March 3, 2012
This article originally appeared on the American Express OPEN Forum
The way we frame our business world can significantly impact our success. Frameworks are useful, but they can also be limiting. Perhaps it’s time to rethink the way things have been done in the past.
One useful framework is often called the product funnel or the accelerant curve. This framework typically refers to speakers, consultants, Internet businesses and those who create “intellectual property.” But the concept can be applied to any business, especially small businesses.
The general philosophy of the product funnel is to have products and services that increase in value so that you can continue to up-sell over time.
In this framework, customers enter your pipeline to buy a low- or no-cost item. This helps you to build trust, which in turn, lets you provide more robust solutions to your customers and put more money in your pocket.
I work with a lot of professional speakers. They would probably draw the curve as it is depicted to the right.
Most speakers offer a $25 product, typically a book. This is the low end of their curve. And, at the high end, they deliver a speech for which they charge $25,000.
Given this framework, the natural tendency is to fill in the curve with products priced in between. This might include CDs, DVDs, membership sites or coaching. They create a $250 product, a $750 offering and a $2,500 service.
The boundaries established by this framework—$25 and $25,000—delineate how you think about innovation.
While this tends to be the practice of most people who offer such services, looking at the curve this way may limit your true growth potential. Instead of $25,000 being at the top of the curve, what if it were actually near the bottom?
What if the top of the curve is closer to $1,000,000, or higher? If that is the case, you need to create products that are more than $25,000, not less. These could include assessments and diagnostics, consulting arrangements, sustainability programs that bring a speech to life over an extended period of time, or anything else that adds value.
From this example, you can see how the framework you create dictates your production. A small framework produces only the results that fit within that structure. Expanding your view opens up possibilities for greater value and financial gain.
This concept can apply to any business.
Are you a plumber? Maybe your typical project generates around $2,000. You may be tempted to offer a lower-cost option, perhaps a do-it-yourself kit, for only $200, which is valuable.
But what if, instead of $2,000 being the high-water mark for your services, you created a $200,000 offering? This would certainly get your creative juices flowing. Maybe, instead of selling your services to individuals, you target condominium associations, selling them an all-inclusive deal for every unit. It would challenge you to think bigger than you have thought before.
Are you a restaurateur? So many businesses offer their customers low-cost meals through Groupon or Restaurant.com. These may be reasonable entry points for your product funnel and are effective for driving new traffic.
But instead of focusing your efforts on smaller “transactions,” what if you shift your view to incorporate a higher-value, higher-dollar, relationship-driven option? How can you create a $10,000 meal?
Think big. Consider catering or developing an annual diet program that delivers meals to your customers to meet their dietary needs. Who knows what you will think of? But it is time to think big.
When you think small, you produce small.
You could even sabotage the business that you already have. I recently purchased a Groupon deal for a cleaning service. The owner’s hope was that Groupon would help her acquire new customers. She has been in business for seven years, but this low-price mindset might have killed her company. So many people subscribed that she could not adequately service her regular customers, let alone the new ones, and she risked losing them.
No matter what your business, avoid the “transactional” mindset. Find ways of engaging with your customers by providing both lower- and higher-priced offerings that will ultimately create a long-term relationship. But even more importantly, think big. Find ways of creating massive value, beyond anything you have considered before. Redraw your funnel or your curve by blowing the top off it.
How will you rethink your business?
Extra added bonus content:
When I originally posted this article on my Facebook page, someone commented that,
“The assumption that you are even worth $25,000 is a stretch for many folks. And for product companies, like shoes, for example, why spend hours thinking about a $200,000 shoe? Certainly that time would be better spent figuring out how to lower costs or enter new markets.”
Great point! Here was my response:
“The usefulness of this concept depends on the evolution of your company. Regardless, it is a useful thought exercise. Most small businesses get stuck with a mental model which limits their thinking. I have this product, so this is what I sell. Just asking the question, ‘What product/service could I offer that is 10x what I offer today?’ can get a mature and established business thinking about bigger opportunities with greater leverage.
“And sometimes it is not about a bigger product. For example, with my self published book, it is easier for me to sell 500 books to one client than it is to sell 500 books to 500 individuals. There is no leverage in the latter. Instead of a $15 sale, I discount and sell 500 in bulk for about $4,000.
“The question isn’t necessarily even new products but maybe different sales channels/methods for increasing $$ per sale.”
February 6, 2012
It is the Monday after the Superbowl. While scanning the TV stations and flipping through the radio channels this morning, it seemed as though everyone was discussing and analyzing (and analyzing and analyzing…) the football game. Everyone is a Monday morning quarterback.
Come on, get a life! Stop living your life through someone else.
Tom Brady does not care about your life. Why should you invest so much emotional energy in studying his?
Instead of being a fan of someone else’s life, be a fan of your own life.
Be a Monday morning quarterback on what worked and what didn’t work last week…for your business. Study your statistics to decide if you are moving in the right direction. Invest in you and your greatness.
I invest my money in me: my education, the development of my business, the hiring of the right talent, personal development, etc. I rarely invest my money in what others are doing. In fact, I almost never buy stocks. If I invest in me and my business, I am confident that in the long run I will have a higher return on my investment.
Start investing time, money and emotional energy in you and your business.
Don’t get me wrong. I enjoy watching the New England Patriots (even when they lose). It is entertaining and inspiring. Their drive and determination always jazzes me up and has me perform better in my life.
But I would not call myself a fan of any sports team.
I prefer to be fanatical about my life; doing what I can to make it as amazing as possible.
[end of rant]
January 9, 2012
My book, Goal-Free Living, was featured on the cover of the November 2005 issue of O, The Oprah Magazine. Two full pages were dedicated to my goal-free concepts. (If you check out the cover left, you’ll see the headline “What the happiest people know for sure.” That is my article.)
Although this was one of the proudest moments in my life, surprisingly, this type of publicity actually had a negative impact on my business.
You must be thinking: How is this possible? Doesn’t everything Oprah touch turn to gold?
Yes, typically. But my situation was different. My core buyers were (and still are) innovators within corporations. As much as I personally admire Oprah and her work, my clients were not as enthusiastic.
For example, after putting the Oprah mention on my website, my bounce rate (the number of people who immediately leave my website) went through the roof. I had potential clients say that they chose someone else who appeared to be more focused on the needs of corporations. They proceeded to share that the Oprah mention made me seem less “serious.”
I even had one client tell me, just as I was about to go on the stage, “If you mention Oprah, we won’t pay you.”
Apparently, the combination of my “self-help” book and the magazine publicity caused confusion. It was no longer clear that my main business focused on the needs of corporations. In this moment I discovered that the old mantra was true: “A confused buyer never buys.”
There is a lesson in this for every small business.
Know your audience. Know their needs—explicit and latent. Speak their language. Understand what gives you credibility in their eyes.
When you innovate, don’t alienate your current market. You can expand to other markets, but continue meeting the needs of those who have been loyal fans.
Innovation is about shifting your business in a new direction at the right speed. Think of the degree of change as a compass setting.
Reinvention is different than innovation. Reinvention (what I attempted when writing Goal-Free Living) is when you move your business on a 90-degrees (or even 180-degrees) turn. It is a pretty radical change. Your customers may not understand the shift and you may lose them in the process.
On the other side of the compass, there are many businesses making only 5-degree turns. They focus their time on incremental innovations. Although these improvements are valuable, on their own they are not sufficient to sustain long term growth and prosperity. You can ride your past success for a while, but eventually your competition will out-innovate you.
So the big question is: What is the right level of innovation? What is the correct compass setting for your business?
Typically, a 5-degree turn is too little while a 90-degree shift is too much. Forty-five degrees should be just about right.
What does a 45-degree turn look like? It is exploring how to tap into your existing market with new offerings, new services and new products, while also expanding into adjacent markets.
My business just turned 10 years old and I am in the process of rethinking my current model. As it stands today, I primarily convey my innovation messages via speeches and books. My objective in 2012 is to leverage my current intellectual assets by finding new ways of delivering my content.
For example, in 2012, I will be expanding the licensing of my content to corporations, training organizations and individuals who can deliver my work. The more I can tap into the reach of others, the more I can grow my business.
For this, I am not changing my message or products. I am primarily deepening the content and making the process of delivering it “replicable.” Instead of content changes, I am exploring different distribution channels such as eLearning systems, membership sites and other digital platforms.
Additionally, while others are delivering my content to my current target audience, I can explore how to extend my existing content to new, tangential markets. For example, my Personality Poker assessment tool has been largely focused on the corporate market. It can also, however, be positioned to provide value anywhere collaboration is beneficial: relationships, families, negotiations, ventures and so on. Expanding in these directions still positions me as a collaboration expert (a key component of innovation) and would most likely not alienate my core market…
Read the rest of this article on the American Express OPEN Forum
(please leave comments on the AMEX site and “like” the article if you in fact like the article…thanks!)
September 22, 2011
In one week (September 29th), my new book will be available in book stores, online, and on the Kindle. It is published by Penguin’s Portfolio imprint. For those of you who are new to this blog, here’s a description…
Best Practices Are Stupid:
40 Ways to Out-Innovate the Competition
Well-intentioned leaders, in their attempts to boost innovation, are inadvertently destroying it.
What if everything you know about creating a culture of innovation is wrong? What if the way you are measuring innovation is choking it? What if your market research is asking all of the wrong questions?
It’s time to innovate the way you innovate.
In Best Practices Are Stupid, I offer forty counterintuitive yet proven strategies for boosting innovation and making it a repeatable, sustainable, and profitable process at the heart of your company’s culture. They include:
- Hire people you don’t like. Bring the right mix of people to unleash your team’s full potential.
- Asking for ideas is a bad idea. Define challenges more clearly. If you ask better questions, you will get better answers.
- Don’t think outside the box; find a better box. Instead of giving your employees a blank slate, provide them with well-define parameters that will increase their creative output.
- Failure is always an option. Looking at innovation as a series of experiments allows you to redefine failure and learn from your results.
I will show you that nonstop innovation is attainable and vital to building a high-performing team, improving the bottom line, and staying ahead of the pack.
Other powerful strategies include:
- The performance paradox. When organizations hyper focus on their goals, they are less likely to achieve those goals.
- Expertise is the enemy of innovation. The more you know about a particular topic, the more difficult it is for you to think about it in a different way.
- The Goldilocks principle. Challenges can’t be too big or too small. They must be “just right” to maximize the likelihood of a workable solution.
- Learn from Indiana Jones. Real treasure can be found when you leave your office, don your fedora and bullwhip, and study customers with your own two eyes.
- Use the reality TV show model. Competitions are as much about generating buzz and stimulating interest in innovation as they are about finding specific solutions.
You can pre-order NOW on any of these sites.
June 16, 2011
Open innovation and crowdsourcing promise to revolutionize the way companies innovate and develop new products, create marketing campaigns and solve problems of all kinds. Unfortunately, there is more confusion than clarity about how to best utilize these approaches. Recently, I had the opportunity to interview Dwayne Spradlin, CEO of InnoCentive, one of the early pioneers in the open innovation market. He is the co-author of a new book on open innovation and he shared his perspectives with me.
Q: Your book is called The Open Innovation Marketplace. From my experience, there are many definitions of open innovation. What’s yours?
A: Open innovation (OI) is essentially not traditional or closed innovation, the latter having been the dominant mode for companies throughout the 20th century. In the closed innovation model, innovating relies on internal resources, problem solvers and experts to solve problems or capitalize on opportunities, whereas in OI, problem solvers and knowledge are widely dispersed and may reside outside the company. Additionally, closed innovation is often practiced by rigid “not invented here” cultures that focus too much on who solves problems, whereas companies that have embraced OI tend to have more open and collaborative cultures that embrace external ideas with the focus on finding solutions to key opportunities and challenges.
It’s the notion of challenges, in fact, which lie at the center of OI from our point of view. Challenges are specific, detailed, and actionable problems or opportunities. Via rigorous methodology, problems that matter are defined, prioritized and converted into discrete challenges. These challenges are then formulated and configured for specific channels (e.g., internal groups or divisions, external crowdsourced communities). The tail end of the challenge process involves submission evaluations and triage, legal and intellectual property treatments for the chosen solution, and awarding winner(s).
Q: Large companies like P&G, Eli Lilly, and even NASA using open innovation. How do you see open innovation being used by small businesses and startups?
A: From our experience, some of the best examples come from the nonprofit arena. These organizations are small and have limited resources similar to that of any small business. Nonprofits such as the Chicagoland Chamber of Commerce, Oil Spill Recovery Institute (OSRI), and Prize4Life have leveraged open innovation to great effect by focusing their efforts on specific challenges or a series of challenges that, with their limited resources, they could not tackle and solve alone. The beauty of open innovation is that it enables all companies, big and small, to leverage the same diverse global communities of problem solvers.
One of my favorite examples of a small business leveraging challenges is Precyse Technologies, a firm that specializes in radio frequency identification (RFID) technology. Like many emerging high tech companies bringing cutting edge products to market, Precyse sought to improve the performance and battery life of its mobile computing products. A challenge was posted to InnoCentive.com and more than 500 problem solvers from 64 countries contributed their ideas and technical expertise to help solve it. Within 90 days, Precyse received 33 relevant submissions—several which offered novel, innovative solutions. The winning solution, which was truly a breakthrough, entailed harvesting energy from radio waves to significantly extend the battery life of Precyse’s RFID tags. The overall experience for Precyse was extremely positive, as the solution enabled the company to get to market faster, lower costs and improve overall utility to its clients in what is a highly competitive market.
Q: What are the mistakes that many companies make when implementing open innovation?
A: The biggest mistake we see is when companies try to “bolt it on” to existing innovation practices and processes. They try to dip a toe in the water and often achieve mediocre outcomes as a result. Or, they approach OI only tactically, and in some cases myopically, as they don’t understand the broader implications of what OI can do to transform their cultures and their businesses. It’s particularly hard for companies that are very rigid and set in their ways. It’s a corporate mindset issue more than anything. The companies that tend to use OI successfully are those that are willing to embrace and combine both traditional modes of innovation (i.e., internal innovation, stage-gate) with newer forms (e.g., open innovation, crowdsourcing), but do it with an integrated set of new processes and reward mechanisms. You can’t keep rewarding people only for solving problems when their job should be finding solutions (inside or outside).
June 2, 2011
As readers of this blog know, I am always interested in exploring different forms of open innovation, collaboration, and outsourcing. Personally, I have used a number of sites including 99designs.com and elance.com. I have used these for the development of logos, graphics, websites, and research. In most cases I would pay several hundred dollars for the work.
An interesting trend has emerged: microwork outsourcing. This is work that can be completed in a matter of minutes and costs only a few dollars.
My favorite microwork website is fiverr.com. Here you can hire people to do lots of things for only $5. I saw that someone offered to write an article for only $5, so I hired her to write an article on innovation. I was impressed with how she could pull together something of high quality so quickly.
This got me wondering: Can she make a living at $5 a time? How long does it take to complete a $5 job? And why do it at all?
So I invested another $5 and hired her to write another article. But instead of writing about innovation, I had her answer five questions about her experience on fiverr.
1. How did you write an article on a topic you don’t know so quickly…and for only $5?
Coming up with methods that businesses can use for innovation and creativity actually is something that I know very well. As an ex-model turned writer/teacher/businesswoman, I try to incorporate as much creativity into my life as possible. None of my income would be possible without a high respect for imagination. As a business owner, I realized quickly that low prices sell large amounts of goods, and it also is a very decent gig for me. Eventually, I will raise my prices, but not yet.
2. Why do you sell your services on Fiverr, when you could probably make more money per gig on sites like eLance?
Actually, I tried eLance, but never quite seemed to get any jobs off it. The minute that I tried Fiverr, I managed to get a gig in the first day. When people actually noticed that my work is decent, the orders poured in.
3. Is there enough money to be made doing micro work? Or do you do this for some pocket money? How many gigs can you possibly do in one day?
I do up to 30 gigs in one day. Microwork can be a decent way to make money, but I think having a part time job is also a smart idea. I like a balance of work.
4. How much time do you spend, on average, for each gig? I was impressed with the article you wrote on innovation.
Depending on how much research I do for the gig, I can spend anywhere from 10 minutes to an hour or so (when I decide to watch TV or eat while working). My typing speed is notoriously speedy, so doing research and actually just compiling my thoughts coherently are the bulk of time spent on each gig.
5. Anything else you I should know about you?
Because of the extreme injustices that have happened to me as an inexperienced model, I have recently taken up advocating for women’s rights, as well as model’s rights. One of my photographers gave me a website which I update with my own blogs about various subjects that I feel are important to women, men, and everyone in that industry. I don’t think that many people realize how corrupt, how sick, and how twisted the world of modeling has become. This is the reason why I warn my students’ parents against getting their children involved in child modeling, and also warn young teenagers who want to follow in my footsteps about the dangers of being a model.
All forms of open innovation, crowdsourcing, outsourcing and microwork are evolving. They are redefining what “work” means for individuals and is creating new career models. It provides exciting opportunities for both the buyer and the service provider.
Tomorrow I will post her article on innovation.
May 13, 2011
People often live by the saying: if you want to get something done right, you need to do it yourself. While I have heard people toss this phrase around like a badge of honor, there is no philosophy more toxic for an organization, especially small businesses. Businesses of any size are complex and it is unrealistic to think that a small number of individuals will have all of the necessary expertise. So how do you determine where to focus your attention?
To illustrate an example of what not to do, let’s take a look at how I used to run my own business.
When sales were slow, I would put all of my energy into selling. Once the sales pipeline was full, I would then focus 100 percent of my time conducting speeches and advising clients. This meant, of course, that my sales pipeline would eventually dry up and I would need to refocus on selling once again. At some point, I would realize that my products were no longer innovative—and no amount of selling will increase sales. Therefore, I would shift my efforts and deep dive into R&D mode, creating a new book, speech or product. And the cycle would continue over and over again.
This is what happens when you do everything yourself. It is inefficient. And worse, it is exhausting.
If you are a small business owner, you need to focus on the activities that are at the intersection of your passions, skills and value. That is, what do you love to do, what are you good at, and what creates value for others. For everything else, find suitable partners who can help you execute.
Start by making a list of all of the activities that your business needs to do: new product development, sales, marketing, customer service, order taking, fulfillment, IT, HR, etc. Go to whatever level of granularity feels right.
Then, for each activity, rate its passions, skills and value quotient from low to high: high passion activities are those you love to do; high skills activities are those where you have the necessary expertise to execute effectively; and high value activities are those that are strategic to your business.
The result gives you seven different targeting strategies:
Strategy 1: Target high passion/high skills/strategic activities
This is the sweet spot of your business. “Target” these areas and put most of your energies here. If this is your core business, then you have chosen wisely.
Strategy 2: Outsource low passion/low skills activities
If you neither like nor do an activity well, then outsource it to someone who enjoys it and has the skills to execute it at a higher level. This can be done through bartering, hiring employees, using contractors, summoning friends and family, revenue sharing or other creative collaborative strategies. Employ this strategy regardless of the value dimension.
Strategy 3: Minimize low passion/high skills/strategic activities
If you don’t want your job to become work, you probably want to outsource these capabilities as well. If you are starting out and finances are an issue, you may want to continue doing these activities for now then outsource at a more appropriate time. Given that they are strategic in nature, someone has to do them as they are critical to your businesses success.
Strategy 4: Learn high passion/low skills/strategic activities
If you love doing these activities, then you may wish to acquire the necessary skills. This can be done through a variety of means including training, mentoring or researching. If you anticipate a steep learning curve, consider finding a partner during the learning process who possesses these talents. This will help you move forward while gaining the necessary skills.
Strategy 5: Extend high passion/high skills/tactical activities
If you are passionate and skilled in a particular area and it is not currently strategic (i.e., tactical), consider how you might “extend” that capability. How can you make this a strategic part of your business? How can you create extraordinary value for customers by leveraging this expertise? Perhaps one way is to offer this service to others who are in a similar business. For example, professional speaking is my core business. However, something that I am both skilled at and passionate about is securing business with large corporations. I could offer this as a service to other speakers as a source of additional revenue.
March 10, 2011
[This article originally appeared on the American Express Open Forum]
I was recently in the market for a new car. I had narrowed down my list of prospects and went out for some test drives. At the car dealerships, each sales person immediately jumped enthusiastically into sharing the features and functions of the cars. “It has cruise control, alloy wheels, and a cup holder.” Exciting. Interestingly, the same thing happened when I was looking to purchase some software. The sales person recited a well-rehearsed script. “Our software will allow you to keep a record of every customer.” My reaction: “Um, and so can all your competitors.” In both cases, I was uninspired and unmotivated to buy.
This got me thinking about the selling process.
Your ability to sell is fundamental to your success. Maybe you want customers to buy a product or service that you offer. Or maybe, as a leader in an organization, you might want your employees to embrace the latest management technique to help spur innovation.
Regardless of what you are selling, from my experience, most people sell incorrectly.
When you focus your selling strategy on features and functions, it positions you as a commodity. It is well-known that people buy more often for emotional rather than logical reasons. So why are you starting the sales process with logic?
A more effective way to sell involves a simple three-step process: ethos, pathos, and then logos. Just in case your Greek is a little rusty, ethos, pathos, and logos are the three corners of Aristotle’s “Rhetorical Triangle” – the use of language to persuade. Ethos is credibility, pathos is empathy, and logos is logic.
Selling your ideas using this construction, in that order, leads to more persuasive arguments.
March 8, 2009
The President of a $1 billion company once asked me to describe his organization in one word. My response?
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.
February 19, 2009
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…