One in 9 companies succeed in building a durable business. Even large companies nose-dive. There is only one reason why companies fail: they screw up their powers.
How many of you remember Blackberry? How many of you had a Blackberry phone? What kind of phone do you have today? Zero Blackberry I bet!
I am a corporate dropout, a HAPPY corporate dropout. In my corporate days, we called these phones “crackberry”. It was the first time we could access work emails remotely. We only had PDA’s before that. We were addicted. They had everything we needed. They were practical and secure. We were getting things done!
Blackberry rose to a staggering 20% market share in 2008/2009 and today account for less than 1%.
Regardless of size and sector, the major constraint on a company’s success is not the quality of their product or service or the intellectual property that protects it, but rather the inability of the company to leverage their power to secure and capitalize on commercial opportunities. Power determines range and when range is narrow, it leaves a company with very little leeway.
Here are the top 3 powers in business you must leverage:
- Power in your story telling
- Power in your business model
- Power in your decision-making
Think about your business being a big bucket. From the day you think of opening a business to actually going for it, to year one, year two, etc., you keep throwing in that bucket everything you learn about your value proposition, your customers, your employees, your finances, your operations…from all of your daily activities to your big dream. As you go along, the thing with the thing doesn’t really go according to plan. It takes you more time, more money to get the results you hoped for. It takes away from your freedom, your family time…and sometimes can just suck the life out of you.
Your bucket is leaking!
But where is the leak coming from exactly?
Let’s look at each power to understand how they manifest themselves and how they can ‘leak’.
- Power in your Storytelling:
People have been attracted to stories for thousands of years as stories help us relate to other people. It’s no surprise that storytelling holds the first of the Top 3 Powers of Business, as it touches all your stakeholders.
- Brand Promise: People aren’t interested in buying your products or services. They are interested in the benefits that come from buying them. How well you share your commitment to your audience on how you will consistently deliver your unique value has a direct impact on your sales.
If you spend your time “convincing” your customers, your brand promise is weak and leaking.
- Customer Experience: A great story leads to action and is shared repeatedly by your customers through recommendations and referrals. Your customers have the power to control your story and, based on their experience, they may adversely affect your traction in the marketplace.
If you get consistent bad reviews, no or few repeat customers, your customer experience doesn’t match your brand promise and leaks.
Remember what happened last year with Chipotle’s E. coli outbreak scare? The incident caused customers to question the core values associated with the brand. Despite all reassurances, the brand no longer controlled their narrative “Food with integrity” and their sales and shares dropped dramatically.
- Culture: Creating a catchy slogan to appeal to customers is not enough since its main audience is internal. Your Brand Promise drives all of the company’s actions and investments in people, processes, products, technology and delivery channels.
If you have high turnover or have difficulty recruiting, your culture is weak and leaks.
Borders’ story is a perfect example. Global book retailers, Borders was founded by two brothers in early 1970’s. For twenty years, they were able to dominate their market because they had created a successful culture based around books: employees were proud of their knowledge and of their assigned section; customers felt like in a library, a refuge. In 1992, they were acquired by Kmart who hoped that Borders’ success will transpose to their failing mall-based book chain Waldenbrooks. That didn’t work out! Many of the Borders senior management team left the company. Borders people were book people, not peddlers of discounted clothes, jewelry and toys. Kmart spun them off via IPO three years later.
- Power in your Business Model:
Every business owner starts a business for a variety of reasons. Whatever the motivation is, it all comes down to creating value, whether it’s business value or personal value. Your business model is the way in which your company births value for all stakeholders, generates revenues and retains profit.
- Operation: The structure and systems of your business define how resources are organized and operated, including roles, responsibilities and accountability relationships, providing a clear and consistent blueprint for how business is done daily.
If you have to redo work, if projects don’t match cost and timeline, if your employees are not the CEO of their position, your operation is weak and is leaking.
- Finances: Irrespective of the size of your organization, finances are regarded as the nerve center of the business (money being the blood). Finances focus on being proactive in planning ahead and managing your cash-flow i.e. the lifeblood of your business.
If your profit margin is low or not improving, if your cash-flow is scarce or impedes your growth, your financial management is weak and leaks.
It is safe to say that we are all familiar with Wikipedia, the online crowd-sourced encyclopedia. But do you remember what was before Wikipedia? Encarta. Microsoft had launch Encarta in the late 90’s. Microsoft was publishing the content themselves, thus having very low margin and an output directly proportionate to the input. When Wikipedia came into the market in 2001 with content created and maintained by users, constantly improving its quality, it only took them two years to overtake Encarta.
- Innovation Capacity: It is difficult to overstate the exponential speed of change in business. Companies are born and die faster every day. To remain relevant beyond the current ways of doing things, can you adapt and proactively act with greater agility, speed and creativity?
If you have a concentration of customers, if you are losing market share, if you haven’t penetrated new markets, if you don’t have new ways of delivering your value in the pipeline, your innovation capacity is weak and leaking.
Blockbusters is a great example here. Blockbuster had 48,000 employees and over $5.5 BN in revenue. Today, it’s Block… who? They failed to keep an eye on the industry trend and upcoming technology: internet and downloading capability.
- Power in your decision-making:
Business leaders are faced with dozens of decisions every day that may impact the future of their organizations. Decision-making is a constant and indispensable component of running a business. However, entrepreneurs are often entangled and entrenched in their ways, in their products and services that they lose their critical thinking and fail to ask the right questions. Rooting out bias from your decision-making process will get you ahead of the game, stress-free.
A very easy trick to see if your decision-making is flawed is paying attention, when making a decision, you constantly start your sentence with “I think”, your decision-making definitely leaks.
Let’s go back to Blackberry. That’s the perfect example on how their hubris prevented them to look beyond their bias. They had predicted all of the iPhone failures: it will crash the network; the battery won’t last. They were right but totally failed to understand consumer behaviors change.
- Goals: Goals articulate a company’s mission statement, bringing its vision to fruition. Their inherent values determine how a business is steered in the right direction. Unfortunately, figuring out exactly what the right direction is and the road map to get there, is not a no-brainer.
If you don’t have written goals, if you don’t have a written plan, you have a huge hole in your bucket! If you don’t have a direction, why are you even getting up in the morning?
- Execution: How do you measure the ability of both the management team and employees to perform? It includes capabilities, competencies, attitudes, beliefs and motivation. More than just the skills needed to support an organization’s growth and next step, execution reveals the unwritten rules that define how work is really done.
If you spend your time micromanaging, if you don’t have a written execution plan with objectives, responsibilities and timeline, your execution is weak and leaking.
- Reporting: Metrics are important because they offer feedback. However, more critical than just having metrics is implementing the right metrics that drive success in the right direction, otherwise a business is just working faster in the wrong direction.
At a minimum if you don’t have, read and understand your financial statements, your reporting leaks.
Knowledge is power! As a business owner, that’s true now more than ever. Don’t lose employees, customers, sales, or revenues trying to patch the gaps in your business. Get to know the ins and outs of your business powers to positively clear hurdles and seize opportunities. If you are a DIY entrepreneur, you don’t have to wear all the hats all the time. Check out our Marketplace.
I will leave you with this quote from Sun Tzu:
“If you know the enemy and know yourself you need not fear the results of a hundred battles.”
Only 1 in 9 companies succeed in building a durable business. Are you the norm?
Carine Dieudé is a Partner & Director of Strategy, and Entrepreneurship Aficionado, at Altima Business Solutions: Capital Acquisition, Critical Path, Outsourced CFO, Strategic Selling and Advisory Board, for startup, small and medium-sized businesses.