Over the next few days, perhaps a week or so, I’m going to pick a word at random and post my thoughts on that word and it’s application/relevance to small business in today’s sophisticated, complex and rapidly changing world. I hope it helps small business owners reflect on their business and stimulates some thoughts. Today’s word is ‘ESSENTIAL.’ Told you it was random.

It’s a word used seldom other than by authors in the title of their latest book on improving your business. You’ve seen it… the essential guide to this, the essential rules for that (I know i’ve done it). Well perhaps those books are very useful, they help us prioritise, they condense the abundance of things we have to do into a quick way of dealing with the obvious….but they are changing! The essentials used to be great products, they are a given now. The essentials used to be a well established business, it doesn’t matter any more, the essentials used to be having premises well located, in most cases who gives a damn about that any more. Our priorities have changed substantially, it’s all got a bit human again!

It’s clear how things are panning out…. great customer experiences. I’ve written a lot about this but it’s essential. According to Colin Shaw in his book ‘The DNA of Customer Experience’ 95% of business leaders believe customer experience is the next competitive battleground. It’s no longer good enough to have a great products or a great idea. Engaging, involving and having conversations with your customers is the next phase.

And, ensuring your people are doing meaningful work they are committed to. In fact, I would as far to say your people want to be part of something that matters, where they are energised, free and inspired by what you do. It’s about skill and behaviour not authority and they want to be led not managed.

As I said it’s all got a little human. What’s ‘essential’ in our small business has fundamentally changed. Moving towards a more human to human experience is something small businesses are in a great position to take advantage of. I’m not so sure our corporate competitors have that.

Especially at the start up phase.

The only thing we can truly predict is that we do not know what the future holds so why do we write business plans and forecast financial returns when they are usually no more than fiction. It’s always fascinated me….and I’m prepared for the backlash from my financial and bank friends on this one. It really is a question meant to stimulate debate.

History, we know, does not give us a good indication of the future. Forecasting is usually no more than a finger in the air to see which way the winds blowing or a guesstimate (seriously it’s nothing more.) Pulling financial forecasting together for a bank, venture capital funding or whatever is, at worst fantasy, and at best, a load of b*!!*&cks. Previous performance tells you that, what happened in the past, not what you are going to experience in the future. And if you’re a start up what’s the past? Just because you performed in the comfort of a proper job as an employee, doesn’t guarantee success in your own business. It’s amazingly different, considerably challenging and you start all over again on the curve of learning.

Often the more information we give people at our start up stage, the more they read into it. You give people ‘noise’ and, unfortunately, they and you mistake it for informed data. Now I’m not saying we shouldn’t be setting targets, I’m a great advocate of purpose. But goals have to be tangible with clear added value attached to them. There needs to be a significant dose of realism so those starting up businesses beware.

Those forecasts about numbers of customers, profits, turnover, cash flow can make you resistant. They can make you vulnerable because, at this critical stage, you are too focused, too narrow and we often don’t build in improbable factors. Recognise the limitations of forecasting, don’t concern yourself if you don’t hit them. At start up, the most important factor is being able to have the courage to change, reflect new conditions and react to competition and innovation. It’s about having the guts to just go out and do it!

There is an interesting article on the BBC news website. It’s an overview about how the current economic climate is affecting small businesses on the high street here in the UK. Go to the following link to read more:

http://news.bbc.co.uk/1/hi/magazine/7656423.stm

Old school marketing is rapidly on its way out. The traditional customer/supplier interaction (I make or supply a product and then as a customer you will buy it) is about as attractive as swimming through nuclear waste! The cost of doing business that way has been phenomenal and why many small businesses have called marketing a waste of time.

The future relationship with our customers is going to be a lot more sophisticated, a lot more meaningful and a lot more engaging. Customers will make decisions on our business based on:

1. Whether they feel a unique sense of belonging to the brand/business. This comes from building a sense of community and creating a social glue that people connect to. Examples, Lego and Harley Davidson.

2. Customers will need to feel that they and your business have a common purpose. Has your business got a strong customer focused approach? Are you passionate about your products/services? Do you uphold morals and ethical practices? Like Eden Project and The Co-operative.

3. How authentic the business is? How it upholds it’s principles? Demonstration of honesty and truthfulness where transparency of engagement with the client is at the forefront of doing business. Everything is exceptional.

4. Consistency. Providing stability in an increasingly unstable world. Probably one of the most difficult things to achieve when we want change but predictability. Companies that do this are Nokia, Honda and Premier Travel Inn.

5. Integrating the customer into your product/service development. Building products and brands that customers can relate to by providing channels and mechanisms for customers to shape and form future products/services.

6. And for some of us….mystery! The more mystique a brand can cultivate, the stronger the possibility of becoming a sought after and admired product or service. Coca-cola did this with their recipe.

There are others but being able to incorporate these ideas into your marketing decision making process makes for interesting ways of taking power from your competitors and generating some excitement about your business. 

Thought I’d lighten things up a bit with a few facts…..

1. Remote controls now outnumber people in the USA

2. A leading Aussie Rules football player gets paid to change his name to a cat food so that commentators can say ‘Whiskas’ when he scores a goal

3. 92.5% of adults regularly research products online before buying them

4. More Monopoly money is printed each year than real money throughout the world

5. Every single possible three character .com domain (50 000) has long since been registered

6. More than 50% of the people in the world have never received a telephone call

7. Microsoft made $16 005 or £8002 in revenue in it’s first year of operation…there is hope for us all!

8. London’s economy is expected to grow at a faster rate than New York, Paris or any other established global city and will become the fourth largest city in the world by 2020

9. Six out of ten small businesses were using email marketing as part of their communication mix in 2005

10. Five out of ten small businesses were updating their website once a month or more in 2005

For those of us who have been dealing with large energy companies, BT or a bank recently….banging your head against a brick wall uses 150 calories!!!! 

Leadership not management is now the key to driving out more production, outstanding creative work and new ideas. So why are we small businesses having so many problems? Well we’re selling more intellect and less material. The emphasis today is on managing the human imagination not production lines. Our peoples expectations have changed but ours haven’t and our customer’s expectations have changed but perhaps ours have not! Trust, respect and loyalty are missing and we only have ourselves to blame.

There are some key concerns….many small businesses have done just the opposite of what they should have done – order and conformity rather than free thinking and risk taking. Many small businesses could not have frustrated their people any more if they had tried to and as small business owners/managers we are so reluctant to let go. It all leads to limited growth and mediocre performance in many cases.

So, small businesses will need to be able to manage change better in the future. They will have to be less organised and less controlled by a single brain. Founders, managing directors beware! Growth will be limited not by production or developing the latest product but by your ability to recruit and retain the best people in the business.

The widespread trend towards interconnectedness will accelerate continuously leading us towards being more nimble, innovative and continuously self modifying. Small, autonomous, flexible businesses will be the ideal structure in the future and your people will have a share equity in those same businesses.

We’re going to have to share responsibility, demand accountability and drive towards common goals. Our jobs as Directors will be less about control and more about disrupting the status quo.

We are exposed to an average of 3500 brands a day. Brand orientated businesses are twice as likely to succeed. 80% of businesses with a strong brand focus have operating profits almost twice as high as the sector average. We’re shifting from profit generation to value creation for all stakeholders and we’re now operating in a world that’s no longer based on the manufacture and trading of tangible products but the creation and delivery of intangible services.

Some of the worlds strongest brands today were not even a twinkle in their creators eyes twelve years ago; ipod, eBay, Google, Innocent Drinks, Big Brother, Harry Potter. We are entering a new culture of mobile usage, organic, downloadable entertainment, male grooming and social networks.

It means instead of messaging people how good we are, we need to involve them. Instead of promising we need to deliver, interactive replaces passive, look and feel is history, it’s actually about experience. And finally, instead of having an audience as customers you have a community of customers!

What on earth is going on? Your most significant question at the moment; is your business strategy designed for a static world or for a changing one? And is it changing in a fundamental way?

Somehow we need to get a grip and work out how to make the intangibles tangible!

If you don’t want to do yesterday’s exercise try this one……in the next 10 days (okay it may take little more time to organise,) round up some of your colleagues and visit two ‘real’ businesses you admire. Hold an open minded discussion with them on what they do well, what they want to improve on, what their challenges are. How do they deal with some of the particular problems you have? What are their aspirations for the future?

Believe me you’ll learn a hell of a lot……

A little exercise……Sit down with two or three colleagues (preferably motivated ones) and launch informally into a discussion around:

WHO ARE WE?

WHAT DO WE STAND FOR?

HOW DO WE STAND OUT FROM OUR COMPETITORS?

WHAT EXPERIENCE DO WE WANT OUR CUSTOMERS TO HAVE?

Honest answers only please! With those same two or three colleagues map out what a great (the business your’e in) would look like? What should it feel like when customers engage with you? Make a list of what you need to do, then go ask some of your clients the same thing…….

I read Chris Anderson’s book a while ago and have just re read it. Its an interesting look at the future trends using the media and entertainment industries as an example. I’d recommend the book to anyone who has an interest in how business could work, actually is working now and in the future. You can see a preview of his thoughts in a video on YouTube at www.youtube.com/watch?v=0Yku0GTrcuw and have an option to download the full video when you are there.

Enjoy.