Understanding Failure Drives Success

Installment 10 in a 10-Part Series

Business has ultimately been well-served by the massive learning and technological advancements gained from the 3-G rocket ride that ended with the burst of the tech bubble.

It’s irritating when the little notice pops up on the computer advising us an unexpected failure has occurred. Our system crashes and we have to restart. Of course, that’s a minor nuisance compared to the “unexpected errors” that sink businesses.

The Bureau of Labor Statistics tracks #smallbusiness failures. Here’s their latest: 20 percent fail in year one, 30 percent in year two, 50 percent fail after five years. Only 30 percent survive their 10th year.

And get this, 86 percent of the companies that were on the Fortune 500 in 1955 no longer exist. The Olin Business School at Washington University in St. Louis studies this stuff and has projected 40 percent of the current #Fortune500 companies will face extinction in 10 years. Mind boggling.

I went back and reviewed the list of 131 organizations I’ve served as a professional advertising, marketing and/or business #managementconsultant and found 39% are gone. I guess that explains why I’m now a little cautious when approached by an #entrepreneur with an idea for a new business that’s sure to change the world (and make them a billionaire).

As I’ve been writing this series, I’ve been compiling this list of things I’ve commonly associated with #smallbusinessfailures:

1) Unbridled optimism and enthusiasm concocting a lethal combination of simultaneously over-estimating and under-estimating things critical to the business, i.e. basically living in an alternate reality, wearing blinders, believing if we build it … they will come, refusing to listen, chasing those who challenge thinking from the inner circle, operating in denial, waiting too late to ask for help, etc.

2) A cookie-cutter #businessplan loaded with unrealistic market and financial data gathers dust on the shelf, but in reality, it isn’t a practical road map for building and scaling a successful business anyway.

3) Being #undercapitalized and undisciplined with spending in the early stages of operations leaving a critical shortage of operating funds when the time comes to actually launch, promote and begin to scale.

4) Waiting too long to give serious attention to proprietary issues of a potentially complex nature, i.e. patents, trademarks, service marks, clearance and protection of intellectual property, etc.

5) Choosing the wrong business partners resulting in crippling and defeating conflicts.

6) Micro-managing while being under-prepared and under-equipped to truly comprehend and lead all the important aspects and moving parts of a #rapidlyemerging enterprise, i.e. over matched, overwhelmed, dysfunctional.

7) Poor inventory management and control, i.e. expanding too fast and having too much; or, waiting too late and having too little.

8) Managing for #revenue at the expense of #profit.

9) Being out on the #bleedingedge with a good idea before its time, i.e. burning resources cultivating and fertilizing while making it easier and more efficient for settlers to come in and flourish at your expense.

10) Bad luck.

Believe me, I’m all for starting and developing successful #newbusinesses. The world benefits daily from the innovative start-ups that are now multi-billion-dollar operations. And, if we were all playing Major League Baseball, we’d be making tens of millions of dollars annually if we could hit .300.

As we entered the new century, I was in the middle of the #techrevolution as #CMO of a publicly-held professional internet services company. We entered the arena via an $880-million IPO. My team led marketing efforts fueling a rocket that consistently produced #doubledigitquarterlygrowth before it flamed out and crashed like so many others. But even though that period of history is marked by failure, the #business world has been well-served by the technological advancements and massive creation of knowledge that occurred during that thrilling 3-G ride.

The deal is, the more we can #learnfromfailure, the more effectively we can #drivesuccess.

This has been a series on #strategicplanning so let’s circle back to that topic. Developing #strategy then making sure it can be implemented with authority is one of the most important responsibilities of the person sitting atop the org chart. There’s a real difference between a business plan created for financiers and a strategic operating plan faithfully and skillfully executed in support of a clear and complete vision cast by the #CEO.

There is no separating #executiveleadership, #vision and strategy. They are inextricably linked. Under poor leadership, businesses fail. The best CEO’s position their organization to succeed by having a well-constructed #strategicplan that enables them to anticipate and fix problems, identify and capitalize on opportunities, and make correct decisions most of the time.

Put the right planning process in place, support it with the right culture, and you’ll always know where you’re going, how you’re going to get there, and when you intend to arrive.

You’ll still be faced with shifting landscapes, unexpected developments, financial challenges, surging competitive pressures, and motivational and political hurdles; but, because you’ve seen to it that your business is grounded in #smartstrategy, you’ll be leading an organization that’s better prepared to dodge, pivot and accelerate as it marches confidently into the future.

Key to Success: The Rolling 3-Year Plan

Installment 9 in a 10-Part Series

The Rolling 3-Year Plan can be your key to business planning success.

In this #strategicplanning series I’ve been drawing on knowledge gained over my #marketing and #consulting career seeing #planning processes break down and fail. I’ve shared specific insights into where and why it happens and offered counsel around various pieces and parts in hopes of helping you experience greater planning success.

I addressed how budgeting cultures suffocate planning; showed the benefits that can accrue when a planning culture is adopted; addressed the effects of the tactical culture and what happens when tactics replace strategy; introduced the benefits of casting a clear and complete #vision; presented 10 common goal-setting mistakes; tackled important truths around #branding; and stressed the vital nature of managing the #customerexperience.

All this to set the stage to hand you the key to #businessplanning success: 1) Commit to building and nurturing a planning culture, and 2) Adopt a rolling 3-year planning process.

As cellular service was beginning to be introduced in the U.S. our advertising agency won the Southwestern Bell Mobile Systems account. They were one of the early pioneers in this transcendent industry and eventually joined other properties that morphed into AT&T Wireless.

At that time, I met a brilliant woman who was running the business. She was really smart and a fierce competitor who aptly carried the surname Champion. I’ve heard it said a leader is someone you choose to follow to a place you wouldn’t go by yourself. This lady was a leader’s leader. She taught me an important lesson about planning by preaching a very simple yet powerful acronym over, and over, and over again.

It’s “MAP/WAP” … Make a plan/Work a plan …. Make a plan/Work a plan … Make a plan/Work a plan.

Champion believed the right cultural mindset was integral to successful planning and wanted the process to be stimulating, productive and fun for people in all areas and levels of her organization. She loved seeing enthusiasm permeating the operation top to bottom; and, was energized as her staff began recognizing the true value and abundant possibilities inherent in her MAP/WAP teachings.

This leadership giant was pushing the widespread adoption of an evolved strategic mindset and had the whole place thinking horizontally as well as vertically. Each entity had a strong understanding and appreciation for how its work and performance related to and impacted each of its organizational relatives. Her staff pursued goals fervently and accepted the personal responsibility and accountability that accompanied their efforts to achieve the goals.

The very nature of a rolling 3-year plan is that it’s never finished. You’re continuously making the plan and working the plan. It’s an ongoing practice of preparation and execution of thoughtfully conceived courses of action consistent with the strategy. You’re stacking a long series of tactical victories on top of another as you stride toward a clearly-defined destination.

That destination is the vision cast by the #CEO, fully-supported by the executive leadership team, and actively embraced throughout the organization. Right now, you’d be working on 2019, 2020 and 2021; next year, 2019 rolls off and you’re preparing for 2020-2022; etc.

I think creating smart strategy is the most important responsibility of executive #leadership; and, strategic planning is where leaders demonstrate their ability to guide the organization with confidence, wisdom and courage. Once the vision is set, it’s up to management to make sure everyone understands the priorities and knows the organization will do what it takes to help them win.

There are six main components to the Rolling 3-Year Plan: Objectives, Strategy, Tactics, Budget, Timing, Monitoring and Measurement.

Your #objectives are clearly-defined, measurable goals that can be reasonably achieved. I love Warren Buffet’s approach to goal-setting. He says, “Don’t look to jump over 7-foot bars. I look around for 1-foot bars I can step over”.

Your #strategy lays out the specific approaches that will be used to reach the objectives. Your #tactics are the specific methods and moves that will be made consistent with the strategy and within the available budget and stated time frames.

Your plan will address immediate short-term challenges; look to the mid-term to identify, define and address challenges and opportunities that require time to analyze data plus supplemental funding; and, it will contemplate longer range issues like infrastructure needs that require careful study and larger investments.

Creating rolling 3-year plans is a fluid process. Objectives are modified as indicated by performance and adjustments in tactics are made as learning is gained from monitoring and measurement. Outcomes are tracked continuously, followed weekly, reported monthly, and formally reviewed quarterly with executive management.

Your guiding document will be a product of collective wisdom that charts a solid course to take your organization forward with confidence. The rolling 3-year planning process will give you a stable mechanism to help keep things from breaking down. The overall exercise will inspire imaginative, creative and resourceful thinking. Existing thoughts and ideas will be crystallized and formally expressed, fresh new discoveries will be made, and a Champion will be smiling knowing you’ve got your team on the path to success.

Managing the Customer Experience

Installment 8 in a 10-Part Series

Once a customer has a bad experience they can go thumbs down on your brand in a hurry.

Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it.” You can argue the time frames but there’s no challenging the admonition.

Millions of interactions among humans and brands occur every day. This is where expectations that have been created, and promises that have been made, are met and kept (or not). Brilliant ideas, years of research and development, hundreds of millions of dollars of investment in production, distribution and promotion, and it all gets sideways in a hurry when a customer has a bad experience and goes thumbs down on your brand.

Ask United Airlines. They suffered the mother of all #socialmediacrises when a video of law enforcement officers dragging a passenger forcibly off one of its planes went viral. It wiped out $1.4 billion in UAL value overnight.

As I define it, “Your #brand is your reputation and your reputation is achieved through consistent actions, communications and delivery of experiences over time. The process of building a brand is a continuous series of making and keeping promises that grows into a meaningful relationship. Your brand accumulates value as trust, confidence and loyalty escalates through positive direct and indirect interactions with others”.

Today, how people feel about your branded organization and its products and/or services depends on their most recent interaction and how it was perceived against the backdrop of prior experiences. Think of each new interaction as an opportunity to make a valued deposit in their #goodwillbank. Those deposits demonstrate their worth when an individual has an encounter that rubs them the wrong way. Show them love every time you can. Like #SethGodin says, “It’s easier to love a brand when the brand loves you back.”

#CustomerExperience (CX) has emerged as the new competitive battlefield. We’re living in a world where organizations are disproportionately rewarded when they deliver a great experience and disproportionately punished when they deliver a poor one. That has everyone’s attention.

#CX is a game changer. It can be the absolute #branddifferentiator. It possesses the power to enable a business to gain a true competitive advantage in a hurry and it’s moving rapidly toward overtaking the textbook differentiators (price and product).

I like simplifying things. At the base level, Customer Experience translates into knowing and understanding how a person feels about a brand. Believe me, that feeling is a very clear indicator of how they’ll talk about you and spend their money.

The complexity comes with the realization the customer experience entails everything that can leave an impression on a customer – direct and indirect – inside and outside the organization. The natural urge is to try to control as many variables as possible. That desire is what spawns all the talk about the #customerjourney and mapping all the various #touchpoints which is the where, why, when, how and with whom a customer interacts as they experience a branded offering of products or services.

Some leaders like #Apple have re-imagined and engineered the CX so each touch point is managed to meet a customer’s needs and make them feel truly valued in the process.

But, that’s no easy task.

The challenge is the customer experience is not a onetime event with one person. It’s a dynamic, ongoing, ever-changing series of interactions with a big universe of humans comprised of diverse demographics, expectations, interests, personalities and IT skills. Success requires constant observation, deep analytical understanding, and persistent management because customer perspectives and perceptions are fluctuating all the time.

Fundamentally, customers want the same thing now they’ve always wanted – to have their needs met. But technology, jet-fueled by the speed of the Internet, has enabled users to be more demanding, vocal and forceful than ever. They want instant attention through the channel that’s easiest and most convenient for them, a more personalized and intuitive experience, and faster resolution of their issue no matter how they choose to connect.

Hence, there’s a lot of construction, culture changing, and training underway as organizations build out broad infrastructures to deliver a consistent CX across the diverse channels.

No one department can own the customer experience. It involves product, sales, marketing and customer service operating in unison in a tight circle around the customer. Through constant observation, the multi-department group is monitoring experiences and identifying and resolving gaps in expectation versus performance usually related to communication, knowledge, standards and delivery.

The intent of all involved is to make every effort to produce experiences that delight customers and minimize the number that go thumbs down on the brand after being made to feel underappreciated, dehumanized, disrespected, and/or defeated.

Customer experiences producing satisfactory trial, followed by established repeat purchase patterns, are incredibly valuable to an organization. Research says returning customers will spend up to 67% more with you in year three than they did in year one.

Invest in managing customer experiences around your brand and you’ll be on your way toward producing a loyal army of consumer evangelists actively advocating for your organization and its products and services.