Business Rocks – What’s Your Manifesto?

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This week’s riff: Parliament reopened this week with the Queen’s Speech, setting out the legislative programme that the new government will pursue over the next two years. The programme was based on the Conservative Party’s election manifesto, widely regarded as one of the worst of recent times. Given the loss of the party’s parliamentary majority it was unsurprising that many items from the manifesto were either watered down or dropped.

But does the fact that the Conservatives’ manifesto was a vote-loser mean that manifestos should be avoided? I believe just the opposite. The Tory manifesto allowed people to make a clear choice. Without a manifesto people would simply vote based on personality and gut feel, not specific actions.

If you want to lead change in your organization or team, some sort of manifesto is a great way of engaging your people and giving them clarity about the future. When Richard Baker became the CEO of Boots the Chemists, for instance, one of his first acts was to give his new executive team a memo that set out the behaviours he expected from his closest colleagues (You can read an edited version of it here). It was, in essence, his leadership manifesto, and one that people were happy to follow.

Recently, I have written my own strategy manifesto – see here – and the process of writing it has helped me better understand my own beliefs and will allow me to deliver even better strategy programmes for my clients.

So, how about you? What is your manifesto for change? And how will you ensure that it is a vote winner that leads to higher levels of performance for your organization?

Off The Record: Manifesto by Roxy Music

Hold out when you’re in doubt

Question what you see

And when you find an answer

Bring it home to me

© Stuart Cross 2017. All rights reserved.

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25 Ways to Lead Your Market

Finance Idea on Chalkboard

In yesterday’s post – see here – I set out that you had to be #1 in your market, in some form, or risk your ability to grow and thrive.

But what are the different ways you can lead your market? Critically, it doesn’t need to be simply market share, though that can help. Rather, your form of leadership should be sufficiently attractive to your customers that it generates the returns necessary for your business to thrive.

Here are 25 ways you can lead your market. Which of these would best drive the profitable growth and success of your business?

  1. The biggest overall market share
  2. The biggest share of a particular city, region or country
  3. The most profitable player
  4. The biggest geographical reach (most countries served)
  5. Leadership of a particular channel
  6. The biggest share of a particular customer or market segment
  7. The lowest prices in your market
  8. The highest prices in your market
  9. The highest quality products
  10. The biggest range and choice
  11. The fastest turnaround and delivery time
  12. The most enjoyable customer experience
  13. The friendliest service
  14. The most expert service
  15. First for the latest fashion trends
  16. The most personalised and bespoke products, services and solutions
  17. The very best deals and offers
  18. The most hassle-free customer experience
  19. The coolest designs
  20. The most convenient locations
  21. The best customer rewards
  22. The greatest level of product and service innovation
  23. The most satisfied and loyal customers
  24. The most customers served
  25. Famous for going the extra mile

© Stuart Cross 2017. Al rights reserved.

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#1 or Gone: Why You Must Become A Market Leader

Winning Business

Which airline is the #1 player?

If you ask this question in the USA, you’ll probably find that Southwest Airlines is the leader, while in Europe it’s Ryanair. If you look at long-haul flights then Singapore Airlines is often passengers’ first choice, particularly if they’re flying first class. Alternatively, Turkish Airlines has flights to the most countries, but American Airlines is the biggest and most profitable airline business of all.

All of these airlines can claim to be #1, even though they serve different markets, offer different propositions and have created different sets of competitive advantages.

FlyBe, on the other hand, has no claim to be #1. It’s a nice enough airline, but is unable to beat Ryanair at the low-fare end of the market and is unable to complete with the full-fare airlines on the provision of a high-service experience on European flights. Unsurprisingly, FlyBe is losing cash and has recently posted a £20 million loss.

It’s the same in other industries. Unless you are #1 in your market, it’s likely that you will struggle to generate the revenues and profits necessary for you to thrive. Like FlyBe, you will simply be locked into a cycle of anaemic profits, periodic losses and the constant threat of failure.

The good news is that you don’t necessarily need to be the biggest player in the market to be a leader that can thrive. As with the airline industry, there are different ways to achieve that status.

Here are the three questions you must answer to determine your route to market leadership:

  1. What is your playing field? Every company operates on a different playing field. Your playing field comprises four elements:  the products and services you offer, your target customers, your geographical reach and the channels you are using to reach your customers. What is the playing field that you wish to create? Ryanair’s playing field is to provide short-haul flights to Europe’s budget-focused travellers, while Singapore Airlines is more focused on business and high-income global flyers.
  2. How will you win? You must then choose how you will win in that market. Are you going to be the lowest price operator, like Ryanair or the service leader, like Singapore Airlines? Alternatively, you may wish to be the convenience leader (e.g. Amazon, McDonalds), the product leader (Apple, BMW) or the solutions leader (IBM, McKinsey) of your particular market.
  3. Will your strategy deliver sustainable returns? A desire to be Nottinghamshire’s #1 airline may enable you to become a #1 player in that market, but if the market isn’t attractive enough – and, as far as I know, the passenger demand for flights from Worksop to Mansfield is not that high! – it’s unlikely that you’ll be able to deliver the returns needed for sustainable success. Similarly, an ambition to be China’s #1 airline may seem attractive, but if you haven’t got the assets, relationships or know-how to compete effectively in that market, it’s unlikely that you will be able to turn your ambition into reality.

Without a commitment and strategy to becoming and remaining a true market leader you will struggle to survive, let alone thrive. But, by identifying a sustainable way to lead your own particular playing field you can justifiably claim to be #1.

How will you become your market’s #1?

© Stuart Cross 2017. All rights reserved.

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Business Rocks: 80-15-5

Growth Riffs Logo

This week’s riff: I was sharing a strategy proposal with a potential new client this week, when he asked me how much time the work would demand of him and his top team. I told him that it would need between 3-5 days of dedicated time over 6 weeks to deliver the results we’d agreed. “Oh dear,” he sighed, “I don’t think that we can spare that much.”

All of the highest-performing businesses that I have worked with are led by executives who are able to balance short-term and longer-term demands. One particularly successful CEO told me that he uses the 80-15-5 rule. That is, he and his team spend 80% of their time focused on delivering this year’s results, 15% on ensuring they deliver next year’s results and 5% working on ideas that will only land beyond the next two years.

Taking that CEO’s model and assuming that you work 2o0 days each year, that means that you should be spending 30 days a year developing and delivering ideas for next year’s success and 10 days on ideas that will drive your organization’s performance beyond the next 24 months. In other words, you should be spending around a day a week working on the longer-term growth of your company.

I’m still waiting to see if I’ve been successful in persuading my buyer that the time spent on developing a focused and coherent strategy that his entire leadership team can own and drive will be well invested. But, in fast-changing and dynamic markets, it’s difficult to see how, if you’re solely and continuously focused on the next quarter’s results, you can expect longer-term success to be achieved.

So, how close to the 80-15-5 model do you get? And how many days each week, month and year do you and your leadership team spend on developing and delivering your organisation’s longer-term success?

Off The Record: In The Year 2525 by Zager and Evans

In the year 5555

Your arms hanging limp at your sides

Your legs got nothing to do

Some machines doing that for you

© Stuart Cross 2017. All rights reserved.

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Remember, Nothing Fails Like Success

Boss

Many companies struggle and fail, not because they are bad at what they do, but because they are great at what they do. Look at Kodak, for example. Its decline didn’t result from the company being poor at film processing. On the contrary, the company’s success has stalled precisely because it is great at film processing. And it’s the same with many other companies.

There are many other examples: Nokia, Olivetti, Blockbuster, The Gap, M&S, HMV and virtually every British motor company have struggled or failed because they’ve been unable, or unwilling, to change as quickly as their markets.

There is nothing written in stone to suggest that Apple, Tesco, WalMart, Google or even Coca-Cola will be protected from future demise. My hunch is that several of them will struggle or even disappear in the next few decades.

There are three factors which sew the seeds of failure in successful organisations. Often these factors appear in combination rather than independently, but it is useful to separate them to understand the dynamics at play.

  • Arrogance. Success can breed a belief that you will always be successful and have a right to further good times ahead.
  • Defensiveness. Some companies see strategy as establishing a strong position in the market and then seeking to maximise their performance from it, rather than an ongoing journey of value creation.
  • Business model inertia. Perhaps harder to change quickly is the inertia of a company’s business model. Even when managers do not display arrogance and are not defensive, the complex web of processes, capabilities, assets and cultural approaches that drove market-leading performance is not easily changed overnight.

So how do you ensure that your company continues to climb the growth curve, and avoids hitting a performance plateau or decline? Here are five steps you can take:

  1. Look out for the ‘weak signals’. Understanding the dynamics in your market is critical in anticipating the need for change and responding accordingly. All too often, change is only introduced once profit performance has already eroded, even though the signs of decline – in terms of customer feedback, innovation performance, the rate of market share growth or the growth of a new, disruptive rival may have been evident several years earlier. You must be more attuned to these early warning signs. As former Intel boss Andy Grove put it, “Only the paranoid survive”.
  2. Raise the bar continually. It’s important to recognise and celebrate success, but don’t let it go to your head. All market leaders need to set increasing standards for success or their competitors will do it for them. In 2003, for example, the England rugby team won the world cup. However, by focusing on victory at that tournament as the ultimate goal for the team, it was difficult for the new management to subsequently raise the bar and the team’s performance quickly declined.
  3. A focus on action. The best lesson for focusing on action is this quote from Michael Bloomberg, from his book, Bloomberg on Bloomberg, “While our competitors are still sucking their thumbs trying to make the design perfect, we’re on version No. 5. By the time our rivals are ready with wires and screws we’re on version No. 10. It gets back to planning versus acting: we act from day one; others plan how to plan – for months.”
  4. Cannibalise your own sales. Defensiveness is a key factor in turning market leaders into also-rans. At the heart of this mindset is reluctance, bordering on refusal, to cannibalise your own sales. The trouble is that, in a dynamic market, if you don’t cannibalise your sales you will be overtaken by other players. Apple has brilliantly overcome this issue in the way it has managed the market strategy of the iPod and the iPhone, and Gilette has done something similar with its series of razor improvements.
  5. Reinvent your business model. Innovation at a product level is admirable and necessary. Innovation at the level of your strategy and business model requires a far bolder mindset. I admire UK electrical and electronics retailer DixonsCarphone. They operate in a highly competitive market and have made bold moves over a series of decades to stay relevant and profitable. Twenty years ago they launched new formats such as The Link (for mobile phones) and PC World. Along the way they launched Freeserve, which changed the face of UK internet participation, and, in recent years have removed the Dixons brand from the high street, developed the KnowHow brand and merged with Carphone Warehouse. Although these moves do not guarantee future success they have helped the company keep up with the pace of change – and sometimes to lead the market.

Which of these five approaches will help you ensure that your success does not create the seeds of future failure?

© Stuart Cross 2017. All rights reserved.

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Cross Shots: The Power of 6000

The power of the 6000 opportunities to talk strategy for your business.

© Stuart Cross 2017. All rights reserved.

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The Customer’s Not Always Right, But That’s The Way To Bet

hotel service

In dynamic, turbulent and fast-moving markets, driven by almost unbelievable technological advancements, you can easily become distracted by the noise and activity in your markets and forget this critical business truth.

You do so at your peril.

Like a party of trekkers in the Himalayas who stay physically close to their guides during the raging storms that can descend unexpectedly in the mountains, you need to stay close to your customers at all times. They can guide your next steps and help lead you to a successful outcome.

Customers may not set your destination or the mountain you choose to climb, but they can provide the necessary navigation to help you arrive safely – if you let them.

So far, so obvious, but how many companies stay close enough to their customers, listen hard enough to their customers and act quickly enough on the guidance they’re given, to enable them to either lead their markets or at least move faster than their competitors?

In my experience the answer is remarkably few. Even huge organizations with seemingly bottomless marketing budgets can spectacularly fail to respond to their customers’ changing needs and desires.

Some companies, though, really do put customers at the heart of their organisation. Since 2010, DFS, the UK’s largest sofa retailer, has revolutionized its approach to focusing on and managing customer feedback. Using a Net Promoter Score system (for details see here), the company has grown its sales, profits and market share on the back of these actions:

  • The company collects over 200,000 separate customer reviews each year, covering various stages of its customer experience – pre-sale, point of sale, point of delivery, 6-months post-delivery and following a customer service issue. This represents a response rate of over 10%;
  • Each sales consultant, store team and manager, area, region, delivery team and individual members, the in-house factory teams and the on-line team and call-centre service team receive weekly NPS reviews, and their performance bonuses are directly based on their average NPS scores;
  • The executive team review overall NPS performance each week alongside sales, with actions identified for immediate resolution. Similarly, the monthly board meeting contains a review of the company’s NPS performance;
  • Any individual customer score of 6 or below results in a notification to the relevant store manager, who is expected to follow up with the customer, with central management follow up of how the issue has been dealt with taking place shortly after;
  • The system has been designed to ensure that customers’ answers are as honest as possible. Here are three steps they’ve taken to ensure the integrity of the data:
  • DFS provides a charitable donation for every response received. The director responsible, Andrew Stephenson, found that the previous method of encouraging responses, which was to enter respondents into a prize draw, had slightly skewed responses upwards, whereas a charitable donation had no such impact;
  • The entire system is administered by an independent third-party marketing agency, which is highlighted on all emails. Again, this has been found to improve the quality and integrity of customer responses; and
  • The system is email based, but for those customers where no email is collected, the marketing agency takes their mobile phone numbers to gain a sample of results from these customers to ensure that their views are in line with the majority of email customers and also ensures that individual sales consultants are not ‘gaming’ the system.

In other words, the NPS system that DFS has developed has become the oxygen that is breathed across the business. Rather than pursuing the development of large but intermittent initiatives that tend to follow annual customer surveys, the DFS system allows managers and colleagues from across the organization to make thousands of individual decisions every day that, together, have transformed the company and enabled it to be truly customer-centered.

How is your company receiving, monitoring and acting on real-time customer feedback so that you can grow your business and achieve your goals in the fastest, most sustainable way you can?

© Stuart Cross 2017. All rights reserved.

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Strategy Is Like Football – They Both Need A Goal

Soccer sunset

This is the second in a series of articles expanding on my recent post, Strategic Power: A Manifesto to Revolutionise Growth.

When I coach my junior football teams and we’re doing passing exercises, the boys can quickly lose enthusiasm. But when I add a goal for them to shoot at as part of the drill, their engagement and energy levels are instantly transformed.

It’s the same in business. Without clarity on what you’re trying to achieve, you’ll never be able to determine the best way to make it happen. As Ian Filby, the CEO of DFS, the UK’s leading sofa retailer, argued in my book The CEO’s Strategy Handbook, “One of the big lessons I have learned is that a strategy has to meet a clear goal. Without agreement about the goal, you’ll never settle on your strategy.

All businesses will have many goals, but it is critical that you have a #1 goal; a strategic goal that sits above the others and that will drive your agenda. Otherwise, you just end up with confusion as you switch attention – and resources – between a number of competing targets.

At Topps Tiles, for example, I worked with the management team on strategy over a number of years, but our first ever task was to set the company’s #1 goal. After a focused and wie-ranging discussion, the executive team focused on a market share goal and set the ambition of growing their share from 25% to 33% over a five-year period.

In reality, Topps Tiles achieved a 33% share in a little less than four years. Teams across the business started to ask themselves what decisions and actions would best get them to profitably achieve their 33% share target and found that initiatives such as making the stores more attractive, creating real focus and expertise on tiles and ditching peripheral ranges such as wooden flooring, building stronger relationships with trade customers and enhancing the on-line offer all had a clear and positive impact on their market share metric.

As Matt Williams, the CEO of Topps Tiles, commented, “Among other things, Stuart helped us define a specific and clear goal that galvanised the entire organisation and which has been a key part of our success.”

There are three criteria which help establish an effective #1 goal:

  1. It drives the company’s profit engine. It doesn’t need to be a profit goal – and it’s generally better that it isn’t – but your goal should have a clear link to bottom-line performance. In recent years, for instance, I’ve worked with clients to develop #1 goals that include the number of customers served, the level of customer loyalty, top-line sales and the share of spend from particular customer segments (rather than the whole market) as well as other market share goals.
  2. It has clear ambition. Setting a #1 goal is an art as much as it’s a science. The best goals are grounded in what is achievable or possible for a business, but they include sufficient stretch that new solutions, initiatives and behaviours are required to achieve them. The Topps Tiles goal, for example, was certainly possible, but only by doing new and different things and not simply working harder or doing better what the business already did. One more thing on the ambition: I think that 3 years is a reasonable time frame. Although some management teams, such as Topps Tiles’ executives, opt for a five-year horizon, I find that this can sometimes feel that this timeframe can feel too distant. A three-year horizon makes all the management team understand that they need to start making progress now!
  3. It builds organisational engagement and commitment. The best goals also have meaning for people across your business. That’s why profit is not always the best goal – it has meaning in the board room, but on the front-line of many organisations it can feel a bit conceptual and outside people’s everyday control. The Topps Tiles share goal, for instance, could be broken down to an individual store goal, and Matt Williams challenged every store team to be the #1 player in their town. Similarly, I worked with a leading opticians chain where we agreed on a goal to drive the number of eye tests the business did. This allowed managers to establish individual and store goals that, together, delivered the business goal.

So, you must get on the pitch and create your goal if you want your business to win. What steps will you take to create a clear and compelling goal for your business?

© Stuart Cross 2017. All rights reserved.

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The Truth Can’t Hurt You

Young Honest Businessman is Tested with Lie Detector

This is the first in 12 short articles expanding on my recent post, Strategic Power: A Manifesto to Revolutionise Growth

A relatively little-known 1980s Elvis Costello song, I Want You, has these lines:

The truth can’t hurt you

It’s just like the dark –

It scares you witless

But in time you see things clear and stark

Costello was writing about a failing relationship, but the sentiment is equally true in business. Unless you are prepared to accept, face into and work through the truth of your situation you will never be able to accelerate growth.

Optimism is critical to business success, but unless it is balanced with a cold-eyed understanding of where your business is, and where it is heading, then it is simply hubris. Twenty years ago, when I worked for Boots the Chemists, for instance, the company lost over £100 million in a failed move into dentistry and wellbeing services despite, it being clear to everyone except the CEO that the trials weren’t connecting with customers.

The power of real insight is even greater when it is the power of shared insight. You shouldn’t just focus on what the truth is to you as an individual leader of your business, but should identify what the truth and real insights are to you as a leadership team. That means that openness, a willingness and ability to discuss uncomfortable issues, a desire to look for cause rather than blame on problem areas, as well as a talent to collectively look for and spot emerging new opportunities are all essential characteristics of great strategic teams.

Assuming that you have those qualities, here are the 10 questions that I set to answer when I’m working with my clients to understand their business and identify the critical insights:

  1. Where are you making money? And where are you losing money?
  2. Where are you growing? And where are you going backwards?
  3. Which of your markets have high potential, and which are less attractive?
  4. Where are you beating and where are you lagging your competitors?
  5. What do your customers – and non-customers – really think of you?
  6. What assets, skills and capabilities do you have that really differentiate you and drive your success?
  7. Where are you consistently demonstrating excellence in everything you do?
  8. What have you done recently that is truly innovative? And what do you have in the pipeline?
  9. What do your people really think of this business?
  10. Which of your current initiatives are working, and which are failing to meet their goals?

Collectively answering these questions sobering honesty and hard-headed analysis is the foundation of great growth strategies. After all, the truth can’t hurt you, but telling yourself little white lies can be deadly.

What steps are you going to take to create a clearer picture of the current performance and direction of your business? And how are you going to build alignment and commitment around the insights you generate?

© Stuart Cross 2017. All rights reserved.

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Cross Shots: This Chart Will Help You Take Better Actions

This Chart Will Help You Take Better Actions

© Stuart Cross 2017. All rights reserved.

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