Iteration Is A Strategy July 1, 2013Posted by David Dirks in business strategy, Dealing with change, Solving Business Problems, Strategy.
Tags: business growth, business planning, business strategies, business strategy, David Dirks, dirks on strategy, growing a business, iteration
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Does the Facebook of today look like the Facebook when it was first launched in 2004? Did Amazon perfect its business model of today in 1994 when Jeff Bezos founded it? Is the IBM of today the same as the IBM of say 40 years ago? Here’s another question for you: How many businesses hit a genuine business model home run where sales and profits start cranking out right from the start?
The answers to the above questions are “n0”, “no” and “once in a blue moon – if ever.” To iterate is to keep trying – keep pushing your business model forward. It’s tinkering with the engine until it sounds like all cylinders are working smoothly. In some cases, it’s challenging the very dream we have hold so dear in our business – the very vision we have might not be the vision that produces the life blood of any business – greater sales, growing profits and cash flow.
Iteration is a process that should be integrated into the culture of most any organization but rarely is. Here are some thoughts on the process of iteration:
- Don’t get married to your vision or dream. What? How can we achieve greatness without a vision we can steadfastly commit to? It’s not easy – if it was then iteration would be a breeze and everyone would be doing it. They aren’t – which is just one reason why many organizations fail within five years or less.
- Business plans are like war plans. Everything changes when the bullets start to fly. Yes, I know you spent a ton of time working and toiling over your business plan and it’s a great starting point but…when the reality of the business environment hits it, it’s over. Competitors don’t play nice or according to the plan. Customers are more finicky than the business plan sales projections call for. Things have to change when the bullets fly.
- Not everything has to change. Sometimes iteration means tweaking only what needs to be tweaked. Keep testing, changing, moving forward – throwing out what isn’t working and keeping what does.
- Challenge yourself to iterate on purpose. When you realize that iteration is a part of your business life if you want to succeed for the long run.
When you build a business…it’s about the long run isn’t it?
Driving Foot Traffic: Woolworth’s Style December 14, 2012Posted by David Dirks in Driving Store Traffic, Retailer Store Strategies, Sales Strategy/Tactics, Solving Business Problems, Strategy.
Tags: business strategy, David Dirks, David E Dirks, dirks on strategy, driving store traffic, market differentiation, sales strategy, store traffic
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It took the latest issue of Businessweek to remind of that oftentimes what is new is old. Case in point: the Woolworth’s food counter. Remember (for those of you who are old enough to) the days when you local Woolworth’s store had a lunch counter where great, cheap hamburgers, fries and a great milkshake where just across from those square product bins that checkered the store? Woolworth’s was a pioneer in creating a way to drive foot traffic with something that had nothing directly connected to the products they sold. By having a soda fountain style lunch counter, there sales per square foot where for a long time better than average.
The lunch counter couldn’t save Woolworth’s from going out of business after decades of success but the idea of driving traffic by providing food lives on. Nordstrom operates about 200 restaurants of one kind or another, including coffee bars. Barnes & Noble developed its coffee bar concept to drive traffic and create a reason for people to hang around the store longer. You’ll also notice that the coffee bar is a place where people meet to socialize. They know what Woolworth’s long understood: The longer they stay, the more chance they will buy.
So am I suggesting that brick & mortar store owner rig up the BBQ and serve up some burgers? Not exactly. What I am suggesting is that in the battle of driving foot traffic it might be that food or drink (coffee bar?) might just do the trick. As I always say, there is no magic bullet for creating foot traffic – only hard work and great execution wins the day.
What can you do to create ways for people to want to come to your store and stay a bit longer? Think about it.
“Impossible” Is Just An Opinion December 6, 2012Posted by David Dirks in business strategy, Solving Business Problems.
Tags: business strategy, David Dirks, dirks on strategy, innovation, strategy, success
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Impossible. The word that has closed more minds, doors and opportunities than any other I can think of. “Impossible” is often a frame of mind and an easy, convenient door stop for shutting just about any challenge, idea, project or thought down. Cold.
Of course, it was impossible for us to think of anything replacing the horse and buggy. It was impossible that candles or whale oil could be replaced. Impossible it was to think that man or woman could fly from one point to another. Impossible that much medicine could actually fix a bad heart. Impossible that a man could compete in the Olympics with mechanical legs. Just lot’s of impossibilities out there.
Did you know that Margaret Mitchell was turned down 38 times before a publisher said yes to her manuscript for Gone with the Wind? Or the more recent Chicken Soup for the Soul was rejected 140 times before getting a publisher? Steven King was turned down 30 times when he was trying to publish a manuscript titled as Carrie? The great artist, Monet, had his artwork ridiculed in his day.
At what point do you think that any of these people thought it was going to be “impossible” to get that book published? The first rejection or the 140th? The answer is clear. They didn’t see impossible at the first or last point of rejection. What they saw in their minds was this:
What the mind can conceive, man can achieve.
We can be thankful that there a few people in every organization that see beyond what many of us see as great, impenetrable walls of impossibility. Next time you hear someone use the word “impossible”, just remember that what they really told you was that it is possible.
The App in Brick & Mortar Retail Warfare May 8, 2011Posted by David Dirks in Solving Business Problems, Strategy.
Tags: business strategy, David Dirks, dirks on strategy, marketing, marketing strategy, strategy
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While online sales continue to grow at a healthy pace each year, they still only account for a fraction of total retail sales. Is brick & mortar retail on a march to eventual oblivion? Is there something to be said for the in-store buying experience? Is there any hope for traditional brick & mortar retailers in an increasingly online world?
Smart retailers have long learned to integrate their online strategy with their brick & mortar strategy. They use the websites to drive traffic into their stores using the flexibility and the quick cycle times it takes to implement new sales program on the web.
However, the real ringer for brick & mortar retailers is the rise of mobile applications. Mall owners are just now focusing their digital efforts on creating apps that can steer shoppers to their tenant stores. They are basically welding a Groupon-like strategy to the fast moving mobile application world.
Mall owner Simon Properties is currently offering the mobile app Shopkick in many of its malls. Shopkick offers special deals in tenant retailers, some of which are exclusive to Shopkick members. Simon is also considering just buying an mobile application company just to insure they always have access to cutting edge technology. It seems to make sense on a lot of fronts.
It just seems that mall owners, like many others, were slow to grasp the value of mobile applications in their business model but better late then never.
While many associate mobile apps with gaming and clever utility tools, its real value is in providing a more level playing field for brick & mortar retailers who are looking for an edge that drives foot traffic to their stores.
One interesting note about apps is that they are not searchable using engines like Google or Bing. Apps are close-ended and only use the internet to move data around. Not surprising that Google has been investing heavily in the application market (Android anyone?) knowing that increased use of applications cuts into their traditional world wide web search business.
The strategy direction for retailers, large and small, is in mobile applications. Small retailers who are able to utilize apps like Shopkick or develop their own apps will have the advantage over those who continue to ignore the opportunities within mobile applications.
About Business Incubators… November 29, 2010Posted by David Dirks in business strategy, Solving Business Problems.
Tags: business growth, business strategy, David Dirks, differentiation, dirks on strategy, innovation, market differentiation, marketing strategy, small business strategy
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Do business incubators really create jobs in a substantive way? According to the National Business Incubation Association, the answer is a resounding ‘yes’. According to the NBIA, nearly 87% of small businesses using a business incubator survive to their fifth year in business versus only 44% of small businesses who didn’t use an incubator. Business incubators are once again a hot topic in economic development circles around the country. According to the NBIA, there are about 1,200 active business incubators in the U.S. today. Conceptually, small business incubators make all the sense in the world. By providing low operational costs during the early stages of business development, incubators are placing a bet that by subsidizing some of the operational costs of doing business, these start-ups will have a better chance for survival.
Recently, Syracuse University published an extensive research project that focused on the performance of incubators. Their research tells a different story.
“The findings reveal that the effects of incubation are potentially deleterious to the long-term survival and performance of new ventures. Incubated firms outperform their peers in terms of employment and sales growth but fail sooner…claims that incubators are highly successful and serve a significant number of businesses are overstated. The comprehensive process used in this study to identify the largest possible sample of incubated firms uncovered a fraction of the number of incubated ventures that supporters of incubation claim exist. While improvements are likely possible to the methods used in this study, this study roundly refutes the poorly documented and unpublished studies that cite much larger numbers of incubated firms and much higher levels of performance. The methods and findings of this study showcase that more research is necessary to fully understand the effectiveness of incubation programs. Until then, these findings are instructive in helping and motivating business incubators to improve their past performance.”
The truth is, there isn’t a lot of substantive and unbiased research on the long term results of small business incubators. If you don’t believe me, just look for yourself. Lots of claims of success from the likes of the NBIA, which has an obviously biased interested in promoting the concept of incubation and others.
Are incubators important to economic development (since it’s reported that nearly 94% of them are non-profit and sponsored for local economic development)? The short answer is yes. There are certainly success stories of small businesses who have survived the early years and have grown out of incubation. And we know that small business is the engine of job creation in the U.S.
Is public/private subsidized incubation an good long term investment? Here are my thoughts on this based on my own research so far.
1. Tighter vetting of potential applicants for an incubation program is a must. There is no amount of incubation that can fix a badly designed business model. The failure rate of small business is high mostly because people start a business that has an inherent flaw. Like starting a cash-intensive business without proper funding for the first 3-5 years or starting a business because it sounds like a neat idea until we found out that few people are willing to purchase the goods or services. Having a business plan in hand means little if it isn’t vetted against the same kind of tough questioning and criteria a venture capitalist would use. You don’t just let any business who can show you that they can pay for the incubation services in unless their business plan and model have been deeply vetted. Many incubators are funded with public money and what I’m proposing helps insure that taxpayer dollars are invested in only the best of the start-ups.
2. Even after vetting the best small business opportunities, failure is part of the process. You have to expect to fail to some degree in order to succeed in the long run. If you study the vetting process used by venture capitalists, you find that despite their best efforts, a percentage of their investments will fail. That doesn’t mean you should run from the idea of either using or creating a incubator. This just means that failure is an expectation in the early start-up phase.
The key question is: what have we learned from the failures that we can successfully transfer to new participants?
3. Targeted versus generic incubator? Most incubators are general purpose in focus, which means they will entertain any type of start-up for admission into their programs after meeting their criteria. My business sense is that a focused, industry-specific incubator program has the best chance of impacting economic development. For example, if an area was focusing on solar power panels, then creating an incubator program to attract and retain those kinds of firms would be inherently a powerful way to have real impact in business attraction. A industry-focused incubator program would operate on a triad of providing 1) specifically designed space suited to that industry, 2) Access to research & development available in that industry, and 3) access to investment capital be it private angel networks or other investment programs.
For an area that wants to put a stake in the ground that targets a specific industry, having an incubator program that has industry-specific expertise is a winning differentiator.
4. Intellectual capital is just as important as investment capital. The incubator subsidy is surely helpful to a start-up but I believe the quality of the intellectual capital that is made available to these incubator start-ups is even more vital. There is no substitute, especially in the early stages, for providing seasoned and unbiased business professionals who can ask the right questions in their field of expertise. Asking the right questions leads to helping the business owner/manager in their own learning process and education. I believe an incubator has to have only the best available expert talent available to its participants. Those that serve as the intellectual base for an incubator need to be vetted as well.
5. Regular and intensive business reviews of all participants is required. Incubation participants should be prepared to go through an intensive business review process based on performance benchmarks that have been set up as a part of the business plan/model. If a business wants to participate and receive subsidized business services (especially from public money), it should be prepared to undergo a rigorous business review process that does a deep dive on current business performance. This process allows the incubator leadership to assess and help identify resources for areas that need immediate attention…and before they become a real threat to long term success.
6. An incubation program takes long-term vision. Community leadership, both public and private have to have a clear vision for the long-term effort required to create enough success stories to offset the public and/or private investment required for organic business growth.
7. Equity in participating start-ups should be explored. Today, most incubators look to break-even on the services they subsidize to start-up companies in return for the potential for new job creation and tax base expansion. However, I would argue that to qualify for access to a powerful incubator program, start-ups would be required to give a percentage of equity to the incubator. It might be a small percentage (perhaps between 5-10%) but it would at least provide an additional possibility of the incubator program generating more capital to invest back into the program when their equity position was sold. The incubator equity would be in exchange for the subsidy received by the business. In this scenario, incubators would not have to provide any additional funding other than their current program offerings to receive an equity slice. I think that’s a fair proposition, especially for incubators that receive funding from public tax dollars.
8. Organic business growth is a key differentiator for economic development. Traditional economic development relies primarily on new business acquisition and current business expansion as a measurement of performance. Developing the infrastructure for becoming a magnet for new start-up business is a way for regions or counties to differentiate themselves from their competitors. A high-performing, fully funded, and well-equipped start-up program tells other potential businesses looking to relocate that the area is truly committed to business expansion and job growth.
Business incubators I believe can play a critical role in long-term organic business growth. The key to incubator success starts with engineering the program to run itself like a for-profit business. An incubator with a strong, well vetted intake process along with a substantive and ongoing business performance/review process, and the best business support resources stands the best chance of creating lasting jobs for any region.
Retail Mega Giant without Brick & Mortar? September 23, 2010Posted by David Dirks in business strategy, Solving Business Problems, Strategy.
Tags: best practices, business strategy, customer service, David Dirks, dirks on strategy, innovation, marketing strategy, strategy
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The era of brick & mortar is being tested by some of the biggest players in brick & mortar stores. Now Wal-Mart, in its drive to capture more urban market share, is experimenting with shipping online purchases for free from its website. Working with Fedex, Wal-Mart is offering free delivery of online purchased products directly to a Fedex location.
So, without having to invest in urban brick & mortar locations, Wal-Mart gets a chance to sell product to those mostly younger buyers who are not inhibited to make online purchases. This is also a smart move for Fedex who gets to develop the same distribution service for other large retailers as well.
I like this on several levels. First, it proves that you can weld an idea from common elements. Merging online selling with the distribution power of your delivery service is great example of this. Secondly, it proves that even big dogs like Wal-Mart can think out of the box to solve key challenges. Third, It once again proves that there are other ways to conduct business than by investing in retail structure.
Wal-Mart and Fedex are thinking beyond the usual in looking for ways to grow their businesses. So should we.
Another Lost Opportunity for a Sale May 3, 2010Posted by David Dirks in business strategy, Keeping Your Customers, Sales Strategy/Tactics, Sales Tactics, Solving Business Problems.
Tags: customer service, sales strategy, service sales
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There are times when you realize that it’s the little things that count more often than not. That’s no less true when it comes to businesses who miss an opportunity to capture or in this case, recapture a sale. Let me explain. A few weeks ago, I made an appointment to take my car into the dealer for service that it really needed. For whatever reason, I was not able to make the appointment. Worse yet, I forgot to make a call to let them know that I wasn’t going to be there.
Here’s the service opportunity lost: no one from the dealer bothered to call me back to find out if I needed to reschedule. It’s happened before with the same dealership. The service manager there would find comfort in taking a page from the sales & service book of my dentist, who handles this transaction entirely differently.
If I make an appointment for dental work, the office calls me a few days before to remind me of my appointment. If I should miss it, you can count on the dental office calling me the next day to find out when I want to reschedule. Then I do and I go for the dental work. In effect, the dentist has recaptured a sales opportunity that would be otherwise lost if they didn’t bother to call me back.
The service manager at the car dealer is missing out on a lot of business over the course of a year just simply by NOT calling customers back if they miss an appointment. Recapturing that service sales should be just as disciplined a process as we see from the dental office.
If you’re in a service business that books customers by appointment, make sure your have a mechanism in place to recapture those of us who forget to make the first appointment. Don’t count on customers to call you back and reschedule.
Can the iPad Change the Newspaper Business? March 29, 2010Posted by David Dirks in business strategy, Dealing with change, Dealing With Competitors, Solving Business Problems.
Tags: apple iPad, business strategy, growing subscribers, marketing strategy, newspaper strategy, newspapers, subscription base, subscriptions
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Among all the things we ponder about the new iPad, one of the most talk about and debated issues is whether or not an iPad-like device can impact the newspaper business. My answer, now that we know the capabilities (and that more will be coming soon in terms of software for the iPad), is a resounding ‘YES’. More than anything, iPad devices will change the economics of the business in a positive way.
We’re so wedded to the printed page that it sounds crazy to suggest that any paper can afford to go totally online with a PAID subscriber base. But it can be done.
How? By allowing newspapers to cut costs dramatically.
Let me first explain what I’d do. First, I’d offer only an online version of the paper and price it competitively. That means eliminating the printed version, which accounts for a substantial percentage of operational costs. Second, for subscribers that signed up for extended subscriptions, like 3 to 5-years or more, I’d also offer to sell them the device for a major price reduction. Yup. Just give it to them for far less than if they bought the device from Apple or some other producer. Or, if they don’t want an iPad, give them a netbook instead.
I thought you’d ask that question. For one thing, if I can lock a subscriber in for a long term period by enticing them with a device they can use to read the paper and do other things, I’m all for it. But there’s a far bigger reason for doing this: going online means you’ll take out substantial costs that are currently embedded into your publishing business. Like printing each daily edition and the total production costs involved in doing that.
If you can take out major costs in your business but still deliver a valuable product everyday (via online instead of printed paper), you can improve your profitability dramatically.
How will subscribers react?
At first, there will be some short term gnashing of teeth and discomfort but only for those who are technologically slow-adapters. Change has a way of doing that. However, by reducing your production costs dramatically, you can offer subscribers a better subscription rate to entice them to the online version…or throw in a netbook or an iPad device for subscribers who are willing to lock-in their rate by extending it to 3-5 years. Think bigger and longer here.
Improve the Subscriber Experience
I’d also make sure that the online version offers the ability to customize it to the readers needs. You input the content and organize it then let readers determine how they want to see it online. Wouldn’t be great if I could tag an article or column so that I’d get an RSS feed when new content on that subject is posted again? Let’s find out how readers like to see and consume their information and re-engineer the online experience for them. We need to move the online ‘wow’ factor up a few notches here.
Here’s another twist on enhancing the subscriber experience:
Combining the Best of Print/Digital/TV/Radio
If you’re not engaging your reader on a constant basis, then what’s the point? Instead of having a shelf life of day, a digitally accessed version of the paper breathes life into the content. What a platform like an iPad really does is gives newspapers a chance to give local TV and radio a run for their money. If you can embed an online news channel (via digital video feeds) with a radio platform (like podcasting), with an online print version of your paper, you’ve got the makings of an advertisers dream.
Of course, you see video along with podcasting embedded today with stories. One of the best-in-class examples of this is the Wall Street Journal Online edition. Not only that, but they charge for the online version too. Media-driven tools like the iPad will allow publishers to move deeper into the value they can provide their subscribers. With a digitally-focused product, publishers will be able to embed other types of media into columns and stories to make them come alive. Adding additional content like pdf files that provide additional information for the reader who wants more info will be key.
The embedded video is something everyone seems to do these days. However, what if you created an online, LIVE video webcast…with newsroom that looks the one on TV? For local news and information, nothing beats my local paper, The Times Herald Record (full disclosure: I write weekly columns for the paper…but that doesn’t make it any less great!). A live video webcast is the answer for providing real time updates of news events as they happen? Or live interviews?
The iPad also serves as a way to more effectively repurpose the great content that is created by daily newspapers. Special online ‘books’ of specific local information can be developed and then accessed by all those paid subscribers. Normally, after a story or column is printed, it seems lost forever. Why not look for opportunities to create information books for local and regional issues that can be read on a iPad? Two issues here: repurposing content for revenue generation and organizing previous content so that it is easily found by subscribers. How about links to previous related stories? You could just go on and on.
For those who insist on reading hard copies of stories or want a copy for ‘old time sake’, they can print as many stories as they have paper for.
Say no to page count restrictions!
Today, section editors are restricted to daily page count restrictions. Let’s unshackle journalism with this old-school financial measurement. Content to advertising revenues…it’s a good financial measurement but what if you didn’t have the cost of printing paper anymore? What if your only limitation was server space? There’s no reason for having page counts when
How would advertisers react?
Of course, nothing gets done in publishing if we don’t have advertisers. I’m sure at first, there will be more than a few who will not know what to do or say if they can’t see or touch their ad on anything but printed paper. However, remember that our goal would be to reduce production costs (no printed paper!) as more than an offset for any temporary reduction in advertising revenues.
If newspapers stay focused on growing and retaining their subscriber base online by creating great and dynamic content that keeps them engaged on a 24/7 basis, the advertisers will be there.
Making Online Publishing More Effective for Advertiser’s
Think about this. What if advertisers had their ads place next to topics in the paper directly related to their business? In addition to random ad placement, advertisers could also get the extra benefit of multiple ads in different sections for one price? The digital online platform gives advertisers the ability to pay an incremental amount above their 1st ad in order to place their ad in several different sections of the online ‘newspaper’. In other words, the higher the reader ‘views’ on one section of the paper, the higher the price you pay for your ad to be there or some variation therein. Special ‘instant coupon’ sections that make it easy for customers to download and print coupons.
My point: focus on building your market share with long term subscribers by creating engaging content that readers want and you needn’t worry about advertisers. Advertisers will follow their customers. Keep their customers engaged in your online content either in a PC or an iPad-like device and you’ll win.
Investing in More Journalism
At the end of the day, we want to preserve our heritage of professional journalism. So let’s take some of the savings from not having to print an hard copy edition and invest in more journalism talent or work to retain the assets we have. Give journalists the tools like the laptops and video camera’s they’ll need to capture the local news wherever & whenever it happens.
Cutting out the printed edition of a paper is a gut-wrenching experience for sure. However, with media-centric and consumer friendly tools like the iPad, it’s only a matter of time before printed editions will be just too expensive to produce. Besides, readers like me, who are loyal and pay the subscription fee aren’t too pleased to see all the freeloaders getting the same content online that we pay for. I pay for the privilege of getting a printed paper delivered to our door even though I (and those who pay nothing) can get the same content online for free. Who’s the crazy one here?
What’s Your Profit Strategy? November 27, 2009Posted by David Dirks in business strategy, Management, Solving Business Problems.
Tags: business strategy, David E Dirks, dirks on strategy, Management, managing expenses, profit strategy, profitability, small business strategy
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The headline from a recent article in the Wall Street Journal: “PSA Chief Unviels Profit Strategy”. It seems that PSA Peugeot (the car maker), reeling from the car industry woes, is about six percentage points below the average operating margins of five of its best competitors. The new CEO has declared that 55% of his project increase in profits over his 3 year plan will come from general cost cutting. The balance of his estimated increase in profits will be generated by increased sales in high growth markets and better sales performance in Europe.
I noted a couple of simple things. When a business is in dire trouble from a profit point of view, the 911 is on creating a ‘profit strategy’ that is designed to get a business back on the right track.
How does that profit strategy take shape? If you study profit strategies of companies seeking to climb out of losses and into the green of profitability, you begin to see a few basic ideas:
1. Wringing excess out of the overall cost structure of a business wherever possible. This is typically where the bulk of profit improvement generally comes from. The responses to this strategy run the gamut. Some businesses undertake a slash and burn process without much thought to the what, why, when, where, and how of cost cutting. That results in sometimes creating more weakness in the business by cutting out things that are critical to operational effectiveness the real excess.
The other side of the equation are those businesses that are slow to make the needed cuts that gives them the ability to redirect resources to other key areas of their business. That slow response to incrementally reducing costs over time can lead to a sudden rush to implement draconian cost-cutting measures of all shapes and sizes.
There is no easy answer to how to approach cost cutting as a strategy for managing a business. If you think about it, shouldn’t we always be looking for opportunities to wring the waste from our businesses wherever possible? Companies like Walmart have created a culture of making sure that expenses are always measured and alternatives can be generated to reduce them.
Unfortunately, that’s not how many businesses operate. I was once told that profitability can cover a lot of mistakes. True enough, when times are good and cash flow is everywhere (the good old days!), we can be much more liberal in our overall spend. Sometimes, our businesses can suffer from ‘cost structure creep’. One day you wake up and wonder how you ended up with such bloated pockets of expenses.
If there are any redeeming values for an economic downturn is that it creates an opportunity to manage expenses like we should have done anyway.
2. Selling assets to pay down debt & refinancing short term debt. AB InBev, the firm that bought the mega American beer maker Anheuser-Busch did just that after the merger and the economy created a drag on profits. That strategy lead to a healthy increase in overall profitability despite a decline in overall sales of about 10% worldwide. Getting rid of assets that are not essential and/or central to the core business you are in is always a great way to reduce expenses and, most importantly, re-direct resources to those areas of the business that need it most. In the case of AB InBev, the need to increase sales volume and protect its most valuable brands, like Becks, Bud, and Stella Artois is going to take some additional investment…investment that will come from the increase in profits that can be redeployed for those efforts.
3. Cost cutting is never a substitute for investing in your core business. AB InBev has opportunities to sell more of its Budweiser branded beers in different markets where they have an already well-established marketing and distribution platform. They are also introducing some new beer products like Bud Select 55 and Bud Light Golden Wheat. Those are key strategies and initiatives that require investment in their core business and brands.
Another example would be Chrysler. There is a company that could probably cut costs all day long and never approach profitability. Aside from their auto industry and economy woes, Chrysler forgot (or perhaps it’s last owners, Mercerdes Benz, ‘forgot’) to invest in new products to help it stabilize and maintain market share. Instead, Chrysler now has the least amount of product coming through its business compared to just about any other competitor. Cutting investment in their core business and reducing the percentage of their car line that they replace over time with newer models was clearly not an effective cost cutting tool for them. The result is continual bleeding of profits and loss of market share in an already troubled industry.
4. In times of peace, prepare for war. In times of war, prepare for peace. I’m not sure who said this statement but I didn’t create it. However, it does have immense implications for how we deal with economic upturns and downturns. In times of robust economic growth, particular focus needs to be paid to how we manage our expense structure and how we allocate investments in our core business. When the economy turns sour and if we have been diligent in managing our costs, we’ll have the ability to invest in our core business (creating new products, expanding into new or emerging markets, buying additional market share through acquisition, etc.) when everybody else is scurrying to cut out or drastically reduce costs and investments into the core business.
We’re quick to focus a lot of our energies on the usual suspects of strategy: product, competitive, marketing, sales, and operation. I would also include making an investment in a ‘profit strategy’ as well as an overall guiding influence over all other strategies. A profit strategy should answer to basic questions:
- Where are we going to wring out excess in our business and why?
- What areas of our business deserve additional investment to help us meet our profitability targets?
Both of these questions have implications for the short, intermediate, and long term health of our business.
Shifting Your Business Strategy – 3 August 24, 2009Posted by David Dirks in business strategy, Solving Business Problems.
Tags: business growth, business strategy, growing revenues, market strategy, sales growth, shifting business strategy
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Waiting for things to ‘get better’ is not a strategy. Or least, it’s not a winning strategy. Waiting for things to ‘get back to normal’ is just an opportunity for someone else to eat your lunch. I hear too often from business owners who echo those sentiments. Whatever the outcome of any economic cycle, the high performing Big Dogz who grow through them are the ones who win longevity.
It’s quite natural for a business owner to want to hunker down, close the hatches, and wait the economic storm out. Some businesses will survive and others will not. Let me ask you: who wants to be just a ‘survivor’ when you can do better?
How many do you know that own a business that are using the ‘wait and see’ approach as an excuse to hide in the bunker until the shelling stops? Probably more than you and I know of.
The good news is that you can take advantage of this or any other times of great uncertainty by looking for opportunities that you can leverage to grow your business. I’m just scratching the surface here but some things to consider:
- Work harder to find ways to free up cash that can be deployed to expand your business. The common response in tougher times is to free up cash and then hoard it until the good times come again. Obviously not entirely out of order to keep some cash in reserve but many businesses just hoard it. By the time anyone realizes the good times are back again, it’s too late for you to find opportunities to invest some of that hoard.
What to invest in during tough business climates?
- Upgrade to more efficient and powerful equipment. The right investments could reduce your costs on a product or service line is one possibility if it makes your business provide services faster, better, and cheaper.
- You could take advantage of a weak competitor in a nearby geography that you currently don’t serve and hire additional sales firepower to build business there.
- Buying a competitor when it makes sense and the price is right.
- Develop & expand your product and services lines. We’re often quick to prune the losers (or at least we should be) and much too slow to replace with products/services that could keep revenues moving forward.
- Upgrading customer services. Too often this is left in place or cut back. High performing companies make sure that any customer touchpoints are responsive and best-in-class.
- Establish a strategic partnership(s) with other businesses that are complimentary and have high potential to drive revenue growth. Hunkering down can blind us to opportunities that are staring us right in the face if you only took the time to look.
None of this is easy to do. That said, what it does take to do this well is 1) constant and deep scanning of our business environment to find and connect with opportunities and 2) the internal ability to move on those opportunities that won’t be there if you wait for the ‘good times’ to come back again.