PhaseTwo Strategies for growing business

Question #2: What kind of brand are you building?

This is the second follow-up to an earlier post I made before Thanksgiving.  In that earlier post, I offered three questions that you should ponder over the holiday break.  The purpose of these three questions is to help you think more strategically about your business and create a clearly articulated vision that will guide your activities going forward.  As a reminder, the three questions were:

1. What kind of business do I want to build?
2. What kind of brand do I want to have? 
3. What kind of company do I want to run? 

Why these three questions, you ask?  Because I believe these are the three most important elements of any business -- from initial conception to maturity.  Every strategy you create and every decision you make about your business will eventually boil down to one of these three questions.  They will guide everything you do, so the answers to these questions are VERY IMPORTANT  (in my humble opinion).

In my earlier post, I promised to elaborate more on how to effectively answer each of these questions.  Recently, I posted about the first question:  about your BUSINESS.  That's the first place to start.  If you haven't read it, you should.  

This post will focus on the second question:  

What kind of BRAND do you want to have?

Some would argue that this is the most important of the three questions.  While I won't go so far as to say that (because I believe that these three questions work in conjunction and are quite interdependent), I will say that it is an important enough question to make the top 3 -- that's for sure.  Hmmm...maybe I'll rethink that.  If you were to put a gun to my head and force me to choose only one of the three questions, this might be the one I choose.  Why?  Well, for those of us who believe in the power of brand equity, the answer is very clear (I have always said that I would take a great brand over a great patent any day).  For those who think that "brand" is just something soft & squishy for the "marketing people" to worry about, then this question may not make a lot of sense.  Hopefully, I can convert some of these people by the end of this post.  

Before answering this question, here are some keys to help guide you to the best answer possible:  

#1:  Think from a customer perspective

My definition of a brand is firmly rooted in customer perception.  One of the great injustices in business is the fact that you don't define your brand.  Your customers do.  Therefore, in order to answer this question about your brand, you have to think from your customer's perspective.  This little exercise will help: 

Just like how I asked you to use your imagination to answer the first question -- about your BUSINESS -- I'll ask you to do the same here.  For this question, I want to imagine that you are sitting in a coffee shop, catching up on some reading when you overhear a couple of people at the next table mention your company (or your product or your brand).  You quickly perk up and go into full eavesdropping mode.  As you listen, they start a full conversation about your brand.  You're dying to hear what they say.  But don't tell me what you think they will say today.  Tell me, instead, what you want them to say? What do you want to hear?  Think hard about this and write down everything you would like to overhear.  These comments will serve as the foundation of your answer to this question.  

#2: Think about your brand in relation to your competition

This is an easy thing to overlook when designing your brand -- it's easy to put on blinders to the world when you're consumed by your company.  But I would encourage you, when designing your brand, fully understand your competition.  If the goals for your brand are exactly like those of your competition, then you're going to have a tough time competing.  

Take a moment and go back to that coffee shop.  Now pretend that one of the people talking about your brand asks the other, "But how do they compare to [competitor's product]?"  Go through this exercise for each of the brands/products that you consider as competition.  Make sure you understand how your customers will discuss your brand in relation to your competition.  And make sure your brand goals differentiate against those competitors.  Here is a simple story from Malcolm Gladwell's book OUTLIERS which is a good example of what I am talking about.

Gladwell tells a story about Louis Borgenicht -- a Jewish immigrant in NYC in the early 1900's -- who built a successful garment business from nothing.  Here is how Louis describes his early thinking about his brand goals. 

From my study of the market, I knew that only three men were making children's dresses in 1890.  One was an East Side tailor near me, who made only to order, while the other two turned out an expensive product with which I had no desire at all to compete.  I wanted to make "popular price" stuff--wash dresses, silks, and woolens.  It was my goal to produce dresses that the great mass of the people could afford, dresses that would -- from the business angle -- sell equally well to both large and small, city and country stores....my dresses would save mothers endless work, the materials and sewing were as good and probably better than anything that could be done at home, the price was right for quick disposal.  

I love this story for it's simplicity and its focus on differentiation.  Keep this story in mind when answering this question.  

#3 -- Personify your brand

Brand personification is a good exercise for anyone designing a brand goal and identity.  I wrote a post about it a while back and you can read it here.  Long-story-short -- to personify your brand ask yourself, "If my brand were a person or character, who would it be and why?"  This exercise helps you better understand and communicate your brand.  The other thing this exercise does it help to define the feelings that your brand will elicit.  

#4 -- Make your brand mean something

All the great brands MEAN something.  They stand for something bigger than their products.  The Nike brand doesn't stand for sneakers -- it stands for winning and athletic success at the highest level.   Disney never stood for cartoons -- it stood for family entertainment.  Ben & Jerry's doesn't just stand for ice cream...you get the point.  I wrote an earlier post about this concept that you can read here.  The point is, when you think about your brand, think about what it will stand for.  If it doesn't stand for something --find something for which it will stand.  

#5 -- Use the same guidelines as with Question #1

Just like when answering the first question -- about your BUSINESS -- use these guidelines when answering this question:

1. Project a long-term goal (Think about your brand 30-years from now)
2. Be clear and concise  (Keep your answer between 1-3 sentences)

But unlike your answer to the first question, the answer to this BRAND question will NOT incorporate business terms.  

 

So, those are the major points that you should consider when answering this second question.  When you go to actually answer the question, I recommend starting your answer in one of the following ways:

1. I want my brand to be known for...
2. I want my brand to be known as...
3. When they think about my brand, I want customers to...

I want my brand to be known for creating the highest quality, most indulgent desserts in the world.  

I want my brand to be known as the one place where the average American man can find a complete, sharp, professional wardrobe without worrying about spending a fortune.

When they think about my brand, I want my customers to be think about getting the easiest photographic experience possible.  I don't want them to feel intimidated by our equipment.  I want them to feel that our products were made with them in mind.  

Again, you get the point.  

Just like with the first question, take time answering this question.  When you have something you're happy with, say it out loud a few times.  Imagine yourself repeating it in front of an auditorium filled with your customers.  Does it feel right?  Does it get you excited?  Will it get them excited?  If so, write it down and keep it on your desk.  If it feels the same then next morning when you read it, then go with it.  Post it on your wall and let it guide your brand strategy.  Nice work. 

You're getting there...more to come.  

DS

Great story on opportunity from OUTLIERS by Malcolm Gladwell

I am about half way through Malcolm Gladwell's OUTLIERS.  First of all, let me say that, thus far, I am finding this book fascinating.  So far, it's my favorite Gladwell book to date.  But this post isn't meant to be a review of the book (I will right one once I'm finished).  However, I wanted to offer one story that I found fun and relevant to all of those current and aspiring entrepreneurs looking for and shaping opportunities.  In chapter five, Gladwell tells the story of Louis Borgenicht, a "off-the-boat Jewish immigrant living in NYC in the early 1900's.  The story recounts the start of Mr. Borgenicht's (ultimately) successful women's and children's apparel business.  This part of the story recounts his search for an opportunity after the birth of his second child.  At the time, he was making $13/week selling fish from a street cart.  He needed a way to make more money.  Here is the excerpt from the book:

The answer came to him after five long days of walking up and down the streets of the Lower East Side, just as he was about to give up hope.  He was sitting on an over-turned box, eating a late lunch of the sandwiches his wife had made for him.  It was clothes.  Everywhere around him stores were opening -- suits, dresses, overalls, shirts, skirts, blouses, trousers, all made and ready to be worn.  Coming from a world where clothing was sewn at home by hand or made to order by tailors, this was a revelation.  

"To me, the greatest wonder in this was not the mere quantity of garments -- although that was a miracle in itself --" he would write five years later, after he became a prosperous manufacturer of women's and children's clothing, "but the fact that in America even poor people could save all the dreary, time consuming labor of making their own clothes simply by going into a store and walking out with what they needed.  There was a field to go into, a field to thrill to."  

Borgenicht took out a small notebook.  Everywhere he went, he wrote down what people were wearing and what was for sale -- menswear, women's wear, children's wear.  he wanted to find a "novel" item, something that people would wear that was not being sold in the stores.  For four more days, he walked the streets.  On the evening of the final day, as he walked toward home, he saw a half dozen girls playing hopscotch.  One of the girls was wearing a tiny embroidered apron over her dress, cut low in the front with a tie in the back, and it struck him, suddenly, that in his previous days of relentlessly inventorying the clothing shops of the Lower East Side, he had never seen one of those aprons for sale.  

And this was the start of his garment business.  It's a simple story, but a good one.  The lesson here is DIFFERENTIATION.  Someone once said that the goal of any business strategy is to ensure differentiation.  While I would argue that the goal of any business strategy is to design a method for achieving your ultimate business goals, I would agree that every business goal should be firmly rooted in differentiation.   

Fun stuff...

DS

find this book fantastic.  

Question #1: What kind of business are you building?

This post is the first follow-up to an earlier post I made before Thanksgiving.  In my earlier post, I made the argument that the holidays are a great time to think about your business from a more strategic perspective.  This is because the holiday break gives you an opportunity to step away from the day-to-day details of the business.  A chance to be around friends and family (remember them?) who are most likely not involved with your business.  You can have conversations that are not about your company.  All of this provides allows you to clear your head and reset.  Very often, entrepreneurs and business leaders get so bogged down and distracted by the day-to-day details of the business that they lose sight of their original goals/visions.  They end up running full-steam ahead only to look up 6 months, a year, 3 years later and ask themselves -- where the hell am I?  Better yet, how the hell did I get here?  This isn't where I wanted to be...what happened?

Well, I hope you had a good holiday break and that you had a chance to clear your head a bit.  I'll assume this is the case as I set out in this and the next two posts to help you re-calibrate the way you think about your business.  In my pre-Thanksgiving post,  I offered up the three big questions that would guide your strategic thinking over the holiday break.  In this post, I will go into more detail on the first question:

What kind of business do I want to build?

Ok, ok.  I know it sounds obvious to ask this question.  And to a lot of people, it is.  The answer to this question is related to Jim Collin's BHAG from BUILT TO LAST.  It's a pretty simple question which begs for a simple answer, but I'm always amazed at how many business leaders I meet who can't provide a clear and succinct answer.  When I ask clients -- What kind of business are you trying to build? -- I get all kinds of responses.  Sometimes I get blank stares (deer-in-headlights response) and sometimes I get thirty minute dissertations (overly-educated response)...and everything in between.  And I won't even get into the answers I get when I pose the same question to a firm's employees (let's just say that around 90% of the time, they either have no idea what business they're building OR they have a different answer than the founder/CEO).  

So, how should you answer the question, What kind of business do I want to build?  There are a few necessary steps/tips that will help.  Here they are:  

#1:  Look to the horizon

First of all, each of the three questions from my earlier post are looking for long-term answers.  The answers to these questions are somewhere on the horizon -- 10, 20, or even 30 years out.  What kind of business do you want to have built when all is said and done?  

In order to help get you into the right long-term mindset, I recommend using a bit of imagination.   Do a little role-playing.  Try to imagine yourself retired, sitting at a beach bar in the Bahamas, sipping a Rum Punch, watching the sun set on yet another perfect day.  Feel the warm setting sun on your face.  Feel the soft, salty breeze.  Now imagine that a man sitting sitting next to you at the bar asks you about the company you built before retiring.  How do you want to answer this fellow?  Think about it, but don't answer him yet.  Read the rest of this post and then answer him...you're almost there.  

#2:  Use business terms in your answer

The answer to this question -- about the business -- should include business terms like Revenues, Number of Units, Locations, Customer Counts, Profits, Valuation, etc.  For example:

• Instead of saying you want to build a chain of retail stores, say I want to build the largest regional chain of retail stores serving commercial artists.  To be the largest regional chain, I will need 15 stores within the mid-Atlantic states and total revenue of $13MM.
• If you want to build a nice, small, lifestyle business, then say that.  Say, I want to build a local life insurance provider that generates $1MM in annual billings and $100K in net annual cash flow.  
• If you want to change the world, then say that, but use business terms.  Say, I want every publishing company in the world using one or more of our software tools.  This means I will need to land over 2,500 customers.  

Each of these statements use clear business terms.  This is important because you will be using these statements as the basis for your strategies (which is the next big step).  Using business terms insures that you will have tangible targets and measurement metrics to work toward.    

#3:  Get realistic -- Do your goals make sense?

This point may fly in the face of all of those "anything is possible" evangelicals.  I'm not here to dissuade anyone from thinking big or being optimistic -- amazing things are possible, however I'm also one for realism.  If you say your are going to become the world's leading manufacturer of portable audio players with a product that doesn't match the functionality of even the first-generation iPod, then I'm going to ask you to re-calibrate your business goals.  If you say you're going to build a local, independent insurance brokerage with revenues of $10MM when the market can't even support $1MM of business, I'm going to tell you the same thing.  Get more realistic or rethink the business.  This relates to the next important point.   

Once you have a realistic handle on the prospects for your business, you can move onto the next step.

#4:  Have a firm understanding of what it will take to achieve your business goals

This is very important.  In fact, it's probably the MOST important step in the process of answering this question.  This is the step that many entrepreneurs fail to take.  They don't spend time gaining a clear understanding of what it will take to achieve their goals.  They don't think through what it will take to get from here to THERE.  You need to understand some very important things:

• The potential market size for your product/service
• The product you will need in order to clearly differentiate against your competition and win the hearts of potential customers
• The amount of capital it will take to create/enhance that product and achieve your goals.  You should also know where you will need to go to find that capital.   
• The team you will need to build
• The amount of time it will take to do all of this 

Finally, you will need to predict and estimate the big challenges and obstacles that you will face in the development  of the business you want.  Understand the Dip you will need to get through to achieve success and commit to accepting the pain it will take to get through it.  

You may be wondering how do you gain all of this understanding?  Look around.  Look for similar companies, similar stories to the one you want to create.  How did they do it?  What were their challenges?  How long did it take them?   How did they live while building the business?  Do some learning before setting your answer to this question in stone.  For example, if you are looking to build an advertising-based, online media business, then you have to understand that you will need an enormous online audience before becoming profitable from advertising revenue.  This will require a great deal of time and capital.  The vast majority of these companies raise millions of  dollars of venture capital to achieve profitability (if they ever do).  Not that this is a bad thing -- you just have to understand it.  

I'm not saying that you will ever have a complete understanding of the journey you will be taking before you take it, but I highly recommend that you gain some basic understanding of the path ahead before darting off into the jungle with a dim flashlight and dull machete.

#5:  Be concise!

There is an old saying in the movie business that I've always liked. 

If you can't write a movie on the back of a napkin, don't make the movie.  

They say this for a couple of reasons.  First of all, the studio executives that purchase movie ideas don't have much patience.  They don't listen to long pitches.  And they definitely don't buy them.  And they don't buy them for a very good reason.  Marketing.  If you can't communicate the crux of your story quickly and efficiently, how is the studio going to get moviegoers interested in the film within the space of a 30-second tv spot?  Or a 1/4 page newspaper ad?  More importantly, how will the film generate word-of-mouth?  If you can't tell your friend what a movie's about over a coffee or a quick dinner conversation, how are you going to get them to see it?  

You:  You should see that new movie X -- it's really cool.

Friend:  Really, what's it about?

You:  Ummm, it's kind of complicated.  But trust me, it's good.

VERSUS

You:  You should see that new movie X -- it's really cool.

Friend:  Really, what's it about?

You:  It's set in Rwanda during the horrific genocides of the 90's and is about a local hotel manager who risks his life to save thousands of villagers from the murderous rebel troops.  It's like Shindler's List in Rwanda.  It's really powerful. 

I think you get the point.  This analogy works the same for your business.  If you can't communicate your vision quickly and clearly, how are you going to gain commitment from a growing team of employees?  How are you going to attract investors who are just as impatient as studio executives?  Most importantly, how are you going to sell your service to potential customers?  The answer to this first question about the business you are building will form the basis for your future communication with employees, investors and customers.  

Ok.  Now that you've made it through this post, you can head back to that bar in the Bahamas and answer the curious little man's question.   Answer it out loud.  Tell him about the company you built.  Do it a few times and once you're happy with the answer -- write it down.  Keep your answer posted on your desk and leave it there overnight.  Sleep on it.  If you are still happy with the answer when you read it the next morning -- change it to a forward-looking statement (instead of the story you told your barmate) and commit to it.  Post it on your wall so that it's the first thing you see every morning.  Memorize it and start using it to drive your business strategies.  Remember, this statement should:

1. Project a long-term goal
2. Use business terms
3. Be realistic and achievable 
4. Be clear and concise 

Congratulations.  You're off to a good start...more to come shortly.  

DS