An Invention is NOT a Business

A common misconception I encounter with clients is that 90% of a business is the product. The product or invention is merely a seed that allows the tree or business to grow. An invention will fail to profit if not attended to like a seed sitting a desk drawer. Actually acquiring that seed is juts the beginning. Just think about the path a seed takes to becoming a tree, site selection, sunlight considerations, soil availability of water, constant pruning and more.

Considering an invention, there's Intellectual property to consider for protection. Then there's determining if there is a market. How to get to market. How to build and scale for increased sales. Who will deliver the product? How and who will market the product? Who will fund this vision?

A good MBA can run the company that eventually gets built. But getting from concept to that point requires a commercialization expert (MSTech Comm). Here's where we provide value. All the steps mentioned above and so many more need to be considered, balanced, coordinated and aligned with the market. Only then can one claim to have a business. Only then will an investor consider investing.

Charles Darwin on Small Business Investment

Continuing with my mantra, "Principles of Evolutionary Biology and Business Strategy are the same", I'd like to look at the current state of small business in the US as it relates to our current economic slump.

Natural Law:

It's no surprise that the tallest man in the world lives in China. The shortest man in the world also lives in China. The natural law that applies is the larger a population, the greater its diversity. This is a good thing as this diversity is represented by varying traits within the population. And when the external environment changes, the larger and more diverse a population, the more likely some of its members will possess traits that will allow it to successfully compete and survive. Charles Darwin actually encouraged English cattlemen to increase their herd size to create greater diversity and ensure a healthier heard.

Business Application:

So how does this apply to the business world? The world has become so very small economically. Competition is off the charts creating the business equivalent of the meteorite impact that killed off the dinosaurs. And just as diversity can help assure success within a species,  so can it in the business world. What the US needs now, more than anything, is a whole lot more small businesses that will create diversity of thought and approaches.

Typically, governments attempt to grow businesses directly through targeted investments and job creation. This is an error. The very small number of politically motivated anyway group of people can't possibly possess the cognitive power of the US entrepreneurial population. What government needs to do is remove obstacles that block this unleashing of mental power. Business growth, business diversification and jobs will follow naturally. And beware of the cool business factor. Not all jobs in the future will be technology related jobs. Focusing on a single industry or job type will lead to lower diversity, less competitive power and fewer jobs. Remember the dot com bust?

So Uncle Sam, thanks for the SBA, good move. But let's focus a little more. Increase educational funding at all levels including SBA. Lower taxes. Reduce litigation. And for heaven's sake, ask local small businesses owners what would make their lives easier. This will create a diverse business base and, in turn, jobs. Not all will make it. But that's what evolution does, selects the best to survive.

What My 11 Years Old Taught Me About Business Startegy

My 11 years old wanted a Facebook. I was dead set against it as I could see all the issues surrounding privacy and exposing my daughter to danger and told her maybe when she was older. To my surprise, she didn't react and simply asked to use the laptop. A few hopurs later, she returned with a powerpoint presentation detailing why a Facebook account was safe and appropriate.

IT WAS FREAKIN AMAZING! She addressed and mitigated every concern I had and a few I hadn't thought of. I analyzed her presentation, after setting her facebook account, from a strategy perspective and noted the following:

She focused on her facebook vision
She recognized who the decision maker was, Dad (analysis)

She gained insight into dad and anticipated concerns (anlaysis)

She devised a means of getting and holding his attention long enough to get her point across (strategy)

She addressed known and anticipated concerns (analysis, strategy and execution)
She invited feedback and additional concerns that she might address (monitoring, re-strategizing)

She got her facebook account. Mom was her first friend.

Business Strategy Trumps Great Product

The sad fact is that the best product rarely is the most successful product in the market. In fact some pretty crappy stuff outsells the best products available. Even sadder, the best product available may never make it to the customer as the inventor/owner/provider simply doesn't have a strategy to get to market and out compete the competitors.

My tea New Orleans based tea business was a great example. I initially intended to sell a vastly superior tea product to cafes around the city, replacing the God-awful stuff they sold and continue to sell. I failed completely as I didn't have a strategy to outcompete the nasty tea vendors. Lacking proper marketing skills, I was lucky enough to stumble upon a strategy that saved my amateur a$$.

Every cafe I visited agreed that my product was far better than the one they sold. But the one they sold made better sense for them for any number of reasons. Some claimed it was part of their coffee contract. Others were too busy to add yet another vendor to their list. many simply said what they had sold. Their customers didn't know the difference between good tea and lawn cuttings. That was my cue, the customer needed to be educated. I surveyed, discovered the key to success and crafted a plan to implement.

I opened a cafe to sell directly to customers. I had free tea Fridays to get attention and cups into hands. If a customer brought in a cup of the bad stuff from a competitor, I gave them a free cup on any day. Within a year the cafe was profitable and two months later my wholesale business turned a profit selling to the same cafes that slammed doors in my face. I had created a pull strategy where customers, having tried my tea in my cafe, demanded my product in their favorite coffe shops.

With our new strategy, we decided to replicate this success by establishing single cafes in numerous markets targeting our newly identified market segment. One night and one category 5 hurricane changed these plans. But the strategy was sound and we plan to reignite it soon.

My competitors had a strategy to get in and out-compete me, initially. That was a push strategy making it easy and/or cheap for the cafe owner to use them. I went with a pull strategy that made it impossible for the customer to avoid using me. Love to hear your stories of strategy to overcome obstacles.

The Importance of Early Investment in Brand Strategy

I don't often recommend other consultants. But Zande Newman is one I've followed and used for years. The post clearly articulates a fundamental issue in business strategy, considering all aspects of the strategy from the start. No component of any business stands alone nor should be left for later consideration. Branding as part of marketing, strategic partnerships, competitor evaluation and many more items contribute to a solid business strategy. Have a read.

The Importance of Early Investment in Brand Strategy

At Zande+Newman Design we often meet with entrepreneurs starting new companies and developing new products. Broadly speaking, these folks fall into one of two groups: people who have budgeted for development of a strong brand as part of their launch (these people are often serial entrepreneurs who have launched successful businesses previously), and people who are in the middle of launching their new venture and suddenly realize they are missing key tools they need to be successful.

People in this second group are often panicked. They usually have some form of a business plan but when we inquire about the resources allocated for brand strategy, brand development, and website development they often have not included line items in their budgets for these foundational items.

Too often, during our discussions we uncover deeper flaws within their business strategy that would have been unearthed during a strategic branding process.

At this point, they are often looking at our portfolio and the successes we have delivered to previous clients and the conversation turns to some variant of ‘we really need your services but our limited funding has been eaten up purchasing our building / on the contractor / developing the software . . . .’

While we can -- and often do -- find ways of delivering value to these clients, we are by definition engaged in triage rather than proactive brand building for a strong and successful business launch.

The more successful entrepreneurs understand the value delivered to their bottom line by a strategic investment in developing their brand. They include appropriate funding in their initial business plan. And, importantly, they begin the process early because they know firsthand that by working with a strong branding agency with an effective strategic branding process they will gain significant insights into their market and their product or service. 

That is to say, they understand that branding is about core business strategy -- not window dressing. It is not ‘a logo.’ It is critical positioning and communication strategy. Done well, the return on investment is tangible.

Zande+Newman Design worked with Charles Joseph and his team at Acute Medical in Dallas, TX as they developed a new way to deliver acute surgical and trauma care. Charlie knew that having a strong, professional, and credible brand was absolutely essential to successfully implementing their business plan.

The results speak volumes about why putting investment in brand strategy and brand development should be part of every early stage development cycle.

“Zande+Newman helped us to focus both our communications and our look so we could speak to multiple audiences. The result is that we’ve been able to double our revenue goals in two years, and we continue to accelerate with their help.” — Charles Josephs, Acute Medical

The take away for startups and early phase companies is that you need to be incorporating realistic investments in your brand into your business plan and doing that work as early as feasible. That will provide the greatest opportunity for development of a meaningful and honest brand that is aligned with and supports your business strategy.

Geoff Coats is the owner and chief brand strategist at Zande+Newman Design in New Orleans, LA. He is passionate about helping clients build successful businesses. Talk is cheap. Give him a call at 504.891.4526 if you want to talk about your project or music in New Orleans.

Geoff Coats

504.782.0098 mobile

Twitter: @geoffcoats

Zande+Newman Design

New Orleans

504.891.4526 studio

www.zandenewman.com

Want to learn more?

Sign up for our newsletter.

http://www.zandenewman.com/newsletter/

Business Strategy Graphics

I devised this graphic to show how envision strategy from a VUCA perspective. As I've attempted to state before, I believe all strategy is evolutionary and a single framework, having evolved over time, can be utilized that ALL other approaches can be paired with. It's all the same thing at a certain level. One issue I'm having here is a crucial. A well respected strategist thinks the planning and strategy boxes should be switched. I see strategy as what we intend to do and planning and process the how.

The arrows indicate how this is an interrelated and iterative process of constant input, re-evaluation and responses.

The level of responsibility can be compared to a general on the hill down to the trenches with process. Perhaps monitoring should be a much taller box as it occurs at all levels.

For a paleo perspective, I see the same physical analogy of a cave dwelling ancestor scanning new terrain from a hill top and the process developing as he and his clan descend into their new territory.

I'd really appreciate some feedback here via comment or directly at george.j.constance@gmail.com.

Pseudo-Entrepreneurs, A Tale of Commitment and Priorities

My last quarter in Northeastern University's Technology Commercialization program included an entrepreneur assessment. Throughout the short assessment, I just had to laugh at some of the obvious questions; Would you be willing to risk your savings or mortgage your home for an opportunity? Are you willing to quit your job to pursue this venture? Do you believe your new venture has excellent potential for success? Of course the answers are YES, YES and HELL YES! But I was shocked to see just how many fellow students failed to answer with an enthusiastic entrepreneurial YES. They all thought of themselves as visionaries and entrepreneurs. But when you respond that you certainly wouldn't quit your job or risk your savings to pursue your venture, then you have to scale back to visionary and forget about the entrepreneur moniker. You certainly can't expect an investor to [pony up their hard earned cash if you're willy nilly. And you can't expect your partners to take all the risks for you.

This brings us to the topic of today's post, partners. Like a marriage, a partnership is a very committed relationship. Before committing to a partner or partners, make damned sure each answers "YES" to at least the three questions in the previous paragraph. And don't stop there, actions or priorities of the partner might be another good indicator of entrepreneurial and therefore partnership qualifications. The entrepreneur will forsake the vacation for the venture, attend a graduation but then pop back into the office to contribute, make his or her daughter's ball game but answer the cell when you call. Pseudo-entrepreneurs, however, seem to take every possible excuse to not work like an entrepreneur. They'll proudly draw the line and place the venture second or third or further back in their line pf priorities.

Look, I'm not saying this is wrong. But it's not entrepreneurial. Make up your mind and don't waste my time. If you're talented but not committed, I'll take the risk and hire you later.

Organic View of Business Strategy

Currently reading "The Strategy Book" by Max McKeown. Great overview of the business strateg subject with a collection of business strategy graphics in the last section. I got the book to help align my consulting efforts. I figured a timeline of what to do when and what's next would be a great tool and template to follow with each client. But reading this book along with collaborating with talented folks in the field has reminded me of my early evolutionary biology training and something one of my professors said to me. "Out there" he said as he peered out the window and solemnly continued, "there are no species", to the shock of each student in attendance. Then he continued still staring out the window, "The species are in here" as he pointed to his head with ne finger. Very dramatic. And very insightful. The world just is. We humans cut and dice it up into little pieces that suit our needs. We decide what characteristics make a species, where one begins and one ends.

Business strategy, an evolved and evolving process is the same. It just is and we humans try to make sense of it by slicing and dicing. None of the many approaches to understanding strategy is wrong, they're just different views from different perspectives. And the approach used may vary with circumstance. The best approaches, in my opinion, are the more general, the 10,000 feet ones that include a tool kit to draw on. It's folly to lay out the tools you'll need in the order you'll need them in. Life isn't like that. You plan an approach and use the tools throughout the process. There are steps to building furniture, a hobby of mine. But when one uses a saw or hammer dons't have a pre set sequence. You grab them when needed and apply to the project.

I plan to delve a bit deeper into this as I develop my own business strategy graphics as process and tool set.

Image credit: from wikipedia, Schreiner, a joiner.

Source: de:Eygentliche Beschreibung aller Stände auff Erden, hoher und nidriger, geistlicher und weltlicher, aller Künsten, Handwercken und Händeln ..." / from Jost Amman and Hans Sachs / Frankfurt am Main / 1568 / thanks to www.digitalis.uni-koeln.de

Competition, Innovation & The Way of the Neanderthal

According to Charles Darwin, evolution is a slow gradual and continuous change resulting from inter- and intra-species competition and changes in the environment. Later theorists have coined the term Punctuated Equilibrium to address the fact that some species live quite well for extended periods of time without any noticeable change then suddenly evolve, rapidly, in response to some change in the external environment.

Homo erectus is a great example. It managed to remain fairly consistent in appearance over a broad range for over a million years. Then, with a change in environment, it rapidly diversified into new species, one giving birth eventually to ourselves. In reality, both gradual Darwinian and Punctuated Equilibrium models are at play in varying degrees. That is, poor old homo erectus had to deal with both competition form fellow homos and changes in the environment.

Again, as I always point out, there's a lesson here for business strategists. Owners of a successful product often don't have reason or the will to change. Why change course when things are going so well? I'd argue that they won't stay that way for long. If your business is in a good place, lots of others are going to want to compete with you and they will. Think Neanderthals who thrived for  a couple hundred thousand years until we showed up. The same will happen to any business, all fun and games until those damned Cro-Magnons make their way into the neighborhood.

In addition to new competitors, environmental changes happen too. Just as warm and cool glacial periods effected hominid evolution and gave rise and fall to countless species, new innovations can wreak havoc on your business as well. An example would be the print and television advertising market. They didn't see the internet coming and failed to adapt. And since they certainly weren't pre-adapted, both are probably going to go the way of the neanderthal as well.

And unless you want to go the Neanderthal route, be prepared. Management practices can help. Scan, monitor and react. Invest in research and stay current. You have to be wary of and keep ahead of not only the current or future competition for your product, but also of seismic changes that can effect your industry.

Image Credit: English: Neanderthal exhibition - 16 to 26 september 2009 - centre courrier - Annecy (France). Exhibition by scientists and plasticians, as Dick Claesen et Ludo Vermeulen, associated with Richard Neave, medical artist of Manchester University.

Human Evolution and the Business Strategy Model

As a paleontologist, I tend to see any process as a sequence of interconnected events. What's interesting to me about business strategy is how it relates to natural processes. As the graphic I crated below demonstrates, humans have really changed things. In a VUCA world (Volatile, Unpredictable, Complex and Ambiguous) humans have evolved a really cool pre-adaptive trait, reasoning abilities that allow us to adapt to changes in our environment and the the introduction of new species (Products). Our very productive economic systems are a natural progression of the system that our ancestors developed shortly before leaving the trees and the totally helplessness of non-adaptive living. 

Adaptive humans outcompete other non-adaptive species and less adaptive fellow humans (think Neanderthals) through a process that continues today in business strategy. 

This graphic is the property of George J Constance, Jr. Linking is allowed, but reproduction is any form is prohibited without written permission from George J Constance, Jr. 

and here a closer look at the Adaptive species path:

There's a lesson here for the socialist-minded. The over-riding forces of competition haven't and won't change. And our responses have evolved over millennia. They can't be discarded wholesale. Our responses follow a tried and true method of analysis, strategy, implementation, monitoring and reacting through further strategy. Failure to do so as an individual or a corporation will result in extinction.

Next time I'll attempt to relate this graphic with current business strategy models and to our cavemen ancestor's trek out of Africa.