Not Scaling – Part 2: Starting Small to Build Big

devicesThe big news to share this week on bounceit!™ is that the app went live in the app store, after a long period of creation, and we are starting the process of scaling by not scaling, as was discussed in last week’s blog. This week will be focused on getting a small group to use and try it out on all devices to make sure everything is flowing well. Then, we will move to our local and social media friends to give it a try and to share with others, if they like it. And finally, on to the rest of the world.

Well, sort of to the rest of the world. Some people think big launches matter and they want to create a big event with a lot of hoopla, excitement and media attention. After this happens, then everyone will know about it and you are set to go viral. We thought about this approach a while back and decided against it. Interestingly, Paul thinks that this is not the way to go either. He says founders like to think that they have a great building and everyone who hears about it will want it. Even the best of the viral applications don’t start this way. He also says it is part laziness, that with the big launch, the hard work of creation is done and you can sit back and watch your amazing creation take off. This will not happen and will require getting users one at a time.

Another thing that usually doesn’t work on the way to scalability, is partnerships. Paul’s experience is that they don’t work for startups in general, in the form of getting the big break. They usually take lots of work and don’t lead to the scalability that was hoped for in the beginning. That is where you are trying to be scalable. When you get with organizations or other companies to work on building a core group of users in a certain demographic to experience the feedback, then this approach is doing the non-scalable with a few users at a time. We will be doing this with the University of Tennessee and with Regal Cinemas.

We will move in small, non-scalable aspects first, to build a presence with certain groups that we are targeting.

Paul says that what matters is not the big launch or the big partnership, but the ability to delight your customers is the key to getting bigger. Take a handful of people, make them really happy, watch what they do so you can learn, and they will get friends like them taking you further down the road.

So our plan is to go slowly with our initial roll-out to build a core group of users in our local community and test the app with the different ways new people may think about using it, and also to make sure all the software and hardware running the app will handle the pressure of hundreds of pictures and votes, and then thousands.

Bounceit!™ will have announcements locally next week in the press and we will have an article in Nibletz, which has agreed to use bounceit!™ to get feedback on speaker choices for their two big conferences.

This is an exciting time for founders and also a time not to sit back and wait for things to happen. Entrepreneurism is about getting out and creating the success you want!!

Partnering for Growth

A few weeks back, I shared what we are dong to move forward on the path of concentration around a certain focus with mobile. We have built a mobile app platform that is customizable and appropriate for our focus of working with marketing companies. This has been an evolution for us, and one that recently has had a lot of the details come together.

As I shared before, mobile is growing and the smart phone is being adopted with exponential growth. It has provided opportunity for businesses to connect with their customers that has not been possible before. With the build-out of an app, you can have relationships with your customers or employees that is right in the palm of their hands. The convenient access to knowledge, specials, promotions, events, sales and customer data is significant.
imagesI am in Charlotte for a few days to meet with marketing companies and build relationships that will benefit each of us. We will discuss our approach and platform to make their lives easier, shorten the time to production, and create more profit opportunities. With each of us focusing on what we do best, there are lots of positive aspects to this type of partnership. We focus on building and incorporating the design, and the marketing companies focus on their strengths of design and creativity.

This gets us back to the area of focusing around a certain vertical and making the business process one that is scalable. This approach allows the process to be repetitive and efficient. When you produce different custom software projects, like we have in the past, they require a lot of effort to ramp up and go through a learning curve. But when you do, there is no long-term benefit for that extra effort. This focus will allow us to get a benefit from the learning curve of building the platform and using it again and again.
I am excited about this change in direction and having a certain type of client to focus on – a client with the need to fill a gap that is present when their own clients tell them they want to have a mobile app for their businesses. This will allow us to say “no,” when we are approached to do things that will take us down a path of lost investment and cost, instead of being profitable.
How are you staying focused, scaling and saying “no” to the things you shouldn’t be doing?

The Goal Is Antifragile

Some of you may remember the book, “The Black Swan,” that I have written quite a few blogs on in the past. The reason I have shared from Nassim Taleb often is his philosophical thinking about the world and investing is so insightful and unique that it makes for serious contemplation about the world in which we live.antifragile_the_book

Well, Taleb has done it again. He has written a new book that is just starting to sink in and open my eyes to the implications of his thinking. The book is “Antifragile: Things That Gain from Disorder.” Here Taleb presents to us that things will get more stable and stronger when they have ongoing shock and turmoil, compared to things that are breakable or fragile. That the antifragility of some comes at the expense of the fragility of others.

This happens in the biological world where some parts of the inside, like within a cell, may need to be fragile for the large structure to be antifragile. Taleb uses the example of restaurants in the book, saying that each one is fragile in that they come and go – they compete and go out of business regularly. The local restaurant collective is antifragile with its system providing quality, whereas central control, Soviet-style cafeteria food would be the alternative.

Fragile type systems depend on everything be exact and a planned course. If you have deviations, they are more harmful, so this needs to be more predictive in its approach. The opposite holds true for antifragile, where you don’t worry about deviations and the possible different outcomes that may occur as you move forward.

When you see the world through this lens, it helps put perspective on what works and doesn’t work. This would mean not bailing out on the things that don’t work, and not relying on permanent administrations and forecasting departments that think they can predict the future.

How do you help yourself to become more antifragile? You learn to love mistakes. When you make them a lot, but at a level that is small and reversible instead of large and destructive, you put yourself in a situation to evolve and stay alive. What you may consider is the random aspect of trial and error, is not so random if it is carried out in a rational approach, because the error is used as information.

For the entrepreneur out there, Taleb’s work has a lot of implications for your strategy and thinking in how you approach your competitors, market place and the world in which you live. I will get into that more in future blogs.

As I’m sure you have noticed, we have changed the blog over to a new format, so it will look a little different to you. Thanks for reading.

Compensating with Scalability

A few weeks back, I wrote about my mistakes in not having a focus on a specific niche or vertical and mentioned a bit about what we are doing to push forward with a vertical in the health care space, focusing on mobile apps. We have made some changes and are pushing forward to create a market in the app world that is more scalable than what we were doing before.

Scalability allows you to take something you have already built and duplicate it over and over. It is a key ingredientphoto in business. With the framework we have built, we can add a custom cover to create a product more quickly and with less cost than if we rebuilt one each time from scratch. This is a powerful aspect you get from software.

The healthcare vertical is still being explored, and we are gathering information to discover what we want to do to be a clipper ship and follow the money in that space. We will talk to different companies and ask questions to find their hot spots. With the mobile app platform, we will approach marketing firms about providing this platform for them, allowing them to reduce cost and speed up the process, which will in turn benefit their clients.

This will introduce another level of salability. We can develop relationships with one business at a time, build a mobile app for them, and move on to the next one. With the marketing companies, we can build one relationship with a marketing firm, and they could send us one, two, five, or ten apps to build. Creating value for others pays off with more business and, with the right execution, profits.

How scalable is your business and what are the possibilities of making it scalable to increase your opportunities?


Can a Meeting be a Game Changer?

meetings-suckWhy is it that so many of us don’t like meetings? I personally like the feeling of getting a bunch of innovative people together generating better and smarter ideas than any one of us could come up with on our own. Most people have a hard time seeing a meeting as a game changer. Would you think a meeting could speed up change or push you ahead of the competition to become the global leader in the industry?

Well that is exactly what happened with Wal-Mart. Their Saturday morning meetings created a lead time in the industry and catapulted Wal-Mart up to one of the highest grossing companies in the world. You might say, “Excuse me, a meeting did that?” Well, in Verne Harnish’s book “The Greatest Business Decisions of All Time,” Hank Gilman makes that case.

It began back in the beginning when Sam Walton started this Saturday morning meetings in his first store in Bentonville, AR. He held these meetings to gather all of his people in one place to figure out what was selling and what was not. He would look at different metrics and determine what needed to be changed based on what had happened over the previous week. Then, with the managers brainstorming, they would make changes, put items on sale that needed to go, and move things around to get noticed. After this, they immediately went out and implemented these ideas to take advantage of the strong weekend activity.

Stay ahead of the competition. This was key. By simply staying days ahead, they eventually zoomed past the industry leaders, such as Sears and Kmart. When interviewed, Walton’s friend and successor David Glass explained that a big accomplishment of the Saturday meetings was to collect and distribute information to all of those in the company, so it could be shared. Sam felt that everyone should work together as partners and should know what was going on.

This meeting allowed Wal-Mart’s people to gather and discuss ideas, and they could have all the corrections in place by noon on Saturday. This would put Wal-Mart ten days ahead of the likes of Kmart and Sears. How did the meetings work? The employees would share their best ideas and concepts. The idea of a Wal-Mart greeter came from this. Some executives would show best practices videos. To top it off, if the meetings were getting stale, they would bring in guest speakers like Bill Clinton, Adam Sandler, and Oprah Winfrey.

What are you doing in your meetings to stay just ahead of the competition and share information with your employees? How are you making them feel like partners? And yes, even the best of us can have stale meetings, so what are you doing to make sure they are interesting?

Keeping It Simple Is An Understatement

When we are looking at our business, it seems completely obvious we should just keep it simple. While this may seem obvious, it is much more difficult to accomplish in a complex world filled with complex processes, complex rules, complex people, and complex competitive forces. If we could be more disciplined and keep it simple in our businesses, would we have more success? Well, that is what Ken Segall says in his new book that explains how Apple’s success was based on not just simplicity, but the Insanely Simple.

In the book “Insanely Simple: The Obsession that Drives Apple’s Success,” Segall explains how simplicity was the connecting theme between all the great things they did with hardware, software, strategy, and other areas, thus making them the most valuable company on the planet. Segall’s observations are particularly intriguing because he worked at an ad agency as creative director for companies like IBM, Intel, and Dell as well as with Steve Jobs’ other company NeXT.

cI have been saying this for a while now about the things we do and the products we create, so my interest was piqued. It was very clear that we had not gone to the extremes discussed in this book. I would like to thank my friend Paul Sponcia, a fellow entrepreneur in technology, for sending me this book. He knew it would resonate with me.

Segall says, “Whether you’re a person, dog, fish, or ameba, you will respond more positivity to the simpler solution – even if it isn’t a conscious response.” Knowing, embracing, and leveraging this as a business person, especially one creating the new web and mobile apps, will achieve greater success than those that do not.

Segall gives several examples, including limiting the number of people in a meeting to the few that really need to be there. More people create more complexity. When Jobs came back to Apple, they had about 30 products, and he simplified it down to 4. The iPhone has only one button because Jobs wanted complete simplicity. He rejected many versions before he got to the one button design.

The power of simple not only made amazing products, it became a key value at Apple. I see the power of simple and understand better why the opposing force of complexity gets in the way. I will be more relentless going forward with making simplicity a mantra of what we do.

What are you doing to incorporate simplicity in your business as well as other areas of your life?

My Mistakes

Do you ever think about the mistakes you’ve made in running a business or in life?Blog Pic I would hate to think about the mistakes I have made with the various businesses that I have overseen. If you listed them on a hard drive, you would probably need a gigabit of space. These mistakes include timing, strategy, approach, negotiation, what to focus on, what not to focus on, not keeping it simple, too much process, not enough process, people, and on and on. It just seems endless, and it makes me wonder how I ever had successes, but it also makes me realize why things seem so hard at times. So what do you do?

Well, my simple answer is to not fret too much because mistakes are going to continue to happen. We are all human. The more introspective answer is to learn from the mistakes and avoid making them again. It seems that I get the angriest when I realize that I have made a mistake for the second or even the third time (geez where is a wall I can beat my head against)! I try to ask what caused the mistake and then put a process or approach in place to ensure it doesn’t happen again. If the mistake happens again, I realize that I didn’t take the time to follow up on what I wanted to have in place to start with (oh boy, another mistake)!

One of the mistakes I’ve realized over the past couple of years is not being as focused in a specific niche or vertical within the software space. I have made the excuse that the product side of our business, which is more of the swinging for the fences approach with a lot of strike outs, would be our grand plan. But it is not stable and consistent so we need to have a side that produces cash flow and consistency. That was supposed to be the development of custom software for various businesses. The custom software was ad hock with no real focus and also had a lot of inconsistency. This was not working and for good reason, so it had to change.

We have made changes in our firm to have a specific focus. We have hired and plan around that focus and create an environment of synergy around the health care space. I wrote a blog a while back on the clipper ship strategy, which discusses being flexible and going where the money is, and that is definitely in healthcare. We will tighten this strategy and create a much better outcome and pipeline for our company.

This is one mistake that has been painful, and I will energize us to move forward in a new way. Again, Happy New Year and here is to a making it the best year yet as you and I recover from our previous mistakes!

Offering Less to Be More

In business, we often strive to make all of our customers happy by being good at every feature or service we offer them. The problem is that being good at a lot of things makes it difficult to be great at any one thing. Why do we do this? We think we can excel in any one area when the reality is we are just good or average in all areas. Have you ever thought about trying to be bad at something you do so that you can grow your business and increase your market share?

less-is-more-logo-blackWhat if I was a bank and decided to offer the lowest rates on deposits in all my markets? What if I did this, so I could be the best at customer service? I could stay open 7 days a week and as late at 8:00pm on weekdays. I would hire people based solely on attitude because hiring on both attitude and aptitude is too expensive. I would do this knowing that not having aptitude, your people couldn’t offer 20 plus types of checking accounts and highly complex financial instruments. Would you think my bank could even grow or see the stock price go up if I made those changes?

Well that is exactly what happened to Commerce Bank, which became the fastest growing retail bank in America. They saw their stock price go up 2000% in the 1990s. Commerce Bank made a key strategic decision to deal with a huge sticking point in the industry. They talked to consumers and learned one major concern was that banking hours sucked. They decided to open at 7:30am and not close until 8:00pm, and they kept the teller window open until midnight on Fridays. They also maintained full service hours on the weekends. While they did this, they sampled the marketplace to ensure they had the lowest deposit rates out there, and if they did not, they would lower them until they did.

Commerce Bank realized that in order to have the resources necessary to be really great at something, they needed to be bad at something else. Why? Because being good at everything takes resources, and to be great at something you need to redirect those resources to focus on the things that will make you great. Commerce Bank understood that they money they saved on low deposits gave them the money to fund their longer hours of operations. They discovered that to have the best customer service people and afford them, they needed to sacrifice on aptitude and reduce the complexity of their products, offering only limited financial products.

You can read more details from this example, along with others, in Frances Frei’s book “Uncommon Service.” It shares many examples of companies that sacrificed in one area to be great in another. This book is an important read for making strategic decisions that impact your features and benefits given the resources you have. They discuss creating an Internal Attribute Map to figure this out.

We haven’t done this yet at Efficience, but I am adding it to the agenda for our annual meeting. We need to discuss what we can take away, so we can prop up a key area that makes us stand out in the marketplace.

What you going to drop, reduce, or eliminate to make your offering or service excellent?

Unearthing the Latent Demand to Grow

Over the past few weeks, we have been discussing the change in the marketplace oversupply. If we are going to grow our companies, we need to figure out how to zero in on the right demand sectors. To do this, you first must figure out your demand profit pools. So, what are those? Demand profit pools are the areas of untapped demand that we as business owners may not be aware of because we haven’t dug deep enough.

In “How Companies Win,” Kash and Calhoun discuss this and cite an example of the dog food industry. This industry provided bags of food under standard segments based on large, medium, and small dogs. The food was then segmented under dry/bagged or wet/canned. There was very little vision and, as Kash says, “absolutely no proprietary insights.”

They finally looked at the demand landscape. This takes a look at everything ahead of you, such as valleys, rivers, towns, hills, and whatever else may be out there. The analysis is done with a variety of surveys, focus groups, market research, and other techniques that break down the demand pools by tastes, customer characteristics, lifestyles, needs, and desires. All these combined create the demand landscape.

After this type of analysis on the dog food industry, demand pools were broken up, not by breed or size, but in the relationship that owners had with their dogs. They were broken down by marketing the dog as a child, the dog as part of the family, the dog as an active partner, the dog as a pet, and the dog as a farm implement. As you might imagine, the dog as a child was the high profit center, and the dog as a farm implement was the low profit center. This awareness caused the pet food company to align their products with the right demand and create greater distinctions with each brand, so they avoided competing with themselves.

What if you could find the answers to the questions Kash and Calhoun propose in their book?

  • Find the high-profit consumers who can raise your margins and revenues
  • Understand current, latent, and emerging demand
  • Determine which channels are growing and which channels are slowing
  • Assess where your competitors are strong and where they are weakest
  • Understand the media habits of your most important consumers
  • Identify the best potential opportunities for innovation
  • Build a financial model for resource allocation to drive faster growth
  • Develop insights about the demand of your most profitable customers

Having these answers is the way to deal the increasing oversupply economy that we now have and to create the demand that is needed to grow your business. What are you doing to dig deeper?

Does Your Business have a Demand Problem?

Looking at what has been happening in the world with the slow economy, you would think it all has to do with a bad recession or political activity that is less than favorable to the business world. Look a little deeper, and you will see things are changing. We should be aware of all that is going on for the sake of positioning our businesses for the most potential possible.

I believe, as a leader of a company and the one responsible for putting us in the path of future waves of opportunity, my purpose is to read and learn as much as possible. To achieve this, I participate in the EO University Conferences, attend the Verne Harnish Fortune Conference, and read a large number of books every year. This exposes me to people, speakers, and ideas that help me contemplate what the future may look like.

Back in the early 2000s, I came across a book called “The New Law of Demand and Supply” by Rick Kash that was sent to me by the Williams Inference Center, and I have been reading a book more recently called “How Companies Win” also by Kash and David Calhoun. The first book put some interesting thoughts in my head, but I didn’t see really the power of this thinking until the great recession hit us. Why? Because it took the significant decline in business to magnify how the Demand and Supply forces have changed.

In the past, we had huge demand from those who wanted everything businesses could throw at them. For decades, we could grow revenue by adding more offerings and streamlining supply. We globalized the supply chain, reducing costs by making products in China or India or even just down the street if that was most efficient. We were able to buy so many things as our living standards increased and the costs decreasing. We accumulated so much!

Now, things have changed. The demand is simply not there. We have excessive supply from where we increased it so much in the previous decades to meet the high demand, but this terrible economy has taken away our buying power. We now see an economy that has vast oversupply but not enough customers to support the businesses that are out there trying to provide that product or service. This is the new world in which we are living, so decision makers need to know how to deal with this in order to generate growth in their business.

For those that zone out when you hear “supply and demand” due to the brain trauma you received in Econ 101, let me say it another way. In the past, we desired lots of things (lots of demand) and the business world struggled to make all we wanted and to provide at affordable prices (not enough supply). Now, we have this huge amount of goods (over supply) that companies are trying to sell and not enough people with the desire or resources to buy them (lacking in demand).

There is so much supply for what you are offering, so it is tough to grow business. Can you see this in your business environment?

Supply has vastly outpaced the demand in the economy right now, and the global economy has become unbalanced. We need to grasp this new reality that in order to get customers to want our offerings, we need to zero in on exactly what they are demanding. We will focus on this in next week’s blog.