The best customers are not just ones who buy your products and services, or may spend much more for a purchase than the average purchase value. The best customers are loyal, committed and advocate for a company’s brand, products and/or services without the company asking or incenting them to. I call these special types of customers “customer advocates.” Customer advocates are usually people that are thrilled with a company’s products, services and brand, and are willing to refer them to many friends, associates and family members who they selflessly believe should also obtain the same benefits as they have received. A company that has earned the trust, loyalty and respect of customer advocates has earned something more precious than short term profits and growth. Customer advocates can be the key to a company’s future success if they can continue to be thrilled and their loyalty is retained. First, customer advocates need to be developed. The best way to develop customer advocates is to; 1) provide them with extreme value well beyond expectations, 2) always offer superior products and services than the competition, and most important, 3) treat them like human beings and the “gold” they represent to the success of your business. Once a business has developed customer advocates, it is important to convert them into loyal customer advocates. To produce a significant group of loyal customer advocates a business needs to; 1) continuously improve and innovate so the customers’ wants, needs and aspirations are always more than satisfied, 2) communicate with your customers frequently to understand their changing needs, wants and aspirations, and, 3) enable customer advocates to communicate with each other with a feedback loop back to the business. A sizable group of customer advocates can be a low cost, efficient and very effective means to achieve challenging growth objectives and market leadership in the long run.
I speak with business executives daily from Fortune 100 companies to small businesses, and they often are concerned with workforce productivity and on time performance. In my experience, the larger the organization, the more concerning this is. Typically, there are two main reasons for organizational inefficiency and poor or mediocre performance. First, middle managers think they can motivate associates to follow their lead by managing associates to complete tasks they are assigned. This generally does not work. Second, there is usually a disconnect between the vision, mission and business objectives set forth by C-Suite executives, and the operational objectives of middle managers and associates. The keys to optimized productivity and on time performance are organizational engagement and optimized individual and team contribution. The best way to assure organizational engagement and team contribution is to; 1) expect middle managers to manage budgets, programs and operations that support high level strategic business objectives, mentor associates, not manage associates, (2 give associates clear descriptions of roles, responsibilities, expectations and how they are to collaborate with others in the business, 3) empower associates to make decisions within their scope of responsibility and have all the tools and resources required to get the job done, and 4) breakdown organizational silos and promote collaboration within and between teams and groups. Most businesses spend a lot of time, energy and cost to recruit, train and foster capable smart associates, and then are not enabling them to contribute the extent of their capabilities to help the business succeed in achieving their business objectives. By aligning the businesses high level strategic objectives with operational objectives and associate roles and responsibilities, and promoting and enabling cross organizational collaboration, operational productivity and on time performance can be optimized and be the key to achieving challenging strategic objectives.
Although we have not recovered fully from the pandemic of 2020, we can conclude that some businesses are winners and others are losers as a result of the pandemic and resulting economic downturn. The real winners are not just those who survived, or even prospered as a result of the pandemic, but those who ceased on the opportunities it presented, exploited those opportunities and gained market share, brand value and are turning their good fortune into extraordinary sustainable business growth. Companies like ZOOM came into their own as a result of the pandemic, not just because of the rapid rise in demand for online meeting services, but because they were ready to respond and had a business model that was preferred by more people entering the market than the market share leaders at the time like WebEx and Microsoft Teams. Now ZOOM dominates the market and has the opportunity to make their domination sustainable. Businesses should always see “hard times” as opportunities to achieve extraordinary growth, leap frog the competition and bolster their brand value instead of complaining, hoping to survive and waiting for others (politicians, government, large corporations) to solve the problems that caused the hard times. The keys to prospering during hard times are; being ready (financially and operationally), flexibility to change direction quickly, recognizing market opportunities, getting in front of the competition quickly, and leveraging the extra profits, brand value, new customer base and success into sustainable long term business growth. Opportunities like economic downturns and events like the pandemic of 2020 do not happen very often, so when they do, cease them, exploit them, convert them into sustainable business growth and enjoy the prosperity that they present.
Many businesses use acquisitions as a way to improve market share, enter new markets, acquire new technology, acquire operational capabilities, improve revenue growth or profitability, and in some cases, to eliminate competition. Whatever the reason or intended outcome, often acquisitions do not achieve short term, and some times long term objectives, because they are not assessed thoroughly, planned properly, or the transition of the acquired business into the acquiring business is handled poorly. The first key to a successful acquisition is to choose the right business to acquire, not just based on financial performance and net worth, but based on how well the acquisition can strengthen the acquiring business where it has weaknesses, how instrumental the acquisition is able to contribute to achieving short and long term business objectives, and what it will take to successfully integrate the acquisition into the acquiring business. The second key to a successful acquisition is to assess risk in the areas of regulatory compliance, liability, customer satisfaction and acceptance, financial stability and operational hazards to determine if there are any “red flags” that might impede achieving the objectives for the acquisition. Sometimes “red flags” are there at the time the acquisition is occurring, but don’t rear their ugly head until after it is complete. The third key to a successful acquisition is planning the transition prior to committing to a sale price and closing on the sale. By identifying significant risks and planning the transition ahead of time, the impact of the acquisition on the acquiring business can be assessed and factored into the sale price, conditions of sale and timeline for the expected return on investment to occur to meet expectations. If a reasonable sale can be negotiated, then the transition of the acquired business into the acquiring business will go much smoother and as intended leading to meeting all short and long term objectives, and attaining all the anticipated benefits from the acquisition.
The most successful businesses, large or small, do not attain extraordinary success alone, they leverage partnerships to achieve a level of power that is otherwise unachievable. However, not all partnerships result in achieving the objectives or level of success that was intended. Some businesses tend to form businesses relationships that are transactional or biased to one side, which can yield limited benefits and are more likely to fail. When business relationships or partnerships are formed based on a strategy to result in mutual equitable benefits, then the risk of failure is minimized and the probability of success can be maximized. The main goal of any successful partnership or business relationship is for all parties to win. Partnerships can be in many forms from partnering with suppliers, to partnering with businesses to cobrand complimentary products or services, to partnering with distributors or even competitors to gain access to new markets, or forming joint ventures to develop new products, services or technologies. Forming strategic partnerships can be an effective and rewarding method to drive extraordinary business growth versus seeking additional investment or debit, or investing in an acquisition or in expanded operations to scale growth. Furthermore, when mutual objectives are achieved and the partnership is no longer needed or fruitful, strategic partnerships can be structured to be dissolved with little pain or down side. When structured properly based on a sound strategy, strategic partnerships can result in creating untapped value and fuel extraordinary growth with minimal risk.
A business culture can have a profound and significant effect on a businesses’ ability to succeed in achieving business objectives and prospering as envisioned. Having the best and brightest, significant capital and assets, and great ideas alone do not ensure business success. However, a business culture that is intended to enable business success can be more instrumental in achieving challenging business objectives than any of those things. Some business leaders think that creating organizational competition through conflict and chaos is a business culture that results in significant achievement and growth. This type of culture ignores the power of collective thought, effort and unity that turns a small, nimble, lean organization into an over achievement unstoppable juggernaut. Traditional business culture that relies on a hierarchy in which associates are not paid to think or create, but to do as they are told by management, are not leveraging the full collective power of the organization’s knowledge, creativity and experience. This leads to business success inefficiency that can result in growth impedance, poor performance in the markets, stagnation and decline. Adopting a Lean business culture, on the other hand, can enable and drive business success turning a poor performing organization that often does not achieve important business objectives (strategic or tactical) into a business performance leader meeting or exceeding all business objectives, on time and within budget. The Lean business culture consists of the following elements; 1) unified, collaborative empowered organization, 2) focus on the customer, 3) innovation, 4) data and value driven, 5) low cost production and 6) aspiring to a leadership position. In a Lean business culture, these elements enable tremendous collective power to achieve “Best Status”. If your business struggles to achieve objectives year after year, a transformation to a Lean business culture might just be the answer to consistent business success.
Developing a new product that lives up to, or exceeds customers’ expectations, meets any applicable regulatory requirements, and is safe and effective to use needs to be tested, evaluated, verified and validated. New product design verification and validation efforts require a considerable investment in money and time that can cause a bottle neck in successfully commercializing a new product. Regulated products usually cannot be sold until product design verification and validation are successfully completed. If there are complications in the design verification or validation process that delay a new product launch, significant sales revenue losses compared to expectations can be realized. Using the LEAN V&V method can minimize the time and cost required to successfully commercialize a new product alleviating likely bottlenecks. The Lean V&V methodology starts with having a thorough set of product design requirements reflecting VOC’s (Voice of The Customer) and VOB’s (Voice of the Business) to inform the product design. Defining the V&V requirements by determining what is needed to verify and validate each of the product design requirements while the product is still being designed is the first step in the LEAN V&V process. Often product developers conduct a series of standardized tests that may or may not verify or validate if the new product meets the product design requirements. Relying on standardized tests can result in wasted time and money testing the product for characteristics that are not required while not verifying or validating characteristics that are required, resulting in the risk of quality issues, field failures and potential regulatory compliance issues once the product is commercialized. The LEAN V&V method focuses efforts on the minimum effort needed to effectively prove that each product design requirement is satisfied providing a high confidence that there will be no post product launch quality issues, field failures or regulatory compliance issues. Additionally, using the LEAN V&V method assures that there are no wasteful verification or validation activities. This can reduce the V&V cost by as much as 50%, and shave several months off of the time to launch the commercialized product. If you want to beat the competition to the market with a new product or technology, assure the product will meet or exceed customer expectations and any regulatory requirements, and alleviate the testing bottle neck, use the LEAN V&V method.
Most businesses, regardless of size, are reinvesting less than 5% of their profits in business improvement, innovation development and/or future growth. The least risky, most effective and efficient method for fueling extraordinary business growth is not through raising equity capital, borrowing money or selling off profitable pieces of your company. It is reinvesting a substantial portion (30% to 50%) of your business’s profits into business improvement, product development, brand development, innovation and/or market expansion. However, reinvesting profits for the sake of reinvestment will not necessarily fuel growth unless it is done strategically within the means that the business has at its disposal. Fueling extraordinary growth has to be driven by a long term vision, a mission and challenging business objectives that are supported by the entire organization’s harmonized efforts. Business strategies can serve as a road map of how to get from the current business state to realizing a future state that reflects the business leader’s vision. The amount of reinvestment should be based on available funds from former, current and future projected profits and what is needed to support growth strategies. If all the funding that is needed to support achieving the future vision are not available through profits earned, then a lean strategic approach can be used to build available funding over time through incremental growth initiatives. By approaching reinvestment in business growth this way, you may sacrifice a small amount of shareholder value in the short term, but make up for it and then some with extraordinary business growth and growth in shareholder value in the long run.
Henry Ford famously said “If I asked people what they wanted, they would have said a faster horse.” True innovators need to understand the Voice of the Customer (VOC) to know how to develop a product or service that will not just satisfy them, but will thrill them. Collecting VOC’s is not as simple as asking customers or potential customers, “what do you want?” The innovator needs to have a clear vision for their technology and how it will thrill customers before they engage with customers or prospects to collect VOC data. The innovator also needs to be able to articulate elements of the vision to customers or prospects, without giving away all their secretes. They need to test their reaction to the vision, in order to effectively determine meaningful VOC’s that can be used to determine specific product or service design requirements. Collecting VOC data is really about understanding customer’s and prospect’s aspirations and what they are trying to accomplish. The invention of the automobile was not just about transporting people from “Point A” to “Point B” faster or cheaper. It was about transforming a way of life making so many things possible that were not possible before it’s invention. When collecting VOC data for an innovative product or service concept, it is important to understand what possibilities the customer aspires to that are currently unavailable and will transform their lives to be much better. After analyzing the VOC data, the thrill factors should become evident and meaningful VOC’s can be devised to inform a successful design. Additionally, this needs to be done with the future in mind, not the present. The VOC’s must reflect the time when the product or service are introduced, and well beyond, to lead the competition for years to come.
In today’s hyper competitive global business environment, which seems to always be in a state of flux, is it possible to build your business to be invincible? Perhaps not totally invincible, but it is possible to gain and sustain leadership in your business sector with the winning combination; offering extreme value to your customers and achieving low cost production capability. This combination establishes a solid business foundation that is very difficult for competitors to penetrate, and at the same time, enables business sustainability that minimizes the impact of external forces such as global events like the the Covid-19 pandemic of 2020. Furthermore, when a business has a rigorous and effective culture of continuous improvement, once business sector leadership is achieved, it is difficult to lose it. Extreme value is the ability to have a competitive price (perhaps the lowest price) and provide significantly more value to your customers while maintaining the highest profit margin. Offering extreme value results in not just satisfied customers, but thrilled customers that will be loyal and help promote your brand, products and services. Low cost production capability is achieved through optimization of business operations ensuring that your cost for producing, distributing and offering your product and/or services is the lowest in your business sector maximizing profit margins while providing the highest level of quality. Achieving low cost production capability ensures that you have more flexibility to lower your price if you are engaged in a price war with competitors, and still be able to maintain higher profit margins forcing competitors to sell products and services at a loss when you are still profitable. Low cost production also enables significant investment into the development and commercialization of new leading edge technologies. When you combine the ability to offer extreme value and achieving low cost production it is better than a one-two combination punch from a champion prize fighter.