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30 March 2015

Thinking Outside the Box

Posted By: AIB Business
Thinking Outside The Box

Hunger, discipline, perseverance, attention to detail, and passion are all things that matter when it comes to achieving success in business. However, to give yourself  the best possible chance of success, there needs to be a huge amount of thinking carried out to devise a business strategy that will knock the socks off the competition, writes Pat Sutton from O’KellySutton.

So what’s the cunning plan to be? Abraham Lincoln once said if he had nine hours to chop down a tree, he’d spend the first six sharpening his axe. Having spent the last 25 years advising growth businesses, I know exactly where he was coming from.

A commonly asked question is: Why do so many SMEs fail to reach their potential, or fail to get beyond mediocrity, or just fail to grow? Many just trundle along, enabling the owner to make an average living. The reasons can be varied – and sometimes when an opportunity comes knocking, the organisation is just not ready to convert it into real growth.

Michael Porter of Harvard Business School suggested in 1985 that companies need to choose not only whether to have either a broad market/product focus or a narrow one (a niche strategy), but also either a differentiation or cost leadership strategy. Ryanair adopts a cost leadership strategy, Amazon is something of a hybrid – a hugely successful one.  German companies are world renowned for their niche specialisations.

There are many strategy methodologies/tools available to assist business owners in taking an in-depth look at their business – SWOT analysis, SWT analysis, PESTLE, GAP analysis, Porters 5 forces, Strategy Canvas, Opportunity Matrix etc. Such tools are freely available on the internet and in hundreds of business books. If you select three or four of these and carry out some exercises, you can then assess the results for yourself. These analysis tools can be used anywhere, anytime.

Important elements of the thinking involves asking questions and talking to employees, interviewing customers, networking and researching what competitors are doing. Surround yourself with people who will challenge your ideas and come up with ideas of their own – be they colleagues, family, advisors or customers. Thinking often involves identifying an important problem or an unfilled emotional or social need that is common to enough people for it to be worth pursuing, then developing prototypes to test the market and looking for best fit business models.

Get feedback from customers in a way that is meaningful. Decide on what questions you want to ask and interview at least two customers every week, for example :

(1) How is business?

(2) What’s the latest developments in your industry?

(3) Do you notice any recent developments with our competitors?

(4) What can we do better or differently to help you?

Experienced innovation leaders in successful large organisations work more by example than by dictate: asking questions rather than making decisions, clearing a path to the unknown for the team rather than identifying the end goal. Successful leaders give people the right kind of time, the right constraints and the right tools. Innovation leaders can create a sustainable competitive advantage, not through the brilliance of one particular invention but by creating an organisation that can learn from mistakes faster, more efficiently, and more consistently than competitors do.

The thing about some SMEs is that they can lose focus on building an incredible organisation and instead settle for the ordinary – paying the bills, getting caught up in trying to get the next delivery out, or collecting the next cheque. Even those with really good people on board fail to use them, fail to tap into key available resources. It’s hard to be critical of hard working business owners since most of them work really long hours and make big personal sacrifices. But it is frustrating when potential is not realised.

There are lots of inherent risk in stepping outside the box, and the cost of failure can be high. However, the cost of not trying for that winning product or service can be a life left unfulfilled.

 

Written by: Patrick Sutton, O’KellySutton, Chartered Accountants and Business Advisers, Kildare

Sutton@okellysutton.ie

 

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