Best Practices

Smart Business Strategy Doesn’t Always Require Data

August 22, 2013 By Britt Raybould

Your company may be really great at telling stories, but do you qualify as a storydoer?

A few weeks ago, I came across this idea of companies who are more than just storytellers. They’re also storydoers. Tyler Montague, the source of this idea, outlined six characteristics of a storydoing company:

They have a story

The story is about a larger ambition to make the world or people’s lives better

The story is understood and cared about by senior leadership outside of marketing

That story is being used to drive tangible action throughout the company: product development, HR policies, compensation, etc.

These actions add back up to a cohesive whole

Customers and partners are motivated to engage with the story and are actively using it to advance their own stories

Tyler and his partners went looking for hard statistical evidence to back up their contention that great companies are storydoers. It looks like they’re on their way to confirming numbers that support the theory. The question I want you to consider is why would you need numbers to justify anything on Tyler’s list?

All six items are strategies that could benefit any company. And yet Tyler went after hard data so he could convince people that the idea of storydoing led to business results worth pursuing.

There’s no question we have more data than ever before, and some of it is incredibly useful. So what comes next may sound sacrilegious to data devotees. We don’t always need reams of data to determine if something is good for business.

Tyler’s storydoing example is just one of many sound business strategies that gets more attention if there’s data to support it. But while we’re busy combing through the data, what are we missing? Have we missed an opportunity to make our businesses better because we needed numbers to make us feel comfortable?

I’m not recommending that we go back to ignoring data or only trusting our gut. I do recommend not letting a lack of data blind us to smart business strategy. Sometimes when you’re an entrepreneur it’s the only option available. You often don’t have enough data so say that one decisions clearly tops another.

I suspect that our love affair with data is tied to something that keeps most entrepreneurs and even seasoned business owners awake at night: the fear of failure. Data can make us better informed about some decisions, but it can also create an illusion that we’re making a decision without risk. Data may tell us more, but that doesn’t necessarily mean we’ve got the meaning right.

So the next time you see a strategy like Tyler’s to be a storydoing company, put it in context. If there’s numbers, pull up a spreadsheet and have a party. But if there’s not, use the skills and talent that got you into business in the first place and ask a simple question: does it have the potential to make my business better tomorrow than it is today?

Make Something Good Happen

August 15, 2013 By Britt Raybould

A few years ago, Seth Godin hit publish on a short post that inspired me and probably millions of others: Make Something Happen.

Over the years, we’ve watched as it get twisted into Make Anything Happen. It’s time we reclaim it, and I think it’s possible if we add one word: Make Something Good Happen.

Good can be an incredibly subjective word and idea, but it gives us a baseline, and by focusing on that baseline we’ve got a filter of sorts for our actions. It’s a filter that I think entrepreneurs and established businesses alike need to adopt. For instance, a few months ago Andy Hayes captured in perfect detail some ongoing issues with Software as a Service (SAAS) and how a Make Something (Anything) Happen attitude can frustrate users:

For example, in just the past week:

Flickr changed their entire website design, and pretty much got rid of their pro plan, which I pay for just for the photo storage. Their “update” to users on the changes was so confusing, I had to go read the Mashable article just to understand.

Gmail kicked me into their new “composer” menu, which violates a whole slew of user experience principles. They’re Google, which i suppose gives them license to do what they want, but it breaks Rapportive, the second most important tool for my business (as when you put in an email for a new contact, it shows you their social media links, bio, etc.) And neither Google nor Rapportive seems to care.

Producteev (acquired by Jive Software) has basically closed down my entire backoffice the past 2 days, with no end in sight. They did an unannounced software upgrade, removing key features that we chose Producteev specifically for. But the worst thing is they didn’t tell anyone about the upgrade, and it’s not gone well, so ALL of my mission critical data is now floating in the ether – business development lists, editorial calendars for my magazine, future billing schedules – all gone. And I am a paying customer – I paid because I didn’t trust a free service, and I got burnt because of it.

Our obsession with having the latest and greatest has tricked business into thinking that if we’re not constantly offered updates we’ll leave for something new. Obviously if there’s a known problem with a product or service that gets ignored, then yes, we’ll look elsewhere. But I don’t (and I suspect you don’t either) lie awake at night hoping there’s a notice on my phone to update all my apps every morning. Change for the sake of change clearly falls under Make Anything Happen.

So what does it look like to Make Something Good Happen?

It looks a lot like a to-do list filled with solving problems, answering questions, and giving people a pleasant surprise. On Seth’s original list he highlighted launching an idea, posting a post, running an ad, or calling a customer. In a good situation, all of those ideas still resonate. It’s how you apply them that matters. I particularly like the idea of calling a customer. What if once a day you called one of your customers? Not to sell them anything, but to check in, to see if they have any questions or to follow up an earlier issue. That’s making something happen in a way that makes you memorable for the best kind of reasons.

I don’t accept that the only way to “keep up” with the competition is to look like we’re doing something even if in the big scheme of things we’re actually doing very little. You owe it to yourself and to your customers to deliver substance that offers real value, answers a question or solves a problem. Obviously it’s incredibly easy to Make Anything Happen, to default to a lower standard, but your customers will notice and appreciate the difference when you Make Something Good Happen.

Photo credit: Steve Rhodes

In Business, Your Gut is Only 1 Data Point

June 13, 2013 By Britt Raybould

You’ve probably heard at least one successful entrepreneur talk about how they went with their “gut.” By opting to rely on their intuition instead of data they came up with a decision that led to a wildly successful outcome. While these stories may be true, and thus incredibly tempting if you’re struggling with a decision, they ignore something else: survivorship bias.

How many stories have you heard lately about someone trusting their gut and failing miserably? That’s at the heart of survivorship bias. We hear about the successes, the ones who made it, but we rarely hear the flip side, the ones who didn’t have the best intuition. This bias towards success then leads us to believe that we’re on to something, that we’ve discovered the secret to making tough business decisions. It leads to a question I think all entrepreneurs needs to ask themselves: why are we so obsessed with finding a short cut?

Obviously efficiency is a huge plus in business, and as an entrepreneur, you want to make the best use of your time, but this pursuit of silver-bullet strategies seems like a fool’s errand.

Let’s go back to survivorship bias for a minute. One of the things that makes this bias so attractive is the idea that it’s identified something predictive, something that will always work. That’s the entrepreneur’s version of catnip. There are so many unknowns in both starting and running a business that it’s understandable why we’re looking for ways to remove the uncertainty.

But we get into trouble when we start thinking that these ideas should take precedence over our strategy and assume we’ve found a short cut around uncertainty.

There’s a reason that entrepreneurs collect data about how their business is functioning and how their customers are reacting, then taking the time to analyze it. You need the specific information about your organization to determine what’s working and what’s not. So if you’re opting to put aside all those other data points and trust just one—your gut—it looks much more like a Hail Mary pass instead of a so-called executive decision.

There will definitely be decisions when circumstances will force you to make a call that isn’t supported 100% one way or the other by the data. That’s part of being a leader and using your knowledge to make the best possible decision at that moment in time. What’s not particularly good leadership is waking up one morning and deciding since your gut was right last time, it makes sense to let your gut trump everything else going forward.

The only predictable thing this approach offers in the business version of indigestion. So please remember that your gut may be an important data point, but it’s rarely the only one that matters.

Photo credit: Ed Schipul

The Costco Lesson: You Don’t Want an Off-the-Shelf Business

June 11, 2013 By Britt Raybould

Back in the ’90s, Gatorade ran a commercial with this tagline: I wanna be like Mike.

The Mike in question (for anyone younger than 30) was Michael Jordan. The ad worked incredibly well because at the time, circa 1992, Michael Jordan was THE sports figure. And the setup was perfect. Every kid (and many adults) who played basketball loved the idea of being “like” Michael Jordan. It was an easy leap to say, “If Michael Jordan is drinking Gatorade, I should, too.”

But the me-too strategy that works so well for a marketer trying to sell a product comes with issues for a business trying to be like another business.

I’m a firm believer that there is much to be learned by watching how others do business. Whether you’re an entrepreneur assessing how the industry leader does things or the enterprise solution checking out a startup’s innovative idea, there’s value in watching and learning. Where the trouble starts, at least from a strategic standpoint, is when the desire to emulate becomes a me-too strategy.

For instance, I read a profile of Costco and its current CEO, Craig Jelinek. It would be incredibly easy to say that based on Costco’s success, every other company would be crazy to not follow Costco’s lead.

While competitors lost customers to the Internet and weathered a wave of investor pessimism, Costco’s sales have grown 39 percent and its stock price has doubled since 2009. The hot streak continued through last year’s retirement of widely admired co-founder and Chief Executive Officer Jim Sinegal. The share price is up 30 percent under the leadership of its new, plain-spoken CEO, Craig Jelinek.

Despite the sagging economy and challenges to the industry, Costco pays its hourly workers an average of $20.89 an hour, not including overtime (vs. the minimum wage of $7.25 an hour)…Eighty-eight percent of Costco employees have company-sponsored health insurance…Costco workers with coverage pay premiums that amount to less than 10 percent of the overall cost of their plans. It treats its employees well in the belief that a happier work environment will result in a more profitable company. “I just think people need to make a living wage with health benefits,” says Jelinek. “It also puts more money back into the economy and creates a healthier country. It’s really that simple.”

There is little in there to disagree with, especially add it all together and get Costco’s success. But, and this is the piece that gets overlooked, Costco is Costco. It’s built a set of systems and an environment that lets it excel at what it does really well. So if you assume that you could transplant in whole what Costco is doing internally that tells me that you don’t really understand how your business works.

The actual Costco (Apple, Nordstroms, Whole Foods, etc.) lesson that does matter is that you must learn and define what systems and environment your business does need to excel.

You don’t need to be the next Steve Jobs or Jack Welch to run your business really well. You just need to be the version of you that pays attention to your business and what’s actually working.

Yes, strive to meet the standards set by industry leaders, but please don’t fall into the trap of thinking you need to look like them in every way. If you do, you run the risk of becoming generic, the business world equivalent of a “parrot.” So look for ideas and opportunities to improve. Look for the bigger why in a company’s success instead of seeking to copy the specific moves. Because once you understand the underlying reasons, it becomes much easier to see what’s applicable to you and your business.

As a result you’ll become the kind of business that attracts customers who love you for very specific reasons instead of an off-the-shelf version that’s only tolerated.

Photo credit: jimcchou

You Can’t Afford to Stand in the Middle

June 6, 2013 By Britt Raybould

The center of the road is an awkward place to be, but all too often, it’s the strategy that gets picked by entrepreneurs who want to hedge their bets.

Christopher Penn highlighted one particular sticky wicket for middle of the roaders: creative destruction:

Right now, the email marketing industry is going through a destruction phase. The “mid market” is vanishing, and has been since 2010-2011 in the email marketing industry. In the email marketing space, you are either serving the small business niche…or you are serving the enterprise. The middle of the road customer is vanishing as they either move up or down market, and the vendors are consolidating, too. That’s the destruction phase. The big players buy up the healthy companies, and the sickly ones eventually wither and perish. Very few companies ever successfully walk the middle of the road for their entire existence – they have to go big or small to survive.

Let’s focus on that last line: They have to go big or small to survive.

I appreciate that there’s a certain comfort in feeling like you can go one way or the other. I even understand the arguments for offering that level of flexibility. What I don’t accept, however, is the middle of the road as a long-term strategy. As Penn notes, it’s about survival, and hanging out in the middle doesn’t come with very good odds.

First, the middle is too narrow. Over time, the winners gravitate to one side or the other and the losers disappear. What remains is such a tiny portion, that unless you own the middle in your niche, survival becomes incredibly difficult.

Second, when you pick the middle, you’re setting up a scenario where someone else (i.e., not you) can determine your future success or failure. That can’t have been on your to-do list when you started your business. The desire to be an entrepreneur comes, in part, with the desire to have control. Sticking to the middle means giving up control.

Finally, you’re way too exposed when you hang out in the middle. You can only stand in the middle for so long before your hedging makes you a target. Instead of appealing to customers, you’re making it easier for competitors to do two things: 1) beat you (think small business) or 2) crush you (think enterprise).

Playing the middle game looks incredibly tempting. I’ve done it a time or two myself. But the cost is incredibly high.

Pick a side. You can’t afford not to.

Photo credit: Mike