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...

Unhappy customers tell on average 22 other people. If you ticket price is $50 that is $1100 in revenue. How would you like to know before they tell 22 others? Learn more

Word of Mouth Wins Again

Word of Mouth Wins Again

This from Double Click's report on the internet's role in the modern purchase process:

'Word of Mouth' Is the Single Greatest Form of Purchase Influence.

No great surprise there. We all experience it every day. The real question for us as business owners is: is there some way we can increase the positive word of mouth about our business?

I think it goes with out saying, that we have to start at the beginning with our product or service. It has to be remarkable. In other words, our offering needs to stand out so much that our customers want to talk about it. Assuming we've got remarkable, we can either leave the "word of mouth" to chance or help it along.

Shameless plug: a tool like PromoterZ™ is like a putting a megaphone in the hand of your happiest customers. Why leave the word of mouth to chance? Help it along by giving your customers an easy way for them to tell their friends about your business. End of plug.

Whatever you are doing to grow your business, remember: word of mouth rules. Do you know what your customers are saying about your business?

The Happiest customers tell on average 8 other people. Who are your happiest customers? Promoterz knows. Learn more

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.

Promoterz is the hands-free, word-of-mouth marketing service that takes care of the details so you can focus on business. Learn more

Small businesses main problem? They need more customers.

Small businesses main problem? They need more customers.

In September of 2005 our company sponsored a survey of small businesses in the service areas. The purpose of the survey was to ask the business owners, many of them franchise owners, what their significant business hurdles were. The key areas of the survey were customers, growth, technology and research, and employees. You can see the complete results here.

There are many things to be learned by studying the results that you can see here, and I hope you'll find them interesting and helpful. It will probably come as no surprise that the common problems facing service businesses are:

  1. Finding new customers does not occur fast enough
  2. Growth of revenue is also not as fast as desired
  3. Cutting through the advertising chaos to reach customers is difficult
  4. The internet is providing little benefit to small businesses
  5. Issues regarding costs and working capital are also significant.

No real surprises but it does highlight the need that small business owners have to gain new customers and get the ones they have to purchase more often. Doesn't that solve most, if not all, of the issues they identified?

The question is how to do it. Our suggestion?

The internet provides a powerful tool for communication and advertising that small business and franchise owners aren't using enough or effectively for marketing. It's called "internet marketing" or "online marketing" and it can include "email marketing". It's likely that small business owners don't know how to use internet marketing as the internet is seen as a big nebulus thing with no tie to location and most small businesses are tied to one location.

The business principles we espouse, regardless of the vehicle used to enact them, are:

  1. Making our businesses remarkable by taking great care of customers
  2. Listening to and acting on what they have to tell us
  3. Giving them a megaphone to tell their friends and colleagues.

It's a simple formula for success and it works. The internet provides a very inexpensive and effective means of doing so when you use the right software tools.

Do you remember your customers on their birthday? On their anniversary? Do you give special notice to recently acquired customers? Promoterz does. Learn more

Email Marketing is still hot

Email Marketing is still hot

How do you communicate with your customers? We all know that there's getting to be more and more online activity. How much? According to the Pew Research Center:

The proportion of Americans online on a typical day grew from 36% of the entire adult population in January 2002 to 44% in December 2005. The number of adults who said they logged on at least once a day from home rose from 27% of American adults in January 2002 to 35% in late 2005.

On top of that, Americans don't feel overloaded by the information they're getting on the web. Pew Research stated:

Just 15% said they sometimes felt overwhelmed by the amount of information they had, while 71% said they had all the information they needed and thought it was manageable, and 11% said they were missing information that they wish they had.

It makes me further think about how we communicate with our customers. Some businesses have jumped into the blog world in hopes that their customers will come and engage with them online. That works for some but this strategy doesn't work well for many small businesses because their business just isn't the type to draw attention to itself such that a customer would want to come and read about them in the normal course of the day. Do you want to know what's going on in the world of sandwich making, hair cutting, or pool/spa maintenance? Me either, not so much that I would return again and again to hear it.

The good news is that I would like to hear about special offers my hair cutting place has or new sandwiches my favorite sub place has coming out. And I, like most people, would like to hear about it through email. There continues to be more techie ways to send information out there (like RSS), but email is THE killer application... the most used, it allows you to push your message to your customers when you wish and they pick it up when they wish. It is effective and personal because it comes from you, allowing you to share offers and news. What's more, it allows you to develop a relationship with your customers.

This is all good and true, but knowing this and doing nothing about it will not help you grow your business. Here's my shameless plug for Promoterz™, a system that automates the sending of special offers through email. It doesn't require more time from an already busy small business owner either, in fact it's kind of like having a really cheap employee that talks to your customers 24 hours a day, 7 days a week. It also encourages your customers to send referrals about you to their friends, making it a word of mouth marketing tool. Additionally, it gives you feedback from your customers about the most important thing they can tell you about your business.

Promoterz™ is the internet marketing tool for small business. (End of shameless plug.)

You work hard to make sure your customers are happy. Don't waste happy customers. How easy is it for your customers to share with their friends? Learn more

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.
I grew up in the west and now live in Arizona. There is a simple rule for growing things out here (this rule applies everywhere but is more obvious in the arid west): if it doesn't get water it does ...more.
After describing modern consumers and their desire to watch or read what they want, when they want, the current issue of Business Week concludes: The result: a serious case of attention deficit for ...more.
What is the most compelling thing about your business from your customers' perspective? Is it remarkable? ...more.
Another example of the power of promoters. Shade Clothing sells undershirts for women that are longer than normal for those that aren't interested in showing the world their belly button. It was fou ...more.
I read recently about a musician--a cello player to be exact--that moved to New York City. She didn't know anyone in the city and was looking for opportunities to play her cello. Her solution? She ...more.
I read a great article recently about George Washington. As I read about his amazing leadership characteristics it occurred to me that they are the same characteristics any entrepreneur or business l ...more.
On the company the effect is like being assimilated into the Borg, but for users of their software it's like having a friend with a malignant brain tumor. You're going to have to say "goodbye" soon t ...more.
What says summer more than traveling carnivals? Cotton candy, hot dogs, rides that go around and around until you puke! Does life get any better than that? I submit that it cannot! The blog worl ...more.
Remarkable is the key here. These native american kids are remarkable in and of themselves. Their product follows suit. They have figured out government issues, food serving issues, product, marketi ...more.
In the cluttered marketplace we compete in, I don't think the power (and necessity) of staying in touch can be overemphasized. I learned the lesson again last week--thankfully in a good way. It had ...more.

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