Short-term and Long-term Dilemma

The biggest challenge in my career is how to balance between short-term and long-term to drive a sustainable performance.

The issue is to be sustainably profitable you need a group of true passionate customers who believe in your brand. To achieve this level, it requires a continuous, smart, strategic brand and ‘know your why’ investment. Many companies are always under a pressure to deliver a right-now performance. To deliver the right-now performance, we have to concentrate most if not all resources to short-term sales and marketing activities.

And, because you have to come up with new promotions all the time to sustain the short-term results, you wouldn’t have the time and the energy to invest in the longer-term future. Worse, the cost of doing business is getting more and more expensive because you have to target new customers all the time. It’s basically a death spiral. We would keep on doing it until it eventually ends.

If people at the top don’t understand this dilemma, it’s going to be hard to change.

Apivut

Say Hi to February

Time flies very fast. We are in February now. It’s my routine that when a new month comes, I list what I need to achieve (my key objectives) in the month.

Our marketing team now looks after the hotel portfolio too. The daunting task is there are more than 55 resorts and hotels to worry about. During the transitioning periods, we got all sorts of information from all hotels. And, one thing that I notice is that we tend to do a lot to offset shortfalls in performances. My immediate question that I asked myself yesterday was “did they get a lot from all of those activities?”. Or “did they get very little from each of them that was why they had to do a lot?”. Let think for a second. What is the problem here? They didn’t get a lot from each activity. That’s why they had to do a lot.

In the world where resources are scarce. That ‘do a lot to get a little’ hardly works. Your team would run around like a mice in a spinning wheel. What missing is “a good strategy”. If you spend a little bit more time to understand (and list) all the challenges, you will have a clear direction of what need to be done. You would do less to get more.

That’s my mammoth task in February. How can I tell the team that we need to step back and rethink about our challenges. Then, we will agree on a sharp, focused action plan. Wish me luck.

Apivut

Intensity vs Consistency

These 2 key words will be used in a background of my strategy this year. They will be used in different context. And, they are both important.

Branding: consistency is more important. We need to be consistent in our positioning, our messages, and our content creation.

Strategic priorities: there are so many things to do. Instead of setting a priority and allocate resources the old way, we will do them all but apply intensity levels to each priority.

Staff training: I will need both intensity and consistency. Intensity alone won’t make knowledge sticks. Consistency alone won’t change their behavior.

Leadership: consistency is a key here. I have to communicate more often with the messages towards our agreed strategy.

Apivut

What is strategy, really?

I am always interested in strategy. I feel that it’s a term that we all use, but not many people know what it actually is.  It happens to me a lot at work. It’s always like this, I talked to my team on, say, our social media activities, I asked one of my team why there was no progress. One of many answers always is – “I don’t understand why we are doing this. I don’t think we have a strategy for our social media”. I then asked “OK, we have discussed this many times. Before I go through it with you again, can you please tell me, in your words, what is a strategy?” If it happens to you, your boss asks you this question, what would be your answer? It’s intriguing, and I really want to know your answers.

When asked, what is a strategy? I often heard something along the line of – it’s planning, it’s how a company uses resources, it’s a way to achieve our goal, etc. It’s not wrong, but it’s also not right. I am not saying what I have in mind about the answer to this question is the right answer. However, I did some research to get to the bottom of this.

The outcomes of my research for the answers to this question involves the following keywords:

  • Problems
  • Competitive advantage
  • Strengths/weaknesses
  • Execution/Implementation
  • Choices (what to do and what not to do)
  • Differences
  • Change of external forces
  • Branding/Positioning

I also found terms like strategic planning, strategic building block, branding positioning, resource allocation. If you do the search yourself, I bet there is an 80% chance that your search results would be the same, with those keywords.

With all of the above, I want to propose my own version of what a strategy is. I am a big fan of Richard Rumelt’s book (Good Strategy/Bad Strategy: The difference and why it matters) so I am influenced by his thoughts. Below is my proposal.

“A strategy is an activity that utilizes the insights of your challenges to design a coherent set of actions based on your strengths to address newly identified opportunities or to overcome obstacles.”

According to Richard, the first step to check if you have a strategy at all is to see if you understand your challenges or not. In his words, “A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the more fundamental problem of comprehending the situation”. Basically, what he said is, “diagnosis is a judgment about the meanings of facts.” I think his book is impressive and if you have the same interest as I am (in Strategy), you should read his book (if you haven’t done that yet).

Strategy work is important. It determines lives and deaths of companies, battles, negotiations, everything. It’s more important than many people thing. Surprisingly, not many people understand what the true strategy is.

Apivut

Start with the product

It’s getting harder and harder to have a product that stands out of the crowd. Some companies like mine have a product that lasts for a long time and it’s not easy to come up with a new product. What are we going to do if we have to stick with our existing, non-attractive product?

In my opinion, there are 2 options to deal with this situation:

1. Repositioning the product: it means looking for the minimal viable audience and reposition your product to suit them. It is the same product but you create reasons for this group of people to buy your product.

2. Partner with other products: for example, if you are selling hotel rooms and your hotel doesn’t have a unique proposition, you may partner with a cooking company and offer a cooking package while staying at your hotel.

Remember this – there is always a solution to every business problem.

Apivut

Good strategy for 2020

No, I don’t have business solutions for you next year, sorry. The year end is approaching and some of us is thinking or planning about next year. Will it be harder? What am I going to do to get better results? What is my strategy for 2020?

I read (no I skimmed through) this article – Science Behind Successful Business Strategy – and I don’t get much value out of it. So, I told myself, I will offer a different suggestion. For next year, I would like to encourage you to do one thing for me (well for yourself). Please think, or list, or write down your current business challenges. What are the challenges that keep you awake at night? Write them down.

There is a simple way to help you understand your business challenges. It’s to ask a why question 3 times.

  1. Why can’t I generate sales from my Facebook page? Because I don’t have enough audience.
  2. Why don’t I have enough audience? Because I don’t post valuable content for my customers.
  3. Why don’t I post value able content for my customers? Because I don’t focus on generating valuable content.

Well, your strategy in this example should be creating content that offers your customers’ solutions to their problems.

Doing this is far more important than coming up with mission or vision. Understand your business challenges is the most critical step to develop good strategy. This is my wishing you Merry Christmas and Happy New Year message.

Apivut

The Infinite Game

I am preparing myself for the end of the year break. I normally spend 2 weeks back home in Thailand with my family. It’s a nice way to reward myself. Part of my break is about finishing a few books. So, I have bought 3 books and hopefully I can finish them all before the year end. One of them is The Infinite Game by Simon Sinek. A disclaimer, I haven’t read his book yet, but I am a big fan of Simon.

I have watched his Youtube videos about the infinite game concept in the past few weeks. From what I gather (without reading the book yet) is that there are 2 types of game players – the finite and the infinite game players. And, the differences are:

  • The finite players play to win.
  • The infinite players play to keep playing. Their mindset is to beat their yesterday’s self.

It’s a very intriguing concept. I like to think that I have the infinite mindset. I will tell you more once I finish his book.

Apivut

What is strategy?

We all have heard and used the word strategy almost everyday in our professional life. But, I found that not everyone truly understand what strategy is or whether what they are talking about is actually a strategy.

I got a serious interest in strategy when I was studying my first Master Degree. I came across an idea of “managing your desired outcomes”, which I think it’s a fundamental principle of any strategy – personal or professional. If you apply this principle – plan your desired outcome – you will always 1) think a few steps ahead and 2) you will respond, not react. Your life is going to be much simpler because you always know why you do what you do. As my interest in this area grew, I then chose to do a Ph.D. in business strategy. I learnt that there are many tools that help businesses do strategic planning such as SWOT Analysis, TOWS, The Balance Score Card, and etc. The problem is there are so many of them. I really doubt that anyone, apart from those high-fee consulting companies, would know or get benefits using those tools. They are very, very theoretical.

A few years later, I came across two great books that entirely changed my perspective about business strategy – one is Good Strategy Bad Strategy: The Difference and Why It Matters by Richard Rumelt, and the other one is Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renée Mauborgne. I summarised the concept of Blue Ocean Strategy in my previous post.

Why did I like these two books very much?

The first book by Richard taught me about the core principle of a strategy. He suggested that a good strategy needs to have the following three components:

  1. A diagnosis – what is going on? What is(are) the challenge(s) that you or a company encounter? I find that this is the most important step in any strategic activity. If you don’t understand a problem, how could you come up with a solution?
  2. A guiding policy – once you understand the challenges, you need to come up with guidance or a direction on how you think you can overcome those challenges. It could mean that you need to add more product features, or you may need to add another product line, or you need to improve your service offering.
  3. Coherent actions – There is no distinction between a strategy and an execution. You may have heard people saying –  oh it’s not working because  even though a strategy is good the execution is bad. The execution bit is a key part of your strategy, period. To execute the guiding policy above, you need to design all related / relevant actions.

What’s about the Blue Ocean book? The concept of the blue ocean strategy is to encourage us to stop restricting our thoughts around the traditional competition and industry boundary. The authors call this traditional concept “red ocean” – the trade-off between differentiation and low-cost. The blue ocean strategy argues why we have to choose if we could do both. The question is how and if you could find a way to do it, you wouldn’t have to worry about competitions anymore. The idea is basically to look for gaps or unfulfilled pain points or demands and offer something to close those gaps. In short, blue ocean strategists focus on creating and capturing new demand, not fighting over existing customers.

A true insight about strategy is valuable to everyone. It helps you to understand the situation, apply the right solutions, execute at the right time, and ultimately deliver the outcome that you want. You have to believe in this one.

Apivut

What I learn from Louis Gerstner

Louis Gerstner was a legendary CEO who saved IBM more than 20 years ago. He wrote a book called “Who Says Elephants Can’t Dance?” I love this book and have read it multiple times now. What do I learn from Louis’s book?

Louis had many interesting and useful management principles that I think would never been obsolete. The ones that I like the most are:

  1. I manage by principle, not procedure.
  2. The marketplace dictates everything we should do.
  3. I look for people who work to solve problems and help colleagues. (Love this) I sack politicians.
  4. I am heavily involved in strategy; the rest is yours to implement.
  5. (Also love this) Move fast. If we make mistakes, let them be because we are too fast, rather than too slow.
  6. Hierarchy means little to me. Let put together in meetings the people who can help solve a problem, regardless of position.

When I struggle at work, I always go back to his book. He is like my mentor.

Apivut

How to incorporate good strategy in a business plan for solo business owners

As a solo business owner, would preparing a business plan be on a top list of your priority? Based on the common challenges for many solo entrepreneurs (aka solopreneurs), preparing a business plan is not something that many solopreneurs do. Why is that? I come up with two main reasons – firstly, the word business plan sounds daunting, i.e. there seems to involve a lot of time-consuming work. Secondly, many solopreneurs think they have everything in their heads. Besides, many think their business models are straight forward – buy or create products and sell those products to someone else. How hard could it be?

Well, I do agree that the word business plan sounds daunting because I also don’t like to do it. However, it is important to have a plan for any business. Even you don’t require funding from a bank, having a plan and even better, a plan with a good, solid strategy, could make your business successful and increase a chance of success in a long term (by the way, did you know that more than 90% of new business failed?). Many sources suggest certain formats for a business plan. The structures are very similar. For example, an Australian Government website suggests having the following format:

  • Title page – This describes what the plan is for and includes general information on your business.
  • Business Summary – A one-page overview written after your business plan is finalised.
  • About your business – It covers details about your business including structure, registrations, location and premises, staff, and products/services.
  • About your market – This is the marketing plan. It should outline your marketing analysis of the industry you are entering, your customers and your competitors.
  • About your future – This section covers your plans for the future and can include a vision statement, business goals, and key business milestones.
  • About your finances – The financial plan includes how you’ll finance your business, costing and financial projections.
  • Supporting documentation – List all of your attachments under this heading in your plan for referral.

Some sources such as National Australia Bank (NAB) suggests focusing more details on a sales and marketing component and including a pricing strategy. I think the bank wants to ensure that solopreneurs are clear about how they generate revenue. 

My formula is slightly different. I am a big fan of having a clear strategy in mind. And, it’s always a good practice to put the strategy in the plan. Why? Writing strategy down is a great way to organise your thinking process. It also means that you have done your homework before you write the strategy down. Below is my recommended structure of a business plan for any solopreneurs.

Executive Summary

Have you heard about an elevator pitch? If you have under 1 minute to explain about your business compellingly, how would you do that? My suggestion is that you include the following components in your pitch:

  • Our business notice there is a gap in [xxxxxxx], and we can offer a perfect product or service to fulfill that gap
  • We will do it by [xxxxxxx]
  • The following will be happening in the next months

Demand Gap Analysis

This is the most important part of my business plan. You have to find out if there is unfulfilled demand in a product or an industry that you are interested in doing business. If you are selling the product that many people are already selling, it would be hard to differentiate yourself from the crowd. I don’t say that it’s not possible, I say it would be hard. In this case, you will have to ask yourself – why would customers want to buy from you? Is it because your product is cheaper or better? How can you tell customers that your product is better?  

Business solution

Once you identify the demand gap, now it’s the right time to explain about your product or service. Below are the good questions that should give you an idea on how to write in this section.

  • What is the product or the service?
  • How is it going to fulfill the demand gap?
  • Are there a number of businesses selling or offering the same product/service?
  • If there are, how is your product/service different from those businesses?

Sales and Marketing plan

This section is to use the analysis from the business solution section above and add how you would tell customers about your product or service. Imagine that no one is aware of your offer. You will have to explain how you will let people know. And, it’s not just letting them know about your product/service. You will have to give them good reasons to buy from you. You also need to think about communication channels. The common online channels to consider are:

  • Social media
  • Email
  • Search Engine
  • Website – to me, it is necessary to have a proper, professional looked website. The first impression is very important.

Financial plan and forecast

Your financial plan and forecast don’t have to be complicated. Chances are you will rely on personal financial sources anyway. What you have to bear in mind though is that you have to split your limited budget in different bucket carefully. The main buckets are:

  • Product-related budget
  • Sales & Marketing budget
  • Contingency budget

Remember this – you should always have enough money as a backup.

Future Plan

You should try to think and explain what could possibly happen in the next two to three years. Of course, you wouldn’t know for sure. However, this exercise encourages you to think beyond the next six months. My assumption is you want your business to last as long as you want it to be, correct? It doesn’t have to be complex. You could only ask the following “what if” questions:

  • What if my customer’s preferences change next year?
  • What if my suppliers increase prices by 10-20% next year?
  • What if there are 5-10 people selling the same product next year?
  • Or, what if my business work so well that I have to add more staff?

I hope the above plan doesn’t sound too daunting. I strongly recommend that if you plan to launch a new business, you should spend a few hours to prepare the above plan. I can guarantee that it will save a lot of your time and money.

Apivut