Technology Can Stimulate Innovation and Empowerment

by | Aug 9, 2018 | Operations

There are two seemingly conflicting trends in organizations regarding technology and innovation. The first is a trend towards autonomy, which focuses on organizational goals, as well as cooperation and empowerment. The second is a trend towards automation, which simplifies work requirements and can result in fewer workers. I argue you can have both autonomy and automation… You simply need to focus on improving the autonomy at all levels as you increase the automation.

The autonomy approach is described by Fred Kofman, who promotes cooperation and voluntary exchange for mutual gain. According to this theory, motivation, culture and collaboration produce better solutions than pure self-interest. In short, organizations should focus on winning for the organization, and not just the individual silos of participants.

Organizations in Silicon Valley often devote their attention to things like automation and AI. However, they are held accountable for the trend that some jobs are being replaced by robots. This includes jobs like taxi drivers (replaced by self-driving cars), hedge fund managers (replaced by algorithms), or financial journalists (replaced by chatbots).

This idea was brought home to me a few weeks ago, during a visit to an 1850’s restoration community Sturbridge Village. They had little cottages doing various tasks to make clothing (like cleaning wool, spinning, weaving and sewing). The work that went into production of a few yards or one shirt was incredible. In contrast, my experience in the apparel industry was that we could weave millions of yards in short periods, thanks to automation.

Similarly, Google and others are developing AI programs to write and develop artistic works. They argue that this technology will greatly enhance an artist’s ability to create, while others argue that it will just replace artists. My own experience in the apparel industry is that automation greatly enhances the artist’s potential by reducing mundane tasks. Instead of it regretting the displacement caused by automation, we need to focus more on realizing its potential for individuals. For example:

  • Don’t let automation or analytics give you one simple answer. Programs and situations are diverse, and require a variety of solutions. A great example is the success of the Golden State Warriors and LeBron James in basketball. The Warriors win by an integrated team that gets the ball to the open man, and passes more than any team in history. LeBron’s teams have won by making LeBron the focal point, and supporting with complimentary plays and personnel.
  • Similarly, organizations need to consider their goals and processes. Do you need more expertise and experience, or more creativity? Are you maximizing the potential of your stars and developing collaborative solutions? Do you need diverse expertise on a problem?
  • Most people I see working care about their jobs and try to do them well, regardless of pay or status. A very simple recommendation is just to consider how can we can empower our staff to do even better. We should acknowledge that there will be mistakes, but they will be far less than the total gains.
  • “Need to know” should be a dead phrase, so help staff understand goals and strategies. The more we trust staff to understand these strategies, the more likely they are to embrace them.
  • I believe “leadership” is an obsolete term. The best leaders I have seen are people like head nurses, restaurant expediters, triage managers, and legal assistants. They coordinate and manage various (and frequently much higher paid) participants. The process involves gaining their cooperation and motivation to execute a great final result. In contrast, authoritarian (rather than expert or professional leadership) is usually more harmful than helpful.
  • Many financial and analytical models focus on a single or best solution. I recommend focusing on the parameters of alternative models. Then you can manipulate the model to evaluate alternatives. For example, we have developed a dynamic operating profit model that allows you to analyze the interaction and impact of various factors like price, cost, margin, distribution marketing etc. It has been effective in helping clients understand retail and online opportunities.  Download it here.

In summary, automation and AI offer great opportunities to improve performance, especially when used with analytics. These strategies should also include empowering the organization. In particular, we should continuously challenge assumptions, review alternatives and evaluate progress.

Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA And PhD from the Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startup and small businesses.

Is Marketing Execution More Important than Strategy?

by | May 24, 2018 | Marketing

Many marketing guides start with developing strategy – understanding your focus and defining your brand.  I argue that execution and excellence are more important than developing vague brand and marketing strategies.  As Walt Disney said:

“Do what you do so well that they will want to see it again and bring their friends.”

While this quote may seem obvious, it has a number of implications that are frequently ignored.  For example, when I talk to marketers, they frequently discuss the latest hot trend – targeting, SEO, social media, videos, paid search, etc.  However, how we execute these strategies for our situation may be more important than the specific program.  In addition, many marketers downplay measuring the results of marketing efforts.  Now, digital marketing allows you to develop, test, measure and adapt.  You can now test various programs and strategies before making expensive commitments.  Paid search is an example where key words, offers, and links, are frequently the keys to success.  Thus, testing various alternatives can dramatically help focus a program.  However, many advocates will recommend spending thousands of dollars a month with little clue of what will work.  Similarly, many marketing programs get enamored with technology while ignoring basic execution concepts.  For example, I recently read some exciting marketing plans from a client that included videos, links, and many other details.  However, they were so focused on technology that they forgot simple things like phone numbers, e-mail addresses, and how they would help their customers.

Here are some tips related to execution in your marketing programs:

  1. Goals – What are your long-term volume and image expectations?  Are you building sales just for today, or are you seeking long term customers?  What are your organizational and financial resources?  Who is your target market?  What is your competitive positioning?  The answers to these questions can change during the marketing strategy process, and they will affect your program as you begin to execute in the real world.
  2. The Internet – It’s fast, centralized, and cost-effective. Traditional print media and many retailers are dying compared to Internet retailers like Amazon (who represent between 35-45% of internet consumer sales, and are growing at about 20% per year.)
  3. Pricing, Stock, Forecasting, and Value – Now with the ability to reach customers in remarkable ways, you must consider all of these as part of your plan.
  4. Product Expectations and Customer Service – You’re a brand.  People expect a certain kind of quality based on your target demographic, so keep that aligned with your goals.
  5. Develop, Test, Measure, Adapt – This is the scientific method for a Lean Startup Strategy, and thanks to the Internet you can do all of this really quickly.  One of the key recommendations of Eric Ries in The Lean Startup is to “test, measure, and pivot until you get it right.”
  6. Customer Retention – Satisfied customers are the best, most cost-effective way to grow a business.
  7. Traditional Advertising – While firms generally are spending less money on traditional media, it can still be an important component of good marketing (especially if your products and services lend themselves to such media).
  8. Distribution – How are you selling your products or services?  Trends in distribution are changing rapidly, and your process needs to be in sync with the times.  For example, automation and customer service are replacing the direct salesperson.  Money can be saved by eliminating traditional channels and substituting direct shipping and the Internet
  9. Integration – The key to an excellent marketing plan is to employ all of the tools you consider relevant and affordable, and to develop a targeted plan with clear action steps and benchmarks.  First and foremost, the plan must fit your goals and your budget.  It is then critical to measure the results and adjust to maximize your goals and profit.
  10. Risk and Openness – I encourage you to consider more risk in our changing environment, and I also suggest changing the business culture to encourage more risk-taking.  I often say, “If you aren’t making mistakes, you aren’t trying hard enough.”  Mistakes mean you and your business are growing.  Consistently exploring alternatives and evaluating your decisions will help you figure out what’s working.
  11. Measurement – A number of general guidelines should be followed when making goals and measuring them.  First, make goal-setting a process and communicate these goals to those involved.  Second, be certain to understand the different needs in different situations.  Third, be sure to use clear and simple measurement tools.  Fourth, be sure to use the process for improvement (rather than simply as a tool for criticism).  Focus on the mediums that work the most; not based on trends, but on what has the best outcomes.

Dr. Bert Shlensky has an MBA and PhD from the Sloan School of Management at MIT.   He is the President of the New York-based consulting firm The Startup Connection, where he uses his 30 years of high-level business experience to guide his clients towards maximum sales and profit. For a free consultation, please visit www.startupconnection.net.

Prioritizing is Easy With the 80/20 Rule

by | May 17, 2018 | Marketing

The original concept in 1908 by Pareto was that 20% of the population controlled 80% of the wealth. In the modern business realm, it has been proven time and time again that 80% of business revenues are generated by just 20% of our customers. Yet we all continue to waste time, money, and inventory dollars on customers that bring in a lower return. This tendency also frequently adds confusion and complexity. At StartupConnection, we help our clients prioritize.

While much of following the 80/20 rule is focused on analytics, the most important (and sometimes simplest) way to keep existing customers happy and is to exceed expectations. As Walt Disney said, “Do what you do so well that they will want to see it again and bring their friends.” Satisfied customers, repeat customers, positive social media, and referrals are the best and least expensive marketing a business can have. There is no substitute for a satisfied customer. In contrast, dissatisfied customers, poor service, and negative referrals can offset even the best marketing efforts.

Some specific examples of using the 80/20 rule with my own clients:

  • We helped a number of businesses create sharing sites for parties, home services, programming etc. While the concept is relatively simple, the cost of finding suppliers and developing marketing programs can be both expensive. I have been successful in encouraging these businesses to focus on the services that have the most potential.
  • We helped a textile company prioritize its product offerings; at first they were focused on being all things to all people. We worked on developing groups of products, increasing design and marketing efforts, and eliminating over 40 % of the products (which represented less than 10 % of sales.) The result was greatly improved efficiency, but more importantly, the ability to add products by more integrated merchandising.
  • Prioritizing and following the 80-20 rule can be easily improved by just taking care of your best customers. For example, why do new customers sometimes get better discounts than the best old customers? I encourage clients to treat the best old customers really well, in addition to seeking out new customers.

Here are some tips to consider when executing the 80/20 rule:

  1. Reduce inventory. By following the 80/20 rule, you’re choosing to operate using less inventory. You must first admit that certain products (even if you truly believe in them), simply are not selling. This leaves more room for carrying the products that do sell.
  2. You should spend your resources on what you know will provide a return on your investment. Reducing products that may or may not be a good fit for your customers can save you money. Also, think of all the headaches, space and time you’ll save by not having to market obsolete inventory.
  3. The 80/20 should not preclude development and testing of new products. However, this usually requires more analysis of the program, evaluation of results, and withdrawal if success is not apparent.
  4. Simplify products and services. Your customers will also appreciate this. Think about the last time you went to the store to buy one simple thing, and you saw enough options to fill a late 1980s Sears catalog up. It made it difficult to choose the right product, didn’t it?
  5. By focusing on the products that you know your customers want, you’re making them feel much more confident (especially when you’re selling online.) Instead of finding new ways to market products that simply aren’t selling, you may be better off to shift over to what is selling. If you give people what they’re searching for, they’ll buy. If you don’t, they won’t. It’s that simple.
  6. Have you run an unsuccessful AdWords campaign lately? It may be the actual product or service that you’re marketing and not the ad. If you’ve followed every best practice and your product isn’t selling, maybe you have to blame the product, and not the ad.
  7. I know you hate developing complex forecasting models and spending lots of administrative time on the logistics of obsolete products, but you’ll get over it. Who knows? You might even find some more leisure time.
  8. Suppliers also like the 80/20 rule, and they may reduce prices or increase service if their orders are more concentrated. Everyone in the supply chain, right on down to the customer, is much happier as a result.

This brings me to my next point… what is the MOST important reason the 80/20 rule works? Happy Customers! Want to start rocking your business by following 80/20? Contact me and I’ll get you started!

Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA And PhD from the Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startup and small businesses.

How to Write a Winning Elevator Speech

by | May 11, 2018 | Marketing

OVERVIEW

how to write a sales pitch (or elevator speech)At Startup Connection, we believe that the skill of communicating passion for your business — in the form of a refined “elevator speech” or mission statement — is a pure necessity to your success.

Mark Twain is often credited with saying, “I would have written a shorter story, but I didn’t have the time.” These days, we refer to a very short synopsis of your business as an “elevator speech,” and in this article, we’ll call it “the sales pitch.” A sales pitch is a concise, carefully planned, and well-practiced description of your company that anyone should be able to understand in 60 seconds or less. Learning how to give a great sales pitch is a valuable way to share your message. It is also a great way to truly refine the essence of your company’s vision and plan. On one hand, starting the sales pitch is not easy, and it requires some effort and practice. On the other hand, the process should be made as simple as possible.

One of the best strategies we suggest is to start with taking less than one hour to write a first version. Focus on your idea, passion and emotion in this draft. Don’t worry about content, format, or style… we can help you fix all that later.

The sales pitch is as essential as your business card, and you have about one paragraph to get the attention of your audience. You need to clearly and rapidly be able to communicate who you are, what you do, and how you can help your listeners.

Before you can convince anyone of your business proposition, YOU need to know exactly what that business proposition is! You need to define precisely what you are offering, what problems you can solve, and what benefits you bring to prospective customers or clients.

Specifically, the sales pitch answers some of the following questions:

  1. Who are you and who is your company? For example, “My name is Jim Cando and my company are Cando Widgets.”
  2. What are your key products or services, and what are their strengths? “We make awesome widgets that are guaranteed to make you healthier, richer, and happier. Our widgets are made with 100% healthy ingredients, cost less, and are easy to use.”
  3. What adjectives come to mind to describe your company? Avoid common words like better, bigger, and well made. Instead, think of emotional terms like indestructible, exciting, or scrumptious.
  4. Who is your target market? Be specific in terms of age, lifestyle, location, and income. “We target millennial men who work out and are looking for a shirt that fits”.
  5. What problem do you help customers solve? Talk about benefits instead of just descriptions. Examples of benefit statements include: “We help you save time and money,” “We make what is usually a horrible experience into something satisfying and exciting,” or “We understand our customers, and ensure that they have the best product selection.”
  6. What is your business model and strategy? For example, “We are a home service company. Our goal is to develop a base business of 500 customers and $1 million in revenues, and then to grow 10 to 20% per year. We plan to spend 15 to 20% of our sales on internet marketing, materials demonstrations, and exceptional customer service. Our profitability is derived from our low overhead, competitive margins, and growing brand.”
  7. Who is your competition and how are you better? For example, “Our competition is anyone who sells widgets. We offer the right product at the right price, with great customer service and product selection. We save customers money by helping them purchase the most effective product (rather than the cheapest or one with the most bells and whistles) based on what they need.”

Your challenge is to deliver a great pitch that will make someone want to know a whole lot more about your business.

WORKSHEET

Basic Elements of a Good Elevator Speech

Once you have developed a good sales pitch, you will be amazed at how handy it is, and how often you use it in a variety of settings. To be sure your pitch is top-notch, here is a checklist of important elements to consider:

  • A “Hook”: Start with a hook, a statement or question that piques interest and makes the listener want to hear more. A hook can be a surprising or amazing fact. For example, if you were marketing a product geared towards entrepreneurs, you might start with “More than one out of every two Americans works for or owns a small business.”
  • Length: Your pitch should be less than 60 seconds. If your sales pitch runs on for too long, you risk losing the interest of your listener. Get to the point you are trying to make, and explain why it will benefit your target audience.
  • Passion: Listeners will expect energy and dedication in your speech. If you aren’t excited about your idea, why should the listener be? Why is this idea exciting, and how will it benefit your target audience? This must be conveyed in your sales pitch.
  • A Request: At the end of your pitch, you must ask for something. Are you looking for capital? Strategic partners? New markets? Use the fact that you are with the customer to your advantage – ask them to take advantage of this opportunity and close the deal on the spot. Always establish a follow up question, in case your target is unable to commit outright.
  • Practice: Be sure to spend time developing, practicing and testing your pitch. Create short videos of your pitch and critically review your presentation. It is imperative that you convey confidence in your product, and how it will benefit the customer.

Think about your ideas and call me for some free mentoring. I know it is not easy, but the more you work on defining your business, the more comfortable you will become. Call today at: (914) 632-6977.

Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at MIT.   He served as the president of West Point Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start-up companies and small businesses. Call today for a free consultation, so we can use our business plan templates to take your business to the next level.

Business Planning is a Process (Not a Formula)

by | May 3, 2018 | Planning

Creating a business plan is a lot like forecasting the weather… those who are in charge of predicting a storm get blamed if they are not 100% accurate. The same logic applies to business planning in terms of timing, expediency, and execution. This can lead many business owners to abandon ship, rather than seeing it as an opportunity to change course.  Always remember, business planning is a process.

Carl Schram, former head of the Kauffman Foundation for Entrepreneurship, recently wrote Burn the Business Plan, which echoes a similar strategy for a streamlining the planning process. Reis and Schram are mostly right to criticize excessively lengthy business plans. At Startup Connection, we argue that business plans are necessary, but that they need to flexible and dynamic (and meant primarily for yourself, not others.) As the saying goes, “If you don’t know where you are going, any road will get you there.” Making plans for others (especially venture capital firms) and following specific rules almost guarantees the process will not be useful to you. In addition, venture capital firms account for a very small segment of business financing, especially in the beginning. A business plan is not just a document to be stored on a shelf; it should establish parameters and be developed, tested, and be continuously revised. Even with a “perfect” business plan, there will be failures along the way. In particular, failing and learning from failure are critical components of the ongoing planning process.  Business planning is a process.

Some Planning Suggestions

There is no cookie-cutter approach to writing a business plan. Get your ideas on paper before stressing about the organization of information. Don’t stifle yourself. Write it in your own words, as simply and concisely as possible.

Focus on your passion. A successful business plan should express why you think your business is a good idea and why you will succeed. If you need to dress it up in a suit and tie to show to investors, do that later. A business plan should be YOUR vision.

Common Parts of a Business Plan

Every business plan is different because every business is different. However, there are some common elements to consider, such as:

  • Mission statement
  • Goals
  • A description of products and services
  • Ideal customer
  • Analysis of the industry and your competitors
  • Marketing and sales tactics
  • Operational plans
  • Manufacturing and delivery logistics
  • Resources necessary (this includes labor, equipment, and facilities)
  • Financial budget

Also, focus on the components that are most important and challenging, rather than worrying about making every section perfect.

Some Further Tips

  • Don’t be too verbose: A formal business plan must focus on the needs of the audience and the entrepreneur. Business plans must be on point and clear. Typically, plans should be 15-30 pages. If additional details are required, put them in a short appendix.
  • Think it through: You might have a great idea, but have you carefully mapped out the steps you’ll need to make the business a reality? It’s worth investing your time in the planning phase to ensure you might make money in the long run.
  • Do your research: Investigate everything you can about your proposed business. Google and Amazon are great and easy tools to understand the market and your competition.
  • Be realistic about your competition: Is your product or service something people really want or need, or is it just “cool?” Why do you think people will buy your product or service?
  • Get feedback: Obtain as much feedback as you can from trusted friends, colleagues, nonprofit organizations, and potential investors or lenders. You’ll know when you’re done when you’ve heard the same questions and criticisms again and again. The goal is to have a good answer to almost everything that can be thrown at you.

Completing the business planning process can be challenging, but it should also be interesting, productive, and satisfying. The hardest part is developing a clear picture of the business that makes sense, is appealing to others, and provides a reasonable road map for the future. Another challenging aspect is integrating your products, services, customers, marketing, operations, management, and financial projections seamlessly together. However, these pieces should not dilute your enthusiasm to succeed.

Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at MIT.  He served as the president of West Point Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start-up companies and small businesses. Call today for a free consultation, so we can use our business plan templates to take your business to the next level.