Welcome to the November 2019 edition of our Small Business Advice - designed to provide you with food for thought.
Find a quiet corner, grab a coffee, and make time to take stock and contemplate. Our aim is to provide enough varied content to be able to think differently about your business, to look to the future, and to generate some of your best ideas.
This month: Doing good ideas justice, the importance of boredom, and why the most expensive does not necessarily mean the most appropriate.
IDEA EXECUTIONER?
It is well known that a huge percentage of businesses fail early in their lifetime - but what if the cause is not a bad idea, but bad execution?
An idea shouldn’t have to be perfect in order to succeed. Good ideas – which are not in short supply – just need good execution to do them justice. If more businesses had the skills to bring the best out of their idea(s) then more businesses would be successful.
This is not just true of a new business, but of every new idea in your business:
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Give all of your ideas the chance to succeed by properly planning and resourcing them, and above all by making sure that you bring the right skills in to maximise their chances.
This is just as crucial when looking back and evaluating past failures:
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Don’t immediately dismiss a failure as a bad idea – look at it critically, look at all the factors, and determine objectively why it wasn’t a success.
If the idea was good enough, then allow it to inform both your future ideas and your methods of execution – it’s the least that any good idea deserves.
FINDING YOUR NEXT BIG IDEA
People often ask what lies behind Little Big Data® and this article, while about the process of writing, comes as close as anything I’ve seen to explaining the core concept.
Innovation and creativity are essential to keep businesses fresh and competitive, so it makes sense that a writer’s constant need for original ideas would yield some vital insights.
There are many pearls of wisdom in this piece, all of which are crucial for any business to incorporate. Here are some of my favourites:
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It is important to make space for daydreaming and the opportunity to be bored.
Difficult as it may be to see “doing nothing” as working, it is actually one of the most productive parts of your routine if you can use it to let your mind wander, think and create.
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Constantly ask questions, about anything on any topic.
And then ask the questions that the questions pose.
This iterative approach will lead you closer and closer to the elusive root cause of a problem.
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Doing this process properly will generate more ideas than you can actually use, so find a way to critically evaluate them, prioritise them, and actually do something with them.
Selecting just a few opportunities at a time will give them the best chance of succeeding.
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Never be afraid to throw it all out and start again, whatever stage you are at.
This is what we call our “R&D approach” to generating insight, and it is one of the central principles of Little Big Data®.
It is incredibly hard to let go of all of the work you have put in, and takes real persistence to start again – but it is the only way to get to the needle in the haystack.
DON'T BE TOO HARD ON YOURSELF
Much has been written about the potential impact that AI will have on jobs and employment in general. This article has a slightly different take in that it examines the potential fall-out in highly skilled jobs.
The conclusion is that humans will be left with only the harder decisions to make, as everything else will be automated – but the problem that this highlights is relevant right now, in a pre-AI world.
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It is important to include “easier” tasks alongside the more challenging items in order to maintain variety, a sense of accomplishment, and the space to generate ideas.
This is as true for your own To Do list as it is for your business in general:
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Make sure your business goals include the perfect mix of quick-wins and longer-term goals in order to keep things moving forward with a degree of momentum.
Determining the ideal balance should be a core part of your planning process.
THE ENEMY OF MY ENEMY IS MY FRIEND
Much is made of the resilience of vinyl records, but in actual fact it is more than resilient – it is resurgent. When you dig deeper, you can actually see a broader trend – what is true for vinyl is also true for analogue cameras and printed books amongst other things.
As this article notes, once the product that displaced your product is itself displaced, conditions can be right for the original to return.
This is not always true – the original product needs to be good enough to warrant a return, but if it has retained its original technical qualities and now benefits from tangible, analogue appeal then it can be a success.
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When planning ahead and looking for new ideas, never discount some of your tail products. This is a genuine chance to turn a challenge in to an opportunity.
Research, and track the progress of the technology that displaced your product. Try to find the right time for a comeback, and then test the market.
Bringing back one of your previous stars can be an elegant way of bridging the gap to your next one.
THE MOST EXPENSIVE IS NOT NECESSARILY THE BEST
An argument for the imposition of a maximum wage – predominantly on CEO pay. Whilst this is an interesting argument in and of itself, the concepts that it is based on are worth considering independently.
At its core, this is based on the theory of diminishing marginal utility – the idea that returns reduce the further you go (in this case as you spend more). This in turn implies that there must be a point past which the incremental benefit is lower than the incremental cost, and hence it’s not worth it.
Whether you agree with this or not in the context of CEO pay, you absolutely need to factor it in to your business decisions.
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Costs in your business do not have a linear relationship with benefit – that is to say that spending more will not automatically deliver more value to you.
Keeping this in mind, all spend decisions need to be rooted in knowing when you have reached the optimal point – past which you are in to the “nice to have” phase. This is the point at which you should pull back and redirect resource elsewhere in your business.
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You don’t have to shoot for the best of the best in every area of your business – in fact you can’t.
Resources are limited and need to be treated with care.
Underinvesting - or cutting back too much - can be just as damaging, though.
So this is about choose your battles. About knowing when to invest more or when to invest the bare minimum, and making absolutely sure that you stick to your strategy.
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Keep in mind that when investing in anything, you can achieve the same probability of success with a large spend as you can with a very large spend – such is the level of uncertainty associated with every investment decision.
Past success does not guarantee future success, and the most expensive does not necessarily mean the most appropriate.
BREADTH OVER DEPTH
A great article on why no one is immune to challenges - not even strong, healthy entities like the German economy. It may have seemed at one point that the German economy was unstoppable, but its current slowdown highlights the fact that everything has a limit.
One of the fundamentals of growth according to this article is Connectedness – and this is as true for your business as it is for a national economy. Connectedness makes growing easier. Connected products or services can be more readily offered, because the expertise and resources are so transferrable.
Focusing on Connectedness makes a lot of sense.
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Building a specialism is important for creating expertise, awareness, and a niche – but beware of going too far.
If you specialise too much, you will eventually close off future opportunities when you reach the limit of your expansion.
More breadth in your business means more adjacent possibilities open up – more connections and therefore more opportunities to move in to in the future.
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To develop and maintain breadth takes planning, and it takes innovation – it doesn’t happen by chance.
When building your plan, you should always strive to broaden your products and services with an eye on the future.
Multiple offerings with complementary resources is an efficient way of operating and helps to spread your risk at the same time.
STUCK IN THE PAST
Another insightful article from Morgan Housel, highlighting how difficult it is to force people to adopt new technology. More often than not, introducing new technology or a brand new product is a long process that takes requires persistence and patience.
Why should this be? To put it bluntly, people only have the past as a reference point – which means anything current feels cutting edge. When viewed in these terms, is it any wonder that change feels unnecessary? If you’ve never had it so good then why do anything to rock the boat?
Getting your head around this could be the key to getting your new product adopted early, but more importantly this has huge implications for your business internally.
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The danger for any business is that today’s conditions feel like the end point – like further progress is irrelevant, impossible even.
Take a moment to look back at the history of your business and see how far you’ve come, and how you have evolved.
Then ask yourself – why should this be the end of your progress?
If you think it will be, then you will probably be proven right – and this is a serious problem, because to stand still is to go backwards.
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Beware falling in to the trap of assuming that because this is the way you’ve always done it that it must be the best way.
Just because it is easier and quicker to do the familiar, doesn’t mean it always will be.
This is why focusing on always improving your processes to increase productivity is so important.
It won’t happen by accident – you need to force it, and that means a conscious effort, real actions, and specific investment in continuous improvement.
If you’d like to benefit from a sounding board for these - or any other - ideas for your business, why not contact Corner Finance at info@cornerfinance.co.uk or visit us at www.cornerfinance.co.uk
