Is Your Organization Anorexic?

The President of a $1 billion company once asked me to describe his organization in one word. My response?

“Anorexic.”

The Vice Presidents who sat around the table nodded in agreement.  They assumed that I meant there was no fat left to cut.  That is not what I meant.

Anorexics often have relatively “high” body fat percentages because their lean body mass erodes along with the fat.

This is what many organizations have done.  An an effort to cut costs, in addition to cutting fat, they also cut large amounts of lean body mass.

Are you thinking of further cost cutting?  If so, what are you eliminating?  Fat?  Bone?  Muscle?  Vital organs?  No company in history has ever “cut” its way to long-term success.

Exercise grows muscle while burning fat.

Innovation is exercise for businesses.  It helps grows the organization while also enabling cost efficiencies.

During the depression, Henry Ford said, “A man who stops advertising to save money is like a man who stops a clock to save time.”

The same is true for innovation.  Although cost cutting may be a necessary short-term tactic, it is NEVER a strategy.  If you are in cost-cutting mode, make sure that your cuts target fat and not lean body mass.  In addition, be sure to exercise your organization,  Invest in innovation now and you will be prepared for long-term growth and success.

P.S. I like this photo. It nicely depicts the obsession that many companies have with measuring everything in sight, yet in the end not measuring anything of value.

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Is Your Career Doomed? Mine Might Be.

I spend most of my days thinking about the “innovation bell curve.”  The concept is simple, yet profound.

Budget brands will continue to prosper as mid-market consumers move left to save money.

Although premium brands may suffer slightly, there will still be strong demand for high-end products and services.

It is the middle of the bell curve, the “mid-market brands” that are getting squished as consumers move toward greater value and premium brands reposition themselves (a bit more) toward the mid-market customer.

I’ve been thinking about this model as it relates to my career - giving speeches about innovation

On the right-hand side of this model are the “celebrity” speakers.  These individuals include Harvard Business School Professors (e.g., Clayton Christensen), former CEOs of big companies (e.g., Jack Welch), and major best-selling authors (e.g., Seth Godin).  These individuals charge MUCH more than I do.  But they are also a draw.  For large events, having one of the speakers on the platform will get butts in seats.

On the left-hand side of this model are the “vendor” speakers.  These individuals work for large companies who view speaking as great marketing.  These speakers are often not only free, sometimes they even pay sponsorship dollars to be on the platform.  VPs of Innovation for large consulting firms or presidents of innovation software vendors fall into this category.  They have something to sell the audience.

Where does this leave me?  It certainly leaves me rethinking my business model.  Then again, I am always rethinking my business model.

I am continuing to put more energy into books and products like Innovation Personality Poker®.  These move me towards the left-hand side of the model.  You can take me home for a fraction of the cost of one of my speeches.

I am also staying focused on the corporate market (rather than large conferences) because there is still great demand here.  With group sizes of 50 - 300, celebrity speakers are prohibitively expensive.  And given the small event size, the marketing opportunity is not as great for vendor speakers.  My business continues to boom in this area.

Finally, I am shooting the pilot for my TV show in April.  If all goes well, I may be able to re-position myself in the right-hand side of the chart - a celebrity speaker.  But of course, time will tell.

Where are you positioned?  Who is squishing you out of business?  How can you reposition yourself?

P.S. In a previous blog entry, when discussing the innovation bell curve, I talked about the wisdom of Mr. Miyagi in the Karate Kid.  He talks about those in the middle getting “squished like grape.”  I thought you might like to see the YouTube video…

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Johnny Cupcakes

What do T-shirts and cupcakes have in common? A guy by the name of Johnny.

Today I spoke at an event for the National Foundation for Teaching Entrepreneurship (NFTE).  They are an amazing organization that teaches entrepreneurship to high school kids, many of whom are in the inner city.

I did a breakout session for about 50 students.  We had a blast.

The keynote speaker was Johnny Cupcakes (that wasn’t his given name, but is the name he now uses).

Ever since he was in high school, he has been an entrepreneur.  He bought candy in bulk at Costco and sold it to students.  He bought gag items (whoopi cushions, itching powder) and sold those - until one student had a bad allergic reaction that landed that kid in the hospital.  He made buttons that were sold in a comic book store.  While there, people gave him various nicknames - Johnny Appleseed and Johnny Cupcakes, for example.  One day, as a gag, he made a Johnny Cupcakes T-shirt.  People loved it.  He made more designs.  After selling them out of the back of his car for a while, he started selling them on the web.  His fan-base grew until the point he opened a store on Newbury Street in Boston.  This is a VERY fancy and expensive retail street.

Johnny is a great role model for the students.  He has never had a drink, never did drugs, and has dedicated himself to his business.  He said his happiest moment was when he could hire his mother as his bookkeeper so that she no longer had to do a job she didn’t like.  When I spoke with him after the event, he said he would never sell the company for any amount of money.  The business is now pulling in millions of dollars per year.

What does this have to do with innovation?  Quite a bit actually.

Johnny has dedicated his life to his business.  He even left college to stay focused in his business.  Most of the money he makes he puts back into the company.  He took big risks.  He signed a multi-year deal for $7,000 a month retail space.  You have to sell a lot of T-shirts to recover that kind of money!  He did a brilliant job with word-of-mouth marketing.  He has never done any advertising. But people line up days in advance when he launches a new line of limited edition T shirts.

And this is his brilliance.

Although he had requests to sell his shirts in all of the big stores, he declined.  He wanted his T shirts to be exclusive.  You can (for the most part) only buy his items from his stores and online.  The stores are AMAZING.  They are done up just like a bakery.  He has been meticulous with the details.  Mock ovens that open randomly shooting off steam.  Cupcake scent.  The doors to the storage room are made from huge 10 foot tall oven doors.  The T-shirts are displayed in bakery cases and refrigerators with the motors removed.  The labels in his T-shirts are in the shape of oven mitts.  The boxes are beautiful and are in the shape of a muffin box. He even sometimes throws random things in the boxes of T shirts ordered online (e.g., a battery, 37 pennies, or a baseball card).

I could go on and on.

In previous articles I describe the bell curve of innovation.  Johnny has been masterful at working the right side of the bell curve.  Exclusivity.  Creating an experience.  Limited editions.  Attention to details.  A conversation piece.  Johnny is not about T-shirts.  He is about a life style, a story, and an experience.

If you are not familiar with Johnny’s work, please visit his store or his website.  He’s an inspiration.

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Why Aren’t You More Successful?

A friend of mine is a fantastic freelance writer.  After telling her how great she is, she asked, “So if I’m that good, how come I’m not working now?  Tough market out there.”

Yes, it is a tough market.  But I suspect that is not the reason she can’t find work.  She has fallen into the trap of believing that being good is good enough.  It’s not.

I often tell other professional speakers… “We are not in the speaking business, we are in the marketing business.”  Or maybe more accurately, we are in the marketing and innovation business.

The late, great Peter Drucker once said, “You get paid for creating a customer, and you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center.”

His perspective is brilliant.  I particularly love that his definition of innovation is not focused on creating new products but rather on “creating a new dimension of performance.”

If your business is not as successful as you would like, maybe you need to focus more on marketing and innovation.

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Making Your Products/Services Affordable and Accessible

One of my last blog entries discussed the need to create affordable and accessible solutions as a way of staying competitive. Given  globalization, cheap labor, and a damanged economy, this makes more sense than ever.

Here are three starter questions to ask to help you generate new ideas:

How can you productize a service? One way to make a service more affordable and accessible is to turn it into a physical or digital product; something that requires little or no human intervention. In my earlier entry, I talked about Cybersettle automating insurance claims processing. My Innovation Personality Poker enables people to recreate one of my most popular speeches/workshops. Self-assessment tools can reduce reliance on consultants. Remote diagnostic technologies can speed medical exams and pre-qualify patients before they come to the doctor. Legalzoom.com offers affordable legal advice for people who might otherwise not seek counsel. TurboTax simplifies tax filing. Experts convert their intellectual property into books, mp3s, DVDs, digitally delivered training (including eLearning) systems, or online databases. The possibilities are endless.

How can you offer a low-cost product/service? In an earlier blog entry, I quoted Antoine de Saint-Exupery, author of The Little Prince, who once said, “Perfection is finally attained not when there is no longer anything to add but when there is no longer anything to take away.” I love that.  Ask, “Why are people really using our products/services and what are the bare minimum ways of delivering the desired outcome?” $300 netbooks are stripped down computers because most people want to do word processing and surf the net. Tata is offering a $2,000 car in India (ok, maybe that is a bit too scaled down). Ernst & Young Consulting (now Cap Gemini) once offered a subscription service, Ernie, which provided small businesses with a low-cost alternative to high priced consulting. Dow Corning, the maker of silicone-based products, created Xiameter, an internet-based division that sells product only in bulk… with no call centers.  Which features, services, or qualities can be reduced in order to tap into a new market?

How can I make my product addictive? Drug dealers know that if you get someone hooked on your product, they will come back to buy more. This strategy can be useful for attracting – and retaining – customers. Last month I spoke with the CEOs of three software companies. The one strategy that was pertinent to all three was the development of a stripped down version of the software…and potentially offering it for free. The idea is to get the customer hooked and using the software on a regular basis. Then as the customer’s needs grow, they will need to upgrade (note: this is not the same thing as offering something free today and then charging in the future). I worked with a major computer manufacturer many years ago where this concept was applied. Their flagship computer was (let’s call it) the “F” series. But that was too expensive for most companies, so they introduced a much slower and less expensive computer - the “E” series. Interestingly, the two models were 100% identical except a computer chip was added to the “E” to slow it down. The company knew that many customers would eventually want an upgrade, and they simply pulled out the chip and charged an exorbitant fee.

All three of these strategies move your innovation to the left-hand part of the bell curve (above) rather than the right. All three can be used by any company to augment their existing products and services.  The point is to make your “core competency” available to a broader market - without negatively diverting energies.

I will be including more strategies in future blog entries.

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