If you’re planning to develop new products and services, you should test them with your customers with just as much care and attention as a new business going to market for the first time.
One way of finding new customers for your products and services is by increasing awareness in your local area. Read through this article to find out how you can attract new cusotmers
Growing your business, whether through increased sales or improved profitability, often means you need to invest more. You can do this by looking at the strategies within this article
Once your business is established and you’re making a profit on the products and services you sell to customers, you may want to start thinking about how to grow. Many businesses think of growth in terms of increased sales, but it’s also important to focus on how to maintain or improve your profitability.
Leadership is a vital concept with numerous connotations. For instance Maxwell defined it as “having a genuine willingness and a true commitment to lead others to achieve a common vision and goals through positive influence”. Similarly, Dr Myles Munroe referred to it as “the capacity to influence others through inspiration, motivated by passion, generated by vision, produced by a conviction, ignited by a purpose”.
However, to narrow this down, for the purpose of this article, leadership is defined as the ability to influence people to passionately pursue a vision now and beyond the current leader’s tenure. Implicit in this definition are two most important roles that differentiates between great leaders and leaders who only occupy a position: Mentorship and succession.
The word méntoras (μέντορας), the Greek word for mentorship originated from the classic poem ‘The Odysse’ by Homer in 800 BCE. The poem describes a character, Odysseus who was the King of Ithaca. Odysseus was preparing to live his kingdom for Troy and decided to find someone who can act as a friend, teacher and adviser to his son, Telemachus whilst he was away. The name of that guardian was Mentor.
Therefore, to mentor simply means to replicate oneself in another. It is a process of carefully imparting the key skills and qualities of a mentor into a mentee.
Mentorship is the relationship between the mentor and the mentee where the former teaches the latter on how to effectively maintain and enlarge the vision of the former.
Similarly, the term successionem is a Latin word for succession that simply implies to follow after or step into the shoe of another. It is the process of effectively planning the handing over of a leadership position to a well trained mentee. Succession is one of the only few words in the dictionary with the word SUCCESS. Thus, succession is the successful handing over of a leadership position to a successor (mentee) in order to successfully cary on the vision of the mentor (leader).
However, Mentorship and succession have been the most neglected aspect of leadership. A lot of organisational and political leaders have held unto power for the longest of time and when they do let go, there is always a struggle to find a perfect replacement.
But why do leaders hold unto power ? Why can’t they simply plan their succession by mentoring others? The answers to these questions, the author believes are anchored on two key pillars:
1) the core values of the leader that he or she has acquired from his or her environment and 2) his or her lack of understanding of the importance of Mentorship and succession.
In the worldview of the great Italian writer, politician, philosopher and historian, Nicole Machiavelli “It is much safer to be feared than loved,”. Implicit in this worldview was the advocation for manipulation and cruelty as the best strategies to be a great leader and hold unto power for the longest of time.
Machiavelli postulated that the utilisation of deceit and the killing of the innocents. is a sine qua non to attain and maintain power. His doctrines were predominantly practiced by ancient and medieval leaders.
Decades after, the author of ‘The 48 Laws of Power’ (shown in figure 1) Robert Greene built on Machiavelli’s worldview by propagating what seems to be the most ruthless view on leadership.
Figure 1: The 48 Laws of Power
Some of the key laws that may have consciously or subconsciously led to the neglect of leaders in mentoring their followers are:
Law 2: Never put too much trust in friends, learn how to use enemies.
Law 3: Conceal Your Intentions.
Law 6: Court Attention at All Costs.
Law 8: Make other people come to you – use bait if necessary.
Law 11: Learn to keep people dependent on you.
Law 12: Use Selective Honesty and Generosity to Disarm Your Victims.
Law 15: Crush Your Enemy Totally.
Law 17: Keep others in suspended terror: cultivate an air of unpredictability
Law 18: Keep Others in Suspended Terror.
Law 20: Do not commit to anyone.
Law 27: Play on people’s need to believe to create a cult like following
Law 42: Strike the shepherd and the sheep will scatter
Law 43: Work on the hearts and minds of others.
Taking Law 11 in particular “Learn to keep people dependent on you” it is clear that Greene is suggesting that leaders shouldn’t empower their subordinates. They should rather keep the core secrets that help them to attain and maintain their position away from their followers. In fact Greene specifically asserted that you should “never teach them enough so that they can do without you”. Simply keep them wholly dependent on you and you became more powerful and feared.
Thus, philosophical leadership theories postulated by Machiavelli and Greene, has transcend the minds and actions of most leaders even today. Most leaders believe that teaching a follower to take on leadership roles will only help to weaken their current power base. They believe the best way to stay in power is to widen the gap between what they know and what their followers know.
However, 21st century leadership requires a complete overhaul of the Machiavellian philosophical values. Leaders need to develop values that are in congruence with mentoring their followers to take on leadership positions. Leaders need to understand that Mentorship and succession are naturally built into the leadership function.
Mentorship allows leaders to find their successful replacement. Mentorship makes it possible for a leader to delegate activities thereby reducing their workload. To mentor is to understand that there is a leadership potential in every follower and that it is the responsibility of the leader to harness that potential. Leaders don’t therefore, need to have their followers dependent on them, they simply need to empower them for a successful succession.
In order to effectively mentor and plan for a successful transfer of power from the mentor (leader) to the mentee (follower), the following six key strategies embedded in what the author calls the MENTOR’s Model can be utilised:
M: Mobilise the greatest of your followers into a MASTERMIND GROUP
E: Continuously ENGAGE them on your broad vision
N: NURTURE them with tips and advice on a continuous (Kaizen) basis
T: Provide regular empowerment TRAINING programmes in the form of workshops, seminars etc
O: Set Specific, Measurable, Achievable, Realistic and Time-bound (SMART) OBJECTIVES and delegate part of your leadership function
R: REVIEW their performance on a regular basis
In conclusion, with the ever changing world, meeting the needs of current and future challenges requires an exemplary leadership style that is rooted in effectively planning for succession through Mentorship. Leaders should understand that their greatest achievement lies not in the number of infrastructural facilities they build, but rather the number of followers they helped. make leaders. In essence, Leaders should simply build people not buildings.
Like humans, businesses operate in an environment that can positively or negatively impact their operations. A business environment is basically the surroundings of businesses. These surroundings are mainly divided into two: micro and macro. The micro environment is also referred to as the internal or inside environment whereas the macro environment is referred to as the external environment.
To be effective, businesses (Small, Medium or Large) will constantly need to analyse both their internal and external environments. To do so, they will need to utilise key strategic tools e.g. SLEPT-D, Value Chain analysis, SWOT etc.
This article will however, focus on one main framework that is widely used to analyse a firm’s internal (micro) environment: the VRIO framework.
The VRIO framework was developed by scholars: Barney and Hesterly in 2006 to help businesses to effectively assess their internal environment with the aim of identifying their core strengths (capabilities) and weaknesses. The framework is rooted in the believe that a firm’s strength and/or core competence is derived from within itself. In other words, the source of a firm’s competitive advantage can be found in the resources it possesses. This is called the resource-based view of strategy.
VRIO is simply an acronym for Value, Rarity, Imitability, and Organisation, each of which represents specific sets of questions that must be carefully answered in order to successfully ascertain a firm’s. competitive advantage. The key questions to ask around each are as follows:
1. Value
Are our resources of value to our customers and other key stakeholders? Are we able to effectively and efficiently exploit the resources we have to take advantage of opportunities and/or weaken a competitor?
Note:
a. Resources in this context refers to both your tangible (money, buildings, machineries, fixtures and fittings etc) and intangible (skills, competence etc) resources at your disposal.
b. Value in this context refers to the monetary and social benefits (satisfaction) a customer receives in exchange for the price you offer.
2. Rarity
Are the resources rare or scarce? In other words, is the value you are providing limited in supply? Are you the only business providing that value or do we have few or many businesses doing same? Are you in a monopolistic, oligopolistic or perfectly competitive industry ?
3. Imitability
Can the value you are providing be easily imitated or is it costly to imitate? Imitation here refers to the ease at each a firm’s product or services can easily be copied by others in or outside its industry.
4. Organisation
Do you have the right supporting systems in place to exploit the advantage you have? A good analytical tool to use to ascertain how organised your business is, is the McKinsey 7-s framework. According to McKinsey consultancy, a firm’s competitive advantage is hugely derived from the effective interrelation between the following 7-S’s: Staff, Style (leadership style), Shared-value ( the culture of the business), Systems, Strategy, Skills and Structure.
VRIO and Decision Making
VRIO is thus a great strategic decision making tool in the hands of any business who wishes to effectively compete in their sector and industry. The diagram below shows a synopsis of the different outcomes of a carefully planned VRIO exercise.
From the diagram above, the following conclusive statements can be made about your firm:
1. If the firm’s resources are not VALUABLE to the market in which its operate, it should be outsourced to a company in another market where that value is needed
2. If the resources are VALUABLE but not RARE, the firm is in a competitively disadvantaged position which simply means that it may not survive in the market space if concrete strategic steps aren’t taken urgently
3. If the resources are both VALUABLE. and RARE but that it is not expensive to imitate or copy, then the firm will have nothing but a competitive parity. It competitors will try to imitate its products in the very near future
4. If the firm’s resources are VALUABLE, RARE and is also very expensive to IMITATE but that it is unable to sufficiently organise itself to sustain its advantage, it will end up having a temporary competitive advantage. This was the case with Motorola whose competitive advantage was short-lived by the emergence of companies like Samsung and Apple
5. Lastly, If the firm has VALUABLE resources that are RARE, costly to IMITATE and has the right ORGANISATIONAL setting that is supported by the effective interrelation of the 7-S described above, it will enjoy a SUSTAINED COMPETITIVE ADVANTAGE. This is the sort of advantage that Google, Apple, Microsoft, Paypal, Alibaba etc are enjoying.
To put the framework into perspective, here is an example of a VRIO analysis of Apple Plc
•••
Value: Yes
Apple has a strong brand presence and loyalty and provides products that are well designed and convenient for its customers
Rare: Yes
Unlike other mobile phone manufactures, Apple is the only company that has its own software: the iOS. In addition, the software is seen as one of Apple’s USPs (Unique Selling Prepositions).
Costly to imitate? Yes
Apple’s iOS, closed ecosystem and brand loyalty including its complex manufacturing process and organisation is costly to imitate. Comparatively, other devices from their main competitors, like Samsung, Google, Huawei, HTC, LG etc all run on Google’s Android software.
Organisation: can Apple exploit its resources ? Do they have the capability? Yes
Apple has trained and motivated staff, great systems, the right mix of skills, organic (flexible) organisational structures, excellent strategy, dedicated skilled employees, great style of leadership and an awesome organisational culture (shared value), all working together to sustain its competitive advantage.
In conclusion, SMEs as well as large businesses can adopt the VRIO framework to assess their internal environment. The framework helps in identifying their key resources and capabilities and it will show whether they are Valuable, Rare, Imitable and have the right support system (organisation) to exploit its resources and capabilities.
On average 8 out of 10 businesses fail in their first year of operation and only few go on to become global companies.
Several reasons have been put forward for such failures ranging from the lack of funding to the lack of a sizeable market. However, no matter what the reasons are, business failures can be traced to the lack of effective growth strategies.
Growth is pivotal for any business. It is the very rationale behind the establishment of a business.
Meanwhile, the lack of effective growth strategies has led to the demise of many well established companies by smaller ones through the disruptive innovation process (see Figure 1 below).
Figure 1: Disruptive Innovation
Figure 1 clearly shows a snapshot of big businesses that have been outcompeted and to a large extent chased out of the market by smaller businesses.
Arguably, these companies could have still been in the market today controlling the largest portion of it if only they were able to effectively strategise for sustained growth and survival.
Growth strategies can be defined as Strategies that lead companies to either compete or dominate their industries for as long as possible. It is the process of clearly and continuously spelling out what needs to be done and by when. Put simply, growth strategies are the innumerable decisions you make as a company on a daily, weekly, quarterly and yearly basis.
To grow, businesses need to ask themselves the following four fundamental questions:
1.Where are we now?
2. Where do we want to go?
3. How do we get there?
4. How do we know that we are there?
Each of these questions presents an opportunity to crucially assess your internal and external environment and effectively plan for any sudden shock from the market. Here is a brief analysis of the questions:
This question prompts you to look at your current situation as a business. You can do this by asking critical questions like: how are we doing? What’s our core competence? Are our customers and staff happy ? What’s the current sales figure? Who are they current and new entrant to the market? What is our current overheads?
To be more structured, you could use key strategic models like SWOT, VRIO and McKinsey 7s to carry out your situation analysis.
For example, SWOT (shown in figure 2 below) could be used to ask key questions like: what are my Ss (Strengths), Ws (Weaknesses), Os (Opportunities) and Ts (Threats)?
Figure 2: SWOT Analysis
The answers to these questions will help you to use another SWOT related strategic model called the TOWS (Threats, Opportunities, Weaknesses and Strengths) matrix (shown in figure 3).
Figure 3: TOWS Matrix
The TOWS Matrix is used to effectively counteract your threats, take advantage of your strengths and exploit your opportunities.
The McKinsey 7s (shown in figure 4 below) which was developed by the US based consulting firm, McKinsey, allows you to review the effectiveness of your business by looking at the interrelationship between your Strategy, Systems, Staff, Style, Skills, Structure and Shared-value.
Figure 4: McKinsey 7s Framework
This is the question of the future. It clearly requires you to set and/or review four key vital components of your strategic plan: Vision, Mission, Objectives and Tactics ( herein referred to as VMOT).
A company’s vision clearly states its long term direction. Vision helps in painting the picture of the type of company you would want to see in the foreseeable future. To a large extent your vision describes your ideal state including what is unique about your product offering. The vision statement of Google for instance is “to provide access to the world’s information in one click.”
A mission on the other hand captures the purpose of your business. It clearly spells out your Why? Figure 5 below shows examples of vision/mission statements by some of the most prominent businesses today.
Figure 5: Examples of Vision/Mission Statement
An objective on the other hand focuses on the short term goals that needs to be achieved. Objectives are derived from your vision and should be Specific, Measurable, Achievable, Realistic and Time-bound (SMART).
Tactics are the specific and practical steps taken to achieve your objectives which will inadvertently lead to the achievement of your vision and mission.
This question allows you to strategically determine your road map towards the vision of your company. Your road map is the bedrock upon which all other components of of your business sits on. The more clearer and precise it is, the more easily you can sail towards your vision.
To strategise, companies normally use key models like Ansoff Matrix, Porter’s Generic Strategy and Bowman’s Clock.
Ansoff’s matrix was developed by Igor Ansoff and was first published in the Harvard Business Review in 1957, in an article titled “Strategies for Diversification.”
The model has been widely used by small-medium as well as large companies to expanded their operations and maximise their bottomline. The model (shown in figure 6) identified four main strategies: market penetration, product development, market development and diversification.
Figure 6: Ansoff Matrix
A market penetration strategy is when a company decides to sell or produce more of its existing products to its existing market. You do this because you know that the product works and that there are very few surprises in the market.
Product development strategies is when a company decides to produce and sell their new products to their existing market.
On the other hand, market development strategies is when a company decides to sell their existing products to a new market whereas diversification strategies seek to sell new products to an entirely new market.
Porter’s generic competitive strategy (shown in figure 6 below) was developed by Michael Porter in 1978. Porter stated that a business can compete in three main ways: cost (being the lowest producer), differentiation (offering products that are unique to the market) and focus (focusing on a specific niche).
Bowman’s Strategic Clock is a competitive model that guides businesses on how to effectively position their products in the market. Broadly speaking, Bowman’s clock gives the options to businesses to position themselves based on two main dimensions: perceived value and price; both of which can be either low or high as show in figure 7 below.
Figure 7: Bowman’s Strategic Clock
As shown above, there are 9 key ways of positioning in the marketplace, each of which is centred on the two dimensions of price and perceived value.
Having carried out your situational analysis, set a clear vision and mission, adopted appropriate strategies and techniques, it is important to clearly set some Key Performance Indicators (KPIs). KPIs allow you to assess your company’s progress against your vision and objectives as you carefully implement your chosen strategies.
One of the key models that is widely used by companies to set KPIs is The Balanced Scorecard (shown in figure 8 below). The Balance Scorecatd was developed by Robert S. Kaplan and David P. Norton. KPI compromises of a “a set of measures that gives top managers a fast but comprehensive view of the business” (Kaplan and Norton, 1992).
Figure 8: The Balance Scorecard
Source: Kaplan and Norton (1992)
As shown in figure 8 above, it can be seen that the model is divided into four sections:
These three questions will help to clearly ascertain where you are at, as an organisation.
A typical example of a balance scoreboard of a company Kaplan and Norton referred to as Electronic Circuits Incorporated (ECI) is shown in figure 9 below.
Figure 9: ECI Balanced Scorecard
In conclusion, the business environment in which organisations operate today is constantly evolving. Thus, for SMEs to thrive, they will need to constantly review their activities by asking themselves four key questions:
Permit me to take you through a random muse on customer management and the kind of relationship you should have with them.
I will be introducing you to two renowned models that you may have come across.
But first let me make these assumptions upon which the first framework/model is built upon:
1. Not all customers are profitable
2. Your business shouldn’t be set up to satisfy everyone
3. A loyal customer is not necessarily a profitable customer and vice versa
4. Your resources as a business is finite. Thus, it makes a business sense to primarily focus on those that are both loyal and profitable
Now to the first model
This model, which was developed by Reinartz and Kumar is called the Customer Relationship Groups. It helps you to classify your customers into 4 major groups as shown above.
The model also helps you to effectively build a relationship with the Right Customer or pivotal customer.
There are two major variables that are used to classify your customers:
Each of this variable could be high or low. Thus, a customer with a high potential to bring in revenue and/or increase your profitability but with a resultant low loyalty is called:
Butterflies make you money but aren’t loyal.
have low profitability and low loyalty
have high loyalty and they are loyal to your brand but they bring in low revenue.
Lastly
have the potential to make you high revenue and they are also loyal to your brand.
Now every organisation has these different types of customers. It could be even related to your employees.
How do you manage each of them ? How do you ensure that your finite resources are effectively and efficiently met?
How do you achieve synergistic effect?
The model below will help answer this in synopsis.
This is the stakeholder’s analysis model that was primarily introduced by Mendelow to classify and manage your various stakeholders.
A stakeholder meaning anyone with a conceivable interest in your business e.g, shareholders, staff, suppliers, customers etc.
2. Strangers = monitor (exert minimum effort)
3. Barnacles = keep informed through your marketing efforts or various customer touch points
4. True friends = manage closely. They are your golden eggs.
End of random musing.
Starting a Business is no longer difficult, Scaling is!
Once upon a time starting a business was the most difficult thing to do for most people. However, with the advent of technology and the vast amount of free information coupled with the amount of mentors who have passionately shared their success stories to ignite the burning desires within us, starting a business has become much easier.
Worldwide, over 100 million businesses are created every year but according to a Forbes’ 2021 report, 20% fail in year 1, 30% in year 2, 50% by year 5, and 70% beyond year 10. Among those that stay, most remain pretty much the same way they were created; same system , culture, number of employees, leadership style, level of profitability, products etc.
Why is this the case?
I am guessing you will say lack of finance. Whilst this might seem right on the surface, it is unfortunately not the primary reason. You might be for instance lucky to have an investor fund your idea but if you don’t have an appropriate system or the requisite mindset, it will disappear really fast and inhibit your growth.
So why then do businesses fail to scale?
Simply put, many were not designed with the intention to scale.
Business design otherwise known as Organisational Design (OD) is at the heart of all growth firms. The Chattered Institute of Personnel Development (CIPD) defines OD as:
“the review of what an organisation wants and needs, an analysis of the gap between its current state and where it wants to be in future, and the design of organisational practices that will bridge that gap”.
In other words, OD seeks to answer four main questions that should be frequently asked:
Now, let’s take each in turn and briefly explain.
This is a question of vision. Organisations built to scale are driven by their vision. A vision is the future put into perspective. It is where you want to be as a business in the foreseeable future e.g 5 years from now. A clearly stated vision serves as both a motivator and discipline for all members of the organisation. A vision reminds you of why you do what you do when the going gets tough. An organisation’s vision is normally written in a form of a statement which speaks to the future. Some examples include:
Google’s vision is “to provide access to the world’s information in one click.”
Amazon’s vision is “to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
Coca Cola’s vision is “to craft the brands and choice of drinks that people love, to refresh them in body spirit. And done in ways that create a more sustainable business and better shared future that makes a difference in people’s lives, communities and our planet.”
Dangote Group’s vision is “ to become the leading provider of essential needs in Food and Shelter in Sub-Saharan Africa.”
Pfizer’s vision is “ to Innovate to bring therapies to patients that significantly improve their lives.”
Implicit in all of the above visions is growth; they are simply saying, this is where we intend to go (from 0 to 1 and 1 to exponential growth). That vision is then communicated to all members of the organisation. The question therefore again is: what’s your vision? Where do you see your business 5,10, 20 years from now?
This question prompts you to look at your current situation as a business. You can do this by asking critical questions like: how are we doing? What’s our core competence? Are our customers and staff happy ? What’s the current sales figure? Who are they current and new entrant to the market? What is our current overheads?
To be more structured, you could use key strategic models like SWOT (Strength, Weakness and Opportunities), and McKinsey 7s to carry out your situation analysis.
For example, SWOT could be used to ask key questions like: what are my Strengths(S), Weaknesses (W), Opportunities (O) and Threats (T)?
The McKinsey 7s which was developed by the US based consulting firm, McKinsey, allows you to review the effectiveness of your business by looking at the interrelationship between your Strategy, Systems, Staff, Style, Skills, Structure and Shared-value.
This question allows you to reflect on the where you are now as a company (situation analysis) and where you want to be (vision). Knowing the distance to your destination gives you hope and time to think of how fast and efficiently you can get there.
This question allows you to strategically determine your road map towards the vision of your company. Your road map is the bedrock upon which all other components of of your business sits on. The more clearer and precise it is, the more easily you can sail towards your vision.
To strategise, companies normally use key models like Ansoff Matrix and Porter’s Generic Strategy.
Ansoff’s matrix was developed by Igor Ansoff and was first published in the Harvard Business Review in 1957, in an article titled “Strategies for Diversification.”
The model has been widely used by small-medium as well as large companies to expand their operations and maximise their bottomline. The model identified four main strategies: market penetration, product development, market development and diversification.
A market penetration strategy is when a company decides to sell or produce more of its existing products to its existing market. You do this because you know that the product works and that there are very few surprises in the market.
Product development strategies is when a company decides to produce and sell their new products to their existing market.
On the other hand, market development strategies is when a company decides to sell their existing products to a new market whereas diversification strategies seek to sell new products to an entirely new market.
Porter’s generic competitive strategy was developed by Michael Porter in 1978. Porter stated that a business can compete in three main ways: cost (being the lowest producer), differentiation (offering products that are unique to the market) and focus (focusing on a specific niche).
In summary, starting a business is easier today than it was decades ago. The most difficult part however, is growing it and this is so because most organisations were not design with the intention to grow. Organisational Design (OD) is a strategic and wide reaching process that continually seeks to answer critical questions like: where you want to be? what is your current situation? what is the gap between your current situation and where you want to be? how do you get there?
The OD process therefore, helps you to have a holistic view of the strategies, culture, leadership style, systems, people, customers, sales, profits, overheads, policies and procedures and how they are set up to achieve your desired outcome: SCALE.
List of Business records to keep if you're self-employed.