Business Innovation

Building Trust Instead of Selling

Building Trust Instead of Selling

John Jantsch of Duct Tape Marketing fame was recently interviewed by a BusinessWeek editor. A few of the tidbits:

It appears to me that advertising itself is at an all time low for effectiveness, and businesses that really succeed are focusing on the idea of building trust and educating as opposed to selling.

When asked for the short list of what small businesses should absolutely be doing to market themselves, Mr. Jantsch responded with the following three:

  • One: Absolutely differentiate yourself from everyone. You have to find a way [to make] people say you're something different, whether that's to focus on a narrowly targeted market or [through] packaging. Otherwise you're just competing on price. And the line I use all of the time is that price is a really bad place to compete because there's always someone willing to go out of business faster than you.


  • Two: It's more important than ever, and easier and cheaper, to embrace technology, and specifically the Internet, as a tool to educate, market, and generate leads. It offers a tremendous way to automate the whole process and is a great tool for customer service and project management -- things that add value with clients. If a small business isn't taking advantage of these tools, they're giving up a great way to level the playing field with much larger companies.


  • Three: I always ask people how they got to where they are now. Amazingly, it's mostly through word of mouth referrals. The follow up question is: What do you do to systematically take advantage of that? One of the most powerful tactical aspects of marketing is referrals, and when it's done right, there could be zero cost.

Differentiate, use the Internet, and systematically generate word of mouth referrals. What a great list! I couldn't agree more. And you know the easiest way to do it? (shameless plug coming) PromoterZ is the easiest, quickest and most inexpensive way to do all three of those things. If you haven't already checked it out do it now at www.promoterz.com. (end of shameless plug)

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Does Your Company Have An Evolutionary Advantage?

Does Your Company Have An Evolutionary Advantage?

Like just about everything else these days, Google seems to have the answer to long-term consistent business growth. Interesting commentary in the Wall Street Journalby a Gary Hamel. Mr. Hamel is a visiting professor at London School of Business. He makes the point that it is very difficult for any company to avoid declining even with a great business model and tremendous success. Dell Computer being a case in point, but there are countless other examples of decline. Why? In Mr. Hamel's words:

What the laggards have failed to grasp is that what matters most today is not a company's competitive advantage at a point in time, but its evolutionary advantage over time.

He goes on to say that he believes Google gets this and will avoid decline for some time into the future because it's management approach guards against the following evolutionary risk factors that most other companies succumb to:

  • Evolutionary risk factor #1: A narrow or orthodox business definition that limits the scope of innovation. Google's response: An expansive sense of purpose.
     

  • Evolutionary risk factor #2: A hierarchical organization that over-weights the views of those who have a stake in perpetuating the status quo. Google's response: An organization that is flat, transparent, and non-hierarchical.
     

  • Evolutionary risk factor #3: A tendency to overinvest in "what is" at the expense of "what could be." Google's response: A company-wide rule that allows developers to devote 20% of their time to any project they choose.
     

  • Evolutionary risk factor #4: Creeping mediocrity. Google's response: Keep the bozos out and reward people who make a difference.

Our companies may never become the size of Dell or Google (if you are like me, you don't want them to) but this seems like a good organizational analysis tool to keep handy in case things seem to be going stale. Oh, and don't forget to check the mirror when you start looking for bozos...

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Making Gold from Scrap

Making Gold from Scrap

Nucor's business is not new and sexy. In fact it is as rust belt as it comes: melt down scrap steel to make new steel. What's amazing about Nucor is not the business they are in but their results.

How does 387% return to shareholders over the past five years sound? That's better than Amazon, Starbucks and eBay. Since the 1980's it has grown into the largest steel company in the U.S. In 2005 it did $12.7 billion in sales, up from $4.6 billion in 2000. Income was $1.3 billion up from $311 million in 2000.

Their secret? This radical insight from their legendary leader F. Kenneth Iverson: employees, even hourly clock-punchers, will make an extraordinary effort if you reward them richly, treat them with respect, and give them real power. Sounds like something we in the service industry might be able to learn from.

From a recent article by BusinessWeek:

At Nucor the art of motivation is about an unblinking focus on the people on the front line of the business. It's about talking to them, listening to them, taking a risk on their ideas, and accepting the occasional failure.

Lot's of people talk about empowering employees and paying for performance, at Nucor it's not just talk. Base hourly pay at Nucor is around $10 an hour compared to other companies that average $16 to $21. But a bonus tied to the production of defect-free steel made by the worker's shift can triple the average to $30 at Nucor. Bad work is also penalized. If a bad batch is caught before it leaves the plant the shift loses the bonus on that batch. If the defect doesn't get caught till it gets to the customer, they lose three times that amount.

Thinking that will only work with certain employees? Nucor has applied it at several acquired sites with tremendous success. They don't force new employees to switch immediately to their new pay system, they just start posting what the employee would have made. It doesn't take long for employees to demand the switch even as production at the facilities goes up.

Hard Work and Humor

Hard Work and Humor

Inc.com has an article about Gert Boyle, chairman, Columbia Sportswear. You might remember her as the one that does "animal testing" on their clothing sending her son through a car wash.

The article details the growth of Columbia Sportwear from a small failing company to market leading success today. At one point, according to Columbia's web site, bankers told her they needed to sell the business. After realizing that she would only get $1,400 off the sale she said:

For that kind of money I’ll run the company into the ground myself.

Her story reminded me that as a business owner you can't choose what life gives you, whether death of loved ones, multiple labor strikes, or whatever. But what you can choose is how you will respond. Being in business is tough, she showed some great characteristics such as working hard, not giving up, trying new things, and humor.

It is a good read and when you get done check out the hilarious ads of "animal testing" on their site.

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Guy Kawasaki - The Art of the Start

Guy Kawasaki - The Art of the Start

Guy Kawasaki has posted the table of contents, first chapter, and index for his latest book, "The Art of the Start". If you haven't read it yet and are in the start-up process, or preparing for it, you should give this a read.

Lots of great info here. Here's a quote from Clayton Christensen, author of The Innovator's Dilemma and The Innovator's Solution:

This is a delightful, complete, and consummately practical entrepreneur's handbook-quintessential Kawasaki. Every person who wants to start a business should read it. And read the footnote on page eight. There's more good stuff in here, but this alone is worth the price of the book.

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Seeds from the blogworld
We search the business blog world looking for posts that illustrate principles, or "Seeds", that if followed, or "planted", will help small businesses grow. We list them here for your convenience. Enjoy.

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