Julia's blog

It was almost starting to feel like Groundhog Day. Last week, I met with three different business leaders on three consecutive days, all of whom were essentially saying the same thing. That they were going to add a new sideline to their business.

What they were saying was not, in itself, remarkable; businesses start new sidelines (products, services, etc) all the time. But what was interesting here was that the sidelines were so incredibly far removed from the talents of the business.

Without spilling secrets, I can tell you that one of the businesses, a successful online retailer of beauty products, was thinking about manufacturing home storage solutions. Another wanted to leverage the foot-in-the-door they had into big corporate HR departments by developing a product that sat as awkwardly with their current business as jewellery sales would to a butcher. And the third business was ready to launch into a random new area on the basis of one, yes one, customer request.

It's not all together surprising that in the midst of this inclement financial climate all new opportunities look like raincoats. But they really do need to pass the waterproof test first. This doesn't mean diving into ROI calculations and the like, but rather answering the simple question "does this opportunity play to our unique talent?"

Most often we miss the waterproof test because we have never really thought about what we, as a business, are talented at. So my suggestion this week is that you take some time with your management team to work out what your unique talent is, and then use this new found clarity to quickly weigh up some of your more outré opportunities.

Here is how:

• Start by asking what your business is good at and what your business really understands.
• Now consider what your world is. This part is important because next you will look at what you can be best in your world at. Your world can be very small if need be. This isn't about world domination but rather being the best at something in your sphere of influence.
• Now, using your responses to the two previous points, think about what you can be best in your world at. This is your unique talent. I am often asked whether it is important to be "the best at something". Well yes, I do think so, otherwise what is special about your business, how will you continue to grow profitably? But remember, it's only about being the best in your world.
• An important point to note I think is that whatever you are best at needn't be a sales differentiator; your unique talent is not necessarily directly about winning business. An online discount store I know has the best warehouse and picking system in their world. As a result of this their cost of sales is kept very low and they are able to price competitively. Interesting add-ons for this business would be those which utilise their warehouse and picking systems, after all, that is their talent.
• Lastly you should also reflect on what you cannot be the best in your world at. Maybe someone else has bagged that spot, maybe you just don't have that talent. Either way, you won't want to play there.

Overall, keep this uncomplicated. The idea is simply to have clarity about your unique talent. Once found it will serve not only as an early benchmark to evaluate opportunities against, but also as inspiration in your search for opportunities to leverage. And if you are anything like the three businesses I mentioned above, there are many more opportunities out there.

I was lucky enough to spend last Wednesday at Rosemount Australia Fashion Week. For those of you who aren’t familiar with the ins and outs of the fashion world, RAFW is essentially a glamorous trade show. The seats aren’t filled, as you may expect, with wealthy fashionable types, but rather with buyers from high- end retailers.

Fashion is business, and designers know that better than anyone. They are at the mercy of increasingly fickle customers and their reputation hinges on the delivery of great new product (“collections”) twice a year. When you then consider that the world’s most successful designers (Karl Lagerfeld, Marc Jacobs etc) are, in the most part, middle-aged men who create almost exclusively for youngish women it begs the question “how do they do it?”

The answer lies in the designers muse. Great designers always have a muse; someone who embodies an ideal client, someone to project their ideas onto, someone to remind them how their customers think and what they like, and someone that inspires them to create.

So what relevance does this have to non- fashion businesses?

In my experience most business owners absolutely understand that to grow their business they need to know their customers, and they usually interpret this as an exercise in gathering demographic data and statistical profiles. But this often fails to meet the needs of the consumer, because at the heart of success is creating products for people, not statistics.  

My suggestion to business owners then is that instead of assimilating the buying habits of an amorphous group of female 25-35 year olds, they take inspiration from the great fashion designers and find themselves a muse.

To find a muse, start by identifying your key customer; the person who buys enough of your product at a price that generates your best profit, then:

-    Find a real person who both embodies your key customer and inspires you; make this person your muse
-    Work on getting to know your muse. Not just the facets that relate directly to your product, but also the seemingly irrelevant stuff; their nuances, their habits, their ambitions, their kids, their clothes etc.
-    Bring your muse to life inside your business. Some businesses create a cartoon persona for their muse, others use the real person, irrespective of what you choose, the addition of visuals and stories will help everybody to understand.
-    Keep in regular contact with your muse, possibly for years. See how their aspirations change and understand how that impacts your business.  Much has been made in the press recently about how the beleaguered US motor industry, and Ford in particular, failed to do this.
-    Refresh your muse. If your muse moves away from fitting the profile of a key client and is no longer relevant, replace them.

Of course the concept of having a muse is not just limited to business-to-consumer industries; the business customer is a person too - you just have to identify exactly who in the business it is. Business muses will rarely be as elegant as designer muses, but if everything they say about fashion is true, they will probably easier to please.




 

A pharmacist was telling me about his moderately successful pharmacy business. He loved the business and wanted to grow it, but was disappointed that, despite his great passion and flair for pharmacy, his business success would depend more and more on his ability as a retailer.
Had he known, he said, back in his university days that his technical training would count less to his financial success than his artistic display of Easter eggs, he would have chosen a different career.
Pharmacists aren't alone in this dilemma. Optometrists too are finding it tough, with their optical skills playing second fiddle to their ability to shift Gucci frames.
And there are countless other examples of trained professionals frustrated that the economics of their industry are changing, and that the very thing that makes their business money is quite distinct from their technical speciality.
So the question is, when the industry changes - when money is to be made by retailing product rather than selling your specialist services - do you have to embrace the change or can you stick to that which you are good at?
I believe that you can stick to what you are good at, but that you need to make a conscious decision to do so, rather than simply decline to make the change.
Certainly there are plenty of examples of businesses that have set out to buck the trend and chosen a different path to economic success - Southwest Airlines must be the most often quoted example - but importantly, they planned to do it.
As a start, I suggest that businesses looking for profitable growth in a changing industry:
Take a detailed look at the strengths and weaknesses of the business.
List the products and services at which they can, or do, excel.
Decide what is or can be "uncommon" about their offering. So in an environment where pharmacies are glorified shops, the pharmacist who devotes his effort to personal medication consultation is "uncommon".
Identify the core customer who is most likely to buy their "uncommon" offering in sufficient quantity to make a profit (this step is so important; identifying a "profitable" customer).
Change the way they do business to make their "uncommon" offering the centre of their effort.
Communicate with their customers so the element that is "uncommon" is loud and clear. Think about simple messages which are as explicit as "we spend our time fixing your medication not our window displays".
So although the economics of his industry are changing, or indeed have changed, my pharmacist friend has options. He does not have to become any more of a retail expert than he already is.
Of course the irony is that if his "uncommon" offering is centred on personal service, it is highly likely that he will generate a customer base that trusts him, and will, irrespective of his retailing skills, buy the off-the-shelf products anyway.
 
 

I have just returned home from a visit to the Marysville region in Victoria, a trip undertaken with the Kochies Business Builders team  to help some of the businesses devastated by the February bushfires, get back on their feet.

The sentiment of the business owners we met was most definitley to rebuild their businesses, despite the fact that many of them had completely lost their premises, stock and, for those in the tourism trade, flow of customers.

In a quite different way another business that I know, which to be diplomatic, we will call Smiths, is also starting a rebuild. It had to. After many six years of making tidy profits Smiths booked a shock loss in January and February followed suit.

There are many reasons for Smiths woes but an obvious one is that the company lost its sense of purpose. It got sidetracked. Smiths did originally have a purpose, but following the company’s initial success it was inundated with with opportunities. Rather than selecting the ‘on-purpose’ opportunities it simply embraced them all, aimlessly taking on anything and everything. During that time it didn’t create any opportunities of its own creating them. When the GFC came along and the opportunities exited, Smiths was left wondering which way to turn.

Although we often think that the purpose of a business is to make money, it is really just a very important by-product. Business research is laden with evidence that companies which set out to achieve a higher purpose are profoundly more successful than those who simply set out to make money.

Smiths has started rebuilding itself by first finding its purpose. But you don’t need to wait for the tide to turn to do the same. I encourage all businesses who want to sustain profitable growth to do find their purpose. After all businesses with a strong sense of purpose find that they attract the very best people - people who want to do meaningful work - and that their people make the best decisions, because they can apply a simple test “is it on-purpose?”.

So how do you find your purpose? Simply by answering the question “why are we in the business that we are in?”.  Once you have found your purpose you need to articulate it in a clear, simple, slightly colloquial form. This is not a copywriting exercise, rather you should just use the words and phrases ordinarily used by your employees. You know you have a good purpose when everyone from the receptionist to the CEO understands it. Wal-Mart’s purpose ticks all the boxes “to give ordinary folks the chance to buy the same things as rich people”

I am often asked whether a company could, or even should, change their purpose. Cadbury did, it started as a tea, coffee and chocolate drink company with a purpose ‘to provide an alternative to alcohol’. Now, almost 200 years later, it’s purpose is ‘to create brands people love’. But for many businesses a purpose will last a lifetime.

Which brings me back to the businesses in the Marysville region. While each business clearly had its own specific purpose, for many it was, in some way, about providing an experience for tourists. Understandably few tourists are visiting the region now so the businesses are rather purpose-less. Please hurry back.