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I’ve got a confession to make – my smart phone has a lot of features that I’m never going to use.

  • Don’t get me wrong. I like the phone and it does everything that I want very well indeed.
  • I’ve been using it for about six months now and it’s already a couple of models out-of-date.
  • Product development in the smart phone industry is very rapid and life cycles are short.

Product development and marketing are aimed very much at the Early Adopters. This group, described in Everett Roger’s book The Diffusion of Innovation is very open to innovative products, makes considered decisions and its members reaction can be a good guide to the product’s commercial success. They see the potential for the features and are happy to invest time to experiment with the product and even suggest features for further development

At the other end of the scale are the Late Majority and the Laggards. These are much more cautious or even hostile to the innovation. They will buy the product when it’s their best or only option to meet a need. They’re only impressed by a feature if they can use it easily.

What’s that got to do with making them better customers?

According to the late Chet Holmes, author of The Ultimate Marketing Machine, only 3% of the potential customers for your product or a similar service are actively looking to buy it now. The chances are that you’re focussing your product development and marketing on that 3%. The trouble is that all your competitors are focussed on the same 3%.

So what are you doing about the 67% that could become customers, but not yet? I know it only adds up to 70% but about 30% of your potential customers will never buy from you no matter what you do.

The extra 67% will include for example:

  • The customer who is open to the idea of buying now but doesn’t have any imperative.
  • The customer isn’t ready now but will need the product at some time in the future.
  • The customer who isn’t aware that an answer exists to his specific problem.

This customer pool is many times larger than the Early Adopters, it’s not asking for innovative new features and there’s far less competition. It’s wide open for innovative product development.

So what can you do about it?

Going back to my phone, how about some frugal innovation? How could it be simpler with fewer features or having only the most important displayed? Don’t just remove features but see what users would value. How, for example, could the keyboard be designed to make fewer errors when the user is a bit clumsy?

These potential customers are also an opportunity for new competitors able to offer simple low cost products. With your product development strategy ask yourself what somebody new to the market could provide – and do it first!

Can you remember working with a team that really performed?

Everybody maintained high standards and the team met challenging targets.   You were productive and your output was high quality.  You almost certainly enjoyed working together.

Let’s ask a couple of different questions:

Did you all like each other and spend your spare time together?

Were you always in agreement so that your team was free from arguments?

The chances are that there were team members that you didn’t get along with socially and that team members did sometimes disagree quite strongly.  The difference between your team and one that didn’t perform was that you could handle conflict constructively.

There’s a problem when we try to avoid conflict completely.  We not only see situations differently but we have different assumptions about the “rules” that limit what we can do about it.  If we can’t challenge each other’s’ assumptions, we can’t identify a common goal and align our paths in the same direction. Team building requires conflicting ideas to produce a strong and unique collaboration.

There are healthy and unhealthy ways to deal with potential conflict within teams.

We must at all costs prevent the conflicts that are personal, where the argument is directed at the team member himself, not the issue.  I would include in this the negative personality behaviours – aggression, bullying, and deception for example.  These can only be prevented by a confident leader prepared to act as a role model, not a dictator.

There are also, however, both healthy and unhealthy ways to deal with the issue itself:

Avoidance: As managers you should be very concerned if there isn’t any conflict within your teams.  Far from a sign that all is well, it means that members are uncomfortable, stifled and do not trust each other, or you, enough to speak their minds.  Meetings will be boring and won’t result in action.

Obliging: Members suppress their own concerns to satisfy the concerns of others.  This means that relevant information and viewpoints are left unheard.  The team does not benefit from all the information available and at least one member will be resentful

Dominating : This may have a use when formal authority is needed to implement an unpopular action but the trampling of equally valid viewpoints by one or two dominant individuals has no place in team projects where there are options to be considered

Compromising: This has its place when the issues involve conflicts of personalities that are preventing progress of the team.    By definition, it will not result in the optimum decision for the direction or action of the team.

Integrating: There is open discussion about the issues that encourages the opposing parties to seek alternative solutions to the problem.  This requires that there is trust within a team that accepts the possibly of differing view.  This is the method of resolving conflict that marks a high performing team.

Product development involves more uncertainty than any other activity of a business.  It cannot be successful unless team members are able to share their differing assumptions, experience and opinions.

Conflict is inevitable and welcome in any team building endeavour.  It’s a lack of conflict that should be more alarming.

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Nearly every business owner understands the familiar SWOT process for business analysis.

  • Strengths of you and your business
  • Weaknesses
  • Opportunities
  • Threats

If you’ve ever written a business plan this was probably the first thing that you did.

Perhaps you presented the plan to a lender or investor.  Maybe you used it to decide the next steps in your strategy.

Most likely it was then filed away until a new plan was going to be written.  That’s a lot of time that you invested that was wasted if the analysis didn’t take your business forward.

So why doesn’t a SWOT analysis work? I’ll suggest three reasons

  • You lose interest while you’re still writing it
  • The four sections S-W-O and T don’t fit with each other
  • The issues that are most important to your business are an afterthought

Let me explain

Think about the order in which you carried out your last business analysis

Strengths – It wasn’t too difficult to think of some features that are good about your business.  What did you think of that was great and set you apart from your competitors?

Weaknesses – You probably thought of a couple of areas of your company that could perform better but the question is too general.  How can you say that you’re too weak until you know what task you have to perform?

Opportunities – You almost certainly identified some or you wouldn’t be in business.   You thought about this subject right after listing your weaknesses.  Were you in the frame of mind where your imagination was free and producing creative ideas faster than you could write them down? Almost certainly not

Threats: By the time you started thinking about the threats to your business you were probably bored with the exercise.  You wanted to finish quickly so you didn’t waste time on research.  You wrote a handful of sentences to show that you considered the subject and finished on this low note.

Why should we be surprised if a business analysis doesn’t focus on the most important issues and why your business activities won’t be aligned with it?

Now imagine reversing the order and perform a TOWS analysis

Threats: You’re immediately dealing with the issues that are most important to your business.  You have a reason to research your market, competitors and technology

Opportunities: You’re still fresh and your research has provided a lot of new information.  You’re in a position to identify new opportunities that you would otherwise have missed

Weaknesses: The question now has a focus.  How must you strengthen your business to deal with the threats and exploit the opportunities?

Strengths:  Now that you know what you want to achieve, you can measure your business against the requirements.  Which opportunities are you particularly well-placed to exploit?

The four sections are consistent with each other and the exercise has ended on a positive note where you are in control.

You’ve not only performed an accurate business analysis that’s identified the most important issues but you can now turn it into a business plan that’s relevant, realistic and provides a pathway that can be followed to achieve business success

 

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An important skill that I recommend to anyone who wants their business to grow is the ability to recognise that there will be similarities between one situation and another even though they appear at first to be completely unrelated.

I came across a perfect example this morning in an old college metallurgy textbook written by the legendary Sir Alan Cottrell.

Metallurgy, for thousands of years since the Bronze Age, was an empirical science – advances were made by discovery and experiment. The science to explain metals using their arrangement of atoms is less than a hundred years old.

There are other parallels with modern business, and an important factor in business analysis, as you read Sir Alan’s words when theory enters the world of practice:

The link between the science and industry requires care and attention or the two sides drift apart.
Science without a practical purpose becomes pointless and trivial. Industry without science will stagnate technically and survive only by cheap labour and clever accountancy

He clearly recognised the challenges of the industrial metallurgist = business:

  • Must solve urgent problems by the quickest route
  • Largely empirical answers because there’s no time to fill in the background
  • Needs to use intuitive judgement to conceive, try solutions and move on

Equally however he needs analytical skills:

  • A good background in science to narrow down the options
  • The ability to turn random information into a coherent picture
  • The ability to know when caution or action are appropriate

So what can this teach us about business analysis and operation?

  • Running a business is not a pure science where the variables can be tightly controlled
  • The business analysis process needs to ensure that the “science” to solve problems is robust and relevant
  • Business owners cannot solve problems effectively unless they can separate the relevant information from the noise and convert it into a usable form
  • Define how to identify success or failure quickly to avoid wasting time and resources
  • Business analysts must recognise the value of empirical knowledge, intuition or even the off-hand comment of an operator that has previously been disregarded
  • As business analysis professionals we must continually work to ensure that we never allow our business theories to be disconnected from experience

Most important is Sir Alan’s message that, without science, industry (= your business) will stagnate.
A responsible specialist in business analysis or product development will ensure that the science (= his expertise) is relevant and supports it.

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How do you solve your business problems when knowledge and experience aren’t enough ? The answer, of course, is that you have to produce new and inventive ideas
So do you think you’re creative and able to have lots of great ideas ?

Most of you probably answered “No” to that question so here’s a challenge. In one minute, how many uses can you think of for a paper clip ? Try it before reading on.

When I run this exercise with small business owners, most individuals will come up with three or four uses. Some of them, usually in creative roles such as design or marketing will have a few more but not many will reach double figures.

So how come, when I presented the same challenge to my grand-daughter, a bright eight year-old, she was able to produce no less than forteen ideas in thirty seconds ?

  • The first thing she did was twisted the paperclip into another shape
  • She then joined it to other paperclips
  • Finally she thought how Mummy would use it

Three of the most basic lessons that everyone learns on any creative thinking course

  • Challenge the assumptions
  • Combine objects and ideas
  • Look at the situation from a different point of view

One of the biggest obstacles to the development of ideas is our lack of motivation. We see creative thinking as unusual and requiring us to learn special techniques. In fact, as my grand-daughter showed, the methods are entirely natural but we’ve forgotten them.

The spectacular conclusion of a 25-year study by George Land that started in 1969 was that 98% of three to five year olds were creative geniuses, falling to 2% when they became adult. We don’t need training to become creative. We started out creative and learnt not to be.

The good news is that, once we recognise what has happened, we can make choices whether to be creative. We may be out of practice but we can’t entirely lose our basic creative nature any more than we can lose our ability to read.

Try the paperclip test again using the three lessons above. Your ideas should, this time, be not only more numerous but more inventive.

Now try using the methods to find an inventive answer to your biggest business challenge.

From time-to-time, we all need that proverbial kick up the backside but when we have to deliver it to ourselves, we’re too personally involved, and product innovation is always a reluctant discipline.

Here’s a technique that I find simple and effective to separate myself personally from the subject, when I need to do more than just think aloud, but produce action as a result.

It relies on making effective use of space and acting as a critical friend to my efforts. Ideal places for me are an office or a small training room. A room about fifteen to twenty feet square with a whiteboard or flip-chart is ideal as a product innovation environment. If you work from home, use another room or the garage rather than your regular office.

Start by writing a few sentences about the product or concept you want to work on.

Obvious product innovation hurdles would be a problem where you’re struggling to find an answer, issues that you have to weigh to reach a decision, or a task that you just can’t find the motivation to start.

When you’ve written them on your big whiteboard, stand for two or three minutes reading. Don’t try and find answers, just absorb what you’ve written.

Then walk over to the other side of the room and “see” yourself standing where you were, reading the words. I find it works best when I’m off to the side of “myself” rather than directly behind.

Talk frankly about the issues with product innovation to that person on the other side of the room. Treat it as if you’re talking to a friend or a client that you’ve had a long relationship with.

Edward de Bono’s Thinking Hat system provides a good check-list that you can follow.

First of all, set out the problem that you’re going to be working on. Then talk about the facts. Don’t forget to use this time to congratulate “yourself” on what you did right.

• Talk about the emotions involved, for example that you understand why this has been difficult or why you’ve been procrastinating on your product innovation path.
• Talk about the options and the possible good and bad outcomes of each.
• Ask yourself for new ideas, what could “you” do if there were no restrictions.
• Finally agree what will happen next.

It may seem unnatural at first but after a few minutes the conversation starts to flow easily, thoughts that you’d buried will surface and you will be motivated to take the necessary steps toward your goal. Like any thinking and coaching technique, you have to feel comfortable with it and make time to practice.

Some people will find it easier and more effective than others. Once you’re familiar with using it, you’ll be amazed how it removes obstacles that get in the way of your product innovation.

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Faced with a myriad of situations and logistical nightmares, some humorous, some not so funny, a supply chain consultant definitely needs the relief of a good laugh from time to time.

Humour has a place in our lives. It provides us with a way to look at situations from a new point of view. This is essential when we’re trying to create new ideas and, of course, there’s the dark humour that the medical and emergency professionals use to separate themselves from traumatic reality for a few moments. As long as our “Humourworld” doesn’t become our new home, we all need to take regular vacations there.

Here’s a joke that you may have heard before:

Two hunters are in the woods. As they make their way along the path, they hear a loud crashing noise and look up to see a large bear charging down a hillside. Realizing that they are the bear’s intended lunch, one of the hunters takes off his back pack, drops to the ground and begins to change from his hunting boots into trainers. The other hunter asks “You don’t really think you can out run that bear do you?” The first hunter replies, “No, but I can outrun you.”

The first hunter has recognised a point that’s relevant when we set out to improve our business – most of the time we’re not trying to out-pace the biggest most capable player in the market; we just have to be more agile than some identified competitors. A good supply chain consultant will definitely make you more agile.

A continual source of frustration for the providers of improvement techniques such as Lean or Six-Sigma is the reported high failure rate of projects – at least 50% and some reports have suggested that more than 90% fail to deliver the expected benefits. The concept of managing the supply chain efficiently is a prime example that consistently misses the mark.

The main reason is the lack of continuing commitment from top management. This typically results when:

• The logistics case wasn’t translated into time, money and risk.
• It’s treated as a project, not a fundamental change in the actual working of the business
• The metrics aren’t compatible with traditional accounting techniques.

The lesson for us is that the objective for our clients is beating competitors, not introducing systems. A supply chain consultant will introduce the right tools to manage the existing process more effectively, not necessarily reinvent the wheel

We must make sure that we clearly understand the true demands of the shop floor and the resources of time and money that they have available. We can then provide tools and training that are affordable, the best available, and simple to use to produce results.

Returning to the example of our hunter – he doesn’t need to be a top class athlete, the result of years of commitment and training. He only needs to throw off his excess weight, put on his running shoes and know how to use them to be successful in the competition that concerns him. The same logic can be applied to your business product delivery which is where a supply chain consultant will prove to be invaluable.

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As a progressive thinker and the ideas man behind my business consultancy I often find the best ideas are the ones we can learn from history. If I’m looking for inspiration for business ideas, “The Art of War” by Sun Tzu can always be relied upon to offer some timeless gems.

I was reading his thoughts on Tactical Dispositions and was struck by the opening remarks:

  • The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.
  • To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.

For me, these remarks carry the message that strategy in difficult times needs to be dynamic and optimistic rather than the familiar belt-tightening where the first casualties are the company’s future – Product innovation and marketing.

We all know that companies that invest, in a time of economic uncertainty, will emerge stronger than their competitors, but it can be hard to justify funds for new projects when cash is tight.

This is a time when we need to see stop seeing product innovation as new products or services but use a more generic rule – a process to transform ideas into business value.

What does this involve?

  • Business consultancy is a competitive game and I have to reflect on my competition, so I advise my clients to do the same. As Sun Tzu says – “put yourself beyond the possibility of defeat”. What could your competitors do to steal your best customers without losing money in the process?
  • Keep an eye out for new technology and trends. Welcome new ideas, especially the ones that make you think.
  • Identify and solve your customer’s pain. It’s straight out of the textbook but make the effort to understand their real needs. If it’s cost, do they need all the features of your product? The packaging? Large stock? Why do they buy from you?
  • Where could you reduce costs? Not by cutting staff but by improving quality, reducing waste and unnecessary activities.
  • Your suppliers – how could you help them to reduce costs, improve quality and delivery?
  • Your finance – what can you do to ensure that you’re paid in time?
  • Send out the message – We know times are difficult for our customers so this is what we’re doing to help you. As a business consultancy in difficult times this is my primary mission.

Why do it?

  • You’re sending the message that you believe your business has a future
  • You’re developing a culture that’s comfortable with managing change
  • You’ll retain your most valuable staff
  • When the economy recovers, your competitors will be too weakened by their cost-saving measures to respond.

The very nature of a business consultancy is to be agile and adopt strategies that reflect the dynamics of the market, both for our clients and our own business. Victory depends on it!

As a manufacturing consultant I often ask my clients what they’d rather be, the company that pioneered the market or the one that dominates it?

Headline writers love first-movers and we take for granted statements that we must innovate to survive, push into new markets, capture market share at premium prices by targeting the early adopters and build brand loyalty.

In my role as manufacturing consultant I try to help my clients see that what they may have isn’t first-mover advantage but first-survivor advantage?

Let’s go further and consider the advantages of letting your competitor be the mine-sweeper.

Free real-world research – the results of focus groups and observing customer use cannot compare with knowing what customers are really prepared to pay.

You can offer an alternative – let the pioneer experience all the customer complaints before you enter the market with a product that addresses all their frustrations.

Reduced marketing cost – your competitor has the expense of raising awareness of the product, identifying applications and educating potential users. All you have to do is identify its limitations and present your better alternative.

So should you patent inventions or not?

As a manufacturing consultant I believe that a patent has two main purposes:

It gives the inventor the right to sue anyone that believes has infringed his invention. This may be enough to deter small would-be competitors, but won’t be enough to withstand determined opponents with deep pockets. It doesn’t automatically give the inventor a monopoly or guarantee that he’ll make money. A more positive application is to assist the inventor to raise finance.

We are all familiar with the reason for a patent – the competitive edge that comes with a monopoly. Why, then, is it often a disadvantage to be first? Of course the early entrants are committed to their technology but could the patent itself be a liability?

My experience as a manufacturing consultant has proven that the potential danger of the patent is that it commits the first mover to an unproven technology. I have personal knowledge of a company that wasted $5m+ and several years to unsuccessfully commercialise a patent.

The irony was that a low cost alternative had been prototyped within two hours of asking the question – “How could a competitor get around this patent?”. The young technologist was not however allowed to pursue his idea because of the embarrassment that it would cause following the premature launch of the patented invention.

Here are some of my suggestions if you’re the first mover in the market

• Engage an experienced manufacturing consultant.

• Make sure you really understand the customer, the technical requirements and the standards that are expected.

• Customers buy solutions, not patents. Can you solve the problem quickly with an extension of reliable technology?

• Anticipate problems with new products. Better still, set out to find them. Be ready with the solutions before your competitors will have time to react.

• Look for ways around your own patents. If you can find them – so can competitors.

Adopting solutions outside your original patent isn’t an admission of failure – it’s a smart thing to do. The mere existence of a patent is a foolish reason to saddle your business with extra costs or inferior products.

• Review and challenge cost and time estimates, pricing, market forecasts and the product’s life-cycle. Assume that a competitor will enter the market soon after you launch.

• Take action to stay aware of developments outside your immediate industry. They will alert you to potential competitors and opportunities

Be aware though that sometimes it makes sense to hang back and observe before planning your strategy. It means that you have to be agile when you make your move to deliver a great product at a fair price but at least you’re not making the mistakes for your competitors to learn from.

Last but not least remember that a professional manufacturing consultant will advise and guide you through the critical process of timing in the market which is worth its weight in gold.

Some project requests need a cautious response. One that always puts a business consultancy on the alert is the request from a client that wants to reduce his costs. Cost saving is not an objective. It’s an approach to meeting the true objective – prevent losses, win orders, protect business – and without understanding the objective, the project is pointless.

An axiom of my business consultancy is that the project must have a higher purpose. If it doesn’t it’s likely to cost more than it saves. I’m not criticising the introduction of a new less expensive version of a product with a lower specification, as that’s a different matter. Frugal innovation to supply a “Lite” version of a product, to customers you wouldn’t normally acquire, would tick all the boxes for a switched on business consultancy.

What I’m getting at is the temptation to use cheaper but inferior raw materials that are more difficult to process or affect the quality the product. The loss in productivity can easily outweigh a trivial saving.

It’s also easy to underestimate the time and cost of testing to ensure that the product continues to meet the customer’s specification.

A good business consultancy will advise that if the goal is to reduce costs, the business should look at their processes to identify inefficiency, unnecessary activities, bottle-necks and waste. They should also work closely with their suppliers to identify opportunities for savings – for example their packaging and delivery arrangements or even the purchase of higher specification raw materials that can reduce future maintenance and warranty costs.

Don’t neglect less obvious alternatives. I recall a company where the technician had spent a month to reduce the raw material cost of the product by two per cent. Then, while waiting outside the sales manager’s office, he heard him approve a discount of several times that amount that one of the field team had requested. My business consultancy would advise that teaching good negotiating skills to the sales force, and limiting their freedom to offer discounts would be a very quick and easy way to increase their profits

As a final thought, before cutting costs by turning off obvious targets like heating and lighting, consider whether they might be investments. A retail store of my acquaintance discovered this principle by accident one hot summer’s day when the manager forgot to follow their normal practice of turning off the air conditioning. As a result, they were full of customers seeking somewhere cool, and for a cost that was considerably less than an advertisement. A good business consultancy would review all these aspects of the business and offer advice that may seem paradoxical without the experience they bring to the table.