Thursday, February 23, 2012

Where Innovation Happens


Innovation seems to happen more frequently and meaningfully in small businesses. Why?

Larger companies have a proven business model, and those companies typically hire employees to execute those business models, not discover new ones. This tends to foster innovative thinking to make the business model more effective and efficient, with lots of corporate resistance and barriers to considering new, better ways that veer too far from the norm.

Smaller companies are searching for the way to become big and are often much more open to innovative ideas, business models, and perspectives. These companies are also able to adopt and absorb changes much more quickly, whereas the inertia of larger businesses can be hard to redirect, especially if it requires getting onto a completely new set of tracks.

There is certainly value that comes from each scenario I described above, but this is part of why it is so hard to grow into a big company and still stay competitive. This is also why so many people write about innovation, because large companies are trying a lot of different tactics to be innovative.

I think the real lesson is this: innovation needs to be fostered and empowered as far away from the proven, successful business models as possible. If you run a large company, get R&D away from the rest of the business. Start completely new businesses away from the parent organization and allow as little contact as possible between the two. The employees of the parent company will try and figure out how to fit new ideas into the existing successful business model, and nothing will stifle innovation faster!

Tuesday, February 21, 2012

Centralize or Decentralize

As businesses grow their operations to new states, countries, and continents, they have to grapple with the question of running their business as a centralized operation or as decentralized business units. Centralized businesses grow large, but their hierarchy grows too, usually into a complex web of political, silo-ed, unproductive bureaucracy. Yet the benefit of being able to control decision-making from the top can justify any other collateral damage.

On the other hand, decentralized companies push decision-making to the lowest levels possible, trying to create 'entrepreneurial' thinking in geographic regions or along other segmentation boundaries. Maintaining corporate culture and relinquishing too much control can be some of the challenges of this model.

As a business decides which philosophy to follow, one of the biggest issues I've seen is when centralized companies try to hire employees that only thrive in decentralized environments, and vice-versa. So, regardless of which model you employ, the key is to hiring employees that have thrived in similar systems and will fit into your business structure. Hiring an entrepreneurial individual into a centralized business will usually end poorly, just like bringing a corporate man, who is used to lots of infrastructure and thick-layered processes, into a small, humble business unit will go sideways almost as quickly.

Saturday, February 18, 2012

Impact Your Business Winner in 2012 Small Business Book Awards


FOR IMMEDIATE RELEASE

Cleveland, OH, February 17, 2012 - "Impact Your Business" has been voted a Winner for a 2012 Small Business Book Award, in the category of Management.

The Small Business Book Awards recognize business books that were published in 2011. Small business owners often seek advice and information through books. While there are many thousands of books published each year, it's those of interest to small businesses and entrepreneurs that the Small Business Book Awards seek to honor.

"With so many books being published each year, we wanted to recognize those that made a difference to small business owners and managers and startup entrepreneurs," said Ivana Taylor, Book Editor at Small Business Trends, which produces the Awards. "Our annual Small Business Book Awards are a way to highlight the books that entrepreneurs are reading and learning from."

The Awards are an honor to the authors who write books for the small business and entrepreneurial community. Says Anita Campbell, CEO of Small Business Trends, "For many of the authors, writing a book is a labor of love. Often they get up early in the morning before the rest of the family awakes, and they devote their evenings, weekends, holidays and vacations to writing. They deserve recognition."

About the Small Business Book Awards
The Small Business Book Awards, now in its fourth year, enable the small business community to nominate, show their support for, and vote on their favorite business books. The top 10 winners will be selected by readers based on number of votes as the Best Small Business Books of 2012, while the top five vote-getters in each category become Category Winners. Voting commences February 1, 2012. In last year's Awards, over 41,000 votes were cast by the community.

The Small Business Book Awards initiative is produced by Small Business Trends, an award-winning online publication, which along with its sister sites, serves over 4,000,000 small business owners, stakeholders and entrepreneurs annually.

CONTACT:

Small Business Trends
admin@smallbiztrends.com
Twitter hashtag: #BizBookAwards

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Friday, February 17, 2012

Passion or Passive - Which do You Hire?

Do you hire people that are passionate about your company, what it does, and how they can help and add value to it? Or do you hire people that are just looking for a job?

In his book EntreLeadership, Dave Ramsey makes an excellent point when he writes (from page 21):
Passion is so key in leading and creating excellence that I will hire passion over education or talent every time. I prefer to have both, but given a choice I will take passion. La Rouchefoucauld once said, 'The most untutored person with passion is more persuasive than the most eloquent without.'
Passion instills productive activity. A lack of passion results in passive, how-quick-can-this-day-be-over thinking. Given a choice between the two, I know which scenario I'd rather have in my company. 

The take-away from this is two-fold. First, evaluate how deeply you care about your company and what you are doing. Make sure you have a deep care, and your passion will naturally and infectiously spread. Second, hire people who either already have that passion or who, once they learn more about your company, will get it.

Wednesday, February 15, 2012

Nothing is Below You

I used to work for an organization with tens of thousands of employees, and one day per year the highest paid executives would work alongside the lowest paid employees. It was a way for the leaders to stay in touch with what happens every day.

Yet there was another tangible benefit that came from this exercise. It fostered respect in all of the 'rank-and-file' employees for the leaders of the company. These leaders were willing to sweep floors, pick up dirty laundry, and engage in meaningful conversations with even some of the company's smallest customers.

Entrepreneurs and business leaders need to steer clear of any attitude or ego that keeps them from performing any task in their business. When your company moves facilities, show up and help move some boxes. Every once in a while take a call from an angry customer. Leadership is not about being above certain tasks and duties, but earning the respect and trust of those you hire to perform them. 

Monday, February 13, 2012

The Value of a Customer

Customers are the core component of any sustainable enterprise. The science of attracting and keeping customers is, therefore, of critical concern to entrepreneurs and business leaders. So, what are your customers worth? The secret to assessing this value lies in the key marketing and sales metrics of your business.

Marketing is about generating leads. You need to measure each lead generation activity separately, including the total number of leads procured and the fallout percentage as you qualify and prepare the leads for the sales cycle. Many lead generation activities have costs and, when applied correctly, you will determine exactly how much each qualified lead costs.

Sales is about converting those qualified leads into paying customers, yet there are usually several stages in this process. Some never make it into the sales pipeline, and others exit throughout the process. Ultimately, each sales cycle activity, like an introductory phone call, face-to-face meeting, or proposal presentation, filters into a conversion rate that will help you calculate the cost per customer acquisition.

Now that you know how much it costs to acquire a new customer, you need to assess the overall value that customer will bring to your business. If customer acquisition costs exceed the lifetime value of the customer, then your business will eventually fail. The goal should be to have the lifetime value of your customers far exceed the costs to acquire that customer by as many multiples as possible. Measuring, tracking, tweaking, scrapping, and pivoting are all things business leaders should do regularly with their marketing and sales efforts with an eye toward augmenting the value of the customers or decreasing the costs to acquire them.

Technology can either help or hinder those improvement efforts. For many businesses, several different software applications are often used in the marketing and sales processes of a company, including email software, task lists, opportunity pipelines, contact information, and more. Since these programs typically don't communicate well with each other and the other software used to run the business, many leads and prospects are lost before they can become a customer. In addition, once you gain a customer critical information is often lost and eventually those customers leave.

The idea for writing this post came from a recent conversation I had with some of the team at Fishbowl Inventory, a company based here in Utah. They have a powerful inventory and asset tracking program that integrates with Quickbooks as well as a more powerful stand-alone product that acts as an ERP (Enterprise Resource Planning). However, their customers were having this problem of tying all of their critical marketing and sales prospects and contacts into the one central location where they process orders and keep track of the rest of their business.

Their customers understood this lack of connection was causing them to miss lead generation opportunities, have a higher fallout rate from their sales pipeline, and lose new customers because critical information was lost from the marketing and sales activities related to each customer. In response, Fishbowl just launched a CRM (Customer Relationship Management) program that connects all of the marketing and sales activities together with their Fishbowl Inventory and ERP system. It's called Pipeline Contact Manager (an appropriate name). The point is this: running your CRM in isolation from the rest of your business software will likely cost you time and money and ultimately decrease the value you can earn from each customer.

Key Take-Aways:
  • Know your marketing metrics
  • Know the conversion rates of each step in your sales cycle
  • As you consider using technology to help you track your sales and marketing metrics, make sure it integrates with the main system you use to run the rest of your business.