How to innovate to survive
When one thinks of an innovative company, it is usually focused on those businesses operating in the technology sector. However today more than ever, all companies need to innovate to survive and grow. Strategies that were previously successful are proving to be ineffective and the ability of potential customers to use social media to understand the marketplace means that business owners have to continually embrace innovative ways of meeting these needs.
So how should business owners operate in this new world?
Innovate to stay ahead of the competition
The answer is that their businesses need to create strategies that put the delivery of a product or service to their customers in a consistent and sustainable way at the heart of everything they do and then they need to implement that strategy by looking at innovative ways of continually staying one step ahead of their competitors.
Are you an innovative leader?
The simple fact is that businesses need innovative leaders to survive in the competitive market that most SME businesses operate in. The sad fact is that many are not willing or able to admit this fact but unfortunately it is almost always necessary if a business is to reach its full potential. If you are a business owner that feels you are working harder every day just to stand still and the excitement that you felt when you first started your business has turned into a daily struggle then perhaps you are one of the many business leaders that would benefit from thinking out of the box and adopting innovative ways to operate your business.
Six Innovative Leadership Techniques
The first step on this journey is to take a deep breath and step back from the day-to-day activities of your business to give you a chance to evaluate what needs to be done. This article will briefly explore six innovative leadership techniques that have successfully been used in thousands of SMEs across the globe and might help you think about your business in a different light.
First, it is important to put in place a strategy that correctly positions the business within its market place.
2. Unique Selling Proposition (USP)
Create a unique selling proposition that provides the one reason customers should buy from you.
3. Sell the Benefits
Look at what the product or service actually does for your customers so that you can market your business in a much more effective way.
4. Lifetime Value
Understand the lifetime value of a customer
5. Profit Multipliers
Use the seven profit multipliers to focus the efforts of your business on strategies to grow your business.
6. Exit Strategy
By planning to exit your business you will focus on the actions that will create a value for you.
Before we look at how you can innovate in each of these six areas, there’s on more factor for success.
The Plan to Innovate
The Oxford Dictionary describes a strategy as “a plan of action designed to achieve a long-term or overall aim.” This simple definition provides the first pointer as to what you need to do.
Many business leaders say that they do not need to waste time preparing such a plan as they already know what they want to do. Here lies the problem. A plan is not for the leader but for everyone else who need to understand their role in assisting you in delivering what you want.
Think of your plan in these terms. If you land in a new city and ask a taxi driver to drive you to your office, it is more likely you will get there quicker if you first show them a location map of the office so that they can plan a good route. A strategic plan is simply just a map that provides instructions for everyone to follow to reach a goal established by you.
It is important to have clear objectives within a strategy because increasingly:
Consumers want to buy/use products and services from companies they trust
Suppliers want to form business partnerships with companies they can rely on
Employees want to work for companies they respect
Future Investors want to support businesses that they see as having a realistic plan.
Before putting in place a strategic plan it is essential to correctly position your business.
Start this process by asking two questions:
Which market are we addressing?
And what makes us different?
Remember in business you can’t be all things to all people so it makes sense to stop marketing to the wrong people who do not want or cannot afford the products or services that your business offers. For example for a business that is selling Rolls Royce cars there is little to be gained in talking to a potential customer who can only afford a Mazda.
Therefore define your market by concentrating on a particular niche and then target it.
A niche market is a specific group of people or businesses that want and need your product or service, and can afford to pay for it. By marketing to a specific niche you are stating that you are the company that knows their needs and requirements best. If no one else meets their needs in this way then you are seen as the logical company to turn to. It is surprising how many businesses ignore this simple rule and therefore those that do are often seen as being very innovative.
Once a niche market has been identified ask yourself, what is the one unique thing you offer that makes your prospective customers think, ‘Wow, I must have this product or service? Creating a unique selling proposition identifies the one real benefit that differentiates you from your competition in the mind of your potential customers.
To do this, ask yourself a further two questions:
Why do people do business with you?
And then if people aren’t doing business with you, why should they?
2. Unique Selling proposition (USP)
A good unique selling proposition (USP) attracts attention, distinguishes you from the competition and motivates your prospective customers to take action NOW. If your prospective customer can immediately see what it is you do that is so unique and they find it irresistible – you’ve created your USP.
3. Sell the Benefits
If you now find yourself interested by this line of thought the time has come to begin to think about the needs of your customers in an innovative way. Ask yourself what do your customers really want? People in reality do not buy your products or services (features), they buy the results (benefits) your product or service brings them. A feature is most often some physical aspect of a product – its colour or size of engine - and an attribute if it’s a service. A benefit is what the product or service can do for the person buying it – how it can make their lives better, how it can save time. So a benefit is not a thing – it’s an aspect of the customer’s life that is made better as a result of the purchase.
Benefits come from features and this is sometimes where confusion can arise when marketing a product or service. For example, if a car has a 230 horse-power engine, that’s a feature but is this what the person who buys the car wants? The reality is that this size of engine gives the driver power, speed and pleasure. These are benefits – something the customer feels, gets or is satisfied by. Benefits therefore are all about the customers and it is these benefits what really sells so the answer is to tell them about the benefits in simple plain language so that they understand why they need to speak to you.
4. Lifetime Value
Most businesses spend a great deal of time and effort in finding new customers but having found them, they let them slip through their fingers and allow them to go to other competitors. Even though it is statistically easier to sell to existing customers, this is often not enough reason to concentrate on keeping your existing customers so you should perhaps consider understanding the lifetime value of your customer.
The lifetime value of a customer is calculated by taking the average purchase value of the product or service multiplied by the number of times a customer purchases from you in one year multiplied by the number of years they remain as a customer plus the monetary value of any referrals.
By understanding the lifetime value of a customer you will know through a simple scientific method what you should spend on keeping your existing customers. It will also tell you how much you can afford to spend on getting new customers.
As companies look to survive they look to manage their costs but there is a limit to how much a business can CUT COSTS before quality and service is affected. Therefore, it makes sense to use NO LIMIT STRATEGIES.
5. Profit Multipliers
The next innovation is to look at improving seven profit multipliers in the following areas:
Number of leads
Number of transactions per year
Number of referrals
Average buying lifetime in years.
Increasing just one of these will help your business to grow… BUT by increasing ALL of these Multipliers by just a small margin will exponentially grow your bottom line profits!
6. Exit Strategy
Finally, the ambition of every business owner should be to eventually sell the business at the highest possible price at any given moment in time. However, whether or not you actually wish to sell your business is irrelevant.
As a result of your mindset change you will consciously build a business rather than create just a job. The ‘exit strategy mindset’ compels you to create policies, plans and procedures and as your skills, planning, systems and methods improve... your workload will decrease but your results will increase. This makes the business operate efficiently, effectively and profitably without you having to be there to run it.
Innovate to succeed
Thus, the business then works on ‘autopilot’ and becomes ‘investor ready’ by becoming truly innovative. Success will have been achieved!
If you’re ready to put innovation at the centre of your business, it starts with a conversation. You can get in touch by calling 020 7965 7216 or email us.