growth
Playing to Win, versus Playing Not to Lose
Life is funny. There are always ways to justify nearly anything you want (or don’t want) to do. For example, “The timing is not right” (“We’re not ready,” “The market will be better soon,” “We need to save more,” “We need to staff up first,” etc.) Justifications often include things like “We had a bad experience once” or “We are a very conservative organization” – comments that tend to lean towards risk aversion or a lack of confidence.
I’ve seen this in my own business after a large investment failed to yield the desired results, when I was a regional sales and services leader at a “growth-oriented” software company, and as a consultant. There are always subtle variations to the root cause, but the net effect is that those companies are playing it safe.
Why is that a problem? It may not be. Being content may not be a bad thing. Sometimes the status quo is enough. Having a reliable schedule, manageable stress levels, sufficient funds, and doing something you like with people you like may be the goal. But not everyone is built that way.
Growth often means stepping out of your comfort zone, taking on risk, recognizing the need to adapt to stay ahead of the curve, and being OK with uncertainty. It means bringing on people with different backgrounds, skill sets, and perspectives than yourself. It can be very hard – especially if you are used to being in control and having the answers.
For me, the solution was twofold.
- We had to accept failure as an inevitable outcome. I believe this is where a lot of people stop. If you view failure as negative, then everything that stems from it (loss of money, a hit to your ego, and other setbacks) becomes your focal point. But if you view it as a learning and self-improvement opportunity (“cognitive reframing”), it just becomes part of the cost of getting better.
From your team’s perspective, when everyone is as focused on the journey as you are on the outcome, people tend to view challenges logically rather than emotionally (thereby controlling fear). Success truly is a mental game. - We developed a structured approach for future investments (read more about it here). Each new venture was treated like a project. It was focused, analytical, and unemotional. This became easier each time. It’s amazing how that distance also helps switch the focus from risk to reward.
This new understanding led to a presentation that helped relaunch a company and has helped several clients critically assess both the risks and rewards of their plans, and may help someone consider whether they are focused on winning or simply on not losing.
As Richard Branson wrote in his book, Screw It, Let’s Do It: Lessons in Life, “If you opt for a safe life, you will never know what it’s like to win.” So, are you ready to play to win?
Knowing When to Stop
What’s the hardest decision you’ve ever had to make? Why?
Jetpack Question of the Day
In 2000 we started developing a Franchising System for Business Consulting. We had invested over $100K and were making progress, but we were about 6 months behind schedule when 9/11 occurred.
Everything came to a standstill for a few months. In early 2002 we reevaluated the situation. We were about $50K and less than 6 months from completion. But the total addressable market had shrunk considerably, and there was no telling if or when it might recover.
We had to decide whether to invest more and potentially lose more or kill the project and cut our losses. The decision was difficult. We ultimately decided to cut our losses and walk away from our investment in time and money. It was probably the right decision, but it was still very difficult.
For anyone interested, this post goes into more detail on this topic.
Continuous Improvement, Growth Mindset, and an “Attitude of Better”
This was originally posted on LinkedIn.com/in/chipn
When I had my own company, we focused on providing the absolute best services in a few niche areas. Our goal was to succeed in the spaces that were important yet underserved. We identified those areas, validated the need, evaluated the competition and our competitive positioning, determined the market potential, and then made an informed decision based on that data.
But, this was not a plan for winning. It was a roadmap to places we could win, but nothing more. What would our strategy be? What specific problems would we solve? How would we create awareness around the potential impact of those problems? And how would we position ourselves as the best candidates to address those business needs? In short, what was our real purpose or raison d’etre?
Recognizing that void led to a couple of powerful revelations –
1. It is great to have a goal of being the best at something, but don’t use that as an excuse to procrastinate. Learning and improving is an iterative process, so that goal itself was not good enough.
2. Adopting an “Attitude of Better” became a game-changer. We set our focus on continuous improvement and winning. We became customer-obsessed, driven to provide better service and better results for every customer. We gauged our success by customer satisfaction, repeat engagements, and referrals.
3. But it wasn’t until we adopted an intentional Growth Mindset that our business evolved and improved.
· We leveraged every win to help us find and create the next one.
· Our team constantly pushed each other to raise the bar of knowledge, expertise, and performance.
· Just as important was what occurred next. They became a safety net for each other. Failure for one meant failure for all, and nobody wanted that. They became a high-performance team.
· We created standard processes and procedures to ensure consistency and maintain the highest levels of quality. This applied to everything we did – from working on a task to writing trip reports, status reports, and proposals. It also reduced our risks when we chose an outsourcing partner to help us take on more concurrent projects.
· Whenever possible, we automated processes to maintain consistency while increasing efficiency, repeatability, scalability, and profitability.
· We measured and tracked everything, analyzed that data, captured lessons learned, and continuously worked on improving (and documenting) every aspect of the business.
· A byproduct of this approach was that we could offer leaner pricing based on accurate estimates with very small error margins. Our pricing was competitive, we could fix the price for much of what we did, and our profit margins were very good. This allowed us to invest in further growth.
Our “attitude of better” also came across as confidence when selling to and working with new customers. Not only could we tell them stories of our success that included tangible metrics, but most of our customers became references willing to talk about the value we added. Their stories included discussions about how much better things became due to our work.
Better became the foundation of what we did and the basis of those customer success stories.
Could a New Channel Model Lead to Sales Amplification?
Over the years, I have helped successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. Those companies do a great job closing deals but usually have concerns about not generating or receiving enough new business leads. Or, they develop strong relationships with one or two vendors, only to find later that a key vendor has been sending deals to a competitor.
Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. The business mainly flows upwards to the main vendor. If that vendor has popular and widely used products, then business can be good because of sufficient demand. But when that is not the case, your sales pipeline usually suffers.
Doing something the same way as everyone else may not be a bad approach when there is enough business for everyone, and your growth goals and aspirations are aligned with your competition.
Sales Channel business is usually not the main source of revenue for most companies, but it does have the potential to become the largest and most scalable revenue source for nearly any business. Just think about the money left on the table by not adopting a growth mindset and executing a new and better strategy.
In the summer of 2016, I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their Customers and Channel Partners community. They tried to foster higher levels of collaboration between the various types of partners – implementation services, consulting, staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.
When designing a channel partner program, my focus has always been on finding the balance between promoting and protecting the partners’ business and helping ensure that the end customers have the best experience possible (and have some recourse when things do not work out as expected). There are a variety of methods I have used to accomplish those goals, but the missing component has always been the inclusion of a systematic approach to seed relationships between those partners and facilitate an even greater volume of business activity.
Nearly a year ago, I began working with a management consultancy run by Robert Kim Wilson, which has a business vision based on his book, “They Will Be Giants.” I will provide links for this book and other relevant resources at the bottom of the post. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one, providing examples to prove his point. Having experienced Kim’s PDBE, I see how purpose fosters trust and collaboration.
As I did more research, I found that, especially over the past two years, a lot of focus has been placed on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation is always good.
It is just as important from my perspective that this concept applies to businesses of any size, and it is especially helpful to small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the benefits of adopting this new strategy.
So, how does this new type of Business Ecosystem work?
- The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
- This can become an incredibly sustainable revenue source for companies willing to invest in the necessary components to grow and support their Business Ecosystem.
- Business Ecopartners will have access to trusted resources to augment existing business and take on new, bigger projects by leveraging the available expertise.
- Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management).
- You have seen a growing demand for functionality that relies on highly specialized technologies like:
- Cryptocurrency support.
- Blockchain for financial transactions and things like traceability in your supply chain or IoT data.
- AI (artificial intelligence) and ML (machine learning) to detect patterns and anomalies – such as fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
- Graph databases to better understand a business and infer new ways to improve it.
- Knowledge Graph/Semantic databases to assist with Transfer Learning and deeper understanding.
- Building these practices in-house would not be practical or cost-effective for most businesses, so partnering becomes very attractive to your company.
- This type of business can also be very attractive to a Business Ecopartner because someone else handles sales, billings, account management, etc.
- Other Business Ecopartners could leverage your products or services for their projects and engagements, thus becoming another source of revenue.
- By leveraging this network, your business can compete on imagination and innovation – which could become a huge source of differentiation from your competition.
Value realized from this New Business Ecosystem model:
- These new sources of business and talent can become a real competitive advantage for your business.
- This becomes the source for Sales Amplification because your business is, directly and indirectly, expanding its reach and growth potential.
- The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth – a winning strategy for any business.
References:
- https://kimwilson5.wixsite.com/theywillbegiants/the-book
- https://www.bcg.com/publications/2019/emerging-art-ecosystem-management.aspx
- https://www.gartner.com/smarterwithgartner/8-dimensions-of-business-ecosystems/
- https://sloanreview.mit.edu/article/the-myths-and-realities-of-business-ecosystems/
- https://www2.deloitte.com/us/en/pages/operations/articles/business-ecosystems.html
- https://www.accenture.com/_acnmedia/pdf-56/accenture-strategy-your-role-in-the-ecosystem.pdf
- https://www.bain.com/insights/shifting-from-assets-to-ecosystems-video/
- https://hbr.org/2019/09/in-the-ecosystem-economy-whats-your-strategy
One Successful Approach to Innovation that worked for an SMB
When I owned a consulting company, we viewed innovation as an imperative. It was the main thing that created differentiation, credibility, and opportunity. We had an innovation budget, solicited ideas from the team, and evaluated those ideas quarterly.
Almost as important to me was that this was fun. It allowed everyone on the team to suggest ideas and participate in the process. That was meaningful and supported the collaborative, high-performance culture that had developed. The team was inspired and empowered to make a difference, and that led to an ever-increasing sense of ownership for each employee.
The team also had a vested interest in having the process work, as quarterly bonuses were paid based on their contributions to the company’s profitability. There was a direct cause-and-effect correlation with tangible benefits for every member of the team.
We developed the following 10 questions to qualify & quantify the potential of new ideas:
- What will this new thing do?
- It is important to be very detailed as this was used to create a common vision of success based on the presented idea.
- What problem(s) does this solve, and how so?
- This seems obvious, but selling this new product will be an uphill challenge if you are not solving a problem (which could be something like “lack of organic expansion”) or addressing a pain point.
- What type of organizations have those problems and why?
- This was fundamental to understanding if a fix was possible from a practical perspective, what the value of that fix might be for the target buyer, and how much market potential existed to scale this new offering.
- What other companies have created solutions or are working on solutions to this problem?
- The lack of competition today does not mean you are the first to attack this problem. Due diligence can help avoid repeating the failure of others, potentially providing lessons learned by others and helping you avoid similar pitfalls.
- Will this expand our existing business, or does it have the potential to open up a new market for us?
- Each answer has upsides and downsides, but breaking into a new market can take more time and be more difficult, time-consuming, and expensive to achieve.
- Is this Strategic, Tactical, or Opportunistic?
- An idea may fall into multiple categories. When the Sarbanes-Oxley (SOX) Act became law, we viewed a new service offering as a tactical means to protect our managed services business and an opportunistic means to acquire new customers and grow the business. While this is not true innovation, IMO, it was an offering that flowed from this defined process.
- What are the Cost, Time, and Skill estimates for developing a Minimally Viable Product (MVP) or Service?
- What are the Financial Projections for the first year?
- Cost to develop and go to market.
- Target selling price, factoring in early adopter discounts.
- Estimated Contribution Margin Ratio (for comparison with other ideas being considered).
- Break-even point.
- Would we be able to get an existing customer to pre-purchase this?
- A company willing to provide a PO that commits to purchasing that MVP within a specific timeframe increased our confidence in the viability of the idea.
- What are the specific Critical Success Factors to be used for evaluation purposes?
- This important lesson learned over time helped minimize emotional attachment to the idea or project and provided objective milestones for critical go / no-go decision-making.
This process was purposeful, agile, lean, and somewhat aggressive. We believed it gave our company a competitive advantage over larger companies that tended to respond slower to new opportunities and smaller competitors that did not want to venture outside their wheelhouse.
With each project, we learned and became more efficient and effective and made better investment decisions that positively impacted our success. We monitored progress on an ongoing basis relative to our defined success criteria and adjusted or sunset an offering if it stopped providing the required value.
The process was not perfect…
For example, we passed on some leading-edge ideas, such as a “Support Robot” in 2003, an interactive program that used a machine-learning algorithm. It was to be trained using historical log files, could quickly and safely be tested in a production environment, refined as needed, and ultimately validated.
This automation could have been used with our existing managed services and Remote DBA customers to further mitigate the risk of unplanned outages. Most importantly, it would have provided leverage to take on new business without jeopardizing quality or adding staff – thereby increasing revenue and profit margin.
At the time, we believed this would be too difficult to sell to prospective customers (“pipe dream” and “snake oil” were some of the adjectives we envisioned), so it appeared to lack a few items required by the process. Live and learn.
In summary, having a defined approach for something as important as business needs innovation to grow and prosper, as best demonstrated by market leaders like Amazon and Google (read the 10-K Annual Reports to gain a better understanding of their competitive growth strategies that are largely based on innovation).
Implementing this type of approach within a larger organization requires additional steps, such as getting the buy-in from a variety of stakeholders and aligning with existing product roadmaps, but it is still the key to scalable growth for most businesses.
Where Ideas, Experiences, and Lessons Learned Intersect 