Category Archives: Strategy

Do you REALLY need a vision statement?

VisionMost companies have a vision statement somewhere on their website. However, how much effort do business leaders really put into their vision statement? Isn’t a vision statement just “fluff” and really not relevant for a company to grow and succeed?

A vision statement is sometimes very generic. It is in those instances, when the vision statement is indeed nothing more than fluff, probably created by the marketing department, without giving thought to the “raison d’être” of the business.

You want an example? Sure: ““Our vision is to develop, deploy, and manage a diverse set of scalable and strategic knowledge management tools to serve our customers, improving the possibility of overall satisfaction among our diverse customer profiles.” – YUCK. What the heck does it even mean?

By doing so, a huge opportunity is wasted. Without a very clear and concise vision statement, people may not even know what the company they work for, stands for.  “So what” – I hear you say. My people come to work, they do the job they get paid for, and all is swell. – Is it really? Are your people just motivated by the money you pay them, or are they excited to be part of your organisation?

One reason – and often in business very neglected – for people to come to work is the ability to participate and contribute to a higher cause.

Non governmental organizations (NGO’s) don’t pay very well. Neither does the (non-profit) church. Journalists, teachers, nurses, firemen and other every day heroes are not paid riches at all. Why do people still pursue those jobs? Because those jobs make them feel good about themselves. They contribute to a higher cause, and money suddenly plays a significantly lesser role.

I believe that this motivation is not limited to people in social functions, but applies across the board. Just ask yourself: do you really only work for money? You probably don’t. And neither are your employees. They work for recognition, for status, for pride.  If you can give them that in their job, then money itself is no longer so important.

Instead of paying more, try to give your employees other reasons to stay and to work at optimum performance: Rally them behind a higher cause. Find a high and lofty goal that you as an organization would want to achieve, and focus your internal communication towards this higher goal.

A great example of this can be found by looking at Apple’s history: In the early 80’s, Apple focused their organization to “fight for the control of computer technology against Big Blue (IBM)”. Have a look at their 1984 Super Bowl Commercial.  

Steve Jobs earlier introduced this fight against Big Blue during a keynote address in late 1983 “Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom

Strong words. But with such direction, wouldn’t you want to be part of a “movement” (rather than being a minion in an organization) to “help mankind break free from the shackles of a giant computer company controlling the world”? Ok – this may be exaggerating, but it does hit the point. So what if I pay you slightly less than your peers at Compaq, IBM, or other similar companies during this time? Wouldn’t you still rather “save mankind” or “built another box”?

So think about  it when you put together your vision statement. Make it clear, compelling and above all give your employees a reason why they work for the company beyond the monthly paycheck.

Lessons from the Wordcup – Talent Development

The road to winning the world cup in Brazil for te german soccer team started in June 2000. At that time Germany ended dead last in their group of the European Championship. 14 Years later Germany has the best soccer team in the world, and built the “world’s most successful soccer factory”. The secret to success: Talent Development.

Germany started a very comprehensive youth development program, requiring any club to hire full-time youth coaches. They built appropriate training grounds, established medial departments and initiated co-operations with schools. The German FA started a US$13 million per yar youth initiative, and now operates 366 youth centers in the country, which serves 25,000 kids.The program paid off in 2014 with a very talented and capable football team winning the world cup. The majority of the players in the world cup team are 25-years old or younger.

Mario Goetze, who scored the winning goal, is 22.  Thomas Mueller is 24, Neuer is 28, and one of the “older” players in the team (next to Miroslav Klose, the 36-year old striker, who had the most goals in world cup hstory).  So chances are, many of those players will still be around for the next worldcup. And with the german soccer factory in place, many more talented players are starting to emerge, creating a continuous stream of talent to secure Germany’s top spot in world soccer.

How do you nurture talent in your company? Do you have the equivalent of a “Youth Development Program” to ensure a continuous supply of talented people into your organization? Do you reach out to universities and schools to find potential in early stages, which you then develop or do you rely on external sources to find the people required to help you run and grow your business? While growing and fostering talent from within the organization can take years, the benefits are obvious. Talent from within requires no adaption to your company culture, you have ample time to assess their strengths and weaknesses over time and place them in the positions where they can really shine. Or replace them in early stages with other talented people, if they just cannot perform as expected.

All successful large companies (be it Google, Microsoft, SAP, or DaimlerChrysler or similar) have a very well-thought through internship program, which allows them to grab talent straight from university and mold such talent to become effective contributors and future leaders of the organization.

germanyweb16s-4-webYou may want to consider implementing your own talent development program to secure your internal supply of future company leaders, instead of merely relying on the outside world (potentially mainly people leaving your competitors) to fill important positions in your organisation. To create you own world-class winning team, start early and foster talent.

Oh, and by the way: Thomas Muller (24) has so far scored 10 goals in world-cups. By the time he is 36 (like Klose), he could have three more world cups under his belt, and easily beating Klose’s record. The german soccer team is just getting started…


GER – BRA 7:1 – and what it means for Success in Business

As everyone else on this planet for the last weeks, I have been watching the world-cup. Lucky for me, I spent the last couple of weeks in Germany, hence I was able to watch the semi-final during a reasonable time (i.e. 10 pm rather than 4 am). After having seen the host country not only defeated, but crushed, I then started to think about what lesson can be learnt from this game for business success. The answer: teamwork wins, not heroism.

I have seen it too many times: there are always players (in business as in sports), who think they are just very good (sometimes justified so), and thus believe they have a free pass at doing things.  This often goes at the expense of other members of the team, who then feel unappreciated, and as a result may not perform at the top of their respective game. They feel unfairly treated, as the hero may be able to get away with behaviour that would not be tolerated with other players. Result: disharmony in the team, and disengagement of the rest of the team.

Another problem with heroes is, that sometimes the rest of the team relies and depends on them. This is all good, for as long as the hero is around and plays his / her designated role. If the hero goes missing (in the case of Brazil: due to injury or yellow card), the rest of the team is lost. There are no back-ups, no alternatives, no substitutes that can just take over the ball and run with it. In such cases the strategy is built around a person (the hero), not around a working business model irrespective of the individual. And thus the whole business falls and rises with the individual.

In again other cases people try to be hero. They have seen successful heroes, and how they have been applauded (promoted). They believe, that rather than asking for help, they should try alone to fix a problem or find a solution. They want to be a hero, because they (falsely) believe that this would be in the best interest of the team (or the company). Instead of asking for help, or passing the ball, they just try to do it themselves, even if they may not be the best for the specific job, or may not have the relevant qualifications or training to do so. In the end, the team looses.

It is the role of the business leader or the coach to ensure that the team functions as a team, comprising out of a set of qualified and skilled players in individual roles, who work according to a system, rather than having a hero surrounded by helpers, who don’t know what to do in the event the hero is lost.

Brazil v Germany: Semi Final - 2014 FIFA World Cup Brazil

In this case, Brazil had Neymar and Thiago Silva, but Germany had a team. And Germany won – deservedly.

Fire Your Customers – And Increase Your Profits

You’ve heard it over and over again: the customer is king. Just bend backwards and ensure that every single customer is 100% satisfied and serves as a reference, helping you grow your business. However, blindly following this rule can be a very wrong business strategy.

Instead, try to differentiate between customers, and only treat those customers exceptionally well that you want to keep. No, I am not advocating sending all your customers to the competition. But if you really look closely into your customer base, you will surely find some customers that are a pain in the back. You know, those customers that squeeze you for every possible discount, always want more than what you are prepared to give, and are extremely slow with payments. Those are what I consider the bottom 10 – 20% of your customer base.

In most of the cases the effort required to close a deal, to satisfy those customers and to subsequently collect the payment is significantly higher than with your average customer. And yes, the industry in which you are in obviously plays a role in determining whether a customer is worth keeping or not. What constitutes slow payment and difficult customer for one type of business could very well be an average customer for a different type of business or industry. Even within the same industry there are vast differences in the clients that you attract and keep.

The problem is that if you have too many of those slow paying and difficult customers who take most of your time, you don’t have enough time left to dedicate to you’re A-List of customers – those that do pay on time and are grateful for your business. You spend too much time dealing with customers who are not that profitable, and not enough time with those customers that really create value to your business.

Instead of treating all of your customers equally, you may want to consider to separate your customer base into 3 categories: A / B/ and C Customers.

How you distinguish between them may be arbitrary. You may want to categorize a customer as an A customer because he pays very promptly and you never have issues with payment. Or because the profit margin for specific customers is extremely high – compared to your other clients. Or because they are just very influential and very happy about your service, but you don’t make much money with them. Or all three – how you separate them is up to you.

What matters is that you try to convert those A-customers into raving fans. They should not be satisfied with your product, service and company, but rather extremely delighted and enthusiastic about your business. Having enthusiastic customers is indispensible if you want to continuously grow your business. Those customers act as brand ambassadors and will help you get a significant amount of new business through references.

On the other extreme you have C-Clients. Those are customers that for a variety of reasons you just don’t want to deal with. Those are the customers you may want to consider sending to the competition. This move will not only free up your time (so that you can spend more time with you’re A-Customers), but also allow you to take on more (i.e. other) customers which hopefully will turn out to be B or A-Customers, and thus increase the profitability of your business. In addition, by sending those customers to your competition you create additional work for your competitors with a client you know is not worth pursuing.  This keeps your competitors busy with non-value added work. I actually don’t mind if my competitor spends a lot of time dealing with a particular difficult client that takes up their time – I’d rather have them busy fighting for C-Clients than trying to convert my A-Customers.

In the middle of the scale you have B-Customers, which usually form the majority of your business clients. Those are the customers for which you might just want to continue what you are (hopefully) doing now. Treat them well, follow up, ensure you meet their expectations. You might even want to see if you can convert the one or other B-Customers into a raving fan A-Customer.

It is not a bad thing to tell C-Customers that you may not be able to help them moving forward. Ask yourself: if you would loose this specific customer, would it really be so bad for your business? If the answer is no, don’t be afraid to let them go.

Pole Position

Whatever the product or service is that you offer – you will have competition. If you don’t have competition you need to be worried that you may not have a market. For you to succeed in your business, you need to convince the customer to buy from you instead of the competition. And that is easier if you are the market leader.

Market leaders not only have a significant advantage in terms of credibility over the other competitors in a specific segment, but there is also a positive correlation between profit margin and market leadership. Simply put, if you are the market leader in your segment, you will be able to have higher profit margins, everything else being equal. So how do you become the market leader, specifically if you are just a small and growing enterprise? The answer is surprisingly simple: Define the market that you want to serve in such a way that your specific offering makes you the leader in your chosen market segment.

In order for you to be the market leader, you have to be very clear and concise about exactly what it is that you offer to your customers. For example: You have decided to create a new type of soap based on all-natural materials. If you now choose to define your target market as “everybody who needs soap”, you will find that your growing enterprise has a market share that is so insignificantly small it’s not even worth mentioning. And it will be extremely difficult to stand out of the competition for people to choose your product over all the other soap manufacturing companies.

So you might take the next step and limit your service offering to only those people that choose soap made of natural raw materials over chemically produced soap.

Even with this limited market definition you may find that you are still just one of many other companies competing for the same business. By further limiting your market to only customers that support “Made in Malaysia” or “proudly homegrown by a women entrepreneur” you will eventually find a market in which you have the biggest share. That market by itself may be small, but you are the market leader nonetheless.

From here you may want to pursue two strategies: Firstly, defend your chosen market so that you remain the market leader in this segment. Secondly, expand your market definition slightly so that you operate in a market where you are not the market leader any longer, but you are number two or even three. Be careful not to widen the market definition too much, as your goal should be to become market leader in this expanded segment. Once you have achieved that, this new widened segment should become the market that you will have to defend for you to stay in leading position.

Using this strategy, you will continuously grow the markets that you serve, while remaining market leader in your chosen segment all the time – and over time this chosen segment will become big enough for you to have a very sizeable business.