Decide, Design, Deliver

We do a wide range of work, sometimes with long-established businesses, sometimes with start-ups. Our approach splits business improvement into three areas:

• Commercial Imperative - what’s the case for doing it - the “why”
• Planning Improvements - the what, where, how of action/change
• Taking Action - the who and when to make change happen

Building Your Case, Making Decisions

The Commercial Imperative has three components - profitability, risk and differentiation.

For a start-up business, you have to be creative to figure out how life will go with these three for the first 6-18 months. It’s definitely worth doing though, because we see a lot of mature businesses which have lost the clarity they once had on these things. I’d love for you to avoid some of that pain right from the get-go.

Profitability

Simply put, your profitability is your ability to maintain a (positive!) difference between your income and expenditure. Reduce costs, increase prices. But it’s rarely that black and white. Get a sheet of paper, your iPad, whiteboard or whatever, and start writing down all the things you can think of that affect your profitability, and its cousin - cashflow. What do you need to spend, when, why? How does what you spend clearly link with money coming in? How will you set prices (see also Differentiation below) that people will pay? What will you do if someone needs a refund or return? If you grow really quickly, will you not have enough profit to pay increased production costs - how will you get more cash? How can you charge a premium for your product or service? Can you complement one with the other - a maintenance service that goes with your product, or a product that makes more of your service? Could you re-sell someone else’s product or service so they have the production pain?

We’re looking to get a list of things that could make you more money, and a list of things that could cost you. Plan to do more of the former, and fewer of the latter…

It sounds like a lot of stuff to worry about - but remember, we’re not necessarily looking for all the answers here, just a list of things to think about to make sure you’ve at least thought about how they could affect your business. This leads nicely on to…

Risk

Risk is basically “what do we not know and/or not control” - and how do we stop little bad things turning in to big bad things. Think of it this way - you have motor insurance and a mobile phone so that a car accident doesn’t turn into a £15,000 loss (wrecked car) and prolonged pain (not able to call the emergency services). However, you may not buy the expensive “product protection” insurance retailers pitch every time you buy a toaster or kettle, because you can live with buying a new toaster. You’ve made judgements on the relative risk and the “mitigation” - how you will reduce your overall exposure to bad stuff happening.

Grab another sheet of paper and begin to figure out what bad things could happen and what knock-on bad things could happen. Once again, this is about being aware of the big wide world out there so you can spot things going right or wrong, early. As you write, think of “if this happens, then I’d do this…” and add that to the paper - these are your “plan Bs” and are what makes your business flexible and adaptable.

Maybe one or two risks will leap out at you. Write them on post-its and stick them on the wall in front of your desk. Just keep an eye on them - don’t obsess about them, but make sure you are not burying your head in the sand. Review your overall risks every 6-12 months - this helps you to avoid gradual changes in your situation that end up making you very exposed.

Differentiation

Put simply, why will someone buy from you rather than an established or alternative provider. Wrapped up in this is market positioning, marketing communications, USPs and a host of other business jargon.

You need to be able to answer the questions your customers and investors will ask:

• Who will buy it, when
• How and where will they find out about it
• What makes them feel they need to have it
• Why choose to buy it from you, and
• Why is the price right?

For me, these are the basic points you need to have nailed to make a success of your business.

Personally, I think that Differentiation can be the hardest thing to get right, because in the early stages of business, we tend to see everything through our own eyes. You need to get as wide a set of opinions as you can on this one, not just your nearest and dearest. Unless you have serious intellectual property to protect, I’d use every conversation you have with people to discuss what you plan to do and ask them to comment on the five questions above. Above all, listen to what people say, and try to be honest about whether your potential customers are telling you something different to what you think - if you want to sell to them, they are right, not you…

Next time, I’ll blog on Planning Improvements - what to do with your People, Process and Technology.

]]> http://www.criticalaction.co.uk/blog/since-2012-is-the-year-of-the-startup/feed/ http://www.criticalaction.co.uk/blog/strategy/lower-price-ok-use-it-more/ http://www.criticalaction.co.uk/blog/strategy/lower-price-ok-use-it-more/#comments Wed, 16 Nov 2011 17:35:32 +0000 Keith http://www.criticalaction.co.uk/?p=1252 It’s been a really busy few months, and what we’ve loved is that much of the work has been really creative.

Our bread and butter is helping businesses dig into how they do what they do, and looking for how we, they and their staff can make incremental improvements. Very satisfying.

The work we really love though, is to look at the situation and help an organisation come up with fabulous new stuff - great, unexpected, (positively) disruptive ways of doing things.

We came up with a really intriguing business model for Qton Solutions (a favourite client of ours because of the idea-storms we generate together!) to consider.

They produce software solutions for customers that really liberate value through streamlining operations (fitting nicely with the analysis and design that Critical Action does). However, customers are often concerned that value-based solutions are only valuable to them if they deliver…

A classic example of this is where we show that one can save a business 15 minutes per day per person - across a workforce of 100 people, so let’s say 25 person hours per day, around 6,250 person hours every year - at £60/hr that’s £375,000 p.a.!

Now, that sounds impressive, but we usually also point out that you can only get £375k of benefit if people use that 15 minutes every day to do something productive instead of talk some more about X-Factor or football…

With this thought in mind, we posed ourselves a challenge:

“could we build a pricing model that said - the more you actually use this system, the cheaper it gets, from what it’s worth to what you want to pay?”

We didn’t mean break points for volume usage, we meant the actual money you pay each month to use the system comes down if people genuinely use it…

That’s quite radical - and it usually stops the conversation dead for a few minutes, before the talking really starts again!

If you’re interested in commenting or knowing more about how we’re thinking of making this work - why not get in touch?

I’ve always tried to do at least one course or qualification each year which is nothing to do with “the day job”. This is partly for relaxation, but also because doing radically different things forces you to think differently Lastly, it reminds me what it is like to have to start from scratch again, acquiring knowledge and skills. It keeps the brain fresh.

For example, I went to night school and studied British Sign Language for 4 years (after starting out with just a one year introduction course!). I followed that with a course on welding - slightly different. After that, I started Pilates classes (I’ve broken too many bones to go back to rugby again).

The Biggest Ever Class Intake?

So, I was looking around at what to try next when I came across a tweet about an online degree-level module in Artificial Intelligence that Stanford University were offering - it had something like 25,000 students from around the world signed up. It’s now at over 85,000, I believe.

What a great idea! Bringing that level of expertise to a vast audience.

I’d encourage you to find out more, not just to see if the course is of interest (think “Google is actually artificial intelligence…”), but also to look at how the course is structured, how the content is “chunked up”, how it will be assessed, and how a global population spread across time-zones is accommodated.

Beyond the course content itself, there has clearly been a lot of learning and thinking going on. Stuff we can potentially learn from to, for our customers, our staff and our businesses.

Wish me luck as I brush up on my stats theory in preparation for the course!

First up is “What Would Google Do?” by Jeff Jarvis. Not just an interesting manifesto/thought piece, but also interesting to look at 2009’s predictions through 2011’s lens!

Second is “Yes! 50 secrets from the science of persuasion” by Goldstein, Martin and Cialdini, which never fails to give me ideas for new things to try and new ways to look at old problems.

If you’ve not read them, give them a try - I’d love to know what you think of them.

That said, we have recently been involved in designing and deploying a fair few technology implementation projects within our process and systems work.

What is clear is that over the past year, and probably in the forthcoming year, there are a number of technologies which have come of age, or are due to have some significant upgrades that should transform them.

On-Site Resiliency - Backups and DR Provision

If you’ve not looked recently at Windows Server 2008R2, specifically the new Windows Backup, and Hyper-V R2, then it’s worth doing so now. Ally these with USB3 data transfer speeds and the cheap price of gigabit networks now, and you can produce some very powerful business continuity solutions almost “from the stuff you have lying around”. It’s like when the A-Team used to build a tank, or digger or crane or assault weapon out of an old car and the contents of a farmer’s shed. Even better, no welding is involved, so the H&S risk assessment is easier!

I’ve been impressed at what we’ve been able to design and implement for some quite capital budget-constrained clients using a lot of what they already have. Solutions that just work away in the background, not getting in the way.

A Light Covering of Cloud Can Be Good

As a reseller of Microsoft’s Office365 online offerings, we at Critical Action are also getting quite excited about the possibilities of integrating these with on-premise systems to give an “immediate emergency response” platform - even for businesses that don’t necessarily want to store key data in the public cloud. This latter concern on where data is and who can access it under what circumstances probably stops a lot of businesses moving to the cloud even if other benefits stack up.

Way back in the past, we started the business leaning quite heavily on Google docs; but now I like Office365. It is now a more polished “version 2″ and even the basic few-quid-a-month web Outlook and Word/Excel/PowerPoint/OneNote flavour is functional and familiar enough to help in an emergency: you could coordinate key staff, access and print documents like emergency procedures, manage and produce public relations releases, track basic info, etc. You also have SharePoint online if you want to get a bit more advanced - as we do here at Critical Action; SharePoint is a favourite of ours.

As ever, we love to know how you are making the most of the tools you have in novel ways, delivering more for less.

In this short video (approx 3 mins), Keith considers whether you can start to make a difference to a business with just a few hours work.

Link to video: Can you make a difference in a few hours? (link to YouTube), or click on the video below.

I smile almost every time I use the service - instead of “email sent”, “details updated” or “new subscriber”, you get funny little lines like:

Fine piece of work!
You totally deserve a raise!
The MailChimp Crew

or:

Yippee! You’ve got a new subscriber for your list CAL Monthly-ish Update.
Feels good to be loved.

OK, so it might grate if I spent all day, every day seeing these, but there is an important point here, I think.

When people are busy, when the pressure’s on, when deadlines loom and problems need fixing, the smart leader might inject a little humour into an inconsequential thing.

It makes people smile or laugh, maybe because of the incongruity, maybe because it is just genuinely funny.

I really believe that those sorts of moments of lightness give a little recharge to the team. They know the situation is difficult, demanding - they don’t need reminded of that.

As a leader I believe you can be both demanding and light-hearted - it’s a question of your timing and earned respect.

Talentropy

Then I thought a bit more about it - the flow of talent. This seemed like quite a useful concept to me.

As business owners, managers and leaders, there are two crucial concerns - creating value for stakeholders (owners, shareholder, staff, investors, communities, etc.) and finding and keeping good people for our teams. Value and Talent.

Talent is something you can acquire.

It’s something you can lose.

You can heat talent up.

You can cool it down.

One person’s talents can drive and improve an entire team, service or product.

Another person can suck up and consume huge amounts of others’ time, motivation and goodwill for no net result.

What If?

What if we start thinking of talent as a fluid, volatile compound that we need to work hard to keep in our business equations? Perhaps then our plans and commitment to finding the best staff, investing in the best training for those good people, and rewarding their drive, commitment and ideas becomes a clearer business-benefit decision?

Without putting the energy in, talent cools down and migrates outwards, seeking the next energy source.

Good people move on if they’re not getting what they need.

Our challenge: How much talent is in each of our “business chemistries” and how do we recognise and retain it?

As well as coordinating the speakers, Keith was one of eight subject matter experts giving business owners and decision makers quick-fire, thought-provoking 15-minute talks on what can break businesses, and what we can do to make strong, resilient businesses that survive and prosper - making businesses more unbreakable.

Keith explains:

“The brief we took on was to present business leaders and owners with ideas, experiences and challenges in each of our areas, so that they could leave the morning with positive actions to take and a strong vision for next steps. What is significant for us, the speakers, is that everyone who came left having learned something - in some cases, having had their view transformed. The vibrancy and enthusiasm of the business community in and around Peterborough is fantastic, and it’s great to be a part of helping to keep businesses thriving and resilient in difficult times.”

Based on the success of this event, more are being considered in similar areas and styles. We’d love to know what you’d like to see covered.

The tool is called Disk2VHD.exe, and can be downloaded free from Microsoft (link opens in new window).

You can run it from the command line or double-click to open its GUI.

It’s easy to use - pick the drives you want to convert to VHDs, and set it going.

Two things however make it especially useful.

When you run it on Windows XP, you get the option to prepare the VHDs for use with virtual machines - which also means that you can mount the resulting VHD files as drives within Windows 7.

The second useful thing is that as the utility uses Volume Shadow Services, you can convert the disks of a running machine to VHDs “as you wait”.

This fits really well with our ethos of fast, practical processes that let you get on with the high value things. When our clients engage in XP->Windows 7 upgrade projects, a step we suggest they do, when migrating a machine, is to take a “safety copy” of the machines drives as VHD files onto an external 2TB USB drive. That way, even if the standard approaches to migrating user data and settings break, we have a copy of the old machine. If user remembers that they have 200 Internet Explorer favourites they forgot to migrate across, simply mount their old VHDs as drives, browse to the files they want in Windows Explorer, drag-and-drop the files and unmount the drive. In extremis, we can even start the old machine as a virtual machine. (You can use the Windows 7 boot loader to boot from a VHD).

Different clients keep the VHDs for different durations, from 2 or 3 days to “forever”. Obviously you need to make sure your physical security and processes are sufficient to protect the external drive if it has loads of machines’ VHDs on it…

Usually, you will end up with a VHD per drive, rather than per logical volume. Lastly, if you use disk-level passwords at boot time, be aware that you need to temporarily remove them when you create the VHD file. The largest VHD size supported is 127GB, and you should read the help and caveats on the page linked to above.

So there you go - a bit more technical than our normal blog posts, but too good a tool to ignore.