Category Archives: Strategy

Demographics are Dead – How it works now

Consumption patterns are no longer defined by ‘traditional’ demographic segments such as age, gender, location, income, and family status.

Social networks are for young people… nope, they are enthusiastically used by all demographics. Twitter’s fastest growing demographic between 2012 and 2013 was the 55-64 year age bracket, growing 79%. (Buffer, 2013)

Computer games are for teenage boys and men who still haven’t grown up… nope. In the UK, women now account for the majority of video game players, and there are more gamers aged over 44 than under 18. (Internet Advertising Bureau, 2014)

There is totally different music tastes between oldies and modern teens… wrong again. If you look at the list of the 1,000 favourite artists for 60-year-olds and the 1,000 favourite artists for 13-year-olds, there is a 35% overlap. (Music Machinery, 2014)

Yes, younger, affluent consumers are still (usually) the earliest adopters of new products and services. They are more open, more experimental and have fewer commitments. But now, compelling innovations are rapidly adopted by alldemographics.

This is a summary of a trendwatching article. Please check out the in-depth original here

Consumers can (and increasingly do) pick and choose what products and services they purchase and the brands they identify with, without any regard to demographic ‘conventions’.

Why are demographics dead?


1. Access
Consumers of all demographics and in all markets buy products and services from the same mega-brands: Apple, Facebook, Amazon (the technology sector is especially universal), McDonald’s, Nike and more.

 

 

2. Ability
There is a drive to personalise all products and experiences. Not just by demographic, but by each individual.

 

 

3. Permission
There has is a movement past social conventions, where traditional family structures and gender roles have collapsed. Gender stereotypes are dead.

 

 

4.Desire
Status symbols have changed. ‘Old’ status symbols (material goods like cars) need money to obtain, and were often found in those with higher spending power. However, ‘new’ status symbols (experiences, authenticity, connection, health, ethical and sustainable lifestyles…) are open to all, regardless of age, income or location.

 

 

What should you do?

Embrace the new normal

Embrace and celebrate new racial, social and cultural norms. For example, In February 2013, Korean Air held a beauty and personal grooming workshop for male staff. During the three-hour event, a team of image and makeup consultants instructed male ground staff on personal grooming, skincare and basic makeup techniques.

Re-examine your brand heritage – luxury automaker looks to video games

August 2014 saw Rolls-Royce make its debut in racing videogames. The game Forza Motorsport includes a copy of Rolls-Royce car. It replicates the original vehicle perfectly, down to the retractable hood ornament.

High end auctioneers embrace eBay

July 2014 saw high-end auction house Sotheby’s partner with eBay. The international auctioneer streams live auctions from its New York HQ, and bids can be placed on eBay real-time online.

Combine traditional demographics

Technology is bridging (if not totally eliminating) the generational gap. In May 2014 the CNA language school launched the Speaking Exchange where young Brazilian English students were paired with elderly Americans. Students and teachers could chat via webcam, on a range of subjects as suggested by the course. Each conversation was recorded and automatically stored on a private YouTube channel, allowing CNA’s teachers to evaluate students’ development.

Focus on the smaller remaining niches of interest rather than circumstance

Post work out low carb beer

Lean Machine Ale is a low-calorie, post-workout beer from Canada launched in November 2013. It’s gluten-free, made from natural ingredients and vitamin-enriched, the 5% ABV light ale is designed to aid muscle recovery, boost the immune system and rehydrate the body.

Russian bank offers new-mortgage customers a cat to loan

In August 2014 Sberbank (one of Russia’s largest banks) offered to loan a cat to new mortgage clients. In Russia, cats are considered a good luck charm when moving into a new home; home-owners were encouraged to take photos of the cat in its ‘new’ home and share via social media. The promotion was a publicity stunt, but one that targets a very specific demographic interest

Demographics are dead…

Successful products, services and brands will transcend their initial demographics almost instantaneously. Businesses who continue to navigate using demographic maps, with borders defined by age, gender, location, income will be ill-prepared for the speed, scale and direction of change.

Powerful Companies Build Powerful & Passionate Visions – Here’s How

A robust vision will give you hope and save you time, stress and money.

I suggest to you, “let’s go for a walk.” You decide it’s a great idea and stop what you’re doing. You get up and we head outside. Before we get started on the walk, take a moment. Close your eyes and actually imagine it.

Where are you? What are you looking at? Is it windy? A little cold? Or warm and refreshing? What sounds can you hear?

I then tell you, “go and buy the map, food, supplies and pack your clothes.” You look confused. Rightly so. You can’t do that yet. You don’t know WHY you need to buy it and WHAT it’s for. You first need to understanding where you are going.

Everyone can visualise going on a walk, however, we all visualise walking to different places, in different ways, in different conditions. For your team it’s impossible for them to walk together without the common goal. They walk off one way seeing something exciting and then you have to run after them and put them back on course. But, to be honest even you aren’t totally sure where you are going.

A powerful vision statement is the means to empower each staff member with direction. They can then work together to make a plan and the whole team can start running at a steady pace until they get there.

 

There Is A Better Way

Visions normally fit into one of two camps. They seem too hard to write or they are not meaningful enough to provide meaningful direction. The challenge is to clarify the vision and take the time to write it down, ensuring that it connects with readers in a meaningful way.

Jim Collins scientifically studied company success with an amazing group of researches. They found a great vision has three components:

  1. What you are passionate about?
  2. What you can be the best at?
  3. What is your drives your profit?

Your vision (or biggest company goal) is the intersection between your passion, your brand promise and what drives your profit

What Are You Fanatically Passionate About?

If you really don’t believe in what you’re doing then when the going get’s tough you’ll give up. I know providing for your family or keeping up with your friends can be pretty motivating, but we are looking for something deeper. A higher cause you and your team believe in.

Start by writing a list of what you would be proud of your company achieving. What you would love to read about yourselves in the newspaper. Then ask yourself why you would be proud of that?

Sony back in 1954 “The sheer joy of innovation and the application of technology for the benefit and pleasure of the general public” – this was before they even produced their first radio.

Why is knowing your passion so important? It allows you to draw on your strengths and higher purpose.

Why Are You The Best? – Your Brand Promise

We are in business and it’s a competitive market out there. What can your brand promise your customer that another competitor can’t? And equally important what can’t it promise?

  • McDonalds brand promises that they can deliver a clean, quick burger, at low prices that tastes pretty much the same anywhere in the world.
  • Apple’s brand promises to provide the latest in style and lifestyle design.
  • Google’s brand promises to find the information you are looking for quicker than anyone else.
    What sets you apart?

What Drives Your Profit?

Awesome, now you know your passion, and you can the best at something. Things are looking up. The last empowering question is “how can you drive profit in one KPI?”

I’m not talking about straight $ profit, but $ per something. Profit per customer, profit per visit, profit per risk level. If you could pick one and only one ratio-profit per x to systematically increase over time, what x would have the greatest and most sustainable impact on long term profit?

This is the measure you stress in all meetings and have your managers constantly focus on.

For example, in the book Good to Great Jim Collins explains the American convenience store Walgreens switched their focus from profit per store to profit per customer visit. Renting convenient locations is expensive, but by increasing profit per customer visit, Walgreens increased the number of stores it had to (nine stores every 2km) and simultaneously increased profitability.

 

Write The Big Hairy Audacious Goal

Your vision is your Big Hairy Audacious Goal. It’s your aspirational goal in one short statement. Here are some rules for writing powerful vision statements:

  1. Make it represent the overlap between your passion, brand promise, and profit measure
  2. Make it time bound. Will you actually get there? The time periods depends on the size of your company. For a start-up set it at 2 years. For a medium sized business- 5 years. For a large organisation – 20 years.
  3. It cannot include the word “And.” If you have, it means you have two directions. Pick one.
  4. Remove all vague words like: manage, appropriate, efficient, effective
  5. Ask yourself: “Could a dry cleaning business have the same vision?” In other words, is this really tailored to our business?
  6. Make sure it gets you a bit excited. You will want to tell this to your friends and family
  7. Are you willing to put significant effort to reach this vision?
  8. Can you really deliver it? It should stretch you, but still be possible?

Sony in 1954 – Vision (BHAG):

“Become the company most known for changing the worldwide image of Japanese products as being of poor quality”

Did they make their vision a reality? Will you make yours a reality?

Stop relying on talented people

Talented people are used to solve problems. It makes sense. They have the knowledge, resourcefulness and capability to get things done. This is a problem because it’s not a scalable solution. Often the real underlying problem doesn’t get dealt with. Before long, a similar problem arises again and another talented person is tasked with solving it. What’s needed is a system that identifies the issues and provides a consistent workable solution anyone can follow.

“Talent should serve the system and the system should empower the talent.”

The same goes for achieving results. If your talented staff are achieving top results, don’t be tricked into thinking that every new staff member will automatically perform to the same level.

 

 

“I’ve seen time and time again that when our business coaching clients implement systems and sound business processes, their team enjoys more success, retention increases, and the cost of replacing any one team member drops dramatically.”

 

5 Steps To Building Empowering Systems:

 

1.Harness the knowledge of your best staff

The problem with brilliant people is that it’s too easy to rely on the experience and knowledge stuck in their heads. To grow you need to be able to replicate their experience and knowledge. There are many core tasks in your business, like sales, that your team repeat over and over again. You need to capture your staff’s knowledge and start to systematise by designing repeatable processes.

 

2. Map the process

The best place to start is by designing process maps. A “process map” visually describes the flow of activities of a process helping you gain a clear understanding of how things really work. Check out the example below:

How To Play Pictionary

 

 

3.Improve on your best

Designing your staff’s processes is very exciting. Your goal is to find the easiest and most repeatable way to add the most value. When done properly you go beyond documenting and uncover insights and efficiencies. You can allow people to think creatively about new ways of working. But remember, creativity is thinking of new ideas, innovation is implementing new ideas. You need to make sure any great ideas are put into practice.

 

 

4.Integrate each process into the rest of the business

Just documenting processes won’t change your business. You can’t just write policy and process documentation. You won’t get real results. These documents are rarely followed and rarely kept up to date. You must put a front end on the process that people can interact with.

 

 

 

5.Keep the processes alive

You need to remember that your systems and processes are always a work in progress. They are never static. As your market grows and adapts you need to change with it. We are not looking at putting in the final system that will work for a million customers today. You need to start with the 100 customers. But, that system for the hundred customers won’t work for the million customers tomorrow.

 

Give staff the authority and autonomy to be great. Involve them in the initial process design and then turn them into process champions. Make them accountable to improve the process. Make sure the process controls are helping the team meet the business objectives.

 “My first boss in consulting understood this concept. Whenever I had an issue there were only two outcomes for him: 1. I didn’t follow the process so go back and follow it or 2. The process didn’t work so bring me a recommendation on how to fix it.”

 

Let’s Get Practical – how to give people a way to interact with the process:

1. Visual controls 

  • Checklists. If the process states you need to complete five tasks, then give your staff a checklist to mark off as they complete them.
  • Budgets and dashboards. Allow staff to track how well they are following the process.

2. Procedural control

  • Review process for hiring. E.g. All interviews are conducted by two staff members.
  • Project initiation. Require a business case review before starting.
  • Sales scripts. Reduce thinking time and optimise profit and the customer experience. Include guides on pricing boundaries & upselling.

3. Embedded controls

  • Templates – by completing the template you have followed each step of the process (often without realising it). For example, when we do our free business health check we have standard questions and response templates. This allows us to pool our years of experience very quickly.
  • Saving Power – Hotels have a “lights off” policy to save power. To make this process work they require you to have the key in the room for the electricity to work. When you leave the room it turns off the electricity.
  • Expense process – you can’t make a payment unless you assign a budget code. This ensures the expense data is kept up to date.
  • Customer follow up – When the system registers a sale it automatically creates future tasks for follow up and prepopulates the correct templates or automatically sends an email.

4. Measurement controls

  • This is a carrot and stick approach. Track process efficiency and the outputs in your monthly KPIS. If a staff member is meeting their targets then you don’t need to worry. If they don’t they are now more inspired to follow the process.

 

Aim to Implement all four controls at once

Notice that all of these process controls reduce reliance on you, make life easier for your staff, optimise your profit and provide your customers a more consistent and optimised experience.

Building a process orientated business is not a one off exercise. It is a culture change. If you ever want to scale your business, sell it or reduce your stress you need to reduce the reliance on you.

How you’re supposed to do strategy – simply explained

 

This pyramid shows how the components of your strategy build of each other. The times on the right indicate ideally how often these should last.

 

Do any of these statements characterise your business?

“Business is growing, but I seem to be spending more and more time managing staff and customers.”
“ There is more to do and more tension in the air. We are all working really hard day after day.”
“ I assume we are progressing, but if you asked me how I couldn’t really prove it.”
This is the cry of a business who doesn’t embrace a strategy management system.

The problem: Everyone thinks they are a “Strategy Expert”

I have worked as a business strategy consultant for years. One of the biggest hurdles I have is that everyone thinks they are a ‘strategy expert.’ In most cases they are woefully uninformed. Owning a business doesn’t automatically mean you understand strategy.

This guide explains just how simple it is make strategy work for you.

 

Mission – core purpose of the organisation

Many companies confuse their mission and vision statements; and nearly all companies haven’t articulated them clearly. Your businesses mission is your reason for being. Walt Disney’s mission isn’t to make movies (that’s a product). It is to “make people happy.” This is a mission that will never change in a hundred years.

 

Values – timeless guiding principles

I often walk into offices and see value statements written on the wall. Statements designed to motivate staff. Values like: ‘We respect each other’, ‘we deliver results’, and ‘we own our mistakes’. 90% of the time these are not the organisations values.

They could be values, but what the team does in practice is what matters, not what you write on the wall. Values are the guiding principles of your company that apply to every employee regardless of their rank or role. Like the mission statement this is a foundational element of your company and once you get this right it should never change. You hire staff based on their alignment to your values. You test business decisions and culture development against your values. Values should be taken very seriously. Values empower the success of the business. Without them culture doesn’t develop and your business outcomes are rarely met

 

Vision – a picture of the ideal future in words

Your vision is what your business will look like when you apply your mission. This is the tangible picture of the intangible mission statement. This needs to be very specific and represent the intersection between:

  • What you are passionate about
  • What your brand promised to be the best at
  • What drives profit

 

Your vision (or biggest company goal) is the intersection between your passion, your brand promise and what drives your profit

To develop a vision statement keep your values and mission in mind and then write what Jim Collins calls a ‘vivid’ description. It is not enough to just write a technical goal. It needs to be a goal that the team aspires and rallies around, something that makes sense to them. Imagine 3-5 years into the future and describe an emotive story of what your world will look like when you have achieved this vision.

 

Strategic Plan – your competitive “game plan” for success

A strategy is simply a set of objectives. You start by writing the high level objectives that will make your vision a reality. Then you identify how you will achieve the high level objective. You keep on defining more and more detail until you have a business plan. Your aim is to have enough detail so you can answer questions like:

  • What resources do we need?
  • How will we structure ourselves?
  • Where will we operate?

 

 

Strategy Map – graphical presentation of key objectives

Every employee needs to see where their role fits into the business strategy. The best way to do this is to represent your business plan in a one page strategy map.
The map is best organised in line with the balanced scorecard perspectives. This includes: financial health, customer health, process health and learning and growth. In other words, management must regularly and scientifically answer the following questions:

  • How well are we meeting the wants of the owner?
  • How well are we meeting the wants of the customer?
  • How well are our business processes working?
  • How well are we doing at improving our business systems and developing our staff?

An example of a balanced scorecard strategy map. Linking the four perspectives of your business onto a strategy on a page.

See a video explanation of the Balanced scorecard here.

Cascading Processes & Performance Measures – all departments/individuals that align with overall objectives

A good manager makes each role explicitly clear and holds staff accountable. To achieve this, processes and KPIs are cascaded throughout the organisation. Cascading is the art of aligning all of the individual’s roles up through the organisational hierarchy to achieve the business’s outcomes.
Here is an example of aligning processes up through the department to a high level process on the strategy map:

For each process you have performance measures that will cascade as well. For example:

  1. The marketing manager needs to increase total revenue by $250k
  2. Then the sales department has the target of increasing the percentage of repeat sales within the month
  3. Then the sales rep has the target of reaching ten existing customers on social media a week

“If you don’t measure, it’s like writing your goals down in Sand” – Dr Robert Kaplan

 

Strategic Reporting System – align the performance measures to the rest of the business

This is where the strategy comes off the page. On a monthly basis (or more often) you enforce all employees to report on their performance targets. Each team member is responsible for their performance targets. When a target isn’t met the person accountable asks why that happened and explore the root cause of the problem. They then identify how to make sure they are on target next month by identifying and planning specific corrective actions.

 

 

Now you know the basics of how real strategy works
These 7 components of strategy can sound complicated. But, this is the minimum level of structure a business needs to grow and prosper. If you have specific questions or want to see a practical example, please ask a question below or get in touch.