The world of work that I have grown up in is a lot different from the world my father knew. I remember going to his office at the huge UEB factory in the early 80s and he showed me the office computer and the microfiche. There were ashtrays with the UEB logo. He wore a tie to work every day, and rode his bike with his tie on, with no helmet and no lights. UEB doesn’t exist any more. From its peak in the early 1980s as one of New Zealand’s biggest companies, it completely ceased to exist in 1988.
This was a stark lesson to me at the time. How does a huge company suddenly just disappear?
Despite the obvious changes in technology, the fundamentals of business have not changed since Dad was my age. As Peter Drucker, the father of modern management pointed out long ago, the most important priority for a business is to create customers. And the only way to do this is through innovation and marketing. If you can innovate successfully, it means that you’ll have something new and different to offer people, and if do your marketing properly, it means you can reach a group of people who will benefit so much from your unique offerings that they will pay you enough money to make a profit – and you’ll be able to keep innovating.
Eat, sleep, innovate, market, repeat.
The customer is clearly the most important person in the room because, without them, nobody gets any money to do any innovating or marketing. And customers have a lot more options about where they spend their money now. Competition is rampant in most industries, and most New Zealand businesses do a significant portion of their business without ever meeting their customers. The rapidly evolving technology of the Internet means that entirely new businesses can grow huge seemingly overnight (like TradeMe, Uber and Airbnb) and established businesses can fail almost without warning (Kodak, Dick Smith Electronics).
In this arena, planning becomes more important than ever. The rapid disruption of traditional industries means that you simply cannot afford to persevere with an underperforming business, and it’s vital that you bring new products and services that meet real, unmet need to market as quickly as possible. It’s also important to ensure that you have access to capital because whatever you’re bringing to market, it’s almost inevitable that you will be competing with businesses with deep pockets.
There are a couple of approaches to planning that we have found really helpful at Mogul, both for our own business and for our clients.
The first thing is to take a snapshot of what you’re currently doing. As old mate Drucker used to say: look in detail at every product and service you’re offering, and every activity you’re doing, and ask yourself “If we weren’t already in this business, would we want to get into it?”. If the answer is “no”, then you need to get out. The old has to make way for the new, and the best time for that to happen is yesterday. Things move too quickly now to stick around in unfavourable niches, and you’re better off chasing new opportunities rather than solving old problems.
We have found a good snapshot tool in the Business Model Canvas. It gives you a structured format for listing the critical elements of your organisation, from your revenue streams, customer segments, key partners, to your value proposition. It’s a quick exercise – you should be able to complete it in an hour. Post-it notes are crucial for this exercise. Get a big whiteboard, set aside a morning or an afternoon, get your most important people in the room, and nut it out. Have fun, argue, throw pens at each other, threaten, plead – just do whatever you have to do. Try and find out what business you’re really in. Why do customers really buy from you? How do you really make money? The answers might surprise you.
Here is an example:
Then you can run your critical eye over it and decide if it still makes sense as a sustainable business model.
The next thing to do is to start a whole new business canvas from scratch called “Ideal future state”. This is a chance to map out the business that you should be in. This is important work – possibly the most important work you can do as a business leader. The key is to generate ideas quickly, test them out, and write them down.
Now you’ve hopefully got a reasonably clear idea of the business you should be in. The next step is to test out some ideas in the real world. That means entering the world of lean, agile, rapid prototyping, validation, and sprints. That is certainly a big topic and you can read about it in my next article.
