Four new marketplace truths every small business must know

March 5, 2017 11:38 am ,

What is our value proposition?

For 10,000 years, during a period I call the Age of the Seller, answering this question was the focus of every business as it went to market. Indeed, customers refined their search for products and services down to the semi-finalist sellers based almost entirely on components of the classic competitive value proposition: price, product, availability, service, etc.

But then something happened.

The Age of the Seller was subducted by The Age of the Customer. In this new era, where value is now presumed, the prime differentiator is no longer competitiveness, but rather relevance. Today the question every business must focus on when they go to market is: What is our relevance proposition?

So does this mean sellers no longer have to be competitive? Not at all—no one will pay you more than they should. But consider four new marketplace truths:

  1. With value now presumed, customers expect to find what they want, at a price they’re willing to pay, from dozens of sellers.
  2. They don’t care if they do business on Main Street or cyber-street.
  3. Prospects are self-qualifying themselves and pre-qualifying a business based on relevance to them before a competitive position has even been established.
  4. Prospects are doing all of this before you even know they exist.

That last point is perhaps the most breathtakingly disruptive development in the shift to the new Age. As this shift plays out, two types of sellers—Hidebound and Visionary—currently exist in parallel universes, but not for long. Which one are you?

Hidebound Sellers
These companies are so invested and entrenched in the old order of control that they deny the reality in front of them. They can be identified by the following markers:

• Misplaced frustration: As performance goals get harder to accomplish, frustration makes those who deny the new realities think their pain is caused by a failure to execute.

• Bad strategies: It’s said that armies prepare for the next war by training for the last one. So it is with Hidebound Sellers. While Age of the Customer pressure makes them think they’re being attacked, they persist in using Age of the Seller countermeasures.

• Destructive pressure: Convinced of execution failure, pressure brought to bear by management results in an employee casualty list and a shrinking customer list.

• Equity erosion: Defiance in the face of overwhelming evidence sustains the deniers until they run out of Customers with old expectations, and their equity and access to credit are depleted.

Visionary Sellers
These sellers are adjusting their plans to conform to the new reality of customers having more control. Visionary Sellers are identified by these markers:

• Acceptance: They accept that customers have new expectations about control and make adjustments to this reality.

• Modern sales force: They hire and train their sales force to serve increasingly informed and empowered customers.

• Technology adoption: They offer technology options that allow customers to find, connect, and do business using their expectations and preferences.

• Relevance over competitiveness: They recognize that while being competitive is still important, it’s been replaced in customer priority by the new coin of the realm: relevance.

• Special sauce: They combine and deliver high touch customization with high tech capability.

In The Age of the Customer, Hidebound Sellers are dinosaurs waiting for extinction. Visionary Sellers are finding success by orienting operations and strategies around a more informed and empowered customer seeking relevance first.

Write this on a rock … What’s the verdict? Are you Hidebound or Visionary?

Posted in: Age of the Customer, Moment of Relevance, Sales

What Macy’s and Sears didn’t know about barbells

February 20, 2017 11:36 am ,
The American retail industry has been going through a major shift in recent years, but very recently we’re seeing increasing pressure on the Big Boxes.
In my last column, I introduced the macro-economics concept of The Barbell Effect now being created by this disruption in the retail sector. This column reveals why that macro-disruption should be good for Main Street businesses out in the micro-economy. If you missed the first column, check it out. In the meantime, here’s the gist:
The Barbell Effect occurs when entrenched, legacy practices are disrupted by forces like new technology, innovations, and shifts in demographic behavior, like when people stop going to malls. Those industry players who fail to adapt to the shift are forced to retreat into the contracting middle, the bar. Those who adapt will prosper in the bell ends, where most customers are going. Remember, the barbell doesn’t exist prior to the disruptive pressure — it’s the result, not the cause.
As the Big Boxes are being squeezed into the claustrophobic, bar-of-irrelevance, they’re closing stores faster than you can curl a two-pound free weight – by the hundreds. Their legacy model — customers walking into their stores to buy stuff — is built around a 150-year-old paradigm that’s shifting. Futurist and implications expert, Joel Barker warns, “When a paradigm shifts, everything goes back to zero.”
The energy driving this shift is the fast-evolving customer expectations, which are increasingly associated with e-commerce. Customers are finding it easier to shop for and acquire stuff online, which fits their 21st century lifestyle and saves them time. Here’s the retail barbell by the numbers: currently, online sales are just over 8% of all retail, but with a bullet of a half-point a year. Meanwhile, the legacy brick-n-mortar sector has seen 27 months of declining sales (Bloomberg).
Of course, we know who’s greasing this shift: the 1200-pound Internet gorillas like Amazon and Google, plus one more disrupter — mobile. Mobile computing wasn’t any part of our past, but with 20% of online sales and a faster bullet, it will dominate our future — as in tomorrow. You must have a mobile strategy.
In his 1982 book, Megatrends, John Naisbitt prophesied, “The more high tech we have, the more high touch we will want.” Make no mistake — this retail Barbell Effect is the fulfillment of the Naisbitt prophesy. The good news for small business is the Big Box retreat is leaving a High Touch vacuum you can fill, if you understand what’s happening on the ends of the barbell:
  1. The digital bell – for when customers seek sexy, high tech, virtual contact, while allowing Big Data manipulation and scratch-your-own-itch service;
  2. The analog bell – where customers go to satisfy their craving for that special sauce made from Main Street high touch AND slightly-less-sexy high tech. It tastes like this: “We’ll help you scratch your itch” customization; “Good to see you again, Mrs. Smith”; “Thank you for your business;” “Be sure to check out our mobile site.” “Follow us on Facebook.”
The reason it’s The Barbell Effect, and not The Lollipop Effect, is because of the primal truth that powers the analog bell: One hundred percent of customers who demand digital are themselves 100% analog. You and I, and every one of our customers are as analog as a caveman or a kumquat, which means we’ll always have analog, high touch itches. And with all the high tech leverage they can muster — 3,642 backscratcher purchase options (I checked) — Amazon can’t scratch one analog, high touch itch.
In the wake of the big retreat of the big retailers, combined with the analog limitations of the big e-tailers, that High Touch vacuum will be filled by Main Street businesses delivering their high tech/high touch special sauce. And since your small business doesn’t have to conquer the world to be successful, you don’t care if the digital bell is sexier and bigger than your part of the analog bell. The big guys need all of that to survive — you don’t.
Write this on a rock … Vacuums don’t stay vacuums for long, and there’s no room for you in the bar. Tick tock.
Posted in: Age of the Customer, Management, Moment of Relevance

Beware the Barbell Effect, unless you’re a small business

February 12, 2017 11:35 am ,

Once upon a time, in a land far, far away – in Internet terms that’s about 10 years ago – a small business owner didn’t have to worry too much about macro-economics. Well, that was a nice trip down Memory Lane.

Today, Main Street business owners have to operate every day in their micro-economy, while keeping an eye on what’s happening at the macro level. Alas, macro-economics isn’t easy to get your head around when your highest priority on Monday morning is to cover payroll on Friday.

Here’s a handy macro-economy metaphor: the Barbell Effect. Essentially, this phenomenon occurs when natural forces – new technology, innovations, shifts in demographics and behavior, etc. – disrupts entrenched, legacy practices of an industry. The disruptive pressure squeezes industry players who fail to adapt causing them to contract into the bar. Those who adapt find their way to the bell ends, where there’s room to expand.

At the macro level, the barbell doesn’t exist prior to the disruptive pressure – it’s the result, not the cause. In the marketplace, the energy causing the disruption is customers empowered with new expectations. This will be on the test: When customers are empowered, businesses are disrupted and barbells are likely.

There have been many examples of the Barbell Effect – some small and local, and some even global. I read recently about a housing barbell in one city where units on the high and low ends – the bells – were selling well, while the ones in the middle – the bar – not so much. The American banking industry has experienced its own Barbell Effect this century. As big banks got bigger on one end of the barbell, community banks hung in there on the other end, while medium-sized banks experienced financial claustrophobia as the bar got thinner and thinner.

Right now, the Barbell Effect is creating an existential reaction that can literally be watched by Main Street small businesses from their front doors as no-longer-relevant retail giants are closing hundreds of stores at a breathtaking pace. Here are some numbers: As of this year, 200 Sears stores closing brings their numbers down 60% in the past 5 years, while K-Mart is shuttering over 100 locations. Macy’s is closing 100 stores, and JC Penney is projecting 300 store closings. And besides these big guys, many medium-size retailers are also making the acquaintance of the bar between the bells.

The pressure creating this retail barbell is arising from new and evolving customer expectations, which increasingly means higher adoption of e-commerce – online shopping/purchasing. But the new expectation isn’t about unique products, lower prices, or better service, it’s the most powerful relevance advantage in The Age of the Customer: saving time. Technological innovations and customer care practices – easier mobile shopping and electronic payment, plus free delivery and easy returns – are saving customers enough time to change their shopping behavior and create a barbell.

As we witness the disruption – if not the end – of traditional, big box retail, let’s remember the good news about the Barbell Effect: It has two fat ends – the bells. On one end of the retail barbell are disruptive companies like Amazon, Google, and any other purveyors of the online retail model. On the other end are small businesses that understand that the online, digital model cannot fulfill all of the expectations of their analog customers. Indeed, the current Barbell Effect is producing a customer experience vacuum that will be filled very profitably by small retailers who deliver the special sauce of the both/and business model: traditional, analog retail (High Touch), combined with online, digital capability (High Tech).

In my next column I’m going to reveal what it takes to maintain occupancy of the fat ends of the barbell, and why this current retail phenomenon is great news for small business CEOs who see the micro-impact of the macro-economy.

Write this on a rock … Blasingame’s Law of Business Love: “It’s okay to fall in love with what you do; it’s not okay to fall in love with how you do it.”

Posted in: Age of the Customer, Customer Care, Moment of Relevance

Two reasons quality service can take you down

January 29, 2017 11:32 am ,

Successful customer service is the process of delivering value to customers in exchange for payment.

Surely this is the prime directive of any business. But that process isn’t truly successful unless the relationship can be sustained, and only quality produces sustainability.

But what kind of quality?

“Quality service” is a 20th century term that businesses use to declare a commitment to diligent customer support. But customers typically associate it with, and businesses too often tolerate it as promptly addressing a problem. Unfortunately, here’s what quality service often sounds like:

“We’re sorry we delivered the wrong size part. But we’re committed to quality service, so one of our trucks will be there in an hour with the correct part.”

It’s true. Sometimes quality service like that impresses the customer – and businesses even like to brag about delivering it. But while prompt attention is admirable, it’s not optimal because it has a negative impact on sustainability in at least two ways:

  1. The customer was inconvenienced by inaccurate service – you screwed up!
  2. Allowing an avoidable problem to occur is the worst kind of profit-eating inefficiency.

In the 21st century, successful small businesses have converted their problem-fixing “quality service” to the profitable and sustainable “quality process.”

Put simply, executing a quality process is serving customers correctly the first time. Accomplishing a quality process ranges from the very basic, accurate order filling, to the more complex, integrating into your operation only those vendors that share your quality process commitment. It shouldn’t be breaking news that your large business customers have been doing this for a couple of decades, to eliminate weak links in their supply chain.

The optimal goal of your quality process is sustainable customer relationships. That means 1) you did it right the first time; and 2) you made a profit and didn’t squander any of it on mistakes. Such sustainability is in evidence when customers return to find your profitable business still there, ready to serve them again with your quality process.

So why would anyone live with profit-eating quality service instead of managing with a quality process? Because cash is a drama queen and profit isn’t.

Delivering quality service is practiced by crisis managers. The crisis comes when you could lose a sale – possibly even a customer – because an order was filled incorrectly, creating a hit to your cash flow so quickly and dramatically that it takes your breath away: “OMG, get out there right now and fix this!”  Lots of drama for everyone.

Having a quality process is a commitment to profitability, requiring disciplined, long-view professional management. You’ll recognize it by the sound of no drama experienced by you or your customers … crickets.

Professional small business CEOs know that focusing on a quality process – doing it right the first time – takes a commitment to quality hiring, efficiency training, and a focus on what customers want, not just what they need. These practices produce sustained profitability and, in time, will eliminate your noisy cash flow drama.

Remember, the quality service you’ve been so proud of may seem admirable, but when delivered in response to something that was avoidable, it assaults profitability, threatens sustainability and ultimately will put you out of business.

Write this on a rock … Convert quality service into the more profitable – and sustainable – quality process.

Posted in: Management, Quality process

Four letters from your big customers

January 15, 2017 11:29 am ,

Consider the ancient proverb: “Any chain is only as strong as its weakest link.” This is about four letters with this proverb in mind, sent to small businesses from their corporate customers – two that have been sent and two that will be.

1. Quality

The first letter was born in the 1950s, when the ideas of the godfather of the 20th century quality process, Edwards Deming, reversed “Made in Japan” from a metaphor for cheap into a mark of quality. During the 1980s, after American industrial competitiveness fell behind global competitors, quality processes like ISO and Six Sigma were adopted, returning “Made in America” to a mark of excellence.

By 1990, with their in-house quality act now together, big businesses realized they needed similar commitments from the small business vendors that had increasingly become more like integrated partners. As such, big business needed to know that the support from these partners would at least not diminish the quality expectations of their customers. Consequently, small businesses started receiving letters from those big customers requesting evidence of quality process practices, if not certification, without which there would be no continued, or new contracts.

2. Y2K

The seed for the second letter was planted by computer programmers in the 1960s. When these programmers wrote date codes with six digits, as in 121565, for December 15, 1965, they did so to conserve what was at the time very expensive data storage. However, they didn’t realize they were creating the literally ticking Y2K time bomb.

Around 1995, experts started worrying that when the clock ticked midnight, January 1, 2000, zillions of lines of date-sensitive computer calculations would fail by going back a century – 010100 would revert to January 1, 1900 – instead of rolling forward to 2000. Consequently, the codes in millions of programs had to be fixed. By 1998, small businesses started getting letters from their larger customers requesting evidence of their “Y2K compliance,” without which there would be no new contracts with eight-digit dates.

3. Sustainability

The third letter was born in the middle of the 20th century, when we started realizing that the solution to pollution was not dilution. Since then, environmental stewardship has evolved from not polluting to sustainability. That word – sustainability – essentially means doing more with less, and it includes making waste useful – especially water. It turns out that sustainability is not just the right thing to do. Since it’s been proven that it can also contribute to profitability and a positive corporate image, it’s become a 21st century business best practice.

You may not yet have received a sustainability commitment and practices letter from your corporate customers, but it’s coming. And because of that best practice thing, it will be irrespective of the current state of the geo-political climate change debate. So start thinking about resources usage, including energy, consumables, production waste – especially water. Start documenting your efforts, practices and performance in recycling, reusing, conserving, etc., so when a customer hands you their “Sustainability Letter,” you won’t have that “weak-link in the headlights” look.

4. Cyber-security

Does anyone need a review of the multiple and significant cyber-assaults that have been made on digital assets and records of American business and government in the past few years? Whether from cyber-criminals or cyber-spies, the threat is real, comprehensive, determined, unrelenting and, to date at least, very successful – for the bad guys.

Expect the Trump administration to push for increased cyber-defense measures for the government to an unprecedented degree. Because of the massive level of business that corporate America does with the federal government, a cyber-security partnership will logically be forged, as they collaborate on cyber-practices, expectations, tools, innovations, etc. This will be the most comprehensive commingling of efforts and shared goals by business and government since WWII. So expect your large customers to begin requiring cyber-security practices verification, either by a letter, or in the specifications of an RFP. Your corporate customers are not going to let you be their weak link.

Write this on a rock … Take a lesson from the Quality and Y2K letters. Set yourself up for success by taking action on sustainability and cyber-security. Do it now!

Posted in: Future Thinking, Management

Why strategic alliances are a 21st century imperative

December 11, 2016 11:26 am ,

Closeup Businesspeople Hand Holding Jigsaw Puzzle

In the 1990s, when I began thinking about how to help entrepreneurs prepare for the 21st century, I condensed the areas requiring a heightened level of importance into three critical disciplines:

1. Leveraging technology in every aspect of your business;

2. Professional networking, as opposed to just meeting new people;

3. Building strategic alliances as a growth strategy.

If by now you haven’t become at least somewhat proficient with the tech stuff, you don’t have much time to adapt, adopt and survive. Better get busy.

And thanks to the work of people like the legendary Ivan Misner, founder of Business Network International (BNI), most of us now subscribe to what I call Misner’s Razor: “It isn’t netplay; it’s network.”

But what about that alliance thing?

Blasingame’s Second Law of Small Business states: It’s redundant to say, “undercapitalized small business.” It’s a natural law that small businesses come to the end of their resources – people, assets, technology, cash and credit – much quicker than do our big business brethren and sistren. So by that definition, we have to do something as primordial as when Og asked Gog to hold the chisel while he carved out his new stone invention that looked a lot like a donut. We have to seek and develop alliances.

Answer these questions:

  • Is your business growth hampered by a lack of people, capital or other assets?
  • Would you like to bid on a request-for-proposal (RFP) that has specifications beyond your company’s ability to perform?
  • Are you reluctant to ask a large customer about their future plans for fear that your organization may not be able to step up to the answer?

If you answer any of these – or variations thereof – in the affirmative, perhaps it’s time to pursue one or more of these three alliance examples, in descending order of formality.

Partnership

A partnership is more formal and typically longer term. Regardless of how it’s structured, in general, all partners have a vested interest in the success of the entire enterprise. Think of two business owners buying a commercial duplex and sharing the space because neither has the cash or credit to swing the deal alone. Most partnerships are best organized with the help of an attorney. But remember, because it’s more formal, probably even legally binding, choose your partners well.

Once, when consulting a mentor about choosing a business partner, he used hyperbole to encourage caution by saying, “A partner is only good for two things: sex and dancing.” But it isn’t hyperbolic to say that alignment of values between the parties is imperative to a successful partnership. This is a natural law: Regardless of how symbiotic the combined contributions may be to the venture, a partnership founded by parties with conflicting values is doomed from the beginning. Choose your partners well.

Subcontractor

By definition, a subcontractor becomes a contractual participant you bring in to help fulfill a larger project for which you are the lead vendor or general contractor. Unlike a partner, a sub expects to get paid for delivery of work or products regardless of how the project turns out.

Subcontractors are a great way to leverage your business without giving up control of the opportunity. But remember that with this step you’ve created a performance chain. And we all know that any chain is only as strong as its weakest link. A weak subcontractor could undermine your performance, harm your brand, and may even take you down.

Like partners, choose your sub-contractors well.

Strategic alliance

This relationship is typically less formal. Let’s say a web designer, a programmer and a search engine optimization expert plug each other in on projects as peers, instead of as subcontractors. After a project is executed and paid for, the participants go their own way until the next symbiotic scenario. The most successful professionals I know claim, nurture and go to market with many and varied strategic alliance relationships. And most were born from networking.

Going forward, I believe we’re going to see more enthusiasm and growth in the marketplace than in the past few years. That should mean more business, which should present more opportunities for alliances.

Before giving up on a project because you don’t have the in-house resources, look around for ways to create alliances that allow you to take advantage of an opportunity.  Start establishing them now – before you need them.

Write this on a rock … If Og the caveman can create an alliance, you can, too.

Posted in: Future Thinking, Management, Strategic Alliances

Diaper Changing Stuff (DCS): Five critical questions for startups and veterans

November 14, 2016 11:24 am ,

Small business owners have to deal with two universes every day: the Marketplace, and what I call, the Diaper Changing Stuff (DCS).

The Marketplace is the fun place, where you buy and sell stuff. Playing in the backyard of this universe is why you became a business owner in the first place. And the good news is, most entrepreneurs are pretty good at the rules and expectations of this universe before they start their business.

The DCS represents mostly backroom, operating tasks (read: not much fun) that have to be done in order to present the business and its products to the Marketplace – accounting, cash management, banking, capital allocation, payroll, regulations – you get the picture. Just as no one has a baby because they like changing diapers, no one ever went into business because they’re passionate about inventory management or accounts payable. And yet, those tasks are as critical as the fun ones.

If you’re thinking of starting a business, don’t do it until you’ve compared my quick DCS checklist to your abilities. If you’re a business veteran, road test your DCS skills against this list to see where you might need improvement.

1. Cash and accounting

Do you know the difference between cash and accounting? Gain this understanding before you hock the house to start your business, because it’s the most imperative financial dynamic you’ll face every day. In fact, it’s the number one business issue that will wake you up at 2am. Remember, you can’t make payroll with a debit or a credit.

2. Capital allocation

Do you know how to properly allocate operating and non-operating capital? Don’t use operating cash to buy long-term assets, or borrow money to operate on. Create a capital source and allocation strategy before you crank up your corporation.

3. Banking

Do you know how to talk banker? If you need a loan, can you explain what you’re going to accomplish with the money, AND how you’re going to pay the bank back? If you make a loan request without this information, you’ll just burn a banking bridge. Bankers are easily frightened, and no one ever got a loan from a scared banker.

4. A/R Days – A/P Days

Do you understand the relationship between Accounts Receivable Days and Accounts Payable Days? If you extend credit to customers, you have to fund those accounts until they’re received, which is usually later than when you have to pay vendors. If you’re not tracking this relationship, you could literally succeed yourself out of business. And the first indication you’re in jeopardy will be a call from your banker telling you to make a deposit, or a vendor putting you on C.O.D. Sometimes these calls come in at the same time.

5.  Quality Process

Do you know the difference between Quality Service (QS) and Quality Process (QP)? QS is always making the customer happy, no matter how many times it takes to get it right. QP means getting it right the first time. QS is an expense you have to pay for over and over. Having a QP is an investment in excellence that stops the bleeding and moves customers from complaining to placing new orders and referring you to their friends.

Bonus question: Can you operate the business you had the entrepreneurial vision to create? Not everyone can. Don’t start your business unless you’re ready to change the diapers on your baby.

Write this on a rock … Blasingame’s Fourth Law of Small Business: “Successful small business owners have the spirit of an entrepreneur and the heart of an operator.”

Posted in: Business Ownership, Entrepreneurship, Management, Quality process

The wonderful world of small business niches

October 30, 2016 11:22 am ,

One of the things Sears Roebuck is famous for is their Craftsmen tools, especially their mechanical socket wrenches. Once, while buying one of these, I was confronted with the options of “Good,” “Better,” and “Best,” a strategy for which Sears is also famous. Asking about the difference, I was told that the Best model had more notches, or teeth, inside the mechanism, allowing for finer adjustments when tightening a bolt or nut.

For the past 30 years, the marketplace has increasingly become like that “Best” socket wrench: every year, it acquires more notches, except in the marketplace, notches are called niches (I prefer “nitch,” but some say “neesh” – tomato, tomahto). And just as more notches in a mechanical wrench allow for finer adjustments, niches create finer and more elegant ways to serve customers, which they like – a lot.

Webster (and Wikipedia) defines a niche as, “a place or position perfectly suited for the person or thing in it.” If ever a concept was perfectly suited for something, it is the niche and small business. Indeed, as one small business owner creates a new niche, another is creating a niche within a niche. It’s a beautiful thing.

Rebecca Boenigk is the president of Neutral Posture, Inc., a Texas company she and her mother founded in 1989. This small business manufactures REALLY comfortable and ergonomically correct office chairs. As a guest on my radio program, she told me they attribute their success to filling a niche: Their chairs aren’t for everyone, just those who are willing to pay a little more for a chair that promotes the best posture at work. Many small business fortunes have been made with the Neutral Posture model of being the best-in-niche, rather than trying to conquer the world.

The mother of niches is what Adam Smith called “the division of labor,” which today often manifests as outsourcing. Outsourcing is when individuals and businesses spend more time focusing on their core competencies and contract for the other stuff. For example, there are more professional lawn businesses today because folks are increasingly realizing they can earn more by sticking to their professional knitting, than it costs to hire their grass cut.

And across the marketplace, it’s become an article of faith that the best way to stay on track is by outsourcing non-core tasks to a contractor – often operating in a niche – whose core competency is that task. I’ve long said that the best thing that ever happened to small business – after the personal computer – is outsourcing, because it manufactures niches, which are pretty much the domain of small business.

As niches have increased in number, so have entrepreneurial opportunities, resulting in the most dramatic expansion of the small business sector in history. It’s difficult to say which one is the egg and which is the chicken: Have entrepreneurs taken advantage of niche opportunities presented to them, or have they carved out niches while pushing the envelope of an industry? The answer is not either/or, it’s both/and.

In the future, there won’t be more mass marketing, mass media or mass distribution, but there will be more niches – lots of new niches. Even niches of niches. And that’s good news, because more niches means a healthier small business sector, which I happen to believe is good for the world.

Write this on a rock … Most small businesses will find more success by creating and serving niches.

Posted in: Branding, Entrepreneurship, Future Thinking, Management

When trust is a best practice, profit margins increase

October 10, 2016 11:20 am ,

Few contemporary prophecies have stood the test of time better than this one by John Naisbitt, from his 1982 watershed book, Megatrends: “The more high-tech, the more high-touch.” I call that, “Naisbitt’s Razor.”

The reason for Naisbitt’s accuracy is simple: High tech, by definition, means digital. But you and I are not the least bit digital; we’re 100% analog. And our analog nature manifests as a desire to connect with – or as Naisbitt says, “touch” – other humans. So the value of touch increases proportionally with the increase in the velocity of our lives.

Digital is fast; analog is not. We may transport ourselves virtually at the speed of digital, but once there, we touch -eye, ear, hand – at the speed of analog. So how do we reconcile the fact that as high-tech consumers who desire and eagerly adopt each new generation of digital, we’re still, and will always be, analog beings? One word: trust.

Nothing is more capable of accelerating with high-tech while simultaneously governing down to high-touch than trust. Naisbitt didn’t directly address the concept of trust in his book. But I interviewed him twice on my radio program and I think he wouldn’t mind if I expanded his razor to: The more high-tech we have, the more imperative trust becomes.

In another of my favorite books, Built On Trust, by co-author and frequent guest on my radio program, Arky Ciancutti, M.D., I found this: “We are a society in search of trust. The less we find it, the more precious it becomes.” For millennia, customers did business with the same businesses because they wanted to deal with the same people. We trusted the people first and the company second. In an era where erosion of the high touch of trust is often lamented by customers and employees, there are still places where it not only exists, but was actually born. Where, in contrast to the rest of the contemporary marketplace, trust is still found in abundance. Those places are almost all on Main Street in the form of small businesses.

With trust now more precious than ever, build the foundation of your small business’s culture on it. And when you can deliver on trust as your North Star, you’ve earned the right to go to market with it. Here’s an example:  Reveal the combined industry tenures of your leadership team (101 years), or the average tenure of your staff (18 years). When prospects see those numbers, they hear T-R-U-S-T.

In one interview on my show, Arky said, “An organization in which people earn one another’s trust, and commands trust from customers, has an advantage.” Since contemplating that, I’ve maintained that being devoted to trust is not only the right thing to do, it’s a business best practice. Let me explain.

As the velocity of the digital marketplace increases, our business has to move faster, and our stakeholders – employees, vendors, etc. – have to keep up. As one of my vendors, if I can trust you to keep up, that’s a relevance value worth more to me than the competitive price of a low-bidder I don’t know. You just converted trust into higher margins.

In the greater marketplace, where devotion to trust is no longer ubiquitous, small businesses have been handed a rare gift. And all they have to do to claim it is create and leverage the relevance advantage Arky means when he says, “The advantage trust gives your organization is there for the taking, waiting to be harvested. It’s not even low-hanging fruit. It’s lying on the ground.”

You may have heard me say that the Price War is over and small business lost. Well, the Trust War is on, and small business is winning.

Write this on a rock … To claim that victory you must operate at the speed of trust.

Posted in: Customer Care, Management, Moment of Relevance, Trust

Four IP questions to tell if you get it

September 18, 2016 11:17 am ,

One of the most interesting aspects of the marketplace is the evolution of how businesses leverage assets. For most of history, business leverage came from these three categories in this order:

1. Muscle power (human or animal);

2. Tangible stuff (raw material, inventory, tools, etc.);

3. Information (intellectual property, or IP).

Historically, the strongest cavemen, the biggest horses, the fastest ships, the largest factories, all had an advantage over lesser competitors. We’ve all seen this: “Largest inventory in the region.”

But here’s the interesting part: As the marketplace has evolved, the order of importance and the value of assets has inverted. Studies show increasing emphasis is being placed on IP and the ability to leverage it with less emphasis on leveraging tangible assets.

And what about muscles? Increasingly in the global marketplace, human brawn is number four on a list of three.

The good news is small businesses are joining this global trend of leveraging IP more and tangible assets less. They’re increasingly using technology in exciting new ways, doing more virtual business and are as likely to develop a strategy for doing business across an ocean today as they did across town 20 years ago.

Regarding how essential IP is to a small business’s 21st century competitiveness, more and more small businesses get it.  The bad news is there still are far too many who don’t. As an example, incredibly, almost half of small businesses still don’t even have a website.

To see if you “get it,” consider these four questions:

1. If I gave you for free (a) a truckload of inventory or (b) a special technology that would help you serve customers better, which would you choose?

2. Do you spend more time (a) thinking about products and services or (b) finding technology to more effectively serve new customer expectations?

3. Do your employees (a) use the same technology in the direct performance of their jobs today that they did 5 years ago or (b) different technology (not just new machines)?

4. If you purchased another business, which would be more valuable to you: (a) the inventory and equipment, or (b) the digital records of their customers: names; contact info, including email; what they buy; when they want it; why they buy it; and how they use it?

If you chose (a) for any of these questions, it’s likely your business’s performance is on a declining trajectory. But if you chose the (b) options, congratulations, you get it about IP.

Write this on a rock … In the 21st century, leverage intellectual property more and tangible assets less.

Posted in: Business Ownership, Future Thinking, Intellectual Property, Management
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