High growth companies actively pursue “customer lock in” strategies

21/04/2015

Ambitious high growth entrepreneurs should spend at least 3 days of their official working week living in the customer’s world. Viewing the market place from the desk is extremely dangerous, being immersed within your industry and the needs of your customers provides real-time market intelligence. This helps to tailor propositions specifically to the wants and needs of your market place; it also supports new product and service development. Gazelle companies create a massive gap between them and their competitors because they deploy innovation and imagination to problems, this inspires and very often leads to development and evolution of propositions that the customer didn’t even know they wanted! They occupy uncontested space. Others will soon start to copy and replicate – your job is to stay one step ahead of the game.

High growth businesses we have studied stay close to their key stakeholders. More specifically, they spend time:

  • Looking at the factors that impact their customer’s performance – this provides opportunities to provide new solutions
  • Understanding their customers strategy – this facilitates a partnership working model
  • Looking at how they can help improve efficiencies, reduce costs and enhance performance.

Getting close to the market helps to drive what I term “customer lock in” – that phase of the supplier/customer relationship were there is a true partnership, mutual respect and a genuine win-win. Moving to lock in can absorb an enormous amount of time effort and energy, however the rewards can be big. It also makes it very difficult for competitors to move in and occupy your space. Being embedded means any new entrant would have to untangle lots of relationships, systems and processes to get a foothold.

A word of caution – never take relationships for granted and be aware of performance vs. KPIs. Customer complacency represents a real danger zone for businesses. Lock in delivers true competitive advantage.

 


John Leach – An interview with Carter Corson

16/03/2015

John Leach, Chief Executive, Winning Pitch, describes how it is always important for entrepreneurs to consider the emotional as well as financial costs to growth.

Click here to the article and more from Carter Corson

In your work you talk about “profitable, sustainable high growth”. What does sustainable refer to?

One of the key things around growth is that it all starts at the top. When we talk about high-growth businesses and organisations, what we’re referring to are those that can sustain 20% growth each year. This level of growth usually pivots around an individual who has a high degree of energy and wants to take the business to places where other entrepreneurs don’t want to go.

It begins with a mind-set driven by a genuine intention and ambition toward growth. There are many individuals who state that they want to grow but there’s a lack of genuine commitment. There are many people who talk about growth who are actually hallucinating rather than visioning.

Sustainable growth starts with genuine, sustainable intent that is actually followed through with strong execution. Sustainable intent translates into building the right team, working out the business model, financing it in a feasible and taking calculated risks.

There is a common misconception that entrepreneurs are nutcases who play the lottery with the family jewels. In fact, successful entrepreneurs are very much about assessing risk rather than taking risk. This gives them clarity in deciding what mitigating actions are required to avoid doing something calamitous.

When we talk about entrepreneurship, do you think that we sometimes over-focus on the individual? Can we lose sight of how while individuals may be the driving force behind a company, it takes a team to build it?

It does indeed start with the individual. The founders who grow their businesses into something quite special are the ones who have a high degree of self-awareness. However, it is important to think about the DNA of a great team, which I call the Thinkers, Doers, Sellers and Controllers. When you first set up, the founder is all of those things but they typically have a natural orientation to one or two of them. Successful entrepreneurs build a finely tuned engine that has an even mix of all four. Self-awareness is such an important part of the growth equation. You can’t do it all yourself – the minute you try to, you have a serious problem. You really need to build a team around you that is significantly better than you in lots of different areas.

Often, entrepreneurs can suffer from an imposture syndrome. They end up sitting in the board room thinking “everyone in here is smarter than me”. In reality, they have got themselves that far by being clever enough to have the right people around them. That is such an important part of the mix. .

In the UK there are 4.8 million businesses. There are only 36,000 that employ over 50 people. Why? Because it is so difficult. To grow beyond 50 you have to really be good at managing and building, which means recruiting while retaining the right talent. When they have 25 or more people, many entrepreneurs give up, sell up or they choose to downsize. Ultimately, sustaining profitable growth is a leadership challenge and this is a big problem for the UK plc. It comes back to the issue of recognising what skills needs to fit around the top table and who needs to sit in the right seat.

In a recent report, the problem of ‘leadership capability’ was cited as the second most important reason for the failure of UK businesses to scale up…

Absolutely. What you do when you start-up on your kitchen table is very different to when you are running a business of 150+ people. You have to develop and change.

I explain it as the Mind-set Staircase. Your mind has to make various transactions across the staircase where you go from being a founder, to a social worker once you have more employees. Then you assume the role of a strategic manager once you have other layers in there that are dealing with the numerous aspects of managing a business. That is one of the main reasons people don’t grow. Entrepreneurs say “the more people I employ, the harder it gets”.

Again, finding the right talent to sit in the right seat is crucial. I am a non-exec on four fast-growing businesses. In each of these, the first challenge to address is the people/talent issue. Often we find we have the wrong people, so invariably we start to look at the team. In most instances it has grown and has a product and a market, but the team running it is not fit for purchase. In many instances, we work on team dynamics – getting the right people doing the right jobs while building a culture that is conducive to innovation and success. That is one of the hardest things to do in business.

For entrepreneurs, what do you see as the emotional costs to growth?

Growth is more than just a series of spreadsheets showing financial projections. There are a lot of decisions that need to be made that impact on people around the entrepreneurial team – family, kids, wives and husbands. When making an executive decision, very often there is a difficult conversation going on back at home: “I need £200,000. I am going to re-mortgage the house.” “What does that mean for us?”

These are emotional decisions and they start to weigh heavy. There is often not only a financial cost to growth, but very often there is a medical cost. I see so many health-related complaints with ambitious people – anxiety, high blood pressure and ulcers. We never read about this but within my own networks, I see the impact that running a business actually has. It ends up running your life. This means you have to be mentally resilient, being capable of switching off and or to cope with uncertainty. Because we are British, we don’t talk about these things.


The high growth entrepreneurial mindset

05/03/2015

I am a great believer that successful high growth entrepreneurs embrace the right mindset for success. My second book Success Factor – Master the Secret of a Winning Mindset outlines my thoughts on the secret sauce of the way they think – here they are:

1. Define your personal intentions and align them to the things you love doing. With this sense of purpose and clarity you can then begin the journey to achieving what you desire from your life, business or profession. Remember alignment must be achieved between personal and professional intentions – they cannot work in isolation.

2. Prepare yourself for the journey by creating the right mental conditions. Resilience and mental toughness are directly related to your sense of purpose. If you give up after the first hurdle then your purpose is not strong enough! It wont be easy! Be careful about what you think about! That’s what you will get.

3. Personal responsibility for your actions means that you will make choices and not sacrifices. Belief in yourself is a key part of the way to think – if you don’t believe in yourself then no one will! When things go wrong don’t fall to victim mentality as this gives rise to a whole series of self defeating internal discussions – become the master of your own destiny.

4. Taking action must quickly follow all the thinking. Success is down to 20% thinking and 80% doing. Strategies emerge when we take action – strategy comes alive in the execution – it is this action that creates serendipity – people will often talk about getting lucky! Success Factor believes that luck is the product of intense activity and personal clarity! We then start to walk the path of our destiny.

5. Embrace the spirit of cooperation and working with a team ethos. Going it alone can be a tiresome and difficult journey. Caring and working with others can be the catalyst for us reaching our destination. Finding those who can support our shortcomings and plug the gap in our performance, can make things happen smoother and quicker.

6. Learning to lead ourselves before we lead others is vital. Once self-leadership has been mastered the leadership of other can commence. This means we must foster an environment that create the conditions for success to flourish, we coach those we are supporting, we communicate with impact and we ensure those under our leadership conform to the rules.

7. Playing by the rules is an essential part of long-term sustainable success – we must observe the value of humility and operating by a set of values that show caring for others and our environment. Practicing the philosophy of giving before we receive warm the hearts of others and is visible representation of the fact that we live a life of integrity – our reputation is often all we have to trade.

8. Engaging with others and building win – win relationships is a vital step to success. By embracing a mindset that life is truly a pitch we begin to recognise that competition means that we have to sell to get what we want – this could be our skill and expertise, qualifications, talents or products and services. By active listening and marrying carefully our proposition to what others want – we start to build relationships.

9. A creative mindset helps us to truly stand out from the crowd. Creative capital is often viewed as the ultimate source of competitive advantage because it unlocks our imagination – drives innovative thought and delivers remarkable differentiated results. Keeping a fresh mind and outlook enables us to remain ahead of the game and become memorable to those we need to influence.

10. Going the extra mile by doing things others wont do will get you remembered. Life has become extremely competitive which means there are far more applicants than jobs, more suppliers than contracts, less places on popular courses. The only way to get the edge is by digging deep and going one step further than others.

 


10 Ways to prepare your mind for high performance

18/12/2014

“So how do leaders shift from lower states of mind to higher states of mind and improve their effectiveness and performance?” This was a question posed on Harvard Business Review forum I contribute to; here were my thoughts and contributions to the debate

Its simple. It all starts with what you think about. We must listen very carefully to the internal conversations we have with ourselves. The key to moving from ‘downbeat’ to ‘upbeat’ is:

1. Be aware of the internal negative conversation – address it

2. Create space to think ‘fresh positive thoughts’

3. Speak to positive people who lift your spirits

4. Tune in to the things that lift your soul – sport, music, hobbies, personal passions

5. Write down your thoughts and combat negativity with a ‘+ve to do list’

6. Keep away from negative people at all costs

7. Connect with nature – walk the dog, go for a run

8. Remember most of the things we worry about don’t actually happen

9. Think in the present and get on with it, keep experimenting!

10. Die a happy death. Morbid thought, but a powerful motivator to take action now!

The way you think governs the way you behave and act. Beware of what you are thinking about.

The ability to master the mind is what differentiates ‘winners’ from ‘runners up’. The real entrepreneurial stars are the ones who manage to consistently switch into their higher state when needed – I would describe this state as being one were individuals view both opportunity and challenge within a positive and courageous mental framework.


Scale up companies – The cost of growth

03/12/2014

The scaling of companies is a topic I have been interested in for some years. More specifically why don’t more entrepreneurs go for more ambitious growth? A scale up company is defined as one that grows its employee or turnover at a rate of 20 per cent per annum over a three-year period. Taking entrepreneurs to Silicon Valley the home of scale ups, motivating founders to raise the bar through coaching and creating communities of like-minded business people have all featured in my quest to create more of them. My experience tells me that those who decide to have a go recognise there are two principle costs to growth. These costs are presented in two forms. Firstly, the emotional cost to the individuals involved, this usually manifests in self imposed pressure and the uncertainty that demands resilience and mental toughness to keep going when the inevitable road blocks are presented.

Growth Staircase

The second cost is money hemorrhaging from the till – this is the investment. Pivotal to building infrastructure and embedding the platforms companies of scale require. Within a scale up business costs can rack up very quickly – recruiting new talent, cost of raising finance, professional fees, new premises, IT infrastructure and administrative costs can shoot through the roof. Costs must be controlled and the execution of a growth plan needs to be effectively choreographed – clear roles need to be defined, people need to be accountable for delivering on their tasks. Very rarely can growth be achieved without impacting on profitability, sounds like a statement of the obvious, however as Sherlock Holmes said – There is nothing more deceptive than an obvious fact.’

Coming to terms with the two principle costs of growth is the very reason why the majority of the 500,000 of last year’s new start up’s will never go on to employ one person never mind 10. It’s also why over 99% of UK firms employ less than 50 people. Busting through the natural ceilings of growth requires entrepreneurs to pass the alignment test – once head, heart and wallet are in sync then growth can at least have the chance to happen. Without it, business as usual prevails. So often it’s the financial cost of growth that holds individuals back – once you can get over it in your mind and accept the facts, only then can you move on. This is a hiatus that many entrepreneurs reach – very few get through it.

The UK needs more companies of scale; it’s these businesses that bring about the added value to the economy – innovation, graduate jobs, links to HE and hopefully international trade. Lets give ambitious individuals the trusted advice they deserve. It’s only with a good team around you that you can move forward in an aligned fashion.


8 Essential ingredients of a high growth mindset

23/10/2014

The issue of what constitutes a high growth entrepreneurial mindset is one that has fascinated me for years. We saw in yesterday’s press that 50% of new start ups fail within five years, a recent report from leading accountants MazarsHow to be a stand out SME – showed that very few SMEs grow beyond the micro stage (10 staff). Across Europe, 92% of companies have fewer than 10 employees. Surely not all of these entrepreneurs fail to have a business model that lacks the potential to scale – there must be other issues that lead to what is almost a shopkeeper mentality. My frustration is that I see day in day out companies with massive potential, however the founders often fail to recognise that, with more motivation, much greater value could be created for themselves stakeholders and their family’s. So what holds them back? It’s their pedestrian mindset – If they only had more fire in their belly!

Whilst I would never encourage a business owner to go for growth, if they genuinely did not want it, my experience is that many do want to achieve more – I would say its more than 70% do. My conclusion is the wrong state of mind holds too many entrepreneurs back from greater thingstheir mindset is not tuned into the reality of what it takes to grow. Having a great business idea and tight control over key functions and processes is only part of the success equation. It’s also about having a high performing mental attitude. Mindset is a hugely complex area with many constituent parts. Here is my simple view on the top 8 ingredients that deliver a high growth, high performance mindset:

Desire and intention – every action flows from genuine desire and personal intention. I want to grow my business is easy to say but hard to do. Desire is observed when entrepreneurs practice the 20% thinking and 80% doing rule. Growth entrepreneurs talk about what they have done not what they are going to do. Strong personal intentions create a performance culture mindset and go the extra mile mentality.

Sell, Sell, Sell – every successful entrepreneur knows that without a sale, there is no business, period. Thomas Edison, said I don’t invent anything I can’t sell, how true. I am constantly amazed at how many businesses are started on the basis of an idea with no attention paid to customers or does anyone want to buy this? Selling is not a dirty word; great entrepreneurs are great sales people – get comfortable with it!

Mental resilience – an ability to cope with the random nature of business supported by an ability to get back up when the chips are down is one of the most defining traits of a winner’s mindset.

Self-awareness –there is no way one person can do it all, winners create an effective team and call on the support of others. The inability of a founder/entrepreneur to recognise their own failings will inevitably lead to slow growth. Better decisions are made when entrepreneurs actively encourage trusted team members to contribute and to input to debate. Accelerated growth only happens when the founder starts to let go of parts of the business.

Creativity – the invisible force that drives innovation and ultimately creates a fantastic culture – it also underpins a positive memorable customer experience. Great entrepreneurs have an ability to embrace ambiguity, they are curious, they experiment with new ideas, and they take action. New sales ultimately result.

Self- belief – If you believe you can, you can, if you believe you cant then you’re correct. A belief in ones ability is a good starting point for any growth entrepreneur. Growing a business can be very tough, along the ways critics emerge who drain enthusiasm and energy. Successful entrepreneurs have an ability to close off to negative energy. Very often in a growth business such negativity emerges from the market place and scarily from staff. BYC – Believe You Can.

Clarity – don’t be surprised if you don’t end up at your destination if you don’t know where you are going. Successful entrepreneurs have a vision of what they want to achieve in the marketplace – revenue, profit, market and customers and business model.

Higher purpose – a desire to change a market place, solve a burning issue or address an unfulfilled need is a massive motivator for many entrepreneurs. Higher purpose provides a reason for getting out of bed in the morning. Without a reason, business becomes mundane, passion disappears and people disengage. Personal and business performance suffers. A clearly defined higher purpose and reason instills a desire to serve.

There are many other components but being aware of the above is a great starting point. Create foundations for growth by getting your head.


High growth entrepreneurs have an innovation department

26/08/2014

Business incubators have become a common feature of public sector enterprise support in recent years; many of these establishments have proved to be highly effective in nurturing early stage entrepreneurs. They don’t just provide a desk and somewhere to turn up every morning, their added value comprises: a place to network, share ideas and collaborate. The really good ones offer mentoring and coaching, this is often what makes the real difference between success and me too performance. In many UK regions, incubators have become a hot bed of exciting new businesses, the potential employers of graduate talent – Autonomy in Cambridge is a fantastic example.

This concept of incubation needs to feature prominently in the culture and mindset of winning businesses – any ambitious entrepreneurial company should have a “department” or function responsible for building a pipeline of new thinking that delivers potential new revenue streams or adds value to existing customer experiences. I don’t mean a department literally – it’s about having an organisational process that brings together thinkers, doers, sellers and controllers, one that not only develops new ideas but also implements the commercially viable nuggets that emerge from the process of discovery. The concept of incubation delivers a major thrust for gaining an edge in the market place.

It is my opinion that creative intelligence is the ultimate source of competitive advantage – high growth companies tend to be disproportionately more innovative than the rest of the SME population. They explore, embrace diversity, live in their customer’s world, experiment with new possibilities and avoid complacency by making creative thought a habit, not something they do once a fortnight on a Friday afternoon. It must form part of an organisations “soul”.