iPad was released only 2 years ago in 2010 and yet by the end of this year one in three Aussie households will have one.

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Not to mention that over the past four years, Facebook has gone from 90 million accounts to 900 million, and ‘tweets’ sent, each day, have grown from just 1.1 million to 140 million.  Digital technology has already transformed the music industry, book publishing, and the photographic industry and news organisations and is clearly changing the nature of retailing.  Australians might have been slow to pick up on things like online retail by global standards but they are catching up fast and its having a dramatic effect on how Postman Pat delivers the mail.

Australian Post mail volumes reached an all-time peak in 2008 of 5 billion items and have fallen by almost 20 per cent in the past 4 years.  This year Post will deliver the same amount of letters as they did back in the mid-1990s.  However, it’s not all ‘down down’ in the mail business with parcel volumes growing by around 8-10% a year driven by online shopping and 70% of those parcels are now generated by an online transaction.  All the research is predicting double-digit growth in Australian online spending through to 2020.  Of that online retail 70–80% is generated by Australian e-tailing sites and it’s really the new breed of online retailers (e.g. Catch of the Day, Ozsales, Deals Direct and Greys Online) that are dominating the market.  A recent study released by nab showed that over 70% of sales transactions are on Australian websites and that less 2% of total sales value is from off shore retailers.

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Australian Post is innovating to catch up and realised their vision of ‘connecting the digital economy with the real world’.  Two recent examples are the postcard app which is free in the app store taking pictures from your iPhone or library and turning them into a physical postcard – and then delivering it within Australian for $1.99.  Post has also been installing Smart Parcel lockers around the country that are accessible 24/7 enabling customers to collect parcels when it suits them – day or night.  Customers simply register online and when their parcel is ready for collection Post send them a text message or email.  Trials at several sites around the country have received an overwhelming response with ambitious roll out plans to be announced later this year.

Another example of how parcel service is changing is ‘Delivery Choice’ where Post is working with online retailers to offer their customers the ability to nominate a day, time or an alternative location for delivery of the items that they have bought online.  They can even re-direct their parcel while it’s in transit.  Catch of the Day, Crazy Sales, ePharmacy and Chemist Warehouse where the first online retailers to integrate “Delivery Choice” into their website giving their customers real control over when their items are delivered.

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Another big digital service innovation Post is developing is the Digital MailBox.  The Digital MailBox will be a free service that’s available to all adult Australians.  You will be able to use it to receive and store important documents (like bills and statements) and make payments.  Your own secure online vault with one-touch log-in with one password accessible anywhere anytime on any internet enabled device.  If you are thinking of equivalents in the physical world, this is effectively your letterbox, your filing cabinet and your payments card or bank account – but seamlessly combined in a secure, online environment.  No spam, no clutter, no junk mail and it will help businesses to cut the cost of delivering their essential communications by up to 70 per cent. Telstra, AMP and Westpac are on board already and government agencies and businesses will be announced in October. Australians can trust that their information is safe, stored securely in an Australian based cloud, provided by Telstra.

The Australia Post Digital MailBox will allow Australians to:

• Connect with service providers they have a relationship with – such as banks, utilities and government entities.

• Receive statements and bills, set reminders and make payments online, using any PC or mobile device, anywhere, anytime.

• Use the Australia Post Digital MailBox as a personal digital vault to upload and easily find important documents.

For businesses the system offers:

• A flexible range of integration options to help businesses connect securely to their customers through the Australia Post Digital MailBox.

• A secure digital delivery service to consumers and a range of payment options.

• Better value for money than any other singular service.

Australians can register for an Australia Post Digital MailBox at www.auspost.com.au/digital-post

In closing Ahmed noted that these kinds of innovation are not new to Australia Post who have been early adopters of both transport and communication technologies.  They have been around long before the telegraph, the car, the telephone, the aeroplane or the fax machine.  It was the colonial postal services – for instance – that built the telegraph in the 1870s that connected Victoria to other Australian colonies and the world, slashing the time it took to send a message from Melbourne to London from months to just minutes.

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You might be sitting back and thinking how does this affect me as a business owner or entrepreneur or someone planning my own start up?  It’s yet another demonstrable example of how the digital economy is integrating with the real world to make online business models easier to reach mass market Australians.  With the trust and support of Australian Post the floodgates of eCommerce and eTailing businesses are about to open if in fact they are not already experiencing a torrent of transactions already washing over their spillways from the physical world.

 

Rest assured, if you are fearful your local Postman Pat will not round the corner on his trusty push bike or Honda, Ahmed assured reporters afterwards that you will get your mail every day on his watch.  Of course in the future who is not to say Postman Pat might be in a completely different delivery vehicle and you might be receiving a whole lot more than a couple of letters or bills. 

 

Time to sign up for your free digital mailbox www.auspost.com.au/digital-post

 

Dermott Dowling @Creatovate is an Innovation & International Business Consultant with a passion for building great brands, businesses and teams with extensive experience and achievements across cultures, countries and companies.


7 Steps to Conquer the Web like a Giant Spider Killer!

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In a year where Fairfax announces 1,900 redundancies and News Ltd announces restructures and right sizes (read redundancies) James Tuckerman (founder of anthillonline.com) hosted a series of seminars on conquering the Web with a guest list of Giant Spider Killer entrepreneurs.  Here are their 7 secret steps of web marketing I learned in a day:

1)       Remember the Commanders Intent! (Your Mission Statement)

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Just like when a platoon tries to take an enemy position your business needs a mission statement to guide you when you hit the marketplace and bullets fly in all directions?  In the internet the commander’s intent in the top right box of your mind must always be:

  1. Make it Measurable (if it can’t be measured don’t do it, it’s that simple)
  2. Findable (otherwise your wasting your time)
  3. Shareable (maximise the value of word of mouth and social media)
  4. Manageable (use tools and systems to reduce the workload and focus on value creating activity vs. ‘rinse and repeat’ tasks that can be outsourced)

2)       What’s your Pitch and does it make sense to your 15 year old nephew?

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Anthony Gaddie shared his wisdom on breaking down your business value proposition into simple, easy to understand language your 15 year old nephew understands and your target market.

  • Who is your target market?
  • What we do…
  • Benefits (to target market)
  • Feelings
  • Problems

When you verbalised your ‘elevator pitch’ it should come across like:

You know how…target market & problem

What we do…benefits & feeling

In fact…evidence from past work or client experience (NB: In 30 seconds or less – jargon removed)

Then, Part 2: Set Measurable Goals e.g.

1) Get qualified sales leads

2) Sign up for my blog

3) Click and download a shareable piece of knowledge (Product for Prospects) e.g. YouTube video

3)       Who is Wang Xing? He’s China’s Mark Zuckenberg and here is what he wants to tell us?

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Xing says, “Too many entrepreneurs sell vitamins instead of selling headaches. “  What does he mean? Put simply, what is your customers’ pain point? It’s no good selling them benefits when they are healthy.  Be there when they have a migraine with your aspirin (value proposition).  Be top of mind when they type ‘“help me” into Google.  Do this by giving them relevant small doses of business information in advance of the migraine.  For example which of the following two offers is more effective?

1)       20% off Folate Web Ad or,

2)       Ten Things a Pregnant Mother should not eat with a tear off coupon on the bottom (for 20% off Folate)

Market to the ‘headaches’ of your target market and remember the 7 deadly sins or Maslow hierarchy of needs in understanding their migraine points.

4)       Your Website is Your Home Planet – bring them home!

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What is your website purpose? If it’s not one of the four below you are wasting your resources:

I.        Sales

II.        Pre-qualified leads

III.        Coupons

IV.        Out-going clicks (advertising)

Use Measurement tools to measure your website effectiveness, for example.  They are widely available and many are FREE! Examples include:

  • Google analytics
  • Crazy Egg
  • Unbounce

5)       Don’t try and bed your customer on the first date.  Charm him/her slowly, Barry White style.  It’s a funnel not a tunnel on the Internet.

sales funnel

  • 1000 visits =>
  • 100 email registrations =>
  • 40 surveys =>
  • 10 sales

6)       Even Dummies can do Search Engine Optimisation (SEO)

Hire the celebrity chefs and not the lawyers of SEO and by that, they mean do not be fooled by the mystery and mastery of the 142 secret steps you need to get a Google #1 ranking.  Hire the celebrity chefs and pay for their implementation.  Understand how search engines work.

It’s the number of links and the quality of links on your website.

Understand how ‘spiders’ & ‘bots’ work and how they like the size of the site and ease of navigation, plus SPEED & RECENCY count.  Don’t forget Keywords.   Update ‘title tags’ on your page

  • Home page
  • Permanent pages
  • Posts

Use “about 60 characters”, and lead with the Noun for title tags and if you use a Content Management Systems utilise the headings under the paragraph drop down to maximum effect.  Last but not least, create measurable shareable content i.e. ‘retweetable’ headlines that are interesting and sharable.

7)       Facebook: Like us like Lorna Jane and play by the rules.

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It’s a virtuous cycle and it goes like this: Acquire => Engage => Convert => Engage => Acquire…

Some Facebook tips for newbies from Sam Zivot @LornaJane that will help you on your way include:

  • Learn by doing (there are no experts out there, we are all learning social media)
  • One thought per post (reduce redundancy & duplicated links, etc.)
  • Aim for >1% engagement ratings (comments over likes over fans)
  •  People don’t read Facebook posts, they skim, make your post clear, simple and stand-out from the crowd
  • Only 11-23% of your fans on Facebook will actually see your post
  • Use authorised 3rd party apps for competitions or risk being banned from Facebook
  •  Use simple multi-choice options e.g. like A or B or like or dislike this prototype.  Do not ask open ended questions
  • Follow the leaders to learn e.g. George Takei


Bonus Step & Guiding Principle: Consumers only care about themselves and content relevant to them self

Marketing has changed…from… rent the eyeballs…to….own the eyeballs e.g. twitter

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How often do we spend all our time trying to convince other people and our customers what we have is of value to them?  When if we step back and think what they care about, what is relevant to them and how can our knowledge and the freely and widely available tools and systems at our disposal enable us to put that aspirin within reach so when their migraine hits and they stay calm and Google it, our business comes up trumps!  Thanks James, Anthony, Sam and Pete for sharing your 7 secrets to personal mastery of the tinternet!  This Luddite is convinced it’s time to start practising what I’ve learned.

Dermott Dowling

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