Hartford Business Journal

www.HartfordBusiness.com June 29, 2015 • Hartford Business Journal 21 BIZ BOOKS Change agents employ 'big-picture' thinking "T he Attacker's Advantage — Turning Uncertainty into Breakthrough Opportunities" by Ram Charan (PublicAffairs, $24.99). Strategists often see their road as a straight one with obstacles on the horizon to be dealt with as they appear. Charan cau- tions them that the real obstacles are much closer. Just around every corner lurks outli- ers, competitors, consumers, other indus- tries and government poli- cies that can quickly upset their strategic applecart. How? By altering the structural dynamics and mechanics of a market. Exam- ple: During the financial crisis, banks and financial services companies tightened com- mercial and consumer lending practices. Many small busi- nesses and buyers of big-ticket items could not obtain loans. Many consumers couldn't obtain mortgages. There was a domino effect on other industries. Charan believes that companies blindsided by such events were too focused on executing short-term tactics and daily operations and lacked the "perceptual acuity" to see a bigger picture. They looked at things from the inside out and relied on what they knew. Catalysts, on the other hand, see things in the picture that others don't. They are creative thinkers who are one step ahead of everyone else's thinking. They take risks and get excited about new opportunities. He cites Ted Turner's move into cable TV and developing CNN as "linking a demographic trend with an existing technology." They can also mine gold from "dead" technology. Steve Jobs found a new use (i.e. screens for iPhones and iPads) for Gorilla Glass, a decades-old product mothballed by Corning Glass. Now, others are looking through the Gorilla Glass and developing new applications. The catalyst has future vision, too. Elon Musk's solar-charged Tesla Home Battery, while not economically via- ble today, could be the answer to offsetting high electric bills a decade from now. How do you become a catalyst? Follow thought leaders. Find out how game-chang- ers changed the game by looking from the outside in. Charan's book identifies many and their methods. • • • "Star Brands: A Brand Manager's Guide to Build, Manage & Market Brands" by Carolina Rogoll (Allworth Press, $24.99). Rogoll, the woman behind many of Procter & Gamble's iconic brands, has developed a five-step framework that starts with concep- tion and ends with ongoing nurturing. Bud- ding brand managers can use the book as a resource; for owners of small and medium- sized businesses lacking marketing expertise, it's a textbook. As such, it's important to under- stand that brand encompasses more than a product or service; it's about how the business does business. Key points from the five steps: Step 1 – Brand assessment and goal setting: Ask questions of your stakeholders that drive to their perception of what your brand means to them. Develop goals based upon what's working and what needs to change. Step 2 – Defining brand equity and target: Brand equi- ty deals with the promise of the brand in the marketplace and its unique benefits in its target market. The broader the target market, the more difficult the task of defining brand promise. Step 3 – Crafting a communications strategy: Effective communications requires insight. Discussions with target consumers should drive to the practical and emotional reasons behind the "why" of your product benefits. Communications must speak to both types of reasons, and identify media sources that your targets look to for information. Step 4 – Establishing the marketing strat- egy: Marketing's four P's (product, place, pro- motion and price) are interdependent. Rogoll explains their integration through her "brand math" formula (Brand sales = Awareness X Appeal X Distribution X Usage). Step 5 – Building the marketing plan and measurement: The plan's statement of purpose takes into account what the brand stands for in terms of consumer expec- tations and the four P's. It should also include a budget and ways to measure perfor- mance. Rogoll's use of Harley- Davidson's two-page plan cov- ers all the bases. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak THE RAINMAKER The power of the right metrics By Ken Cook A t the recent Connecticut Business Expo I moderated a panel discussion on inno- vation and growth. The panelists were all successful entrepreneurs. The audience was very engaged, especially when it came to learning the lessons applicable to build- ing momentum and getting a business to the next level. Much of the dis- cussion focused on the passion an entrepreneur brings to their business. It's passion that motivates someone to be working at 6 a.m. or 10 p.m. when others are sleeping, reading or watching TV. There was one question, though, that took the discussion out of the world of emotional commitment and locked it firmly in the world of facts, figures and data. A participant asked the panel the following: "I'm considering investing more of my own money in my busi- ness. What can I do to protect my investment and ensure my business gets to the next level?" It's a great question and one that entrepreneurs face every day. The response from each of the panelists was virtually the same: "Know your data and measure your results." Every business has one, two or three numbers that are clear indicators of how that business is doing. Every successful entrepre- neur knows what those numbers are and dili- gently tracks them. Entrepreneurs should think of themselves as doctors. The numbers are symptoms. If one or more numbers are not where they should be, then corrective action is needed. Here are some examples: Contractors live and die by the gross margin percentage on a job. They know that if they can deliver jobs at a 60 percent gross margin, then their business will cover all of its other costs and be profitable. To improve gross margin and increase profits, the busi- nesses need to become more efficient in how they do their work, and/or find suppliers who can provide materials at lower costs. Every percentage point improvement in gross mar- gin should drop right to the bottom line. Financial advisors strive to increase assets under management. The more money they look after, the greater their fees. The activities that produce assets under management are sales and marketing oriented. If a financial advisor's assets are flat, the corrective activity is to focus more on the sales effort. Be it relationship building, speaking, public relations, charity work or increasing referral sources, the advi- sor needs to get out there, make connections, and build relationships. Technology services companies can approach the market in a couple of different ways. They can be a volume provider offering services on a time-and-material basis when customers need them. This is a good entry point into a new account. The next level of busi- ness model is to become a technology partner to customers, managing all the customer's IT needs under a service contract. For this next level business model the key metric is the con- version rate; how many time-and-material cus- tomers sign up for service contracts? If the conversion rate is low, the entrepre- neur is most likely dealing with a segmentation and training issue. Segmentation question: Are we focusing on the types of customers who would be inclined to convert? Training ques- tion: Are our people skilled in building a strong enough relationship with customers that they would trust us with all of their information technology? In either case, knowing the con- version rate points the entrepreneur in the direction needed to grow the company. Back to the panel and the question from the audience member: "What can I do to pro- tect my investment and ensure my business gets to the next level?" Know your numbers. Know what metrics are the key clear indicators of whether your business is healthy and growing. Know the activities that impact those metrics. Finally, evaluate whether you are doing the neces- sary activities to move the numbers in a posi- tive direction. n Ken Cook is the co-founder of How to Who, an organization focused on helping people effectively build relationships and building business through those relationships. Learn more at www.howtowho.com. ▶ ▶ Catalysts, on the other hand, see things in the picture that others don't. They are creative thinkers who are one step ahead of everyone else's thinking. ▶ ▶ Entrepreneurs should think of themselves doctors. The numbers are symptoms. If one or more numbers are not where they should be, then corrective action is needed. Ken Cook

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