Tuesday, July 31, 2007

Take the Time to Be Specific

One of my fairly serious hobbies is seeking out, analyzing, and (rarely) investing in under appreciated excellent companies. And I'm a ferocious reader, consuming a growing list of business, success, finance, investing, entrepreneurship, and related books, blogs, papers, articles, and similar texts. I've also had hands-on involvement in several start-up and more mature businesses in various capacities of responsibility.

It is interesting that a common problematic theme I come across is that of the business strategy being too fast and loose. This happens in large public companies just as often as it happens in small one-person businesses. Sometimes you hear about "needing more focus", "defining your market", "defining your niche", etc.

While this can manifest itself regardless of the stage of the business, it often becomes more dire (or at least externally apparent) as more people become involved in the business and more customers/clients are taken on. Scaling is tough due to the lack of clarity across the organization. Things get dropped. Micro-managing ensues. Mismatched product and service lines and extensions are rolled out. Resources are chaotically allocated. Turf wars can occur. Otherwise preferred and ideal customers/clients leave and similar prospects drag the sales cycle on longer. People quit in frustration -- no longer having the energy to see things through. Seemingly dumb decisions are made by otherwise highly intelligent and competent people throughout the organization.

This is all about and so often can be addressed by the same thing: Be as specific as you possibly can about your market, your niche within that market, and the characteristics of your customers. Once you do, everything else (i.e. next actions, tactical moves, where to allocate limited resources, who to hire, which investments to make, which investments to cut loose on and re-evaluate) becomes quite suddenly far far easier.

Your risk is immediately reduced and communicating your value proposition becomes a day at the beach.
Lest you think this is just a business problem not applicable to our personal lives, consider how being more specific with your goals usually makes it more likely you'll achieve them. Don't shortchange yourself or your business. Draw a specific line in the sand and say there is where I'm/we're headed (don't be afraid to do it because you suspect it may change down the road, that's just fine and shows you're thinking about it).

But that's not the entire story either. An ancillary theme -- and perhaps one causation of the prior problem -- I've noticed takes the form of over eagerness used as an excuse to keep the market/niche/customer defined so loosely. By this I mean not just that the entrepreneur (or equivalent within an existing company pursuing a new product/service concept) is eager to get started with development or selling but that their ambition is so large that they fail to realize that the way to most effectively attack a broader market is often to start by attacking a segment of it first not the entire thing (and then chip away until the entire thing is yours).

Most supposedly "large markets" are really groups of smaller micro-markets. Each of those micro-markets has slightly different needs and other characteristics which make them unique. You are making your job tougher by trying to attack the "whole thing" at the start. It's a question with differing answers -- not because the question is complex but because the question isn't specific enough.

This is a constant problem all over the place. Just this morning I was reading an article posted on GonzoBanking entitled Understanding the Decline and Fall of the Banking Industry (it happens to be told in a satire-like way which makes more sense if you end up reading the entire article but the excerpt is applicable regardless):

Excerpts from strategic plans in this period, however, indicate that bank management was still trying to target all customer segments, all product lines and all delivery approaches. Quotes from this period in business are somewhat comical as bankers write that they aspire to be “best in class,” “high performance” and “customer driven,” but none of the historical strategic plans seem to include what any of these terms actually meant.
My background is not in marketing. I'm actually stereotypically pre-disposed to think that "most marketing folks are fools and liars" since I'm generally thought of as a technology/IT geek (most of "us" tend to be cynics about all forms of marketing and advertising in seems). But that's an unfortunate, naive, and misguided reactionary opinion. After all, what geek wants to build stuff nobody wants to buy/use?

No business should be in business if it doesn't know exactly, and specifically:
  1. who it's target customer's/client's are
  2. why they are (or should be) doing business with you (from their perspective only, not yours),
  3. how they find you and acquire your products/services
This is not just another of one of those "it'd be nice if we did this" To Do items to be filed away that you can limp along without. One (or more) of the following will happen, in time:
  1. You're current (or not yet in existence but looming future) competition will consume your customer base and eat you alive
  2. You will spend money on the wrong things and go out of business (or be forced to merge with a stronger competitor, more on their terms than your own)
  3. You will be relegated, unbeknownst to you, to the least profitable and most difficult customers/clients in your loosely defined market to serve
  4. You will spend incredible and blackhole-ish increasing amounts of money acquiring (marketing to) new customers without adequate return on your investment
  5. You will burn out (and, if you have other staff and management, they too, which has it's own direct and indirect costs which will manifest themselves even if you keep plowing ahead oblivious) sooner rather than later and, along the way, probably burn bridges, alienate clients and partners, grow frustrated with seemingly piling up problems that lack a framework to prioritize them objectively within, inability to successfully delegate, freezing up and putting off critical major difficult decisions that only you can make, and otherwise eventually "giving up" (perhaps not even entirely consciously).
If you are in this boat, don't fret. You're also probably quite smart, analytical, and adaptive. You just took an early misstep. It's correctable though. Take a few moments and complete the following challenges. Go from there. The future should get clearer as you go along.

CHALLENGE #1: As specifically as possible (and if you think you are already to that point, challenge yourself to see how much more specific you can get)
write down your initial gut feeling of:
  1. who your target customer's/client's are
  2. why they are (or should be) doing business with you (from their perspective only, not yours),
  3. how they find you and acquire your products/services
CHALLENGE #2: Concisely whittle down the text from Challenge #1 to its essence. This should be a quick sentence or two that clearly articles what you REALLY do as a business from your customer's/client's perspective and who your "sweet spot" customer's/client's are.

Sunday, July 29, 2007

Doing Less is More

There is a great irony in marketing any product or service. One goes to great lengths to uniquely position their product or service. Then we are careful to convey all the wonderful benefits our product/service will offer the potential buyer if only they'd become an actual buyer.

The counter-intuitive thing is that this entire process is a whole lot easier if we promise less to the potential customer. Not only will we have to work less hard to actually implement all those things we are promising but then:

  1. it will be easier to convey the benefits to a potential buyer -- it'll be easier to hit them over the head, albeit politely hopefully, with a much simpler value proposition that stands out from the crowd
  2. there's less risk that we'll fail to deliver
  3. there will be less disagreement as to what we promised to deliver
  4. it'll be easier to up sell them later upgrades, accessories, add-ons, etc. when we develop those
  5. it'll be easier to over deliver, if we so chose, to gain the loyalty of our customer for a much longer period
  6. our execution steps and decision making will be clearer
  7. it'll be easier realize and to change direction if we discover we're offtrack
  8. we will have to work less for, at worst, equivalent net gain and even, due to less resistance and energy loss from stress and indecision, quite possibly for a greater net gain.
If you want repeat business from the same client/customer....
If you want to reduce your marketing expenses by relying more on word of mouth....
If you want happier employees....
If you want less stressed management....
If you want your potential customers to really understand why you're better....
If you want more satisfied customers/clients....
If you want less employee burnout....
If you want a better sales close ratio....
If you want to shorten the sales cycle....
If you want to simplify your strategic planning...
If you want to lower your customer service support costs....
If you want to improve your execution....
If you want to increase your profits....

Do less. Simplify. Strip things down to the bare essentials.

Promising less really does mean more -- for the customers, for staff, for management, for the business owner. Everyone gives up a bit less and gets a bit more.

Doing less is more. Really.

Some ideas:

Focus on a very specific need within a very specific target market (e.g. tourists visiting Philadelphia who are seeking to learn more about early American history).

Do not try to be all things to all people -- even if you ultimately intend to serve a larger market with a broader set of offerings. You are much more likely to succeed -- including serving that larger market -- if you focus first and expand later. Select a more specific niche within your long-term target market until you are able to nail it down to a very simple set of features/functionality and clearly stated value proposition. Nail it and move on to an adjacent niche.

If you are having problems keeping a project on deadline, don't change the date -- change the scope.

Avoid making promises where there's a decent chance you won't be able to deliver.

Under promise always and, at times, over deliver.

QUESTION : How simple can you make your business, your products, your services, and still make the same amount of profit while working less? If in doubt, what is the basis -- other than fear -- for your current belief?

CHALLENGE: Do more with less.

Friday, July 27, 2007

Now on Facebook

So I apparently created an account sometime back on Facebook (albeit with a blank profile) and in the last few weeks a few folks that know me have found it and requested to "add me". I've shunned places like Myspace and had, without much research, shoved Facebook into the same camp. However I'm going to take a closer look, maybe toss a few nuggets into my profile, and see if I run across any old friends. Can't hurt, right?


Friday, July 20, 2007

Iron Chef Central Coast

At lunch today I ran across an recent issue of Central Coast Magazine where they did a quasi-Iron Chef like challenge with a bunch of local gourmet chefs.

The rules were simple. Each chef was asked to prepare four dishes using a secret ingredient: one appetizer, one main dish, one dessert, and one wild card dish of their choosing. The secret ingredient was the same for all chefs, is readily available, and gave each chef great creative opportunities, leaving a lot of room for interpretation.

Chefs were required to use one blue-veined, one soft ripened, one hard ripened, and one other cheese of their choice. There were no restrictions on which type should be used for which dish.
The winner was “Bill” Hoppe of Hoppe’s Garden Bistro in Cayucos, CA with the following menu:
I think about thirty chefs participated overall and there about half a dozen runner ups highlighted in the article (which can be found online in entirety at the first link above).

Looks like I'll have to add some of these restaurants to my "To Eat At" list. Good eats here I come!

Monday, July 16, 2007

GnuCash 2.2.0 released (and now runs on Windows)

GnuCash is a nifty personal and small-business financial accounting app. It is free and open source and has been usable under Linux for awhile. Now it's available under Windows. Folks that don't already use Quicken or MS Money (or have tried and found them too complex) may want to give this a look.

Designed to be easy to use, yet powerful and flexible, GnuCash allows you to track bank accounts, stocks, income and expenses. As quick and intuitive to use as a checkbook register, it is based on professional accounting principles to ensure balanced books and accurate reports.
The v2.2.0 release announcement: http://www.gnucash.org/#070715-2-2-0.news

Read the Introduction the documentation for more info (excerpt):

GnuCash is the personal finance software package made for you. It is versatile enough to keep track of all your financial information, from the simple to the very complex. It is one of the few financial software packages that supports global currencies, and it is the only open-source program of its kind. Best of all, GnuCash is easy to learn and use!

So, what can GnuCash do for you? It can keep track of your personal finances in as much detail as you prefer. If you are just starting out, use GnuCash to keep track of your checkbook. You may then decide to track cash as well as credit card purchases to better determine where your money is being spent. When you start investing, you can use GnuCash to help monitor your portfolio. Buying a vehicle or a home? GnuCash will help you plan the investment and track loan payments. If your financial records span the globe, GnuCash provides all the multiple-currency support you need.

While GnuCash is well suited for personal finances, it is also powerful enough for business use. There are many business features, from integrated accounts receivable and payable systems, to tax table construction. You will find these and the many other business features surprisingly powerful and easy to use.
I'll be taking a closer look during the next few days.

Mid-State & Rabobank & Brand Equity

According to their press release Mid-State Bank & Trust will be switching to their new parent's, Rabobank, brand name:

The Mid-State franchise will be integrated into the Rabobank organization immediately but will continue to operate under the Mid-State Bank & Trust name until the Fall, when it will be renamed “Rabobank.”

So much for the tremendous local brand equity demanded by the Mid-State Bank name on the Central Coast. Seems to me that focusing on "synergies" behind the scenes such as infrastructure, processing, outsourcing, advertising economies of scale, and perhaps even more visible but still not completely destroying the brand equity areas such as best practices, products/services, management structure, etc. would make the most sense.

It's not as if Mid-State was a teeny tiny acquisition for Rabobank N.A. (though their ultimate parent is much larger admittedly). Though I presume the idea is that Rabobank, in the long-run, intends to expand their North American presence considerably and their plan is to do so under one brand -- which has obvious benefits in the long run.

I wonder if a slower approach was considered -- stick with the Mid-State brand until Rabobank N.A. has a larger piece of the pie in the U.S. then announce the change as a simple "same bank, same ownership, different name". It would be less abrupt and alienating for customers. Right now I'd argue that the Mid-State brand has more stickiness value in its markets than the Rabobank will for quite awhile. Why alienate (and probably lose) more customers before Rabobank has even had an opportunity to prove itself?

Then there's how similar sounding "Rabobank" (especially when spoken fast) is to a criminal activity that banks (and their insurance companies) tend to frown upon. Apparently "Rabo" is a combination of the letters from the original two Netherland-based banks that merged in the 1970s. Rabobank is huge but has a much smaller presence in the U.S. I wonder if they'll make some tongue-in-cheek ads in the U.S. about their name? :)