On Internet Business

Developing and implementing business strategy

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Following on from the last post, a business needs to have a strategy upon which management styles and decision processes are based, or there’s not a lot of point having a business. Amazingly though, a certain percentage of people begin their business careers with a rough idea what they want to achieve and then adjust their behaviour, investment and decisions as they go along. They may well have written a business plan but the day to day process of ‘running’ a business takes over and they lose sight of the need to work to it, or adjust it according to outside factors.

But strategy is both simple and vital. One of the easiest ways to think about strategy is to work out what you can do differently to your competitors and then work back from that to what you need to do to achieve that difference. This is simply a route to defining the ways you can achieve competitive advantage.

Defining business strategy

Competitive advantage isn’t something the average entrepreneur can define alone – it requires a deep understanding of what current and potential customers want and will pay for.

It also necessitates a broad overview of the market to allow your company to decide where to begin: there may be markets you need to develop, customers you need to win over from rivals, products you need to refine and others you need to abandon – all these are strategic decisions that can only be made when both breadth and depth inform the choices that are made.

Using simple tools like SWOT analysis or hiring a facilitator to help your executive team brainstorm can add the next level of value to strategy by bringing some blue sky thinking to the process, but it’s important not to get into scenario building until you have facts to put under your future projections or it’s easy to end up with unimplementable strategies.

Implementing business strategy

There’s not a lot of point having a strategy unless it informs daily business decisions at all levels of the company. Many people use the SMART toolkit to ensure that strategic directions can be executed effectively and having proper adjustment mechanisms such as customer feedback, internal analysis and training and development structures that support the strategic direction of the business.  Clarity about how these internal systems work is important but even more so is the ability to regularly assess progress towards the strategic aim to adjust the strategy if outside forces impact it.

Battleship strategy image courtesy of john-morgan

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Management style and decision-making for business success

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

The business world is changing fast, and management styles have to keep up or they, and the businesses they are being used in, die.

One of the biggest failure areas  in business is that people think their management style and their decision-making process are the same thing, but they’re not. It’s typical of paternalistic managers (those who treat their staff like a family of which they are the stern but loving parent) that they are also indecisive. Why? Because the paternalistic personality also tends to worry about ‘favouring’ one child over another, which in business equates to giving too much credence and resources to one department or development at the cost of another. This can lead to paralysis in decision-making or procrastination until more evidence is available and that’s nothing like the usually expected decision model of strong unswayable leadership from a benevolent but often old-fashioned decision-maker.

Another management style that often has a different decision-making model is laissez-faire, which is the hands-off approach used in many creative industries – but it’s increasingly common for laissez-faire to go along with autocratic decision-making. Sir Alan Sugar’s style in The Apprentice, is a textbook example: tasks are allocated and then teams are left to get on with it, but his decision-making about the outcomes of those tasks is totally dictatorial with no right of appeal and very little cognizance of the input of others.

Defining styles in a crisis

There are loads of books, consultants and other strategies you can use to define your management style and your decision-making process but the definition isn’t useful unless you have some reason to change or hone your management skills. When a company as a whole is starting to slip, it’s common to focus outwards: more sales, better returns, quicker turnarounds, not inwards on management style, but this can lead to the disengagement of staff who become less interested in the company’s success and more interested in preserving what they have (seniority, resources) for as long as possible.

So what’s the answer?

Looking at participation is crucial. You don’t have to change a paternal or autocratic decision-making process (if it works) as long as the management style keeps employees engaged (which means involved, not happy – staff in paternalistic organisations are often happy right up to the moment they’re made redundant!) but you do have to ensure that the decisions reflect management priorities and that both are aligned to wider targets such as viability, increasing market share and getting and retaining the best team members.

Change will only come when two things happen – there’s a recognition at all levels of the need to move to more effective decision-making and when there’s an agreement on both short and long term changes. Short term changes are necessary to show employees that top management is ready to move forward but long term changes are vital to drive business success and alter culture. Short termism can be purely cosmetic but for managers who are autocratic is often much more difficult to accept as it requires surface changes to be evident before their objective self-awareness has adjusted to the need to do something differently.

What helps change management style and decision-making?

Clarity about the past, alignment with the present need and focus on the necessary changes, step by step are the keys to creating a new culture in which changes in the individual and alterations to group structure can both happen.

Team-building whiteboard courtesy of Robert Higgins

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Google’s latest algorithms go after content farmers and bad online retailers

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Online Retail, Paid Search, Search, Social Media

Back in December, the Google algorithm was tweaked to deal with a surreal business scenario that was played out through the search engine rankings of an American eyewear retailer, the pages of the New York Times and the number-crunching desks at Google HQ.

Bad Retailers Punished

Essentially, one online retailer had realised that its many extremely poor online reviews and customer comments were actually pushing it up the search engine pages. So (it is claimed) it made an explicit company policy of ill-treating customers and abusing them when the complained, so that they would make negative ‘flaming’ online reviews which served to put the company at the top of the Google searches again, and again, and again.

When the NY Times wrote about this bizarre scenario, the comments redoubled and the company made the top spot on Google … at which point the Google mavens decided to do something. They designed a substantial revision to the search algorithm that stopped negative reviews driving a company up the popularity ladder.  How they did it has not been made clear, and there are still some questions about whether businesses can use this tweak to drive down their competitors by posting false negative reviews to drop rivals back down the rankings. Even so, the tweak made many online retailers happy.

Content Farmers Cut Out

In February a new algorithm, nicknamed Farmer, came into play, and now we’re seeing the results. The familiar name is the clue – this algorithm goes after content farmers who regularly top searches with content that is either derived from other sources (aggregated) or just packed with keywords (spammy).  This is meant to give more content-heavy, original-material sites a chance to reach the top 2 or 3 position, ahead of some of the sites that exist purely to link content to paid-for ads in the hope the viewer will click on them.

Together, these new algorithms herald a substantially different future for online retailers and information providers – they attempt to stop bad retailers using their poor reputation as a search engine tool and they aim to stop content farmers clogging up search pages with keyword-rich but content-poor information.

For many online retailers this heralds a new opportunity – the chance to revamp their own content format to deliver quality information and good customer engagement, not just for its own sake, but because it’s worth competing for a first page ranking again. Or at least it is for now, until the farmers and cowboys work out how to beat this new system …

algorithm billboard courtesy of toastyken

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Gift-Giving as Business Growth Trigger

Posted by Michael under awards, Business Growth, customer service, Entrepreneur Resources, Leadership

John Ruhlin of Ruhlin Promotion Group may be unusual in this time of belt-tightening and cost-cutting. He’s just quadrupled his spend on gifts to employees (and their partners), clients and prospects because, he says, it brings rewards in greater productivity and higher profits. His tips for gift success are an interesting blend of common-sense and hard-earned experience.

1 – Don’t be cheap. He points out that team members may give up to 2,000 hours a year to their employer and to be given a trinket in return is hardly an adequate reward or evidence of thought or appreciation. If it can be found in a cut price store or a promotional catalogue, Ruhlin doesn’t want to know: his gifts are chosen with care to match the recipient and their role in the business.

2 – Make gifts or rewards, not catalogues. This is a point that is only just starting to impact UK businesses, although many have a ‘catalogue’ of options around flexi-time, further learning or selling back holidays to the company, not that many offer a catalogue of incentive items you can ‘earn’ and ‘choose’. Ruhlin’s point is that this throws the initiative back on the recipient, and that the whole point of a gift is that it’s chosen with care. He tries to select items that will match with the individual’s life and dreams, so that people know they are appreciated for who and what they are, as well as for their contribution to the company.

3 – Gift or Salary? Ruhlin suggests that if you pay a little less, and make up the difference in thoughtful and valued gifts, you’ll get more engaged employees because they feel appreciated. This is a very non-British approach, where salary has always been considered the determining factor to a ‘good’ job, and I can imagine it’s an idea that would meet some resistance from both employers and employees, but lots of psychological research into motivation shows that people are more motivated by feeling they are achieving that by monetary gain, so perhaps Ruhlin is right to suggest that higher productivity can be obtained through paying $1,000 a year less, but making up the difference with five or six gifts, totalling that amount, throughout the year.

4 – Partners Matter more. Perhaps the most ‘out there’ claim, to British ears, is the one that by spending more on a client’s partner or spouse than you do on a client, you get a better return. I don’t know if that would be true here, or how it would be measured, but he says that one Fortune 50 Executive claims to spend 3 times as much on gifts and events for partners as on clients themselves, because the spouses and partners ensure the client never moves their business away from the company that treats them so well. I can’t think of a British company that would admit to doing this, but it would be really interesting to compare the two cultures and to see if the same return on gift investment could be found in the UK.

Gift cake courtesy of Ken’s Oven

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Planning Your Business Exit

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

In a recent EO publication, Clifford Holekamp talks about the way he designed his business, from the outset, to allow for the day he decided to sell. His key principles to building a good exit into a business start-up are important to consider, even if you intend to run your business until the day you die!

1.    Designing operational absence – When you set up your business, you might find you get an offer to sell much sooner than you anticipated, or life circumstances might mean you have to take a sabbatical. In either case, if you’ve created a business that can run autonomously without your presence, you are well equipped to cope with whatever life throws at you. Operations have to function without the founder/entrepreneur at the helm and they need to be scalable so that any buyer can see how the business will grow.

2.    Make Marketing Matter - Often companies and brands are built around the founder – just look at the swings in confidence around Apple Inc when Steve Jobs takes a break – so making your company’s marketing focus on brand rather than individuals is a key component to creating a marketable business that has an appeal to potential acquirers.

3.    Easy Accounting – Simple business books, obvious bottom lines and straightforward ownership structures allow a potential buyer to investigate your business and develop immediate confidence that they understand, and can master, the current operating systems and won’t experience nasty surprises down the line.

4.    Legal Niceties - Where a business has assets that involve intellectual property rights, property, investments or research partnerships, there will be opportunities for road blocks to appear in the acquisition process. Ensuring that nothing your business does requires the approval from parties outside the organisation can mean that a buyer moves swiftly from interest to acquisition.

These are all concepts that any business can benefit from, even those businesses that intend to become family dynasties, because they help create organisations that are attractive to buyers, investors, customers and partners.

Exit sign by Mark Hillary

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FundedApps: Turn ideas into cash

Posted by Michael under Business Growth, Entrepreneur Resources

Many of us think we have a great idea for a new app, but lack something: technical skill, time, investment possibilities, to turn that brilliant spark into a commercial blaze.  Now there’s a fantastic new app that helps make apps happen. Called FundedApps, it invests its resources, creativity and experience in making bright ideas into money-earning apps.

How does it work?

It’s a lovely process of using an innovation to develop an innovation. You just:
•    Download the App
•    Use it to create and send your idea (costs £1.19)
•    Idea is reviewed
•    If it passes the criteria it gets investment to turn it into an App (cash payment, see payment schedule below)
•    More investment launches the new App (ongoing revenue stream kicks in)
•    App management and improvement is ongoing

What’s the return on intellectual property?

Three forms of return:

1.    The transformation of an idea into a successful app which earns income
2.    One off payment of £250, made when theAppsFund commits funds to develop an idea
3.    Ongoing 25% net revenue from the launched App will be paid quarterly to the originator

The team behind FundedApps is small and entrepreneurial and uses its business, technology and creative experience to identify, improve and launch ideas into the marketplace so ‘flashes of brilliance’ can become economic earners.

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Making the workplace fun

Posted by Michael under awards, Business Growth, customer service, Entrepreneur Resources, Leadership

An article in Director magazine highlights the importance of fun and creativity in the workplace. Happy team members take fewer sick days and work harder for longer

Define your differences and use them to achieve more

By offering a different kind of ‘perk’ and a clearly defined brand experience to your employees as well as your customers, you can help shape your employment policy and recruit the right people to grow your business. Competitive businesses like the Richmond Group really incentivise their teams by giving them capital to run with on new projects and acquisitions and pitting them against each other.

Do more for them, they’ll do for more for you

Ikea gave all their staff free bikes after the UK government gave companies a cycle to work tax break and several UK companies give their employees free mobiles or free minutes – all this might sound like freebie heaven but it’s a way of showing the quality of investment you have in your employees. In the same way, measuring stress and monitoring workplace issues can really help a company and its employees to manage what matters – which is performance in action. Pret a Manger uses a mystery shopping programme to measure performance and reward ALL staff in a shop, not just the manager, if the results are good.

Reward what matters

Some companies offer holidays in return for performance, others give bonuses and incentives for greener lifestyle choices. Whether it’s onsite gyms or having dry cleaning picked up by a concierge, knowing what your staff want and what they’ll really work for is a way of getting them to respond to challenges with a gusto rather than groans.

Offer choice

Shine Communications lets the employees design their own incentive packages – other companies let staff bid on what they want to achieve or opt out of benefits rather than opting in. It’s all part of empowering the employee and that produces a more satisfied and dynamic team

Reproduced image courtesy of daily sunny

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Scaling your business

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Robert Craven has an interesting think-piece in Real Business, exploring the balancing act that’s required to master the relationship between planning and delivery in a small or new enterprise.

His point is that the problem is rarely a poor plan. It’s usually some kind of impediment to delivery because the organisation isn’t balanced in its structures and the weighting given to different aspects of management. In other words, the love and affection that most entrepreneurs lavish on their creations is misplaced – they work in the business rather than on the business and instead of making scalable businesses using systems, they make successful start-ups that then resist scaling upwards precisely because of their initial construction.

There’s a lot of anecdotal evidence that suggests many entrepreneurs actually have to move away from their business (willingly or unwillingly) during the scale-up process. Quite a few return when it’s over, but it seems the skills that make an entrepreneur may not be those that make a business grow from SME to large enterprise. ‘Systems, processes and controls’ says Craven and those are often dirty words to the streamlined, workaholic, visionary founder.

So finding space to deliver—even if the delivered item/idea/service is less than absolutely perfect—is vital to longevity. That means moving away from planning and perfecting and into the grittier business of meeting deadlines, consistency and reliability. A balancing act that allows for growth.

Photo by banalities

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The 5 key questions to ask a previous employer

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

According to Geoffrey Smart, there are five vital questions to ask when taking up references on a potential employee. Smart is the author and co-creator topgrading: a talent management process and an expert in obtaining the right people for a role.

The 5 key questions are:

1.    In what context did you work with the person?
2.    What were the person’s greatest strengths?
3.    What were the person’s biggest areas for improvement when you worked with them? (bearing in mind that it may be some time since they worked together)
4.    How would you rate his/her overall performance in that job on a 1 to 10 scale? What about his or her performance causes you to give that rating?
5.    The person mentioned that he or she struggled with ……… in that job. Can you tell me more about that?

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Growth businesses in 2011

Posted by Michael under Business Growth, Entrepreneur Resources, Online Retail

IBISWorld Market Research has surveyed the global economy and picked out some industries that a set for growth in 2011 based on revenue and employment growth, current profits, and ease of entry.

Debt Collection

The agency world is growing – and debt collection agencies are a growth industry, proving that financial clouds provide other people’s silver linings.  It’s likely that expected employment and housing recoveries will result in debt collection booms as more liquid punters become able to pay back previously frozen loans.

E-commerce and Online Auctions

There’s been a massive growth in e-commerce, with specialist vendors making huge inroads into classic retail in everything from bespoke tailoring to furniture. There are new online commerce and auction communities too, such as Newegg, and even Ravelry for knitters!

Environmental Consulting

The plethora of new rules, plus new international agreements and the high profile environmental failures in the last two years have all led to a substantial investment in external environmental consulting and verification. But it’s not just big business – there’s a boom in community-based consulting in flood or drought prone areas or where newly built housing may turn out to be an insurance risk. Many ‘domestic focus’ consulting firms registered as start-ups in 2010 and lots of them have seen enough business to be hiring in 2011.

Advertising

Smart agencies are going digital – the demand for digital media is expected to nearly double in the next 5 years and many of the big agencies are setting up incubators to find the advertising talent to meet the projected need.

Employment Consulting

Training, retraining, reskilling and reworking are the buzzwords: re-working is getting the long term unemployed back into employment, reskilling is turning those who’ve lost their jobs into a viable workforce, retraining is about improving business (and non-profit) performance in the face of budget cuts and training is related to skills development and team retention – most of which require outside expertise. Boutique employment consultants are seen as the future: small specialist agencies that combine to meet the needs of large organisations such as government departments.

Photo courtesy of umjanedoan

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