It’s the start of a new year, and I thought this blog from a friend of mine was worth sharing. Tom Marin is a gifted strategist who runs a consulting company called Market Cues. Here’s what he has to say…
Many leaders of companies – especially if they’re the founders – have a never-ending desire to stay ahead. They love the thought of winning, and likewise, hate the thought of losing. These are terrific positive leadership qualities and we strongly support them. The problem, however, is they often continue to use the strategy that drove their company to its current success but fail to change it as the market changes around them. What is needed is a continuous contemplation of new and different directions to keep the company truly relevant to those it serves.
Just look at the myriad of companies that start strong and then sputter out of control. Why does this happen over and over again? According to the Department of Commerce, only one out of ten businesses make it to year 10, and of those that do only 1 out of ten of those will make it to year 20. These are horrible statistics since the majority of all U.S. businesses are privately held.
There are three common mistakes business owners make, and they can kill any company of any size or success.
QUICK WAY #1: Use flawed assumptions. If you read this blog regularly you know we often talk about the absolute need to “Know” your market, your customers in your market, and what makes them tick. Not knowing is like going into battle with a blinder over your eyes and yet, how many companies have actively researched their market in the past 12 months? Or, how many have formally assessed their organization’s performance management in the last five years? Even with a commanding lead in a given market, it’s only a matter of time before your competition will offer a brilliant alternative to challenge your offering and market position. If you have assumed that your positional strength will always carry you through thick and thin, that’s an assumption we would not recommend banking on.
QUICK WAY #2: Set unrealistic time estimates. A company might have a strong showing in a specific niche market, and might be earning higher than average profit margins, and therefore establish a timetable for a new product using the same metrics. After all, it worked in Market A, why wouldn’t it work in Market B? To gain an upward curve in any niche market requires a continual expansion of offerings. This requires the customization of production, operations, sales, marketing and the list goes on. Trying to stand up all of these areas at the same pace of the established business could lead to frustrating results if an appropriate timetable is not planned for and funded well.
QUICK WAY #3: Test in wide open markets. Bolstered by their current success so they employ a full steam ahead methodology. However, there is an alternative that can yield profound results. Testing in micro markets is a long-standing practice of consumer corporations, but rarely practiced by their B2B brethren. Experiment in micro markets with A/B testing with new and innovative selective strategies to see what works best. Don’t spend huge amounts of time preferring to make quick changes based on incoming data. Once the new strategy has been tested and refined, you can push the full speed ahead button.
Such discipline creates focus and this leads to better managed companies. Knowing how to improve your current strategy will usually outperform coming up with all new ones. These simple practices can be the difference between a company that knows where it is going and is moving there profitably, to one that ends up on the side of a road with a flat tire because it became unfocused.