The key purpose of this E-Book “How to Build a Business that Works Without You” is to give you the rudiments of successful business development and ultimately the confidence and certainty of what it takes to be excellent in business.
I hope you read on and that what you find here will benefit you and your business. Do feel free to contact me, Andrew Pearson, on 01280 844966 or at andrew@coaching-business.co.uk with your comments.
2. 2
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How to Build a
Business that Works
Without You!
By
Andrew Pearson
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Give me a lever long enough and a place to stand and I will move the entire earth1
Archimedes
(c287 – c212)
1
Leverage: Archimedes’ principle of Leverage may be applied to all things in business – it is simply concerned
with seeking ways to achieve MORE with less. Leverage together with its sister concept of scale have
influenced the sense and direction of this E-Book!
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Table of Contents
Foreword 7
Introduction 8
Preface 9
The Reason Why Most Business Owners Struggle 11
Putting Business Into Perspective 11
But You Can Still Build A Successful Business 12
Obstacles to Achieving Your Business Success 13
What is the Point of this Book? 13
Poor Business Design Results in You Doing All the Work 16
Frustration, Hard Work and Marginal Results 17
What Does it Take to Be a Strategist? 20
Manage the Business 20
Manage Managers 21
Manage Workers and Work 21
Do you have a strategy? 21
Do You Know What An Hour Of Your Time Is Worth? 22
The Value of Your Time 23
The Difference Between Productive and Wasted Time 26
Two of the Best Ways to Boost Your Productivity 30
Using Scale and Leverage Can Make Your
Business More Successful 31
Think of it Like This 32
Working More on the Business and Achieving More 32
What is Marketing? 33
Let’s Get Back to Business Strategy for a Moment! 35
Start With the Right Objectives 36
What is a Great Strategy? 36
What Superior Value Will You Offer Your Customers? 38
How to Do This Efficiently to Achieve Competitive Advantage 38
Isolate, Develop and Profit from Your Core Competencies 39
What is it that Your Business is Good at Doing? 39
Producing ‘Hearts and Minds’ Loyalty 40
Producing Commitment 40
Solving Problems 41
The bumper car business! 41
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Continuous Improvement (CI) 41
Benefits of CI 42
The Quick and Easy CI Process Works as Follows: 42
Concentrate on Process not Results 42
So What is Strategic Outsourcing 45
The Real Difference Between Outsourcing and Out-Tasking 46
Which Question Are You Asking Yourself When You Consider
Outsourcing? 46
How To Make Your Business And Your Outsourcing Relationships
10x More Profitable 47
The 3 Ways Work Should Be Carried Out In Your Business 49
You Are an Untrained Project Manager, Managing Projects! 48
How Work Should Be Done Inside Your Business 50
What is a Process? 51
How to Develop Processes in Your Business 52
How Systems Thinking Can Save You Time and Money 53
Systems are so Vitally Important because... 54
Metrics: The Language of Business (and Profit) 54
Time to Think and Plan to Do the Really Important Things in Business 55
A Valedictory Strategy 57
A Quick Recap of the Key Business Building Principles 59
Coaching for More Results in Your Business 60
For further support 61
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Foreword
Dear Andrew
I've just finished reading your e-book and found it an interesting insight into the problems
you have identified that impact entrepreneurial business performance and the way that you
suggest dealing with them.
I thought that the insights were right on the ball - the distinction between strategy and
opportunity, the importance of true customer insight, sticking to the things that you can do
best, having a cunning plan and differentiating your service and offer sufficiently from the
competition. Good stuff.
And when it comes to outsourcing I think that price is something that must be related to the
cost of the resource for defined quality delivery - for goods and services that are physical its
easy, when it is intellect, knowledge and experience you are buying it is more difficult. This is
always the case when justifying the cost of consultancy! Similarly, the old adage that success
is 99% perspiration and 1% inspiration, whilst it is a mite simplistic, is also directionally
sound and aligned with your insight on fortitude.
I was intrigued by the focus on cost of time and amused by the one man business
organisational chart. For me the issue of the cost of time is not that I should be worried
about my inefficiency, which may actually be associated with thought and planning, but I
would be concerned if my inefficiency impacted my ability to meet my business targets.
When that happens I would need to understand and consider the reasons for that.
But I wouldn't consider that to be necessarily unproductive if it led to a better plan. The need
for project skills is a key requirement as is the delineation of systems, processes and projects
-something that I do consider to be important to recognise.
I find the book a useful addition to the various "heavy" tomes available that chart ways
for management improvement, providing a manageable and accessible summary to some of
the techniques that are relevant to assist owner managers in small enterprises and also for
those who have the ambition and tenacity to start their own business with their "good idea".
If you want, you can quote me on this point.
I do thank you for the opportunity to have a early look at this innovation. I enjoyed the read
and I do hope that my feedback is taken in the positive way that it is intended. I wish you
luck with your first edition and subsequent ones. I think that you have identified a real gap in
the market for owner managers and the challenge of growing from small beginnings. Is that a
strategy or a plan? Only joking!
With best wishes, Paul.
Paul Hebblethwaite, (Former Technical and Procurement Director of Cadbury Schweppes
& Chair of Business Clusters West Midlands)
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Introduction
Take a look at this list and see where you are with each of elements.
• Carve out a unique strategic position for your business.
• Create a business design that runs and grows without you.
• Leave the world of opportunity-seeker world and enter the world of the strategist.
• Concentrate on your core competence and develop a range of capabilities to sustain
it.
• Realise that your time is all you have and that you need to know its current value, and
plan to achieve super-productivity.
• Build a business around scale and leverage.
• Concentrate on process not results.
• Operate with marketing strategies that cause your prospects and customers to
CLAMOUR for your products.
• Build your team around the key motivators and develop a network of relationships
with talented people whenever you need them.
• Systemise your business with project management methodologies and processes.
• Attempt to reduce every activity and relationship down to a core metric that makes it
easy for you to gauge performance.
• At the end of the day persistence counts; nothing in the world can take its place.
To have a successful business these days you need to be very good at each of these 12 key
elements listed above. Every one of these different business building tactics that you do not
excel at will impede your business’ progress and more than likely cause you to lose
significant amounts of money.
The key purpose of this E-Book “How to Build a Business that Works Without You”
is to give you the rudiments of successful business development and ultimately the
confidence and certainty of what it takes to be excellent in business.
I hope you read on and that what you find here will benefit you and your business. Do feel
free to contact me, Andrew Pearson, on 01280 844966 or at andrew@coaching-
business.couk with your comments.
9. 9
COACHING BUSINESS
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Preface
One of the foremost questions facing business owners and managers today is how they can
spend more time on their business and less time tackling the day to day issues.
For those of you that want answers to a very REAL problem this E-Book provides the
solution …
In my experience of working with a diverse range of business owners and managers – and
crafting successful businesses of my own - the thing that marks out and distinguishes a
successful business owner, or manager, is his or her attitude.
Quite naturally, most people when they start out in business want to achieve as much success
as they can. Similarly many established business owners seek parallel goals when looking to
take their businesses to the next level. For both groups; start up and established businesses,
the people that get on are those that focus their attention on their businesses,
and in particular the specific activities that will help them generate revenue
quickly and then continue to sustain more growth.
In contrast those that labour longest and struggle the hardest fail to adopt the principles and
skills necessary to help them move out of the more technical aspects of their work and on
into effectively directing and managing their businesses to where they w By the way this book
is just a snapshot of my three years of extensive research and development with many
business owners and managers. I hope you find it helpful and that if you have any comments
you’ll contact me direct on 07718 576221.
The information in this book has been applied to a number of business owners that were
keen to have me help them to
remake, remodel and redesign
their businesses through our
successful coaching programme.
I strongly suggest that you print
this E-Book, and read it as soon
as you can. There is a special
diagram on page 16 that you
could also print separately and
hang near your desk.
Once you grasp the concepts you are about to read in the pages that follow – your business
and business life will improve forever.
Most people believe that all you need to excel in
business is common sense together with the will to
succeed.
MOST PEOPLE ARE WRONG
It takes “UNCOMMON SENSE” because most people
are never trained in how to make a business work.
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I vividly remember one business owner, who had moved into retail, speaking to his friend
about adding value and how there seemed even more to do than ever! Interestingly when I
mentioned the possibility of offering a wider range of products, including cross sells, up-sells
and back-ends to increase revenue, he stopped in his tracks, saw the point and was ready to
talk further.
People seem so tied up in “doing the business” that they actually end up doing more for
relatively less. They fail to see that actually working on the business to consolidate it and
systematically making improvements as it grows will make their business run and grow with
amazing efficiency – so that they obtain more money and more pleasure.
If you see yourself here then please read on – this E-Book is for you.
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The Reason Why Most Business Owners Struggle
I have just returned from a recent business workshop. It was great seeing many familiar
faces, and having the opportunity to make new friends. But every time I go to an event like
this I am struck by how almost everybody in attendance approaches business development
or business start up the wrong way.
Lack of fundamental business building knowledge is really the primary cause for so many
people struggling and wasting time, it’s quite distressing. It’s the reason why the
overwhelming majority of people new to business will fail to achieve their goals, even if they
buy lots of self-help products, study them religiously and work extremely hard.
I’m going to address the issues I see, because I know from past experience that the views I
hold important on how successful businesses are built can really make a tremendous
difference in your business, as it has for many of my coaching clients.
This E-Book will communicate these issues, one by one, so that you will gain clarity about
your relationship with your business and how to grow it in a way that you’ve never known
before.
It will show you how some of my clients businesses have achieved revenue increases of up to
30%, and I’m going to show you some of the concepts that are responsible for this sort of
growth.
Putting Business into Perspective
But, before we dive into growth strategies, let’s step back and put business development into
perspective. Let’s take a look at
where your industry is today
and put it in perspective with
an archetypal business. It’s
important to see how the
typical firm fits into the larger
world of business. Looking at
how a typical business evolves
will give you some idea of
where the current state of
business development is, and
how it’s changing.
Understanding the current
state of such business is critical
to your long term success.
The Business Building System
An effective business building system is one that allows
smart but overwhelmed business owners to consolidate
profitability, eliminate wasted effort, and put the best
possible version of their business on auto pilot, so they
multiply their income, spend less time in the business
and more on it, while everything runs and grows with
huge efficiency.
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First of all, many sectors are heating up again. Only last month I was reminded of how
important the London based Olympics are to businesses in land based, food and drink, retail,
tourist sectors.
This means that more and more businesses are going to get a lot more serious about
horticulture, food and drink, leisure and tourism and for each there are opportunities to add
value.
All this reminds me of the day-to-day pressures facing business owners. Business is getting
more competitive. Markets are becoming more and more concentrated. You’ve just got to
look at the power of the big food manufacturers, retailers, hotel groups and leisure centres.
Now let’s imagine a large company coming into your niche. What will it do? It will do all the
things you do and more - and do them better and if you don’t have a business then they will
make things tougher for you – or at worst put you out of business.
The reason is that big business always “knocks up” and steals the thunder of the small
independent operators. And if you know anything about business or have witnessed the birth
or growth of any industry you have already seen this model play out time and time again.
When I talk about this, I tell people that if they haven’t built an actual business around what
they are currently doing – and doing well - they ought to strongly consider creating one
today, ASAP!
But You Can Still Build a Successful Business
The reason I mention all this is that when you think about it this could just as easily be the
current state of marketing and business development in most niches into the rural and land
based business.
Find a niche, design a product (or service), do some promotion and if it works continue to
develop it, if not, find another niche. Sounds familiar, doesn’t it?
More and more successful companies are coming into the market every day.
Practically every week, more and more people want to bring their products and services into
being, whether landscaper, B&B or food and drink producer.
There are some very successful producers that have already made the transition to the
“specialist” world that are continually looking for new niches at which they can point their
deep resources of talent. This means there are an awful lot of people out there looking to take
your business!
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But before I go any further, I want to share what a security guard in a supermarket once told
me. He said that the sensors on the clothing and the guards roaming around a store were not
really about catching shoplifters, they were to make the shop less appealing than other stores
to shoplift in. In other words, the goal is to have more security than the other shops around –
to force would-be shoplifters to go where it’s easiest to steal!
In a way this is an allegory for
business owners. The important
thing is to create the same effect in
the niche that you operate in. Your
intention should be to build a
business that works so well; one
where you have enough products it
makes competing with you
undesirable.
Why? Highly developed
competitors will come to
appreciate that you can take your
front end products and give them
away free, as your income won’t be
affected because your cross-sells,
up-sells and back-ends will give
you your revenue.
And the good news is that you still have time. You can still mark out your niche and build a
real business in it… Now let’s look at a few obstacles that currently stand in your way…
Obstacles to Achieving Your Business Success
Now that you know how markets tend to evolve, and that you should be focused on building
a real business, let’s take a look at the obstacles you might face in actually creating a real
business that has staying power and long life.
Just by pinpointing and eliminating these problems, you’ll be able to grow your business
faster (and easier) than you ever thought possible. These are the same
What is the Point of this Book?
I have for many years now I’ve been personally coaching some enterprising business owners
and managers. In many cases the fundamental problem most business owners and
managers experience is the same one – a lack of focus on long term business development.
A MATTER OF APPROACH
OPPORTUNISTIC
Most business owners
who struggle, are busy
with the day to day of
their business and take
an action based on what
is appealing at a given
moment in time.
In other words as an
appealing opportunity to
do something comes
along – they grab it!
STRATEGIC
Successful business
owners and managers
have an end in mind!
They have a vision,
develop different
options to achieve it,
and they select the one
that is the best.
They ask – continually
– when faced with
decision making ‘what
is the best thing I
should do to bring
about my vision?’
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Let me explain what I mean with a simple overview of the problem starting with some
symptoms...
• The Symptoms: A propensity to adopt new ideas to solve short term
problems. Buying anything like; advertising and new technology and services,
recruiting a PR agent to raise sales and cutting back on staff when things begin
to look a little difficult. These solutions all look like they will make money, but
in fact they produce few or no results.
• The Cause: Opportunistic thinking and
• The Real Business Problem: Lack of Strategy
The very first obstacle we need to look at is you and your thinking! The table opposite shows
what I believe are two different and diametrically opposed approaches to building a business.
The one is strategic or entrepreneurial in outlook and the other opportunistic.
An opportunity seeker is someone that is continually looking for the chance to make a big
killing at the opportune moment. Their only criteria is; “Can I make money from this?” So
today it might be E-commerce, tomorrow an event and then it’s something else, and
yesterday it was some other big concept already forgotten. They could be people for example
that might be tempted into advertising when their promotional budget is geared to some
other form of publicity.
In short opportunity seekers buy lots of products and services, but they use only a few of
them, and the ones they do use are put into touch when the next so-called “easy” or “best”
way to grow the business comes along. The question this sort of business owners asks is;
“What’s the easiest way for me to grow my business right now?”
An effective business owner, or true entrepreneur, on the other hand, is an
altogether completely different person. He or she will have a clear vision of
what he or she wants the business to become. Often this comes from a
‘flash of insight.’ Ultimately it means that they have a platform for real
business development.
Such people can analyse their own strengths, as well as their competitors’ strengths,
marketplace preferences and formulate different strategies for achieving their vision. And
then after reviewing the pros and cons of each strategic alternative they single out the one
strategy most certain to successfully achieve their vision.
A related point is this; following their ideal strategy, and not today’s ‘rocket
science’ that everyone is endorsing, is the way forward. Moreover, the
entrepreneur knows that his biggest opportunity lies inside the business; he knows that his
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basic skills and business competencies, when aligned to any opportunity are going to help
him achieve real success.
And here’s another point that any seasoned sales person will confirm. It’s about 100 times
easier to sell to an opportunity seeker than it is an entrepreneur. Why? Because the
opportunity seeker has no solid decision making criteria to buy with – if you can convince
him or her that they can get more customers and either save or make money with it, you’ve
made your sale.
An entrepreneur, on the other hand, has to assess what you are offering with the demands of
their current plans – will it make it easier for them to achieve their vision? Is this something
that fits into their current approach and if it does, is it superior to what they are currently
doing?
What’s the point of all this? Well, it’s this; the overwhelming majority of business owners are
nothing more than opportunity seekers! They have no strategy, they hop from one approach
to another, and while they may have some arbitrary revenue goal they have no vision of the
business they have to create in order to achieve it. And since they don’t have a clear vision
they cannot follow any sort of detailed plan to accomplish it.
So they end up buying anything and everything that comes with the promise of easy results
with the hope that this is ‘going to be it’ – this is their big chance to make it big. They
especially love (and fall victim to) promises of huge rewards with little to no effort.
Let’s say that you are by now either convinced that you need to be an entrepreneur and build
a business, or you already knew it. Now, let’s talk about what will stand in your way….
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Poor Business Design Results in You Doing all the
Work
The table below shows the typical business activities and processes used to transform
resources into outputs of products and services.
Even though different businesses vary in the nature of their specific inputs and output, all
business operations conform to this general framework. But this rather simplistic impression
of a business belies the true scope and diversity of activities that make up a business.
When you actually consider what has to be done in a business the business model begins to
take on a very different set of colours!
Now for the pièce de la résistance…
If you are ready to see what this business model really looks like, brace yourself and look
over the page.
Production
Customer
Project
Resource
Marketing
Strategy
Capacity
Strategic
Management
Operations
Management
Resource
Management
Is this your
business?
Priority
Design
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Now, isn’t that something?
Frustration, Hard Work and Marginal Results
If you’ve ever felt annoyed with your progress, or frustrated because you’re unable to work
on the business since you’re overwhelmed with the volume of work you need to get done, or
just plain tired – is there any wonder why?
And here’s the really exasperating thing, even though this model is the one that most
business owners are following, do you know what they spend an overwhelming amount of
time on? Searching for more activities, tactics, and campaigns s to squeeze in to the chart
above…it’s quite incredible, isn’t it?
Surely, if you aren’t able to do all the things you’ve got to do, or already want to do - why on
earth would anyone spend any more time looking for more to do? But believe it or not most
!
Since when is
MORE
the solution to having
TOO MUCH
Production
Customer
Project
Resource
Marketing
Strategy
Capacity
Strategic
Management
Operations
Management
Resource
Management
Or is this
more like
it?Vision, Values, Reputation,
Strategic Health, Problems,
Opportunities, Operations,
Structure, Work Design,
Implementation
Performance Promise
Objectives, Brand,
Offer, Pricing,
Channels, E-Com,
Direct Mail, Research,
Forecasts, Sales, Up
& Cross Sells, Front &
Back End Sales, After
Sales, Service,
Loyalty, Building,
NPD, Range,
Merchandising,
Promotion,
Warranties, Calendar
Leadership,
Workforce Plan,
Skills, Motivation,
Culture,
Creativity, Pay,
Reward,
Recruitment,
Development,
Retention,
Outsourcing
Project Plans
Performance
Schedules,
Launches,
Promotions
Plan,
Synchronisation,
Lean, JIT, Lead
Time, Schedule,
Operating
Expense,
Kanban System,
Continuous
Improvement
TQM, Suppliers,
Materials, QC, Stock,
Delivery, Collection,
Process, Design,
Cell Layout,
Maintenance
Frequent Sales,
High Customer
Service, High
Productivity (for
low cost)
Growth, Turnover, Profit,
Gearing, Budget, C/Flow,
Funds, Debtors,
Creditors
Unique Strategic
Position, Game Plan,
Core Competence,
Competitive Advantage,
Implementation
Plan, Necessity,
Sufficiency, Adjustment
Master
Production
Schedule
Priority
Design
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business owners and managers actively seek the latest idea or next opportunity to do what
they want to better than they do now.
The simple fact is that all that happens is that they simply add more and more to their to-do
list of things that simply aren’t going to get done!
The illustration you have just seen is the map of the work of managing a business. Make no
mistake, the individual manage or business owner that succeeds in business is a
STRATEGIST and a manager. But there are many that are, for one reason or another,
diametrically opposed to this mind-set and approach to business building. Most are
OPPORTUNIST by nature and regrettably short on strategy.
So here’s a question for you…
The solution to having too much is not to go and find more to do! It is to stop what you are
doing for a moment and ask yourself; “ Have I been following a rather haphazard
plan of adding more and more tactics and activities to my list of 'things to do
rather than thinking about the results I should be achieving?”
And if you’re organisational chart looks anything like the one on the next page, you’ll be
dealing with the here-and-now in ever decreasing circles, wondering why you are not
achieving the level of success you’ve always wanted.
This is the typical organisational chart for most people running a business, particularly a
small one. Can you work out what you do – or should really be doing in your business?
The thing is to STOP this model. You will never manage or make a successful business or
have the lifestyle you want if you continue down this path. But you can make the change fast
if you do the right things.
The question to ask yourself is this: “Did I start a business to create a job for myself or to
create a business?” If you’re like most business owners – you created a job. Typically most
businesses are run by “Do-it-Your-Self-ers!”
This type of business owner doesn’t want to be dependent on other people for revenues and
income; they know things will be OK because they adopt an “I’m doing it” type of approach.
They like to take control and do it on their own. And their credo is; “I know it’s going to be
good because I’m doing it.”
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But the business owner that lets the business do the work is the direct opposite of this group.
These business owners actually surround themselves with bright and enterprising people
that they can work with to help them do the work of the business. The upshot is that they
move into a management mode! The credo of this group is; “Recruit and manage someone to
do it for you.”
The question to ask yourself is: “Do you run a business to create a job for yourself or to create
a business?” because if you’re like most – you’ve probably created a job.
Only a few business owners let their businesses do the work – most business owners and
managers are doing the work – and invariably the wrong work. If you are growing a business
and earning more and still doing the work you are not running a business you are doing the
technical work of the business, and probably moving into overwhelm. So you should be
thinking of changing.
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And here’s the scary bit; you are working for a madman!!!
One of the odd things I’ve noticed though when I’ve spoken with business owners and
managers is that they recognise the situation and yet do nothing to change it…and isn’t this
the way Lemmings go?
One last point on this is: Once you have got your business into revenue generation mode and
you want to go forward, and I’m assuming you do, you have got to go into management
mode. This means allowing others to do more of the technical and administrative work. We’ll
look at this later but for now…
What Does it Take to Be a Strategist?
For one thing being a Strategist doesn’t mean that you direct the work of others or do your
work by getting others to do it for you.
This wouldn’t do justice to management – and that is what being a strategist is all about. A
business can only think, act and behave as its managers do; on its own a business has no
effective existence. This together with the fact that the test of a strategist is the business
performance he produces, the strategist simply has to manage.
So what is the management role of the strategist? Three things basically. Let’s look at them:
Manage the Business
Managing is about taking action to achieve desired results. A manager is a creator; creator in
the sense that the manager seeks to find strategies for changing circumstances.
The strategist has to live in the present and the future. He has to manage current profitability
or else there will be no future.
Thus the strategist must produce products and services required by customers at prices they
are willing to pay now and in the future. It goes without saying that the more proactive and
creative the strategist, the more the company has of being in tune with its customers and two
steps ahead of its competitors!
Manage Managers
The second function of a strategist is to make people and material resources fully productive
in the business.
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With this in mind it’s no good seeing people as ‘rank-and-file-workers’ doing things as you
direct, without responsibility or share in the decisions concerning their work.
The thing to appreciate is that many ‘rank-and-file-jobs’ are in fact managerial ones, and
would be more productive if made so! And so it follows that actually managing managers
actually makes a business! Consequently to manage managers is to make resources
productive by making a business out of them.
Manage Workers and Work
The final function of management is to manage workers and work. This means managing
workers ranging from the totally unskilled to the accomplished; from the cleaner to the
manager.
It also means organizing work so as to make it more appropriate for people, and organising
people to make them work most productively and effectively.
All this entails considering people as having, unlike any other resource, personality,
citizenship, control over whether they work, how much and how well, and thus requiring
motivation, participation, satisfaction, incentives and rewards, leadership, status and
function.
It is management and management alone that can satisfy these requirements. For
they must be satisfied through work and job and within the business and
management is the activating function that will make this happen! Trying to do a
little better is not a business strategy
Let’s look go on a little further and return to the remarks about strategy that I made earlier. I
suppose the big question I would like to ask you is this:
Do You Have a Strategy?
You see when you think about it almost everybody’s strategy is invariably to do the same as
everyone else but just try to do it a little better.
And if you think about this a little further you’ll realise that this is not a strategy at all. This
type of thinking falls far short of entrepreneurship; it’s simply opportunistic and utterly
flawed.
How many people have fallen victim to this line of thinking, acting like an opportunist
mistakenly believing they were being strategic. Even though they might be increasing
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revenues and profit they’re really working much harder than ever before and often feeling
frustrated, overwhelmed and exhausted.
Take Nick, for example, he told me that the first three years of his business development had
been the longest three years of his life. He made cheese but in truth Nick’s business was not
about cheese – it was really all about work.
He told me that he got up at 4.00 am to open for business, make cheese, deliver to
customers, clean up, reconcile the cash register, go to the bank, have something to eat and
get everything ready for tomorrow’s production. By the time he did all that it was 9 or 10 at
night. And why? Because someone said that he should go into business because he could
make good cheese.
It started as a labour of love. But it had become oppressive!
If you identify with anything you’ve read so far you should feel a sense of relief, because the
truth is you’ve been working harder than you need to for a fraction of the results you deserve.
Do You Know What An Hour Of Your Time Is
Worth?
Have you ever really thought about your time? Time is all you have. It’s a scarce resource.
Even before you begin to think about the value of your time have you ever wondered just how
much time can be lost to distractions? Let’s explore the point a little further before we move
on to value aspects. Taking a typical week how many hours do you think you can lose from
each of the following distractions?
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Even after double counting, people have said that they can lose as much as 12 hours per week
around 20% on a 60 hour week! The implications are stunning!
Clearly we need to think about how we spend our time and on what we attend to – and this is
why an appreciation of the value of time is so important.
The Value of Your Time
The reason you are not achieving the kind of revenues in your business or working the
amount of hours you want is that you have not made it a point to continually
increase the VALUE OF YOUR TIME.
For the sake of clarity let me explain this a little further … All time has value; and the
way you think about time and think about yourself will affect everything that
happens to you inside and outside your business. In short, you have to value
your time before anyone else will.
I’m always surprised at how many people don’t seem to have any idea what the value of their
time is, or how to increase the value of their time. So, my question is …
Interruptions from other people
Fatigue, tiredness, low energy
Worry, concern about the business
Meetings that overrun
IT interruptions
Stress trying to do something that we don’t quite understand
Trying to find something
Indecision about a course of action
Side-tracked by emails
Diversions
Total hours
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“…What is Your Time Worth?”
Do you know what your time is worth? Do you know what your time needs to be worth to
achieve your revenue goals? Here’s the point behind these questions…
If you don’t know what your time is worth and what it needs to be worth, then you cannot
make effective decisions on what activities you should be spending your time on and what
activities you should have others do for you.
So, let’s roll up our sleeves and work out together what the value of your time should be to
get you where you want to be. But before we do let’s set out some practicalities that will help
you focus your attention and effort on specific activities to grow your business.
First of all take your revenue goal and subtract what you are making from it. Then take 10%
of the difference and add that back to what you are currently making as your short term goal.
I know it’s pretty simple – yet what you’re doing is concentrating your mind on what to do to
achieve your short term goals along the way to reaching your long term goal.
Your Revenue Target
What is your revenue goal?
£
Revenue attainment for
The past 3 months?
£
Forecast revenue for
the next 12 months?
£
Goal £
Forecast £
Target £
Target £
x10%
Target + 10%
Target + 10% +
Revenue forecast
REVENUE
TARGET
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I’ve created a table to take you through this process because it shows the basis
of the time calculations we are going to do together.
You enter your revenue goal in the first row of the left hand box. Then, in the box below that
one, enter the amount you made during the past three months.
Now calculate your forecast revenue for the year and enter it in the lower bottom box.
Then simply subtract the amount you are on track to make from the revenue goal you want
to achieve. This gives you the amount you need to increase your revenue by to reach your
goal.
Next multiply this shortfall by 10% and then add this to what you are currently making. In
case you are a little bewildered, read on, I’ve set out an example to help. If you follow along
then you will see a revenue goal of £1 million per year, and that this business owner made
£40k over the past 3 months, which means he’s heading towards an annual turnover of
£160k.
Your Revenue Target
What is your revenue goal?
£
Revenue attainment for
The past 3 months?
£
x 4
Forecast revenue for
the next 12 months?
£
1,000,000
160,000
40,000
Goal £
Forecast £
Target £
1,000,000
840,000
40,000
Target £
x10%
Target + 10%
Target + 10% +
Revenue forecast
REVENUE
TARGET
840,000
84,000
160,000
244,000
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If we subtract the £160k he’s making from the million he wants to make you will see he’s
£840k short. So, if we take 10% of the £840 to get £84K, we can add this to the £160K he’s
forecasted to make and we arrive at a short term goal of £244K. The complete picture is
shown in the table. Alright, so you now have a new financial target to aim at. But how are you
going to get there?
Well to start with you need to make some changes if you are going to do it, and this means
that you’ll need to change the amount of money you are able to generate per hour worked.
The Difference Between Productive and Wasted
Time
The table immediately above shows you more about the value of time than you may have
seen before.
Let’s Find Out Together
WHAT YOUR TIME IS WORTH
How much do you want to earn in the next 12
months?
How many days per week do you work?
How many hours a day do you work?
How many weeks per year do you work?
Total available hours to you to produce your
desired income.
What you must generate per hour.
Divide by 60 to get your minute rate .
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On the first line enter the amount you arrived at for your short term target from the previous
table. Then fill out the number of days per week you work and the number of hours you
work every day.
Now, what is PRODUCTIVE TIME? Before I answer the question, let me tell you about
some advice a good friend of mine gave me. I had remarked how impressed I was with his
output, and how he always seemed to be so productive.
The consequence was that he told me to go out and get an alarm clock and set it for 60
minutes and then just work on building profit during those 60 minutes – nothing else.
I did and let me tell you, that at first it wasn’t easy – I frequently had the urge to break off, to
get some coffee, or get up for a stretch, or deal with numerous inconsequential little
interruptions. But eventually I was able to go a complete hour, full throttle on nothing but
profit building activities.
I learnt the lesson because this is what productive time is all about. Productive time is time
directly linked to generating income. So what percentage of your time are you productive?
Before you answer the question though consider this: one study of managing directors
estimated that of all the time they spent at work 28 minutes of it were productive. Another
one estimated it at 38 productive minutes a day. Sounds incredible, doesn’t it? Only 28 or 38
minutes a day? But think about what a senior manager does and how much time he or she is
actually able to concentrate on profit building activities.
Since you may not have the same level of responsibilities as a managing director of a large
sized business you’ll have a lot more productive time to play with. But productive time
doesn’t just appear! You have to be focused and disciplined to make productive time – and
then be productive!
Here are some examples of non-productive time; talking to friends, surfing the internet,
checking and reading email, answering your phone, studying and learning time, checking
web site stats, organising your desk and cleaning your office.
Reading management books or attending one day courses, even if they reveal the most
powerful secrets on growing and developing business that have ever been written, is not
productive time.
This is a very important distinction because so many opportunity seekers confuse learning
with earning. New knowledge has no worth to your business unless it’s implemented and
acted upon.
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Of course, I’m not suggesting that you shouldn’t spend any time on these activities. You need
to spend time learning, and you do need to network and talk to your colleagues and friends.
The point is that this is not what we would consider productive time. These activities are
maintenance activities. This is what you have to do. You can’t consider such time as
productive time because it doesn’t build a business, it doesn’t increase revenue.
Productive time is time spent creating products, marketing products, improving your
marketing processes, managing revenue generating projects, setting up joint ventures, and
putting scale into your business. But there is something even more profitable and strategic
than productive time, this is called SUPER PRODUCTIVE TIME which you can create
when you build a system around any of your business development activities.
Super-productive time is characterised by systems you create around your principle revenue
generating activities. For example super-productive time would be creating systems that
create products and creating systems that market your products.
I remember when I was a young salesperson working for a Plc. I didn’t have to produce all
the sales literature I just got on with the sales. Then when I was marketing industrial marine
equipment in my first company, I didn’t have to make the products, my job was to create and
implement the marketing plan and when I got into DIY marketing I didn’t do all the
How Many Productive Hours a Day
DO YOU WORK?
What percentage of time are you productive? Studies show that most MDs are productive
from between 28 to 38 minutes per day.
Super Productive Time Productive Time Non Productive Time
Creating Systems that:
- Create products
- Market products
- Build scale
- Achieve more productivity
- Creating products
- Marketing Products
- Managing big projects
- Creating scale
- Talking to friends
- Surfing the net
- Reading email
- Answering your phone
- Studying /learning
- Tidying your office
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advertising, my job was to define the strategy and see to it that our advertising agents and
sales people got on with the sales.
In other words when you build a business the person in charge does all the strategic things –
a person who works on the WHAT– not the HOW.
Each business I worked in continued to grow whether I worked a day that month or not –
new products and services were developed each and every year – and that is why the time
spent on investing in and creating revenue producing systems is SUPER-PRODUCTIVE
time.
Let’s get back to you and the number of productive and super productive hours you have a
day. Do you have an hour of productive time a day? Or is it more like two hours? What’s your
most conservative estimate of how much of your time is productive time?
Unless you have really focused on maximizing your productive time before, I wouldn’t think
that you are spending more than two hours on productive time every day.
Remember, we are speaking of specific income generating activities only!
Let’s Find Out Together
WHAT YOUR TIME IS WORTH
How much do you want to earn in the next 12
months?
How many days per week do you work?
How many hours a day do you work?
How many weeks per year do you work?
Total available hours to you to produce your
desired income.
What you must generate per hour.
Divide by 60 to get your minute rate .
£244,000
6
10
50
600
£406.67
£6.78
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Working with the data we have drawn up earlier, we can complete the process and find out
what your time is worth based on your revenue targets. The table below spells out the detail.
If you recall our task is to reach an annual goal of £244,000.
Now if you work 6 days a week and spend approximately 10 hours a day working in the
business and you are able to generate 2 hours of productive time a day, this leaves you with
12 hours a week completely fixed on revenue building activity.
Now multiply the 12 hours by 50 weeks and you have 600 hours a year to achieve your goal
of £244,000.This means you have to generate an average £406.67 gross income for each
productive hour that you have. Or more to the point you need to make £813.22 each day six
days a week, fifty weeks a year.
Two of the Best Ways to Boost Your Productivity
If you are asking yourself how you can possibly achieve your hourly rate everyday let alone
increase it you’ll find that you won’t find the answer in a text book or on a home study
course. You’ll find that there are two answers to your question.
The first is that you need to build scale into your business, so that you, the business
owner or manager, can obtain the maximum amount of leverage possible.
That’s why knowing your hourly rate is so important. It exposes you, possibly for the first
time, to the reason why you aren’t building the kind of business you’ve always tried to design
and build. And the answer is your business is not currently set up to help you achieve and
then surpass your hourly rate!
The second reason for knowing your hourly rate is that it serves as the benchmark for which
activities you should personally be spending your time on and which activities you should be
outsourcing or delegating. The trick is to consistently concentrate on those activities that can
raise your hourly rate. And to begin to delegate and outsource what needs to be done that
costs you less than the hourly rate you need to generate.
The question that you have to continually ask is this; ”What can I do to build the business?
When you realise that your current business design and structure won’t support what it is
you want to achieve, and when you realise that you have a real chance to make some
changes, you will restructure your time and find the path to success.
But most of us don’t see this and continue to delude ourselves into thinking that if we worked
a little harder or introduced a new product we’ll achieve our goals – if we have any.
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So, let’s pause for a moment and summarise a little before going on. You have just set your
eyes on two crucial concepts that can help you raise your hourly rate – scale and outsourcing.
Now let’s take a look at the first of these; scale.
Using Scale and Leverage Can Make Your Business
More Successful
It’s not possible to go into great detail here, but I can certainly get you started in thinking
about this really supportive concept.
Take a look at the graphic over the page. The first point to note is that most people never get
close to making their hourly rate because they mistakenly believe that what’s preventing
them from achieving higher
revenue targets is absent
knowledge.
And while there might be an
element of truth to the missing
knowledge theory, it’s really only
relevant if you have very limited
marketing and business
development know-how. If you
don’t fall into that category then
knowledge is not your primary
problem. Let me illustrate my
point about building leverage
into your business, with a story.
Quite often I am asked to lecture
in marketing and business
strategy at Magna College
Business School, Oxford. Now, since there is always some overlap in the two courses I run, I
thought that the best way of preparing for both was to draw the related themes from the two
courses together.
This meant that I was then able to spend more time preparing one subject (but less than I
would have spent on two) but still end up with delighted cohorts happy with their exam
grades having spent less work than would have originally been required if preparing and
presenting one subject.
BUILD SCALE INTO YOUR BUSINESS!
If you are unsure about how to generate profits
over your hourly rate usually you have a leverage
(scale) problem – not a deficit in knowledge.
You increase scale by:
1. Increasing one or more of the variables of any
profit producing formula.
2. Developing and implementing a business plan
that creates leverage through a tight focus and
a unique strategic position.
3. Separating out activities that generate more
income than they coast to get done.
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Can you see what I’m driving at? The goal in the business school is to obtain as many high
grades as possible, and the goal in business; high profits. Thus anything that makes your
current business activities more profitable without more work is increasing your leverage.
You see leverage is a strategy for getting the best or highest return possible from your
investments in time, money and effort. Leverage is what successful business people use to
achieve greater success – and far, far quicker than their competitors! It is also why they
move ahead further and faster than anyone else.
Think of it Like This
Obviously, it costs you the same amount of time and money to send a mail shot; whether or
not it generates new business for you. So, if you send a mail shot and it generates £100,000
in new profits, the cost to you of that mailing is no higher than it would have been, had the
mail shot failed.
If you leverage a mail shot by sending a great letter, with a compelling offer, to a targeted
audience, with an endorsement from one of their trusted contacts – you will achieve better
results. Follow that letter up with a phone call and you will maximise the results even
further; often increasing the return by a factor of 4x, 5x or 6x!
In short you will have leveraged the investment you made in that mailing, by getting the
highest possible return for the cost of each letter. You will have achieved more success from
one mailing than most people do from a years’ worth of mailings – and at a tiny fraction of
the cost, time and effort too.
The thing to make sure of, though, is to ensure you are only investing your time, money and
effort in activities that are high-return or ‘upside leverage’ activities. After all; there’s no
point rowing your boat as hard as you possibly can – in the WRONG direction. You have to
make sure you are doing the right things, before you make sure you are doing things right!
Working More on the Business and Achieving
More
There is a further important and related point that you should be aware of and that is this.
You should see that the work you do in your business should serve you in as many ways as
possible. You can do this by concentrating on one niche, developing a full funnel of products,
and introducing cross-sell, up-sells, and back-ends to your customers.
By continually working in that one niche – every successive product you launch becomes
more and more profitable. This means that your leverage continues to get bigger and bigger.
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Let’s say that you have 200 customers and 5
joint venture partners for your first product,
when you launch your second product you
already have a list of customers to make an offer
to and you have your original 5 partners to grow
from.
In addition, any new customers you get from
your second product launch might be impressed
enough that they want more of what you have to
offer so they search and find your first product
and they buy that too. And so forth.
This is creating scale and leverage in a nutshell. Obviously there are much more advanced
methodologies and strategies, but if you are not tightly focused then these won’t help you.
The bottom line is that if you can’t earn your hourly rate right now – you’ve got to get
focused so you can start gaining more and more leverage. This is so important.
What is Marketing?
Let’s start with a question. The quintessential one! “What is marketing?” I just wonder how
many people have really asked that question and what’s more I just wonder how many
people have answered it with something like; “Advertising or promotion or sales!”
Well what do you think it is? ......
The issue is this… Many people have great products and services. But when they start to sell
them, they are unable to convince their prospects and customers of their products’ benefits.
Getting your marketing right is critical to your success, but many people who manage – or
run their own – businesses have never been shown the best way to do it. This costs them tens
or even hundreds of thousands of pounds in wasted effort, time and resources, not to
mention all the lost business.
So “What do you think marketing is?”
If you said something like this; “That the aim of marketing is to know and understand your
customer so well that the product or service fits him and sells itself” give yourself a pat on the
back.
GREAT MARKETING
STRATEGIES
Make your prospects and
customers desire your
product or service so much
so that they come to you so
that selling is made to be
superfluous!
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Marketing is not about trying to persuade some faceless aggregation of customers to see it
your way.
It is about a dialogue over time with a specific group of customers whose needs you
understand in depth and for whom you develop a superior of value which puts you in tune
with your customers and two steps ahead of your competitors – so much so in fact that they
COME TO YOU, you don’t have to go to them. Powerful Marketing Strategies that No One
Teaches
If your attempts to grow your business have met with sluggish results even though you have
got the other result areas that are presented in this Business Growth Series in place – it’s
almost certainly your MARKETING TACTICS that are holding you back and restricting
you to lacklustre results.
Let’s look at some of these tactics now.
Quite simply we can separate marketing tactics into two camps; “Front-End,” and “Back-
End.”
You can think of “Front-End“, as the first sale; the pipeline that brings new customers into
the business. The “Back-End” is the product (or hopefully the series of products and services)
that you sell to your customers after they have purchased your initial offering.
The question to ask now is what tactics you should use in each area. They are:
Front-End: The Marketing and Sales Activities designed to acquire new customers.
Back-End: The Marketing and Sales Activities designed to maximize the profitability of
each and every customer relationship.
Clearly front-end marketing is vital for your long term business success. This is why it’s so
important to inject the power of marketing into your business so that you can increase the
number of customers that come to your business as a continuous flow…
People buy for emotional needs and those emotional needs are never fulfilled. Your role as a
marketer or as the business owner is to continue to exploit those needs because it’s the
emotional void that creates the desire to buy that never gets fulfilled by the purchase of the
product or service. Therefore, in order to do your job right, you need to have multiple
products and premium offers on offer throughout the length of your pipeline – or at the
back-end.
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You’ll always generate more revenue from back-end offers than from front-end ones. They
offer a much higher conversion rate, they usually sell for more money and you can make a
bigger percentage on the
profits on them too. And
it’s always easier to sell to
a customer than a
prospect.
But remember the long
term; you must have
customers coming into the
business. You can’t just
rely on your loyal
customers. By the way, if
you have competition then
you can bet that most are
competing at the front-end
and trying to attack your
front-end offers with their
own so as to eventually
weaken and erode the strength of your own USPs and offers.
The question though is this; are you doing any type of marketing whatsoever, and if you are
where is the focus of your efforts?
Let’s Get Back to Business Strategy for a Moment!
If you recall the original question was: Do you have a strategy? And if you remember I said
that trying to do a little better is not a business strategy. You see, when you think about it
almost everybody’s strategy is invariably to do the same as everyone else but just to try to do
it a little better.
And if you think about this a little more you’ll realise that this is not a strategy at all.
How many business owners have fallen victim to this line of thinking, acting like an
opportunist mistakenly believing that they are being strategic?
Even though higher sales and profits are on the radar how many end up working harder than
ever before - often frustrated overwhelmed and exhausted in the process.
If this is you, then you have most likely been working harder than you need to for a fraction
of the results you deserve.
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Start With the Right Objectives
Boil it all down and essentially any business will make the headlines if it can sustain an
increasing FREQUENCY IN SALES.
This can be achieved in two ways. The first is to meet and exceed customer demands for
quality, produced on time every time at the right price with HIGH QUALITY CUSTOMER
SERVICE.
No customer wants to pay more for a product than he has to. So price is the third objective to
attend to. Maintaining low labour costs are one way of doing this of course but so is
maintaining an INCREASING PRODUCTIVITY IN THE BUSINESS.
You’d be surprised when I say that one major mobile network operator discovered that in
some stores its customer facing staff was actually spending just 25% of its time with
customers, against an industry average of 55-60%!
Have you ever considered how much of your staff time is actually spent on sales-generating
tasks - and how much isn’t! Combine this with an appreciation of your competitors’ sales
performance and think what you might achieve if you did -there have been cases of tripling
the amount (and quality) of customer contact work and conversion!
What is a Great Strategy?
A great strategy beats the odds; because in the face of uncertainty, obstacles, and risk you
decide what course of action leads to success. Indeed a great strategy is about knowing what
path to take, what course to follow, what unique position to hold and what means will
achieve the end result.
But where is the starting point? It is this; successful strategies are built on ‘creative insight’
and ‘doing what you do best’ to provide superior value to the customer.
I want to emphasise the supremacy of creative insight. Many public and private institutions
advocate business planning as a panacea for successful business development. They are right
BUT ONLY TO A DEGREE.
But I would say first give me the idea, or the insight that will put the business in tune with its
customers and set it apart from its competitors - then let’s plan, but not before! If you’ve ever
read anything on business you see how any book on strategy will give up a page two if you’re
fortunate on creativity and innovation and get back into the solid and risk free world of
business frameworks and models!!
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Ultimately, the chief
means to ensuring
survival and prosperity is
to create and exploit a
unique strategic position
in your company’s
current business while, at
the same time, searching
for new strategic
positions on a systematic
and rolling basis.
Have you ever heard
of a Company called William Cook Ltd? Well here’s a story that will fire up anyone’s
imagination
William Cook Ltd, a small and ailing, yet well-established family manufacturer of steel
castings, rose up from the recession of the late ‘70s to become the market leader in lowest-
value segment in the industry.
On taking over the company at that time, Andrew Cook, went completely against the trend
and invested in increased efficiency, quality and capacity, at a time, remember, when output
had been falling and capacity was double the volume of industry sales. Rivals thought he was
mad! Indeed, conventional thinking would have dictated that Cook milk the business and
leave the industry or go into a higher-value and differentiated niche.
But Cook’s investment completely transformed the business. Within a few years, sales had
risen by 10% against industry losses and by the 1990s Cook’s had become the market leader.
“What did Cook’s do to drive forward a highly effective strategy in difficult
times” you ask? Three things that every successful business from Marks and Spencer 100
years ago to Zara of the present day has carried off really well!
To be successful means that a company must decide who will be its targeted customers,
what products or services it will offer them, and how it will achieve all this in a productive
and effective way.2
2
For more on how to create and exploit a unique strategic position, see The Strategic Manifesto, published
by UBS, 2009
THE FOUNDATIONS OF A UNIQUE
STRATEGIC POSITION
1. WHO are your company’s customers,
2. WHAT should it offer them and
3. HOW should it do this efficiently to achieve competitive
advantage?
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What Superior Value Will You Offer Your
Customers?
Now let’s examine these three essentials in further detail starting with the
questions of who and what. Both are fundamentally strategic; the answers to these
questions, together with consideration of the underlying economics define a company’s
positioning and offer of superior value.
An important issue is to find and create ‘space’. Space is about breaking free - free to change,
free to break away from sameness and free to do something new – free to create the future,
free to develop what competitors may have
neglected or an area of latent demand.
The issue is so important that managers
should view positioning – the relationship
between who and what as a major strategic
task and, therefore, one that should not be
wholly delegated to the marketing
department!
How You Can Do This
Efficiently to Achieve
Competitive Advantage
In many ways this is the bit that people tend
to forget about. Yet the real innovator will
give this a lot of time
The question of how is also strategic. The
answers bring what matters to customers in a way that offers additional value to them.
Have you ever wondered how a successful dentist, or garden centre or farm shop achieves
more success than its competitors? Well, let me tell you it’s by giving attention to what are in
fact CRITICAL NON ESSENTIALS of business. These are the things that really, really
matter to customers that will put you two steps of your competitors
It is this that gives a company’s positioning sustainable competitive advantage. Thus if
business strategy is about being different then the essence of positioning is to select and to
CORE COMPETENCE
What is your business really good at
doing?
What skills, knowhow and activities is
your company good at doing to help you
deliver more value to your customers?
• E - comms
• Production process
• Product development
• Customer service
• Reputation
• Innovation
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perform activities differently, or to perform activities that are different to those of
competitors.
Isolate, Develop and Profit from Your Core
Competencies
Successful business strategies are built on competitive advantage based on core competence
and strategic outsourcing. Peter Drucker, a favourite business writer of mine, once said that
any business owner should; “Do what you do best and outsource the rest!”
Drucker is actually saying; make sure that you’re absolutely clear about the thing that you are
really good at doing or put another way; the distinctive competence that makes your business
special.
Distinctive competence is the driver for product and market penetration and development.
People think its market opportunity. But this is wrong.
Great strategies are built on a clear appreciation of “what we’re good at doing” and
converting this into competitive advantage.
If this sounds little strange please be assured it’s not meant to be!
Look at the following examples. Who is it that is really good at data base management in
retail (Tesco), producing electric motors for home improvement, kitchen and garden
maintenance (Black and Dekker), and listening to customers (Apple).
At the end of the day it’s your company’s distinctive competence that causes people to buy
from their chosen suppliers.
What is Your Business Good at Doing?
The importance of the question: ‘what are we good at doing?’ cannot be overestimated. For
what you - and your business - can do that’s of real value for your customers will help you
differentiate your business from your competitors.
With this in mind it follows that if you concentrate on customers, products and a game plan
that leverage your company’s principle strength you are more likely to archive success in
your market with a serious advantage over your competitors.
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Producing ‘Hearts and Minds’ Loyalty
You can also build on your business’ strength by turning it into a compelling vision that can
often be more seductive than the product or service you offer. Most people in life haven’t
really worked out their real purpose in life. This means that they’ll attach themselves to
someone that has if given half the chance.
This is much bigger than finding a niche because if you want to win over the ‘hearts and
minds’ of your prospects you’ve got to go beyond the product to a cause – your business
strength lends itself to being that cause. And this applies to the people that work for you too.
After all they are your ‘internal customers’.
The issue then is to be absolutely clear about the one thing that you are really good at doing
or put another way; what distinctive competence makes your business special. It might be
something to do with safety, or durability, or size.
While you should be awake to these strengths and work with them, there is another reason
for such awareness. And it is that the knowledge of what you and your business can do well
forms the basis for strategic outsourcing.
Producing Commitment
A little while ago I read an article on innovation which said that in western businesses, for
every 100 employees only 11 new ideas were forthcoming from the workforce. In Japanese
companies the figure was nearer 3500!
Thankfully those days are going!
The difference comes from the fact that new idea generation is part of a system - or routine.
A system that fosters new idea generation based on the empowerment of a workforce – in
other words people are motivated to think up, solutions to problems and implement them.
They don’t have to be big ideas they can be small ones. In fact a small idea may be part of an
on-going flow of improvements. Think of the savings and gains that could be made.
But many opportunist managers forget this. They think all new ideas should come from
themselves. They forget about actively getting people routinely involved with improvement
or radical innovation.
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Solving Problems
It has been said that 98% of an organization's problems can be solved routinely. However,
the remaining 2% of a company’s problems – the problems that have the greatest effect on a
business – require innovation to surmount.
Simple solutions to many problems are often just nearby – waiting for you to find them,
build cross-functional expertise and you’ll be able to find innovative solutions to old
problems.
The Bumper Car Business!
In this imaginary scenario a recurrent problem frequently facing the manager of a travelling
bumper car business was that nuts continually fell off one or other of the bumper cars during
daily use.
The issue was that the nuts presented a safety problem. It also meant that staff had to stay
behind after the day’s work to look for them and put them back! And because the rink was
painted black it wasn’t easy to find each nut. They would often work long hours – for very
little overtime pay.
While the manager took the problem to the manufacturers to resolve he knew that it would
take months to get anything done. How on earth did he to resolve the problem? He decided
to ask the team to help.
What do think they suggested?3
Continuous Improvement (CI)
Every member of your team should be encouraged to come up with ideas – however small –
that could improve their particular job activity, job environment or any company process or
plan for that matter. Your people should also be encouraged to implement their ideas as
small changes can be carried out by the people themselves and with very little investment of
time.
Quick and easy CI helps eliminate or reduce waste, promotes personal growth and company
productivity, provides guidance for employees, and serves as a barometer of your leadership.
Each CI may be small, but the cumulative effect is tremendous.
3
If you want to check your answer call me on 01280 844966
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This is what Isobel took upon herself to do to improve things in her work…Isobel, a secretary
in a manufacturing business, devised an improvement that tackled her company’s order
processing system and saved considerable amounts of time and money.
Order forms used to have blue, pink, yellow and white copies. One would be sent to the
supplier, and the others filed in various parts of the company. It’s was all very time
consuming and expensive.
Isobel’s idea was to print the order on headed paper and retain all the information in the PC.
Simple at the time, but it enabled the business to get rid of all bits of paper and the storage
necessary for them. Probably something that wouldn’t have happened but for a CI
Benefits of CI
Quick and easy CI empowers employees, enriches the work experience and brings out the
best in every person. It improves quality, safety, cost structures and delivery. Above all they
help you improve productivity so that you can pass on savings to your customers while at the
same time help increase sales throughput and customer service.
The Quick and Easy CI Process Works as Follows:
The employee identifies a problem, waste, or an opportunity for improvement and writes it
down.
The employee develops an improvement idea and discusses it with his or her supervisor. The
supervisor reviews the idea within 24 hours and encourages immediate action. The
employee implements the idea. If a larger improvement idea is approved, the employee
should take leadership to implement the idea.
The idea is written up on a simple form in less than three minutes. Supervisor posts the form
to share with and stimulate others and recognizes the accomplishment.
Try it for yourself.
Bear in mind though it takes take time to adopt CI processes but when it’s done
it’s worth it in terms of the financial gains made.
Concentrate on Process not Results
Some time ago, I heard a story about a furniture business. This company decided that
because it was doing so well, it should expand into the piano business and also sell pianos!
They went out and purchased a Steinway and took it apart to study all of the pieces. Then
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they made the same pieces themselves and built a piano. When they played it, nothing but
thumps and bumps came out it!
Discouraged and not knowing what they possibly did wrong, they decided that they would
forget about the piano business. They reassembled the Steinway so they could sell it and
when they had the same thing happened - thuds and bumps.
This is how it is with many people and businesses. People tend to look at the results and not
the process that goes into creating a particular result. In order to build a piano, you need to
have studied instrument making and studied it for some time and understand a lot about it.
You also need to understand and study musical theory. It could take generations to refine
what is going on and to become proficient in making a good piano. There is just so much
that goes into it.
This is how it is with everything. You cannot just call yourself a piano company and start
making pianos. You cannot just decide that you want to do something and expect immediate
success just by trying to copy an outcome. You need to understand the complete process that
goes into what you are trying to do.
What I have found is that once people have decided on a certain course the more they then
concentrate on the process and substance of product or service delivery, the better they are
able to do:
The more people concentrate on results, the worse they do in the long run. The most
successful companies are the ones who have the ability to excel in terms of the process. The
most successful workers and employees are the ones who have the ability to excel in the
process.
I am not saying that results do not matter, they do. But what ultimately matters and what
ultimately makes people successful is when they concentrate on the process and how things
are done.
When you concentrate on process you can monitor and improve performance in customer
service and productivity. It is how you do things throughout everything that matters, and
not just the result that really count.
Just think of all those companies that win t a job and simply try and make as much money as
they can as quickly as they can. They cut corners. It’s the people who don’t cut corners that
get good reputations and end up doing well over time.
PROCESS IN THE RESTAURAUNT: In this business, there is essentially one thing you
are doing: providing a customer with an ambience and experience of culinary and service
quality.
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This is the result of what happens when you do the work. This is what most restaurateurs in
the business concentrate on and it is why most of them fail to even moderately reach their
full potential.
Most people in the restaurant business, try cutting corners If you are looking at the business
from a distance without any form of understanding, it’s easy to think that all many chains
and independent restaurateurs do is create a menu and then find the people to cook and
serve them.
This simplistic understanding of the work is something that characterizes the way a lot of
restaurant owners approach their business. Without going into too much detail, however,
there is a much more in-depth way of looking at the work. The best restaurateurs are:
• Constantly thinking about restaurant related issues and standards in their industry.
• Meet with customers’ regularly.
• Offer great service and build long-standing customer relationships
• Know about the industry and the most important things happening in it.
• Have highly developed research skills to improve their service offer.
• Never compromise their integrity with employers.
• Help people, even when it does not mean a short term reward.
• Committed to doing their job throughout their careers.
The entire process that you follow matters and the better that you do in each data point, the
more likely you are to get the results you want.
Think about the manufacturing a world-class piano. A lot of thought probably goes into each
little component of the piano. Whether it is the wood used, the thickness of the wood, the
polish of the wood, where the wood comes from, how the wood is sanded, how the wood is
fitted into the piano, the glue that is used, the skills of the person working with the wood, the
machine that the wood is compressed on (if it is even compressed) and more, the thought
that goes into each process matters. Every data point is refined and studied and probably
has been being refined and studied for a long point in time.
You too need to be focused on the process in your business. Pay attention to the small
invisible things that collectively make a difference. Think of yourself as an instrument, like a
fine piano. It is the attention to everything that goes into you that will ultimately produce
the best notes.
So What Is Strategic Outsourcing?
Well here’s a simple and straightforward example of what I mean.
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Let’s say that you have good email marketing skills but few in personal selling. What would
be a better use of time – to get on with product selling and spend less time on email
marketing or finding someone to help with the personal selling while you get on with what
you do best?
The subject of outsourcing and recruitment concerns choices between core and non-core
work. Remember the words of Peter Drucker? “Do what you do best and outsource the rest.”
Ultimately the choice boils down to two alternatives:
• Getting more customers with value based activity
• Giving customers more value
And here is another point. Any task you can do that is multi tasking – is a task you shouldn’t
be doing.
It’s too simple. You should be paying others
to do it. It should be delegated or not done at
all.
Multi-tasking is flawed as a practice. It’s
much easier to concentrate your attention on
things that it’s easy to do, so you should get
others to do the simple tasks so that your
focus is the business, customer value and
productivity (as you have a limited amount
of time).
Remember the 80/20 rule? It applies here
too. Concentration is the key to profit.
Achieving more profit requires that you
concentrate your effort on the smallest number of activities that will produce the largest
amount of revenue. Do you ever ask yourself; “What are the least number of activities I can
do to generate the most amount of money?”
Therefore, you should out-source or recruit with the goal of finding someone to carry out
activities for you to allow you to free up your time and create scale; people that can help you
with research, find niches, partners, write articles and copy, develop your e-commerce in pay
per click, personnel selling and general management.
OUTSOURCING
FREES up your time so you can
concentrate on producing even more
value for your customers.
• Any simple task that you can do
should be outsourced to someone
else so that you can get on with the
business
• Anything you can’t do you should
outsource so that you can get on with
using your skills
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The Real Difference Between Outsourcing and
Out-Tasking
In order to be successful in
business you simply must
learn how to outsource and
delegate effectively.
Unfortunately most people
approach the whole subject
wrongly. Their flawed
thinking begins with the first
question that they ask
themselves when considering
outsourcing; “Where - or how
- can I get this done the
cheapest?”
The answer to this sort of
question leads to a lot of
disappointment, frustration, missed opportunities and heartache. The reason is that it
displays a deep level of ignorance about what makes a business successful. Frankly, the
question verges on the absurd…
In the first place, it’s the wrong question because the cheapest outsourcing or recruitment
solution is almost never the most reliable, nor the quickest, nor the most knowledgeable, nor
the best choice. When all is said and done, the old saying that ‘you get what you pay for’ is
absolutely true. And since we’ve already established that your time has value – when you
continually spend time on an activity even though you outsourced it, it will cost you a great
deal more than you might think.
I recall a meeting in Birmingham, with a lady specialising in recruitment about three years
ago. I remember her telling me that she was in business to help people save money by
making sound and reliable choices when it came to outsourcing and recruitment. I was also
struck by the fact that her business was doing well. Really well in fact!
Which Question Are You Asking Yourself When
You Consider Outsourcing?
When you ask the question “Where or how can I get this done the cheapest?” you are taking
an out-tasking approach. Your focus is on getting the activity done. When you take this
The Facts on OUTSOURCING
A survey of companies buying and
recruiting revealed:
reported that they have outsourcing
challenges because their companies lack
project management skills.
reported that they lack a good process for
specifying work.
said that they did not have the right metrics
for measuring performance.
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approach you are forced to continually go through the selection process each and every time
you need the job done. This is called ‘outsourcing turnover.’
When you consider the total amount of time you dedicate to finding and selecting a person it
really can become quite expensive. What makes this approach even worse is that there is
always a greater risk in dealing with someone new rather than someone that has a track
record of delivering as promised.
Outsourcing and recruitment is about developing long term relationships with people who
have expertise you don’t have. With this in mind the better question to ask is; “How can I
maintain access to a talented person who can do – or help me do __________ on a long
term basis, so I can seize on opportunities as they present themselves and be assured a
quality job?”
When you take this approach you end up building a team of independent and dependent
people that will either help you directly or free you up to get on with your next business
project. Over time, you and your team work better and better together and it will be your
company that will harvest most of the benefits.
Some of my clients have told me that when they spent real time and money finding, retaining
and managing the right sort of talent they thought it was money very well spent.
How to Make Your Business and Your Outsourcing
Relationships 10x More Profitable
Now we’re going to look at a way to make your business and your business relationships ten
times more profitable. But first, I have some bad news…
The bad news is that even when you set out to recruit people and engineer outsourcing
relationships things can still go wrong. Take a close look at the problems shown in the table
below.
My experience has shown these three causes are responsible for a lot more than just
outsourcing challenges. In fact, being deficient in any one of these three skill sets will
certainly stunt your business growth.
Since each of these skills are so vital to your success let’s look at each outsourcing issue
individually.
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The 3 Ways Work Should Be Carried Out In Your
Business
There are three ways that work should be done inside your business; projects, systems and
processes. So if you are working on an activity that’s ongoing, or something that is done
more than once you should develop a systemized way of running that activity in your
business.
If on the other hand it’s temporary, goal directed, has a beginning and an end, and is unique
it should be managed as a project.
One of the keys to making business more successful is to identify your most important
processes decide how they work and what they deliver and do everything possible to make
improvements where necessary.
To be quite frank with you it comes as a bit of a surprise to me that I’ve never heard anyone
else talk about this distinction (between projects, systems and processes) because in a sense
this is really what entrepreneurship is all about!
Being an entrepreneur is about developing, installing, and continually improving the systems
and processes inside your business while also being involved in a limited number of projects.
You are an Untrained Project Manager, Managing
Projects!
Project management is a very important skill for the strategist. Yet, most if not all the
business owners and managers I meet are untrained project managers, managing projects.
Think about how bizarre that is!
It is when you think that project management offers you the means to achieve your goals in a
controlled way. It offers you the system to organise, co-ordinate and communicate with your
team whether they are outsourced or employed – all essential factors to the success of any
customised project.
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Amongst the things that come to mind when I think of the reasons for project management
are tighter budgets, diminishing resources, more and more time constraints, and competitive
pressures – all of which point to the need to improve the ways we do business.
Thus project management gives us the means to concentrate on priorities, overcome
challenges and problems, take charge of new and important initiatives and become flexible
enough to adapt to change and achieve higher performance and a higher probability of
success in each project.
Even though each project is unique in terms of scope and challenge, a systematic approach
using best practice is key to developing a new strategic position, restructuring your business
organisation, managing new product development, product launches, research, marketing
campaigns, customer expectation and of course managing outsourcing relationships.
My suggestion to you is that if you are managing projects, it would be a very good idea to
develop your project management skills. That’s why I recommend and teach project
management to every client I have because it’s that important.
After all project management is a discipline and
a process that comes with a set of tools and
techniques that define a project’s goal, plans all
work to reach the goal, leads the project and
support teams, monitors progress and optimises
the resources used in order to reach and exceed
the outcomes from the project such as a new
unique strategic position of a product launch.
The penalties for not using - or even of poor -
project management include: missed deadlines,
cost overruns, poor workmanship, conflicts
among team members, redoing work to correct
errors, unclear directions, continuous changes,
forgotten key tasks, poor morale of team, duplication of effort, etc. And all of this leads to
meagre customer service and reduced productivity.
Given the nature of these types of consequence, project management should be viewed as a
tool that can seriously impact business’s success – particularly where new and large scale
activities are planned. Effective project management will help you: meet or exceed customer
expectations, maximise the use of your resources (time, people, money, space, etc.), bring the
project’s goal to a successful conclusion on time and within budget, together with
documentation for any need
PROJECTS
SYSTEMS
PROCESSES
The 3 ways you can streamline
work in your business.
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How Work Should Be Done Inside Your Business
A major challenge facing a business owner or manager today is the need for a good process
for specifying the work. If you could do this believe me you would achieve more leverage in
your business. The reason why people don’t, and why they struggle is due to an absence of
process and system in their businesses.
Edward Deming, the father of the quality movement and the man responsible for Japan’s
rise after the Second World War said: “If you can’t describe what you’re doing as a process,
you don’t know what you’re doing.”
If I may say I couldn’t agree more. It’s
impossible to achieve optimum
performance in your business with
flawed processes.
Process Management is one of the
best ways to document the way work
should be done inside your business.
Most often, process focuses on meeting
the needs of the customer and
delivering a good or service that will
fulfil that need. In many cases, the
business process is actually a collection
of interrelated processes that function
in a logical sequence to achieve the
ultimate goal.
I know a lot of people have some words about McDonald’s foods but what is impressive is the
presence of process and system. How can they get a customer a burger, fries and a drink
within two minutes? Have you noticed now you can get a sweet, hot or cold drinks as well as
a variation in burgers at prices that haven’t significantly changed in years?
Imagine what would happen if something happened in the chain of activities that broke
down; order taking, grilling, toasting, boxing, dressing, frying, inspection, assembly and
service. Imagine what would happen if the people engaged in these activities were poorly
trained in their roles as well as in stock management, procurement and cleaning.
The whole thing would fall down. That’s why having a tool as powerful as process
performance. It’s impossible to achieve optimum performance in your business with flawed
processes.
HOW CAN YOU CAN
MAKE YOUR
BUSINESS MORE EFFICIENT?
PROCESS MANAGEMENT
“If you can’t describe what you are
doing as a process, you don’t know what
you are doing” Edward Deming
Processes are activities, such as new
product development, advertising, sales
and planning.
Once you know what you have got to
achieve its very easy to improve and
optimise each activity you carry out in
your business.
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Quality experts tell us that 94 percent of any breakdown is due to faulty processes, not
human problems, nor anything else. Problems arise for the reason that a breakdown in a
process has occurred. That’s why having a tool as powerful as process mapping is crucial to
streamlining your current operation.
What is a Process?
Processes simply convert inputs into outputs. A key issue is to understand how each one
works and what it delivers and then to experiment with ways to improve the rate at which it
converts inputs into outputs.
For example, in one of the most important processes; sales, it is vital to monitor and improve
the way salespeople convert the people they meet (their inputs) into paying customers (their
outputs).
Fortunately there are hundreds of ways of
improving the conversion rate here. For
example, a now famous life insurance
salesman became a multi-millionaire just by
changing the first few words he said on
meeting a new prospect. While most of his
competitors answered the "So what do you do
then?" question with the words "I sell life
insurance"... a response that was guaranteed
to empty the room in seconds. This particular
salesman answered with the words "I buy life insurance for people at the lowest possible
price. Would you like me to buy you some?"... 19 words that made him a multimillionaire.
Often the difference between success and failure, between stagnation and explosive growth,
can be as simple as that! Other key processes and conversion rates could include:
• How many units of raw material (inputs) it takes to make a unit of finished product
(output)
• How many sales leads (inputs) does it take your sales force to convert into sales
(outputs)
• Haw many first time customers (inputs) they convert into repeat customers (outputs)
• How many customers (inputs) they get referrals from (outputs), and many more
• How many advertisements (inputs) to obtain a contribution from new staff (outputs)
HERE’S SOMETHING
WORTHWHILE
REMEMBERING…
What you can measure, you can
manage… and what you can manage you
can improve!
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How to Develop Processes in Your Business
One of the keys to making your business more successful is to identify your most important
processes, and then do everything you can to improve the conversion rate so that you get
more output from every input. It's as simple, and as difficult, as that!
And, once you've identified them, what ideas, techniques, systems will improve your
conversion rates? Unfortunately the answer is that: you won't know until you try. So how can
you go about developing processes in your business? Here are some ideas.
Start by identifying your most important processes, and measuring the rate at which those
processes convert their inputs into outputs.
Get every single member of your team thinking about what you can do to improve each and
every one of those key processes. Encourage super-creativity by offering prizes for the most
off-the-wall ideas. And reward ideas that work with lavish praise, recognition and perhaps
even something a little more tangible! Julian Richer from Richer Sounds uses this method to
great effect.
Generate further ideas by systematically asking your customers what they really want. Note:
It is always a great idea to listen to your customers. But don't let them set the entire agenda,
since very often they will not be able to tell you what they really want until you have first
shown them what is possible. For example, they are unlikely to tell you they want a
revolutionary new product until you have first told them it has been invented, are they?
Systematically borrow from, and benchmark against, the ideas of other successful businesses
- especially those in different markets. But don't make the mistake of thinking that every idea
has to be original or revolutionary. The best ideas are often the simplest and smallest (just as
they were far our insurance salesman!).
Test your new ideas - i.e. try them one at a time (because if you test more than one at a time
you won't be able to tell which ideas work, and which don't).
Systematically measure the impact on the conversion rate of every new idea you test.
Use the best ideas - and reject the rest - by making sure that the best ideas are built into your
systems so that they are used every single time.
Don't rest on your laurels (after all, today's laurels are tomorrow's compost). There is never a
perfect way of doing anything. But there is always a better way. So carry on measuring and
testing, and carry on finding better ways to do