Category Archives: Innovation

• The secret to growth in a recession: Motorboat vs. Sailboat

  Saturday, June 13th, 2009 by Wes Ball

  As I have watched a broad range of businesses react to this slow economy, something hit me about the differences between those who are thriving right now and those who are either dying or barely surviving.  The thrivers are all “sailors.”  The fatalities (even if they are only dying slowly) are motorboaters.

  Here’s what I mean:

  Motorboaters need to have all the fuel on board necessary to reach their destination before they start off.
  Sailors only have to have the tools and knowledge to take advantage of what they find along the way and stay out of serious trouble.

  • Motorboater businesses worry about moving forward without a clear view of how they are going to get there and confidence that they have enough “fuel” to make it without problem.
  • Sailor businesses move forward with the confidence that they can navigate to the resources they need, as long as they are creating sufficient demand which “floats” their vessel.

  Motorboaters expect to take a straight line path to their destination.
  Sailors expect to take a constantly changing course to reach their destination.

  • Motorboater businesses believe that they should somehow get to their destination smoothly and predictably.
  • Sailors know better and count on using the surprises along the way to help them.

  A motorboater expects to get to his destination as quickly as possible, with the fewest detours, and is upset if he misses the cocktail hour at the other end.
  A sailor enjoys the trip and doesn’t need the cocktail hour to have enjoyed the journey, because the joy was in the process of getting there.

  • Motorboater businesses hold on to an entitlement attitude.
  • Sailors enjoy the ups and downs and the detours along the way without the need for further gratification.  Look at the offices in sailor companies: they are trim, minimal, and functional.

  Motorboaters get extremely worried and begin to panic when their boat tips and water is rushing along one of the the gunwale.
  A sailor knows he has the opportunity to go faster and gain more ground when his boat tips and water is rushing along one of the gunwale.

  • Motorboater businesses panic easily and start “bailing” persons necessary to their future success as soon as they see difficulties ahead.
  • Sailor businesses make sure everyone knows their job and helps them work together to gain success.

  When a motorboater believes his fuel to reach his destination is below the minimum required, he starts to call for help, slows things down, and wallows in the sea.
  When a sailor starts to lose the wind he needs, he moves to where better wind is or simply waits patiently for the wind to come back, as it always does.

  • Motorboater businesses are victims of the economy.
  • Sailor businesses are opportunists.

  A motorboat must maintain power to sustain itself in a heavy storm, otherwise it wallows and is soon capsized.
  A sailboat can maintain itself in a storm without any sails and choose to either run before the storm under “bare poles” or turn bow into the wind and ride it out using a “sea anchor” to make it go slightly slower than the oncoming seas.

  • Motorboater businesses require too much investment to sustain themselves during economic downturns.
  • Sailor businesses can keep moving or just survive with far less investment.

  When the seas get a bit rough and the boat begins to rock, a motorboater will most often either run for port or just hold position, get seasick, and wait until things get better.
  When the seas get a bit rough and the boat begins to rock, sailors know they can make even better speed; they just shorten sail a bit.

  • Motorboater businesses require far more exaggerated responses to difficulties in order to survive.
  • Sailor businesses can reduce their response and still move faster.

  Most large businesses act like “motorboaters.”  That’s why they have to cut people and budgets as soon as they see potential trouble ahead.  They head for port and ride out the difficulties.  They are victims of the economy, not drivers of it.

  The most successful entrepreneurs are “sailors.”  They know how to spot new wind, how to take advantage of changing tides and currents, and they drie their businesses based upon what they come across.  They are the drivers of a new economy, because they are the ones out front discovering what’s ahead.

  Sadly, far too many small businesses try to emulate large “motorboater” organizations.  During tough economic times, they make the same mistakes, but they don’t have the resources to survive as long while doing the wrong things.

  The secret is to make your organization more of a “sailor” organization.  Watch for the wind.  Move to where it is.  Don’t panic when things look tough, but recognize the opportunity to accelerate while others founder or run for port.

  Wes Ball is the author of The Alpha Factor.  He has sailed for more than 30 years in both cruising and racing boats on both coasts and in the great lakes.  He is also a business owner, executive coach, and business turnaround consultant.  He has created growth for businesses in three recessions, even while their competitors are foundering.
  

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• Top nine mistakes owners of small to medium sized businesses make during an economic downturn

  Wednesday, May 6th, 2009 by Wes Ball

  I see many articles being written about how to survive this economy.  Few, however, point to how to create growth.  Well, here are nine mistakes that, if avoided, will force you to grow, while your competitors continue languishing and complaining.

  Mistake #1:  Believing that price discounting will overcome the problem

  Discounting only makes things worse.  Every time you discount your product, you prove that it really wasn’t worth what you originally said it was worth.  It takes a lot longer and requires a lot more investment to raise your prices than it does to lower them.  So it is worth finding ways to sell why you are worth more rather than taking what looks like the easy way out and cutting prices to try to attract customers.

  Mistake #2:  Following big companies

  I continually wonder why small to medium-sized companies are so infatuated with large companies.  Perhaps the fact that I have worked as an employee in two of the largest and have consulted with more than 50 of the Fortune 500 on creating growth helps me keep a more rational view.

  The fact is that larger companies are not as profitable, not as flexible, not as nice to work for, and not as capable of creating dramatic growth as smaller companies are.  So why do so many smaller companies try to emulate what big companies do?

  During tough times most big companies hide out.  They cut costs, often eliminating the very things they need to create future growth.  They make their employees miserable and demoralized.  They make suppliers dislike them.  And they generally behave like angry pouting children.

  Don’t follow that.  Use your strengths to be aggressive and visible, while the big guys are hiding.  Invest wisely in the things that will make you stronger and more attractive when things turn around.  (These things will also make you more attractive now.)  Make employees glad they work for you.  Make suppliers so happy to work with you that they will turn down calls from larger companies to help you instead.  And act like an Alpha – confident, calm, and controlled no matter what the marketplace seems to be doing.

  Companies that follow this model invariably take share from their larger competitors.

  Mistake #3:  Following competitors

  Leading is the key to long-term success and greater profitability.  Every time you follow what a competitor does, you make that competitor look better than you.  You should be looking for something different that you can do that makes you look smarter and better.

  Finding that “something different” requires an understanding of what customers really want to buy, not just what they have been forced to buy.  You need to discover what will make people feel better about themselves (smarter, more knowledgeable, more appreciated, more powerful, etc.) and what will make them believe that other people think better of them (envied, more attractive, smarter than they, etc.).

  Mistake #4:  Believing that leadership during tough times comes from the top of the company

  Contrary to popular belief, success does not come from the top.  Great leadership at the top may make it easier for a company to thrive and grow, but long-term, self-sustaining success comes from much further down the corporate ladder.

  The most successful companies of any size know that it is much easier to be successful and to create growth when every employee becomes a leader of positive innovation and growth.  The best thing a manager can do is to engender a “leadership” and “innovation” attitude among all employees.  They should believe that you want new ideas to lead the company into a leadership position and they should be rewarded for helping that be accomplished.

  While other companies are trying to get more out of terrified, demoralized employees during tough times, you should be engendering a more positive attitude of teamwork to move forward.

  Mistake #5:  Believing that you can’t affect change until the new market defines itself

  Right now is the best time to invest in growth… before things get better.  Why?  Because while almost everyone else is holding back, the companies that confidently define what the market will become will be the leaders coming out.

  It happens in every recession.  But in this one, this may be more true than ever before.  Large companies may never be the same after the government has terrified both corporate boards and stock holders with their heavy-handed tactics of government control.  Many smaller companies have the opportunity to make huge, sustainable strides right now, while larger competitors are wondering how to even run their companies in the future.

  Don’t miss this opportunity.  Become the definer of the future and you can be its leader.

  Mistake #6:  Believing that product or technology innovation is the secret to success

  Products and technology are the things that you may sell, but they are not what people buy… except when there is no better alternative offered.  People want to feel better about themselves.  They also want other people to think better of them.  You can innovate in these areas for far less investment and greater return on investment than you can with any product or technology innovation.

  New products or technology drive entire new markets or business models.  These can occasionally create dramatic growth, if sufficient investment in made.  Innovation in helping people feel better about themselves and better about how others think of them is far less cost intensive and drives far greater ROI more consistently.

  Mistake #7:  Believing that you must improve on product quality or performance to demand a higher price

  Actually, most of the highest-priced products in the world are not superior in either quality or performance.  People prefer to buy ego-satisfaction above function. In fact, in my 15 years of research into how to create dramatic, self-sustaining success, I discovered that people will pay almost anything to feel better about themselves and to make other people think better of them… even when the product or service being offered is of lower quality or performance than competitive products.  At least as long as “minimum” functionality is provided.

  Harley-Davidson, Victoria’s Secret, Mercedes, Tiffany’s, and John Deere are just a few of the Alpha companies I studied that sell more for higher prices despite lower quality or performance than many competitors.

  You can sell more by innovating to provide greater ego-satisfaction than by innovating to create greater functionality.

  Mistake #8:  Believing that cost-side management alone can save you from trouble in a tough economy

  You can’t “save” your way to sustainable success or growth.  Cost-side management has created many spectacular failures, but revenue-side management has always been the key to real growth.

  If you wish to grow (especially with sustainable growth), you must focus upon the revenue-generation side.  And right now is a better opportunity for revenue-side growth than there was two years ago.  Customers still have needs, even if they may be looking for things to put off until later.  The winners will be those who address the most burning needs with believable promises of ego AND functional needs satisfaction.

  Mistake #9:  Believing that growth cannot occur during tough economic times

  While the press and other media focus upon the failures and the reasons for fear, there are a few companies in almost every product or service category that will create sustainable growth without discounting during a recession.  There is no better time for significant, sustainable changes to occur in markets and product categories than during an economic downturn.

  This is your chance, so take advantage of it.

  When the marketplace gets tough, all that means is that someone has a chance to define a new future for the category.  If it’s not you, then it’s someone else who you will end up having to follow once things get better.  If you’re happy with following behind someone else, picking up whatever is left over, then ignore everything I’ve said.  However, if you want to take control of your market or category and make others follow your lead, then avoid these nine mistakes and watch yourself grow.

  If you would like to understand how to overcome these nine mistakes and grow your business no matter what the economy is doing, you need to read my book, The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. You can get your copy for just $24.95 at www.ballgroup.com, or you can buy it through any online bookstore.

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• Alpha learning applied: Why smaller businesses have all the advantage in bad times

  Monday, February 2nd, 2009 by Wes Ball

  Big Ah-ha #1 in The Alpha Factor says, “You don’t have to be the biggest to dominate decisions in your category.”  This is even more true right now as big companies are pulling back.  As they undermine their future, smaller competitors have a unique opportunity to leapfrog upward.

  Throughout the Alpha Factor Project research, we discovered that many product categories are actually dominated by smaller competitors.  No, that’s not contradictory.  Dominance does not always correlate with dollar volume.  Dominance is how much influence a company or product has in controlling 1) buying decisions among customers and 2) business decisions among competitors.

  Much of the reason for this dominance driven by smaller companies is the fact that most larger companies have a hard time innovating in any meaningful way.  Even though many larger companies have product lines and distribution that are the envy of smaller competitors, their innovation is heavily skewed toward “function” – meaning product features, performance, and quality. 

  Smaller companies often combine some functional innovation with innovation in the areas of ego-satisfaction: the two critical Alpha Factors of self-satisfaction (how we feel about ourselves when we buy or use a product) and personal significance (how we believe others perceive us when we buy or use that product).  Where larger companies typically focus most heavily upon functional innovation, smaller competitors (perhaps out of desperation with their inability to compete on functional innovation alone) often do exactly what the market really wants by innovating with ego-satisfaction.  

  That’s how Ben & Jerry’s ice cream became the Alpha of the ice cream category in the 1990s.  It’s how Harley-Davidson took back the motorcycle industry in the mid-1980s, making their product the most desired product in the world according to some research done in the mid-1990s.  It’s how Apple has finally increased its influence in the personal computer category and how it has made its iPod and iPhone the products that people aspire to own.  

  There is so much focus upon large businesses in the business press that it is no wonder that few marketers recognize the real power of smaller businesses to create dominant influence, which translates into greater price leverage, more competitive control, and greater ability to weather tough times or bad mistakes.  There is all too little recognition, however, of the great weaknesses of these large companies, who have become more interested in what is going on inside of their walls than what is needed outside of them.

  The real weakness of larger companies – 1) their inability to innovate sustainably or meaningfully and 2) their internal focus upon perfecting process rather than fulfilling customer needs – is what creates the tremendous opportunity available to smaller competitors right now.  These weaknesses are only exacerbated and magnified, when times get tough.  

  For instance, here’s what I have been seeing more and more among larger companies:

   

  1. Isolation from the help they desperately need: It has become more and more difficult for an outside supplier to find their way in to help a larger company.  Many larger companies actually won’t give employee names or even connect a salesperson with the person whose responsibility it is to buy what they offer.  That means that employees in that company who are facion from the largest marketer in any given category.  The design aspects of new products from larger companies seem to lack any inspiration.  The differentiation being created by these innovations is all but non-existent.  Even their functionality is only minimally superior to existing products.  It’s as though they are just throwing things out there because they believe they have to without regard to the damage such weak introductions might do to the credibility of the company they have worked so hard to build.

  Smaller competitors have typically been the source of innovations that drive new and higher customer expectations (a critical strategy in creating Alpha dominance).  Small companies have always been the real lifeblood of American business.  In good times, larger competitors often play off of those inspired innovations and intimidate the smaller company into submission.  

  Since times have gotten a lot tougher, the process just got a lot easier for smaller innovators.  While the giants sleep, the real innovators have much more room to play unencumbered.  Customers are no less in need of having their functional and ego-satisfaction needs fulfilled.  But now the confusing clutter has been reduced to give smaller, more innovative innovators a real chance to drive dramatic growth.

  What’s your excuse for holding back?

   

  If you don’t already have your copy of The Alpha Factor, you are missing the secret to creating dramatic, sustainable growth even when the economy is as slow as it is today.  You will learn what took 15 years of research and testing with real companies to uncover:  the secrets that turn even small companies into dominant Alpha companies who generate more profit, greater sales, and more marketplace influence than they ever expected.  Your can get a copy today at www.ballgroup.com or www.thealphafactor.com.

   

   

   

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