Wim GE De Vos

Small businesses with a BIG impact

Golden rules for business

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It is so much more valuable to know how to think instead of what to think. That is why we need theories. Golden rules.

A good theory is like a power tool ⚙️.

Caution🔌: Todays management and strategy literature is often more popular because it is marketed like Coca-Cola instead of being truly useful or effective. (“hire A-players; have a good strategy;…🤷🏽‍♂️)
note: Yes this is a clear reference to Jim Collins & company who seem to write the theories first to only afterwards pick the subjects for their “research”… causality is all backwards.

A good theory does not change its mind.

It doesn´t apply only to some companies or people and not to others. It is a general statement of what causes what, and why.**

So here is such a theory or 3 golden rules from Harvard Business Review* on how to build a great business. It is based on statistical solid research and we have applied it rigorously since with success.

3 golden rules to build a great business

  1. Better before cheaper: don´t compete on price, compete on value.
  2. Revenue before cost: don´t drive profitability by cutting costs, instead find ways to earn higher prices or higher volume.
  3. there are no other rules: view all other choices through the lens of the first 2 rules.

So now you can go back to your pending strategic business decisions and apply the 3 golden rules…

  • figure out your product mix, growth, solutions strategy, pricing
  • decide which markets to enter or not, and how and when
  • make recruitment decisions, hire, develop, fire
  • marketing strategy, sales plan, service levels, customer satisfaction initiatives,…

The simplicity of these rules does not mean they are easy to follow through.

These rules simply drastically increase your probability of success…

*HBR “Three Rules for making a Company Truly Great”

** Clayton M Christensen

The importance of Demos

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wow-moment

Most of what we sell is too hard to understand without a demo.

If a picture is worth a thousand words,

a demonstration is probably worth a million.*

Steve Blank in The 4 steps to the epiphany.

So let´s ask ourselves the following 6 questions:

  • Do you have a demo script?
  • Do you have a demo space?
  • Do you have a demo strategy?
  • Does your demo create a WOW moment?
  • Who does the demo?
  • How often do you demo?

There is a direct correlation between:

the amount of WOW moments you create

&

the growth of your business… *

*YOU, once you got your demo-act together.

Escape to Victory: from products 📦 to systems ☸️

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escape commoditization.jpg
more on this from IMD here

The first objective of a company is to survive.

The second is to thrive.

To do both is to move from offering products📦 sales to systems☸️*.

And you better do it fast 🏃‍♀️…

 

*☸️Systems defined as:

  • bundle of products + services + knowledge
  • tailored solution to customers needs or desires
  • organisms that are designed, created, delivered, serviced and updated

 

If you sell products – Amazon wins (or aliexpress…)

If you are a brand franchise – the brand wins

If you sell systems – you win (and your customer too…).

Your choice.

 

Small decisions with a BIG impact 💥.

Note: You can SELF TEST your business using one of these useful checklists – Lightsabers.

Motivation & rewards

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intrinsic motivation drive.png

Motivation is the fuel ⛽️ that drives talent 🎨.

So how can a business truly motivate people?

Old thinking tells you to create a system based almost exclusively on carrots & sticks. Extrinsic motivators like money (salary, bonuses, commission, car,…) & punishment (being fired, ridiculed,…). Yet it does not work (any more)… and it often even does harm.

New thinking tells us we can motivate people beyond basic tasks (eg: decision making, creativity, higher order thinking,…) by focussing on intrinsic motivators. These can be divided in 3 building blocks: autonomy , mastery and purpose.

Todays Business Operating System focusses on intrinsic motivators (check out sources below):

🚁 Autonomy (intrinsic): we desire to direct our own lives and work.

To do: Have people set their own goals and make their own decisions within the strategic vision of the company. Increase autonomy radically when choosing priorities, techniques, resources. Make sure everyone feels to be capable and agrees with the strategic vision of the company… eg: ROWE = Results Only Work Environment.
(top-down management works if you want compliance; if you want engagement self-direction works better)

🧙🏽‍♂️ Mastery (intrinsic):  we like to get better at stuff.

To do: Create continuous and constructive feedback loops so learning becomes a second nature. Cultivate a growth mindset. Invest in training. Cumulative 1% improvements.
(hiring people to simply “get the job done” based on the skills they already have today misses the point of growth and opportunity that lies in each individual)

🎯 Purpose (intrinsic): to be part of something meaningful and important beyond our own selves.

To do: State the companies purpose above all else and make sure it is understood and shared by everyone. Show how every individual can and is contributing to the overall purpose. eg: (audacious) fundamentally change and improve an industry; (In B2b) making partners more successful; (social profit) create opportunities for others;…
(when pure financial incentives are dominant or even disconnected from the companies purpose bad shit happens. Unethical behaviour, bad quality products, lousy service,…)

So what about money and punishment? The old and intuitive way of doing things…

🤑 Money (extrinsic): pay people enough to “take this issue of money off the table”.

To do: offer higher fixed salaries, minimum (or no) individual commission or bonus schemes, in other words an “enough” approach.
(goes against the mainstream approach that largely focusses on money rewarding schemes as the way to motivate people. Specifically “high performers”.).

⛏ Punishment (extrinsic):  counter-productive approach that has to be eliminated from current days business practices.

To do: create a context where taking ownership is by definition a positive, where failure is an opportunity to learn collectively, where mistakes are never a taboo.
(goes against the mainstream approach that relies heavily on a logic of blame, punishment, endless rules that lay out individual quid pro quo to scare people into shape).

Once we have the right people on the team, let´s make sure we get the motivation piece right. And this will mean going in against old school thinking…

Small decisions with a big impact 💥.

Sources (aside from own experience): Dan Pinks 📕 Drive and his 🎤 TED talk “the puzzle of motivation”. Interesting summary in this 📹 animated RSA clip.