Tag Archives: strategy

Think Inside the Box

think-inside-the-box

Think Inside the Box – Where is your Food Coming From?

Strolling the many beautiful aisles of BiG (Ben’s Independent Grocer) in Kuala Lumpur earlier in the year with an awesome Aussie food client I was suddenly struck by one product that jumped right off the shelf and slammed me in the face!  Amongst a sea of 50,000+ products (the average number of skus in a supermarket) and BiG is one of the best supermarkets I have ever visited and that’s quite a few in quite a few countries.

What captured my attention from One Degree Organic Foods was firstly a QR code front and centre of pack with a call to action to discover the ingredient story and what’s actually inside the box!  Funny you would think you could just read the ingredients panel for that information wouldn’t you?  You might also expect to see the usual blah blah blah statements that hide the truth on that same ingredient panel. Statements like “made from local and imported ingredients”, “sourced locally where possible”,…etc etc.  Not here, the family who own and operate One Degree Organic Foods are farmers themselves or as I like to call them farmpreneurs – the new breed of farmers who are entrepreneurs taking their value added brands and food products directly to consumers and baring their all in the name of authenticity and pride and passion!

We can not say it better than the owners so I will just quote what they say on their website: “We’re not a conglomerate, nor a big-box retailer, nor a chemical company with a food division. We’re a family who cares deeply about family farmers and the integrity of your food.” Does that resonate with you? It did with me in a busy brilliant independent grocer in KL, Malaysia in a cereals aisle that had local and imported options from the 4 corners of the globe to choose from.  I ended up standing at the shelf scanning QR codes and watching engaging YouTube videos of Pecan farmers in Peru, Buckwheat growers in central Canada and connecting with the passion these farmers showed to their land and the ingredients inside the box!

This is example is not only good social business its smart business and its smart marketing.  The best of the best in my mind.  Brilliantly efficient and transparent in a modern age where BIG is bad – who trusts large Multinational Profit Shifting Corporations anymore these days?  In fact in food, many have resorted to ‘faux branding’ creating cottage brands and hiding behind PO Box or Head Office Addresses with ABC Pty Ltd passing off a mass produced food item as something akin to a cottage industry startup family food brand.  If they are not creating ‘faux brands’ they are buying the genuine article and bringing them into their fold – founders and all to run alongside their mainstream food brands.  I have spoken  and written about this recent trend at Food&DrinkLive! in Sydney, Australia 2015 and in an earlier CreatoBlog Think, Act, Adapt and Innovate like a Startup!

Shoppers and consumers are asking nowadays – where is my money going? When I shop whether locally at an independent grocery store or with a major national supermarket chain they are already making a decision as to where they invest their hard earned $$$.  After get to the supermarket shelves or jump online you faced with 100s upon 100s of brands to chose from before you make another decision as to which company will you support. That support is being consciously or unconsciously driven more towards small, independent, family owned businesses more than ever before and there are many reasons for those choices.

Think about your own shopping decisions you take.  Of course price is important and as the famous jingle goes “everyone loves a bargain! ”  However do you also think of the following factors in your decisions at the shelf or when shopping online?

  • How is this food grown? How are the animals treated? Is it sustainably farmed?
  • Is this a genuine real article?  How much has my food been processed, added to, tampered with and packaged up?
  • Where is this food from? What about the ingredients that go into making it? Is it safe to eat and feed to my family?
  • Who am I supporting here? A large multinational or a family owned or small business?

Brands BIG and small need to start to think! act…and adapt to these fast changing times.  Technology is making it practical and cost effective for small to meet BIG and beat them on the playing field. Why? Because they come from a place of realness and not marketing puffery. Consumers connect with founders and their startup stories cooking on the stovetop, growing and processing their own farm produce and packaging up and telling their story in a way that is authentic and real.  You can not copy that if you are a large Corporate and it outpositions BIG as BAD and small is GOOD!

The examples we can list of brands that are doing this well is long and numerous but the list of brands NOT doing this is 100+ times longer.  Why not, take the opportunity to use technology to connect with consumers and customers and share your story? The time is now – there has never been a better time to be a farmpreneur or a small food producer. Here is a few other great examples you might like to explore and if you are interested in taking your own business to the next level of consumer connectivity give us a call or drop us a line.

We love working with independent family owned fast growth businesses @Creatovate.  In fact, we have by accident or choice managed to specialise in it with a focus on the twin pillars of sustainable (profitable) growth – Innovation and International Business – what are you waiting for? Get out and tell your story – its real, it’s authentic and consumers and customers want to hear from you!

If you are interested to come and hear Dermott talk about creating value for consumers and customers in consumer packaged goods you might like to come to Changing the Landscape – The Flexible Packaging & Label Makers Association on 10-11 November 2016 in Melbourne, Australia.  Dermott will give a keynote talk on 11 November titled – Creating Value for your customers in the 21st Century for FMCG’s

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.

Bibliography & Additional Sources:

http://www.consumerreports.org/cro/magazine/2014/03/too-many-product-choices-in-supermarkets/index.htm viewed on 16/9/2016

The Big Group: http://thebiggroup.co/BIG/?p=about

Transperant Supply Chain https://www.onedegreeorganics.com/transparent-supply-chain and our team https://www.onedegreeorganics.com/our-team

 

 

 

Advertisements

When to enter new markets?

First and foremost we stood back and used our head as well as our heart to determine Where to go? 1st, 2nd, 3rd, etc.  Secondly, we looked at each market on our Market Opportunity Index© and worked through the appropriate market entry model: Export, Contractual or Investment?  Last, but not least we need to time phase our market entry over the coming horizons of growth so that we can competently and capably execute on our international business strategy.

One of the most enduring and misunderstood growth strategies used in business today is the McKinsey ‘Three Horizons of Growth’.  Having worked in large corporations for well over a decade and consulted to both large and small businesses for several years now I often hear comments from busy executives in corporates and business owners alike “we will do core (Horizon 1) activities this year, then get to international markets (Horizon 2) next year and then start creating new products for those markets (Horizon 3) in 3 years’ time”.  The reality is you need to be working on all 3 horizons of your business growth simultaneously to build a sustainable business growth platform for your business.  Of course you cannot spend equal $/people/time on all 3 horizons but you need to be clear in your choices, communicate them widely across the business and allocate some of your precious scarce resources to all 3 horizons to realise the growth that comes from effort exerted in the ‘now’ that will payback ‘years’ into the future.

McKinsey Model: Three Horizons of Growth (Coley, 2009)

McKinsey 3 horizons of growth

Creatovate has been privileged to work with clients who clearly get the need to plan the “When to enter?” in their international business strategy and work simultaneously on all 3 Horizons of Growth – defending and extending their current home base(s), building momentum by entering new international markets and allocating some of their scarce resources (the most scarce being their time) to creating options for future new market entry which may also entail new market entry models.

Let me share an example.  One of our clients knew they needed to grow fast in their existing ‘hub’ or core home market(s).  They did not want to distract unnecessarily their executive team in their home market(s) with international business opportunity in the immediate term.  They engaged Creatovate as consulting partners and together we set a clear choice based strategy for international growth that had a clear structure with hub or home markets to focus 100% on their patch whilst simultaneously supporting the international business development unit (a dedicated small team).  The leader(s) in the International Business Development unit worked with Creatovate to identify, rank and prioritise new markets for entry and systematically we phased those markets for entry over 3 time horizons, knowing some would be easier to enter than others for example using perfect partners and easier modes of entry like export.  However, our client did not stop there allocating some precious resource: $/people/time and strategic foresight to simultaneously explore and create future options for business growth in difficult but very large new markets that would require more complex entry models like contractual and/or investment.

Speed bumps and unexpected surprises hit them hard in one core home or hub market.  However, the work for international business growth has been done and they are in the very fortunate position of having a queue of difficult to enter highly attractive growth markets sitting in their new business development pipeline ready to activate.  Contrast that story with the vast majority of businesses who are spending almost 100% of their $/people and time defending and extending in their saturated core home market(s) and quite simply can never get out of the daily grind to contemplate growth outside their home base.  I know which business I want to be working with and a part of especially at their budgeting and strategic planning cycles when the topic of ‘new horizons of growth’ comes up for discussion.

The need to focus and split your scarce resource allocation wisely over your core Horizon 1 business – say 60%, and emerging new business – say 25% and finally creating options for future new businesses – say 15% is not simply the domain of big business.  Creatovate has also been privileged to partner with a family owned client business who has very successfully extended and defended their core home market, entered a new market adjacent to their home country and built significant momentum from a standing start in less than 18 months and created a viable new business venture into another new and highly competitive and complex country all in the space of 2 years and all with a team of less than 10 full time employees.  The When to enter? question is vital to your business planning and differentiates the true growth businesses from those that are simply ‘doing the business’.

The lifespan of a company today is getting shorter and we do not have to look far for evidence of this fact.  The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces (Business Week).  To increase your business chance of survival we believe you need to work on more than 1 Horizon of Growth and we believe you need to work on all 3 Horizons of Growth simultaneously.  Reach out, give us a call, send us and email, share your thoughts and comments and experience with us.

Without a clear strategy of Where to Go? How to Enter? Export? Contractual? Or Investment? And lastly but not leastly When to enter? You risk making mistakes and damaging your growth plans.

Dermott Dowling is Managing Director @Creatovate, International Business consultancy. Creatovate help businesses grow outside their home base from market entry strategy to route to market to go to market launch. Contact Dermott if your business needs help expanding your business internationally.

References:

Steve Coley (2009) Enduring Ideas: The three horizons of growth  http://www.mckinsey.com/insights/strategy/enduring_ideas_the_three_horizons_of_growth     retrieved on 12/02/2015

http://www.businessweek.com/chapter/degeus.htm  viewed on 12/02/2015


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.

 


Persistence & Determination are Omnipotent

In the confrontation between the stream and the rock, the stream always wins; not through strength, but through persistence.”  — Buddha

Image

The leaves are browning, the mercury is dropping and the rains are more frequent.  Rather like the changing of the seasons a lot of businesses in traditional industries with traditional ways of working are finding sales, margins and profits are fast browning off like the autumn leaves.  Today many businesses caught in a sales, margin or profit eroding death spiral the typical management reaction is “restructuring or rightsizing” or “cost reduction” which inevitably forgets the most important R – “Rethinking” how we can remodel businesses to be more innovative and ultimately more profitable.

Image

Starting Creatovate two years ago I decided to focus our consultancy services and efforts to help client’s growth through what I personally believe is the most sustainable growth pathway – Innovation and International Business expansion.  At its most basic definition innovation can be described as “change that creates economic value”.  You must be either reshaping value chains to remove cost and / or create value i.e. reduced cost and/or increase prices to customers and consumers.  You can also typically expand your business into one of 3 new quadrants using the Ansoff matrix – new products or services development to existing markets (bottom right quadrant), enter new markets with existing products or services (top left quadrant) or take the bravest bet which is new products and/or services to new markets (top right quadrant).

Image
Ansoff Matrix:  http://www.quickmba.com/strategy/matrix/ansoff/

Standing still is not an option in business today.  You will get run over by new entrants, or incumbents who are running faster than your business or sideswiped by other businesses you did not even see out of your peripheral vision who enter from completely different market spaces with new products and/or services that better meet your customers’ needs (top right quadrant innovators).  Starting any new business is not easy and having worked for large multinationals for over 15 years and with well-established clients over the past two years I can honestly say that no one business is safe in the ‘new economy’.  Complacency will be the seeds of your business demise.  From the Board level to the mail room roles will continue to be constantly restructured and re-scoped and I am afraid to say often without enough upfront ‘Rethinking’.

“Industrial Relations” was a widely used word in the 1990s which later became “Human Relations” and is now more commonly titled “People & Culture” in large progressive modern organisations. During my post-graduate Bachelor of Commerce in Management Honours thesis study I examined Industrial Relations in the Airlines Industry and quickly discovered here was an industry that would always be placing immense pressure on the ‘People’ component in the Value Chain of the Airline industry for the simple reason the typical airline cost structure is divided into 3 almost equal components: 1/3 on planes, 1/3 on petrol and 1/3 on people.  As much as an Airline would like to negotiate a good deal on planes that is going to be difficult when your choices are limited to either a Boeing or Airbus Jet plane and as much as Airlines would like a better deal on their fuel bill that negotiation will also be difficult as Shell, Exxon Mobil and BP will have a view on fuel prices and continued upwards direction.  So People become front and centre in the ‘cost reduction’ eyes of management and to this day Airlines management are still in a constant struggle with how to get the best out of their people for the least possible pay!

Image

Scattered throughout the many loss making Airlines globally there are a few stars making money and my bet is they will have a better strategy and culture to differentiate themselves and possibly a better business model e.g. Southwest Airlines or Air Asia.  Walking into the Ansett NZ head office in 1996 to talk to the Airline Pilots Association union representative I noticed immediately a quote on the wall from Sir Reg Ansett the founder of the Airline that has gone the way of many today post his time in the cockpit “Nothing in this world can take the place of Persistence.”    That quote was on a plaque with Sir Reg Ansett name attached to it but its origins came from the late U.S. President Calvin Coolidge and its full quote is “Nothing in this world can take the place of persistence.  Talent will not: nothing is more common than unsuccessful people with talent.  Genius will not: unrewarded genius is almost a proverb.  Education will not: the world is full of educated derelicts.  Persistence and determination alone are omnipotent.  The slogan ‘press on’ has solved and will always solve the problems of the human race.”

Image

President Coolidge quote and Buddha’s quote brings me to one more thing I have come to realise over the past 20+ years studying, working and consulting.  In the ‘East’ businesses persist and are patient.  Suntory management in Japan became famous for its willingness to wait a long time for results. The company took 46 years to make a profit on beer and 14 years for one of its biotechnology units to genetically engineer a blue rose, thought to be a symbol of the impossible (Kachi & Dvorak, 2014).  Compare this approach to the one most common in the ‘West’ where the constant demands for 10%++ top line and bottom line growth year on year is simply put “unsustainable”, especially if all we are doing is running on the spot and demanding ‘more for less’ from our ‘People’.  Where is the ‘Culture’ that says, ‘persist’, ‘explore’, ‘adapt’, and ‘go again and again and again’ until you turn a dollar, convert a customer, open a new market or create a product or service that solves a new or existing customer’s problem?

Today, with technology front and centre in our lives and as ‘software eats up the world’ around us and computers, apps, robots and systems replace the ‘people’ in many business processes it is doubly and triply important business leaders and their people, Stop! Think! And take a leaf from the wise men and women of the East.  Pause, take the time to reflect, think and then Act! Be brave in your restructures, remodel your business models and take controlled bets with new businesses, new products, and new services into new markets and new and existing customers.  You can no longer win in the bottom left quadrant of the Ansoff matrix and if you are not already moving to the top left or the adjacent right and planning and implementing a manageable bet into the top right quadrant you risk facing the same fate as the late Ansett Airlines.  Every industry is rapidly becoming another Airline industry.  Strategic choices rest with everyone in your business from the boardroom to the factory floor and whether you are a winner or loser in the long race to the finish line depends on how you get the most out of your ‘People’ and create a winning ‘Culture’.

Image
Dermott Dowling is founding 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:

Hiroyuki Kachi & Phred Dvorak (2014) Wall Street Journal, January http://online.wsj.com/news/articles/SB10001424052702303819704579320470878396540, viewed on 8th May 2014


Aim, Fire! Adjust :-) Lead, Learn & Innovate like an entrepreneurial startup

You don’t have to be a start-up to learn, lead and innovate like one…

Image

1. Entrepreneurs are built, not born 

By correlation we can imply all businesses have innovative capacity and building that capability can be through strategy, resource allocation, process, culture and leadership.  Most importantly having a go!  After all is not the best form of learning the practical as opposed to the theory.

Image

2. Start-ups are unique

They are not small versions of large companies and hence traditional business thinking tends to stifle the start-up.  Likewise if a large organisation is looking to innovate and ‘learn by doing’, they need to be open to start up ways of working, managing, funding.  Less ruling by command & control and more by seeking, solving, encouraging and seed funding.

Image

3. The Search for a Business Model

Under lean start up models the founders search for repeatable and scalable business models, rather than settling on one when the venture is launched.  For larger corporates they tend to apply new ways of doing things through existing business models more often than not as the ‘status quo’ police of middle management apply traditional ways of reaching customers and consumers.  Instead a healthy start point might be a small venture team based diverse group of individuals starting with a blank sheet of paper literally and saying ‘without constraint’ what is the best way we can create value from this idea/insight/trend/unmet need and take our product or service to customers and consumers in new and innovative ways.  Senior leadership should give encouragement for the venture teams to take this approach and be open to growing some babies or children outside the corporate home or traditional business model.

Image

4. Run Fast

Successful start ups observe when their business model is struggling, respond to new facts, decide which parts of the business model require urgent change, and act.  Less time on detailed business planning and more time on testing in market with real live tests.  How often do you sit in board rooms with your peers either a) presenting or b) picking apart detailed business cases on products or services with 5 year business revenue and profit projections that could be better spent on inquisitive questioning like “how can we test this for small dollars to get large learning”.  What are some creative entrepreneurial ways we can find out if this is going to work before we scale it and go full blown national launch for example?

Image

5. Pivot and Turn

Pivoting is about iteration, testing and validation, and can be as simple as realising you have priced a product or service incorrectly.  Start up founders realise that several pivots maybe required in the early years to reinvent the venture.  They ensure the culture and staff are flexible enough to turn on a dime if required.  By correlation in many corporate cultures its often launch and leave or launch and run in case things don’t go well.  Culture is an integral part here of creating a testing, learning and adaptive team based culture where the venture teams are kept together post product/service launch and report back in frequently with learning and recommendation to pivot, stop, start again, push harder, invest more/less, etc.  Some large businesses realise that traditional leadership structures or meetings and forums do not allow for this type of learning and iterative process and set up incubators, skunk works, or get senior grey haired veterans to run these entrepreneurial business units.  Cell based structures may also be appropriate and leaders will need to work out how and when the satellite businesses are brought back into the mother ship or scaled and grown by the battalion as opposed to continuing to operate like the special forces.

Image

6. Lean and Learn 

True learning comes from testing aspects of the business model and market hypothesis early and quickly. Rather than spending months researching start ups get their minimum viable product (MVP) to market quickly and let their customers inform them.  Speed is the imperative and their most precious asset.  In the age of ‘accelerate everything’ where we live by the mantra ‘I want it now!” and I can find it in 7 seconds or less on Google this is a very potent message to large corporations.  Research is often done to reassure internal stakeholders and appease layers of management the homework has been done before the big artillery of $$$ of Advertising and Promotion are spent in the market to support this new product or service.  More thinking can and should be devoted to how multiple controlled live tests can be launched simultaneously for e.g. 7 different products in 7 different states and review and learn after 6 months which 1 or 2 continue and we invest redevelop and roll out.

Image

7. Feedback Loops 

Start up entrepreneurs create feedback loops to measure customers response to new products, at least at the very start, to decide whether to ‘pivot or perserve’ with their business model.  They constantly source customer feedback and let it  shape their business model.  With the advent of social media this process of continuous feedback loops should arguably be much easier for the larger corporates than the start ups.  They have the millions of likes on Facebook constantly feedback criticism or favourites on new products and prototypes.  Corporates often have very sophisticated customer engagement models and survey tools as well through third party providers.  Turning these tools towards active engagement on product and service beta development, controlled market tests and post launch analysis with equally prompt redesign and redelivery will increase customer and consumer engagement and arguably make the large corporates a more nimble and liked business by their customers.  The challenge is on the big to be ‘small & nimble’ far more so than the other way around in the modern age of instant gratification, response and listening.

Image

8. The Critical Formula 

Under lean entrepreneurship thinking, chaos + speed + pivots = success.  Start ups  realise they need to operate in environments of extreme unpredictability (chaos), use great skill to change quickly as circumstances dictate (speed) and reinvent aspects of their business model (pivot) to respond to threats and opportunity.  This seemingly choatic, manic, back flipping or zig zagging appearance will not sit well inside many corporations where the mandate is often 10% topline and 10% bottom line growth year on year.  However, entrepreneurship be that corporate or start up is never 10% steady year on year growth and its up to senior leaders to create ‘gambling funds’, set aside intrapreneurial seed capital and manage their own intracompany adventuring like a venture capitalist.  Not all bets come off and provided the company accepts that some bets and teams are like the house money in the casino but that it could be the next one or the next one that comes off they are on the road to learning and the more they learn by doing the more that appearance of fast, pivoting, chaos will start to feel like the new normal around here and that will be a demonstration that culture has come to match the business innovation strategy, they have succeeded in allocating scarce resources to new ventures and they have a process that is producing results.

Image

9.  Entrepreneurship is Management 

While it may not sit well with many strong minded entrepreneurs or creative innovators, Ries notes entrepreneurship is essentially another form of management.  The start up management style recognises the uncertainty of entrepreneurship with its increased risk and reward profile and the need to adapt and develop a stream of constant innovation.   For many large corporates like conglomerates who operate across different industries, geographies or have multiple business units they are already a great example of using multiple business models and management styles.  To them entrepreneurship may not be new and maybe something we have been doing for years without the name tag e.g. Wesfarmers, Tata, China Resources Enterprise to name a few.  For other large corporates who have not yet tackled this head on or are thinking about tackling it head on I can recommend a couple of immediate things to do.  Step 1 Pick up a copy of Lean Start Up and note down everything as you read that is interesting and new, anything you learn and lastly but most importanly, what you can take and apply to your own context.  Step 2 immerse yourself in the learning process.  Go and see some start ups in action in your industry or adjacent industries.  Go and seek to understand how large conglomerates can operate with multiple entities and entrepreneurial divisions inside a large business structure.  Step 3 and the most important step.  Get the strategy out, make sure it has an innovation strategy component and invest some ‘gambling chips’ into starting some ventures.  Back those ventures and applaud their bravery across the business until what seems unnerving, unnatural and unreal becomes the new ‘way we do things around here’

It might take a lot of guts, determination and persistence but then again so does starting your own business as any entrepreneur out there will tell you over a coffee or cold beer or glass of wine.

Create Innovate Grow 

Dermott Dowling @Creatovate


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

Image

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)

image

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?

image

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?

image

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!

planet

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.

image

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

eyeballs

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

Image


%d bloggers like this: