… and does it matter if you don’t stand out?
What makes stand-out businesses stand out?
For me what makes a stand-out business is that it delights me in some way that is actually useful in my dealings with that business which in turn makes me happy to not only keep using the business but also to recommend it to others. So, in judging whether you have a stand-out business start by asking yourself “do customers like using our business, keep coming back for more and willingly recommend us to others?” This can be done informally but will probably provide more useful information if you do it formally through a well-constructed** customer satisfaction survey.
**open to input of true feedback, not worded to elicit only the answers you want.
Other perspectives can be achieved through the eyes of employees and suppliers and along with customers these are the three major commercial stakeholders in any business. The other main stakeholder is the shareholders who will typically want to see the value of their holding grow over time and many will want to feel their investment is in safe hands. In most cases getting the position with the customers, employees and suppliers right will automatically give the shareholders what they want.
Surveys can be used with employees and suppliers to establish how you are doing but another indicator will come from looking at churn; how easily you can recruit and retain people and how readily suppliers work with you.
Making sure customers, employees and suppliers are happy to be a part of the wider business should present itself as a virtuous circle; unfortunately it is sometimes the case that what is good for one maybe bad for the other. For example; if you have customers who are only interested in the lowest price then this puts pressure on what you can pay your suppliers and also the salaries and employment benefits you can afford. In this case the circle is somewhat out of balance as the needs of one party outweigh the needs of the others so other mechanisms may be required. With staff this could be, for example, allowing flexible working and with suppliers guaranteeing them a defined amount of regular business.
For me one of the things that makes a business stand out is when I get excellent service from people that go the extra mile to make my life easier and point out things that could be useful to me that I had not thought to ask about. These staff are not even being paid a king’s ransom for what they do, but they are creating a competitive advantage for their employers.
In summary; what makes a business outstanding is creating competitive advantage through either being different, or being better at being the same and both are comparative positions against the norms of the market and the behaviour of your competitors.
Does it matter if you don’t stand out?
There was a time when there were probably more “me too” businesses than those that stood out in some way but life is much more challenging these days so I think it does matter. If there aren’t some aspects of your business that make it memorable you will struggle to grow and relative to the growth in the economy you may even shrink.
A familiar line from consultants advising companies on growth is “to think outside the box”. It is generally thought that this term was coined by one of the big name consultancies and it stemmed from one of those puzzles in common use in the 1970s and 1980s where the participants were asked to join a matrix of nine dots, organised in a square, without lifting the pencil from the paper. To achieve this you have to take some of the lines outside the box and hence the saying.
I find a more useful application of the idea of “thinking outside” the box can be found in the concept known as the Ansoff Matrix.
As you can see from the diagram, the matrix positions existing (known) and new (future) markets against known and future products.
The majority (some 88%) of business won by established companies falls into the known product sold to known market category. To stand out among their competitors here, they have to add real value to their offering, e.g. through product quality, responsive customer service, being smarter in what they do.
Could it be that those who truly are stand-out businesses, actively seek out and bring about change by looking for growth and expansion outside the box?
Returning to an earlier argument; if you are struggling to make a decent margin, putting pressure on employee rewards, in your traditional market then looking for a more lucrative market, outside the box, might make a lot of sense.
I have observed a number of examples where food suppliers have eventually found it impossible to run a sensible balanced business while supplying large supermarkets so they have re-invented themselves as suppliers to small independent shops and/or grow an on-line business.
Other than the known/known box there are three other boxes and moving to each carries different levels of risk. New product to known market carries the lowest risk followed by known product to new market and finally new product to new market. If you are going to consider a proactive process of moving your business to a different quadrant risk assessment is important; knowing the risks helps you plan to handle them.
Considering new products and new markets will certainly keep your suppliers on their toes while also providing employees with new and interesting challenges. So, it could be argued that an Ansoff Matrix approach to business planning could help to maintain the virtuous circle of customer, employee and supplier satisfaction while also delivering what the shareholders need from the business.
One other thing. Today’s new box is tomorrow’s known/known box so rather than a one-off exercise you should consider an Ansoff review of the business as a part of the strategic planning process perhaps formally re-visiting the topic according to the volatility of your markets. This should be backed up by informal monitoring through measures such as revenue, margin and market share growth. This evolutionary approach to business planning is sometimes labelled as agile; an approach to software developed that first appeared in the 1990s. I think in our rapidly changing world being agile makes a lot of sense and if the Ansoff approach helps such thinking all to the good.
It is common that at the beginning of many of the sales performance transformation assignments that we undertake for our customers the start point is a disciplined review of the proposition the customer takes to market and the markets they target and where their competitive advantage resides. Using tools such as the Ansoff helps us to facilitate the creative process with a cross section of people from sales, marketing, production and the executive team. The outcome may be a recommendation to remain with the current proposition being sold to the current market but often it is other quadrants in the Ansoff Matrix that show where the future lies.
A few thoughts
- Be aware of how your current business is operating. Consider customers, employees and suppliers not just shareholders. Use formal survey techniques as well as informal measures of satisfaction
- When change is presented explore and investigate it and if it can help your business then welcome and embrace it.
- Make change happen. Use techniques such as the Ansoff Matrix to structure your business planning processes and to trigger creative thinking.
- Involve employees and suppliers in your planning process “many hands make light work” but you also need their hearts, minds and brains.
- Foster a change culture; create an environment to allow experimentation where mistakes can be made without fear of personal consequences.
- Equip your people with the skills they need to operate with a continual improvement mind-set. You also need to ensure leaders and managers have the skills and time to mentor and coach to support colleagues.
- Think outside the box of your product and market; can you gain inspiration from other industries which will allow you to create that all important competitive advantage?
Remember; if you keep doing what you have always done you will typically get what you always got. Your only real option is to engender a regime and process of exploration and forward motion focused on continual improvement.