The ironies of small business and democracy

February 25, 2014 11:37 am , ,

One of the great ironies is that while businesses flourish in a democracy, a business cannot flourish as a democracy.

By definition, stakeholders in a democracy vote on issues and the majority rules. But while this process is one of the greatest inventions of mankind with many applications, business is not one of them.

Pure democracy isn’t practical in government, either. But a group of visionary malcontents solved that problem over 200 years ago by creating something new: a constitutional republic, where an elected few represent the interests of all.

A business can be like a dictatorship in that an individual will likely make the final decision. One desk, as President Truman so famously said, where the proverbial buck stops. But here’s another irony: Even though a business may have characteristics of a dictatorship, it likely won’t be successful if the team is managed by a tyrant. The dominator management model is as old as humanity itself, but it requires subordinates to dutifully follow the instructions of superiors. As a withering vestige of centuries past, this model is no longer competitive.

The 21st century management model must look more like a partnership. Just as effective government requires that elected representation augments pure democratic principles, an ultimate decision maker in a business must be alloyed with the experience, brainpower and engagement of the team.

The Founders envisioned a nation that could be as dynamic as it was enduring, and as powerful as it was benevolent, but only if the stakeholders believed their investment in such an ideal was justified. Our republic — warts and all — essentially does this. And even though Americans outsource the management of their government, the classic principles of democracy come to bear with regularly scheduled elections to see if the majority wants to change its mind.

Employees change their minds by seeking work elsewhere. And while they always had the right to leave a job that’s managed by tyrants, past generations swallowed their pride in favor of what we now know was the illusion of job security.

Today, employees have no such illusions. And while they accept the reality that someone has to make final decisions, they also expect to contribute to the basis for those decisions.

In the 21st century, a business still can’t be structured as a democracy or dictatorship. Today employees expect to be led, not driven; they want to contribute, not just take orders, even if the last order wasn’t their favorite.

The 21st century workplace does not abide tyrants.

Posted in: Business Ownership, Management

Don’t forget to listen

February 22, 2014 9:00 am , ,

Perhaps the two most important things salespeople can understand is:

1. The information in their own head is not as important as the yet-to-be-mined information in their prospect’s head; and

2. Knowing how to talk little enough and listen long enough, to be able to mine that gold.

The lesson is similar for small business owners who’ve gone to a lot of trouble and expense to hiresmart employees. We already know what we know; we need to know what’s in the heads of the members of our brain trust. We need our folks to be open and productive with their ideas about problem-solving and business strategy.

How do we do that? Not by behaving like we’re sitting on our throne with all the answers, that’s for sure. Instead, let’s consider the thinking of author and management guru, Peter Drucker, who said, “My greatest strength as a consultant is to be ignorant, and ask a few questions.”

I know you’re very proud of what you’ve learned and how much you’ve accomplished; and you should be. But if your business isn’t hitting on all cylinders; if your plans just aren’t coming to fruition like you intended; if you don’t seem to be getting the most out of your investment in the other humans in your business; perhaps you should try acting ignorant and ask a few more questions.

And don’t forget to listen.

Posted in: Sales

What does your intellectual property (IP) strategy look like?

February 20, 2014 8:00 am , ,

For 10,000 years, business leverage has come from three asset categories, shown below in chronological order of appearance:

  1. Muscle power: human or animal
  2. Tangible stuff: raw material, buildings, inventory, machines, etc.
  3. Intangible stuff: Patents, trademarks, copyrights, trade secrets and other intellectual property

For most of history, business power was heavily weighted on the first two categories. First the strongest caveman and biggest horses had the advantage. Later the fastest ships and largest factories got the jump on lesser competitors. For a small business it sounded like this: “We have the largest inventory in the tri-county area.”

But, as revealed in a study by IP attorney Kenneth Krosin, intangible assets became a powerful force in the latter third of the 20th century. Krosin discovered that at the end of the 1970s, corporate balance sheets were represented by 80% tangible assets and 20% intangible. But in 30 years, by 1997, the ratio of assets had essentially inverted to 73% intangible and the rest tangible.

Here’s what small businesses should take away from the breathtaking explosion of IP revealed by the Krosin study:

• The power of IP is no longer the wholly-owned franchise of big business.

• For centuries intellectual property provided only a marginal advantage even for big business, but has become a two-edged sword – one edge provides opportunity for those who leverage intangible assets more and tangible less, and the other edge delivers disruption for those who don’t.

• Exciting Internet resources and other digital innovations are converging and coalescing in front of our eyes to make intangible assets a much more powerful lever for all businesses.

• IP in the form of digital assets has evolved from two-dimensional tools, like websites, to add the third dimension of a virtual marketplace in cyberspace, aka The Cloud.

• Just because a small businesses may never reach 73% intangible assets doesn’t mean it shouldn’t have an IP strategy.

• Your IP strategy should include acquired intangible assets, like software, as well as the kind that you create, like a business process you maintain as a trade secret.

In The Age of the Customer, a small business must have an IP strategy that’s born from the acknowledgement that it is integral to the performance of virtually every talent and task in your business, and required to maintain marketplace viability.

What does your IP strategy look like?

Posted in: Future Thinking

Acquire and create intangible assets for your IP strategy

February 18, 2014 12:43 pm , ,

In my previous column, I discussed intangible assets as intellectual property (IP) and recommended every small business have an IP strategy.

It’s not my job to tell you what your IP strategy should look like because, by definition, small business intellectual property is as unique as belly buttons. But it is my job is to help you get your head out of the tangible asset sand and start thinking about the increasing role IP is playing in the success of your business operation and customer acquisition.

Remember, your strategy will include IP you acquire from others, as well as the proprietary intangible assets you create. Here are some ways to think about both kinds of IP:

• Don’t think of your new delivery schedule as just a new route for your trucks; it’s your proprietary IP that’s making your business more efficient and more relevant to customers.

• The systems you’ve developed to produce products probably seem routine and common sense to you, right? No big deal. Well, it is a big deal because it’s one of the keys to your success. It’s an intangible asset you created and are maintaining as a trade secret – your proprietary IP. As such it should be recognized, protected and defended just as diligently as you lock the doors of your business at night.

• Don’t think of social media IP you’re borrowing from Facebook, Twitter, etc., as an obligatory task everyone else is doing; this acquired IP is an intangible resource you use to create communities from which come very tangible customers.

• Connect members of communities you build on social media IP with your face-to-face communities (customer list) by developing proprietary IP that integrates the two groups.

• Acquire customer relationship management (CRM) and email marketing IP, and integrate the two with your own program to deliver content to and connect with prospects and customers.

• When you buy your next computer, don’t think of it as replacing an old one. This time acquire an IP tool that puts you in a position to maximize time, energy and resources, and is the device from which you can create your own IP and manage your IP strategy.

Having an IP strategy doesn’t mean you abandon tangible assets – we’ll always need those. But it does mean you put them in the proper proportion with intangible assets. Today, the alpha member of the asset classes is IP. In fact, any and all tangible assets we acquire, and how we use them in the future, will be determined by IP innovations.

Grow your business more efficiently and effectively with an IP strategy.

Posted in: Future Thinking

Blasingame’s new law of customer relevance

February 15, 2014 8:00 am , ,

When you take a photograph, the resulting product is two-dimensional: tall, wide, and flat. But in most cases, you want the photo to actually show depth, where images in the foreground and background are all in focus.

In photographic terms, the range of focus front to back is called depth of field. The way to expand depth of field so more of the subjects in the photo are in focus is to add light. Light creates depth of field.

If you were given a photo of people who were the most critical to your success, you’d easily recognize your customers in the foreground in perfect focus. But as you look deeper into the photo you’d notice the images behind that first row increasingly drop out of focus with each receding row. The reason is because for most of the history of the marketplace, businesses have gotten away with having a very narrow customer depth of field.

When the coin of the realm was to be competitive, that meant you spent all your time thinking about how to serve the person in the foreground, the first row of your business world: your customers. But as I’ve revealed in the past, being competitive has been trumped by being relevant. And in The Age of the Customer, perhaps the most important component of being relevant to business customers is helping them serve the most important person in their photo: their customers.

Let me say that again with Blasingame’s New Law of Customer Relevance:

If you want to have customers for life, help your customers help their customers.

The way to accomplish this is to increase the depth of field of your customer photo. Light up the view beyond the first row of customers so that the second row is completely in focus. This three-step process works every time:

  1. Identify the customer of your customer.
  2. Find out what your customer needs to do to become relevant to their customer.
  3. Whatever the answer to #2 is, help your customer do that.

Executing this approach is how you acquire customers you almost can’t run off. Because when you help your customers help their customers, they know you’re doing more than just delivering stuff; you’ve become part of their team – integrated and committed, like a true stakeholder.

And if you want to pull off the customer relevance hat trick, light up the third row of your businesses photo: Help your customers help their customers help their customers.

I’ve done it – it’s a beautiful thing.

Achieve maximum relevance with customers by helping them serve their customers.

Posted in: Customer Care

The original social media is face-to-face

February 13, 2014 8:00 am , ,

Ever since Samuel Morse invented the telegraph in 1844, each new communication technology has sought relevance in an increasingly noisy universe.

Today there is actual management pain from an embarrassment of riches of communication options. This discomfort is especially keen when connecting with customers electronically: Should you email or send a text message? How about IM? And when should you use one of the social media options?

But from telegraph to telephones to Twitter, there has been one constant that has retained its relevance and impact: in person connection. As I’ve said before, face-to-face contact is the original social media.

For small businesses, social media adoption has always needed to be tempered by ROI reality. And as useful as each new communication resource proves to be, they are after all, merely tools to leverage our physical efforts, not eliminate the basic human need for interacting in person. Consider this story:

A sales manager (whose gray hair was not premature) noticed the sales volume of one of his rookies was below budget for the third consecutive month. Of course, he had questioned the numbers previously but had allowed his better judgment to be swayed by plausible explanations. Now there was a downward trend.

Upon more pointed probing, the manager discovered the reason for loss of production: too much electronic contact and not enough face-to-face. The rookie was relying too heavily on virtual tools and missing opportunities to meet with customers in person.

It turns out lack of training and rubber-meets-the-road experience left the rookie uncomfortable and unprepared to ask for and conduct face-to-face meetings, like proposal presentations. Consequently, he wasn’t benefiting from how the success rate of growing customer relationships can increase when certain critical steps are conducted in person. This manager immediately developed a training program that established standards for how and when to integrate all customer connection tools, including the face-to-face imperative.

If your sales could use some help trending upward, perhaps your salespeople need training to get in front of prospects and customers, particularly at the critical step of gaining an initial meeting. Like the manager above, you may need to establish specific and measurable standards for when face-to-face meetings should take place.

There is one connection option that has borne witness to all of the others and continues to be as powerful as ever: face-to-face.

Posted in: Social Media

Business interruption: It’s not a matter of if, but when

February 10, 2014 12:33 pm , ,

Ten years ago, on August 14, 2003, a single outage in the electric grid cascaded across eight northeastern states, putting 55 million people in the dark for days.

The Great Blackout of ’03, which also temporarily shut down thousands of small businesses, was a catastrophic reminder that we’re all one squirrel-in-a-transformer, fire, flood, tornado, hard drive crash or computer virus away from being out of business. One survey revealed that three out of four small business owners believe they will have a business interruption event in any given year. Alas, in that same survey, only 20% said they were prepared.

Are you prepared to deal with a business interruption event? Here are a few ideas.

Operational recovery
What would you do if your building became unavailable to you or your customers?

1. Instead of desktop computers, purchase laptops with docking stations that allow key employees to work and connect remotely, both internally and with customers. Make sure the laptops have Wi-Fi and a mobile router (4G) in case your broadband connection goes down. This costs a little more, but it’s good connectivity insurance.

2. Identify and become proficient with cloud computing applications that serve as alternatives for any installed programs that may be lost.

Financial recovery
A significant part of the working capital of most small businesses is from cash flow. What would happen if your cash flow was interrupted?

1. Consider purchasing a business interruption rider on your business’s property and casualty insurance policy that will pay you cash upon the acceptance of a claim. Be sure to read the fine print, all policies are not created equal.

2. Maintain a close working relationship with your banker so you won’t have to introduce yourself to the person you’re asking for a disaster loan.

 

Data recovery
Small businesses are using digital assets more and physical assets less in the execution of their business model. Are you prepared to protect your data as comprehensively as you protect your building, equipment and inventory?

1. Assign one person to be in charge of keeping all computers enabled with a proven malware program and keep them current on all units.

2. Regularly copy critical data from your hard drives and store it offsite, plus backup your data with a cloud-based data backup and recovery firm.

The only people who never experience a business interruption event are those who don’t have a business.

Posted in: Future Thinking

Blasingame’s new law of customer relevance

February 4, 2014 9:35 pm , ,

outoffocus1When you take a photograph, the resulting product is two-dimensional: tall, wide, and flat. But in most cases, you want the photo to actually show depth, where images in the foreground and background are all in focus.

In photographic terms, the range of focus front to back is called depth of field. The way to expand depth of field so more of the subjects in the photo are in focus is to add light. Light creates depth of field.

If you were given a photo of people who were the most critical to your success, you’d easily recognize your customers in the foreground in perfect focus. But as you look deeper into the photo you’d notice the images behind that first row increasingly drop out of focus with each receding row. The reason is because for most of the history of the marketplace, businesses have gotten away with having a very narrow customer depth of field.

When the coin of the realm was to be competitive, that meant you spent all your time thinking about how to serve the person in the foreground, the first row of your business world: your customers. But as I’ve revealed in the past, being competitive has been trumped by being relevant. And in The Age of the Customer, perhaps the most important component of being relevant to business customers is helping them serve the most important person in their photo: their customers.

Let me say that again with Blasingame’s New Law of Customer Relevance:

If you want to have customers for life, help your customers help their customers.

The way to accomplish this is to increase the depth of field of your customer photo. Light up the view beyond the first row of business-people31customers so that the second row is completely in focus. This three-step process works every time:

  1. Identify the customer of your customer.
  2. Find out what your customer needs to do to become relevant to their customer.
  3. Whatever the answer to #2 is, help your customer do that.

Executing this approach is how you acquire customers you almost can’t run off. Because when you help your customers help their customers, they know you’re doing more than just delivering stuff; you’ve become part of their team – integrated and committed, like a true stakeholder.

And if you want to pull off the customer relevance hat trick, light up the third row of your businesses photo: Help your customers help their customers help their customers.

I’ve done it – it’s a beautiful thing.

Achieve maximum relevance with customers by helping them serve their customers.

Posted in: Moment of Relevance

Disregard the “Nu-uh!” Effect at your own peril

January 29, 2014 12:31 pm , ,

Once upon a time, but not that long ago, a brand message could be successful even if it was close to a work of fiction.

Created by Madison Avenue wordsmiths, copy for an ad or brochure was crafted to manipulate and motivate using puffery, a legal term referring to acceptable marketing exaggeration. And most of the time it worked.

In fact, generations of consumers allowed themselves to be manipulated by puffery that became part of the sound track of our lives. For examples:

“Plop, plop, fizz, fizz, oh, what a relief it is.”

“Put a tiger in your tank.”

“The best part of waking up is Folgers in your cup.”

Here’s a local example:

“Largest inventory in the tri-state area.”

In the past, I’ve revealed how the 10,000-year-old Age of the Seller paradigm has shifted in favor of the Age of the Customer. The differentiator is control of the information, and your customer now owns that advantage, including the truth about your products, services, and marketplace behavior. This control is derived in part from something called user generated content, or UGC.

UGC is word-of-mouth on digital steroids; the commercial equivalent of political fact-checking. Today a successful brand message will look less like Madison Avenue manipulation and more like the good, the bad, and the ugly of your business discussed by customers in online communities, like Facebook, Twitter, or YouTube. You’ll benefit from good UGC one day and try to recover from negative UGC the next.

Negative UGC produces what I call the “Nu-uh!” Effect. It’s what someone posts online when your brand message doesn’t meet their expectations. If you say you have the freshest salad bar in town and one person writes “Nu-uh!” on Facebook or Yelp, that’s your new brand message until you find a way to redeem yourself.

A “Nu-uh!” could refute your claim in any number of ways, from a well-written critique to “Dude! Seriously?!” Either way, if you’re getting responses like this to your brand messaging, anyone who gives you a “Nu-uh!” raspberry is, at that moment, the co-owner of your brand.

Since no business, product, service, or relationship is perfect, the over-arching goal of your brand strategy in the Age of the Customer is to have more positive UGC than negative and, if possible, leave no ”Nu-uh!” unresolved.

UGC represents the two-edged sword by which brands large and small will either flourish or die.

Disregard the power of UGC and the “Nu-uh!” effect at your own peril.

Posted in: User-Generated Content

Are you practicing Age of the Customer prospecting rules?

January 27, 2014 12:26 pm , ,

As described here previously, control of the three primary elements of the business relationship has shifted as the Age of the Seller is being replaced by the Age of the Customer. The buying decision and access to information about how to make that decision are now controlled by the customer, leaving sellers with control of just the product.

This shift has created many disruptions, especially with entrenched Age of the Seller sales practices, but perhaps none more than business-to-business prospecting. Here are four facets to this prospecting shift:

  1. The expectation of buyers meeting with vendors as a daily course of business is over.
  2. After 10,000 years of needing a salesperson to provide information to make a decision, buyers are acquiring much of that information on their own online.
  3. Prospects are now self-qualifying themselves, and then pre-qualify prospective vendors they choose to meet with, perhaps as few as two, or even just one.
  4. Prospects are essentially ruling competitors in or out before first contact, often before the business knows the prospect even exists.

Prospects like this new empowerment because it saves time, contributes to their decision-making journey, and reduces contact with uncompetitive and irrelevant vendors. Consequently, getting in front of a prospect for a first meeting, which once was almost automatic, now requires addressing the following new Age of the Customer rules of prospecting.

  1. Prospects require a higher level of introduction before granting a sales call.
  2. Prospect research must be conducted.
  3. Networking – in person and online – is essential.
  4. Prospect development and nurturing must be practiced with patience and a dialed down sense of urgency.
  5. With competitiveness now assumed, being relevant is the new differentiator.
  6. Contribute first, contract second.
  7. Relevance and values must be demonstrated.

Even the best salesperson, who will still need every classic selling skill to close the sale, is useless if he or she can’t get in front of the prospect before the buying decision has been made.

Companies that expect to meet sales goals now have to put as much, if not more, emphasis and resources on training, equipping, budgeting, measuring, and perhaps even compensating salespeople for the prospecting disciplines of the Age of the Customer.

Which age is your sales organization prospecting in?

Posted in: Networking, Sales