Have you ever wondered how likely your startup idea is to succeed? Or what steps can enhance your business’s profitability? Perhaps you’ve pondered how changes in your department might ripple through the entire company. These are the types of questions that cross the minds of entrepreneurs, managers, and department heads on a daily basis.
The solutions to these questions often depend on the unique circumstances of each company. What works in one situation may not be effective in another.
But luckily, there is one methodology that could be applied to any business, regardless of its specific circumstances. In this blog we’ll explore what it is and how it can bring value to both you and your business.
The holistic business model
Think of businesses like your body – they do well when you treat them as a whole system. Imagine being open-minded and paying attention to unexpected situations to learn important lessons. Let us tell you a story about a person who faced terrible knee pain, which taught him a vital business lesson.
He went to many specialists for his knees, but they focused on treating the pain, not the root cause. Even knee surgery didn’t help. Frustrated, he tried a different approach and met a sports rehab expert named Nicole Parsons. Unlike others, she looked at his entire body and found the real issue: a muscle imbalance affecting his hips and knees.
With this insight, Parsons prescribed a remedy. After a few months of working on his body as a whole, the person’s knee pain vanished, and he could jog again.
This story isn’t about medicine but applies to business too. For a long time, there were no coaches who looked at businesses holistically. People focused on fixing individual business parts, ignoring the bigger picture.
However, businesses, like bodies, thrive when you solve problems by considering how different parts connect. It’s time for a new approach to struggling businesses.
The three must-have goals
A successful business depends on three key things: being wanted by customers, making enough money to survive, and lasting a long time. Let’s break it down in simpler terms.
- Desirability: This means people must like what your business offers. If no one is interested in your product or service, your business won’t succeed.
- Profitability: It’s not just about being liked; you also need to make money. People should like your product enough to pay a price that keeps your business running.
- Longevity: This means your business should exist for a long time. Why? Firstly, the longer you’re around, the more money you can make. Secondly, people trust businesses that have been around for a while. It’s hard for new companies to convince people to buy their stuff.
These three things are connected. You can’t have one without the others. If your product is liked but doesn’t make money, your business can’t survive. If your product isn’t liked, it won’t make money. And if it doesn’t make money, it won’t last.
For example, there was a fancy wheelchair company that wanted to make the best, most stylish wheelchairs. They focused too much on making them look good and used expensive materials. This made the wheelchairs cost as much as a small car. It wasn’t profitable, and the company went out of business.
So, remember these three goals (being liked, making money, and lasting) at every step of your business. But to do this well, you also need to consider three other things, which we’ll talk about next.
The importance of flexibility in business
Running a business is a bit like sailing a ship in a stormy sea. Just like the ship must adjust its sails to deal with changing currents and winds, businesses must adapt to changes in their environment. The three main things businesses need to watch out for are their customers, their own organization, and the market.
First, customers can be unpredictable. Their needs and preferences can change quickly. For example, if parking becomes expensive in a city, people may stop wanting to own cars and instead prefer to rent vehicles by the minute or hour.
Second, a business itself can change. A small startup with a few employees can grow into a big company with many employees. However, as it grows, it might become less flexible.
Third, the market is always changing too. New competitors can appear, and regulations can suddenly shift, making it tough for businesses to keep up.
If a business doesn’t handle these changes well, it can have serious consequences. Take Volkswagen, for instance. In 2015, they admitted to cheating on emissions tests, causing a huge scandal. Why did they do this? Back in the early 2000s, they decided to focus on making “clean diesel” cars instead of hybrids. But by 2008, they realized their cars couldn’t meet pollution standards in the U.S. So, instead of fixing the problem, they cheated on the tests, which damaged their reputation and cost them $18 billion to fix.
This story shows why it’s crucial for businesses to adapt to change. Volkswagen didn’t consider the changing pollution standards and focused on short-term profits, ignoring the long-term trust of their customers.
What makes people want your product
A product’s popularity depends on three key factors: customer desires and needs, competition, and what the company offers.
Let’s start with customer desires and needs. These are influenced by what customers value and believe in. However, these values and beliefs can change over time. For example, in the 1930s, diamond sales were low, but De Beers changed the game with an advertising campaign suggesting that the size of a diamond reflected a man’s love. This idea caught on, making diamonds a symbol of eternal love.
Next, a product’s appeal also depends on what alternatives are available from competitors in the market. When it becomes easier for new players to enter the market, more options emerge. Think of Airbnb, which disrupted the hotel industry by offering cheaper accommodations without the costs and regulations hotels face.
The third factor is the offerings or customer experience provided by a company. To make your product desirable, you must understand how customers see themselves. Coca-Cola did this by personalizing its bottles with common names, like Dave and Sarah, in its “Share a Coke” campaign. This small change led to a huge success, with millions of bottles sold and a massive social media presence.
In summary, a product’s desirability is influenced by customer desires and beliefs, competition in the market, and the customer experience a company provides. Understanding and leveraging these factors can lead to profitability.
Business strategies for the long haul
To ensure your business lasts, focus on three key factors: customer loyalty, uniqueness, and adaptability.
Firstly, customer loyalty is essential. Your business won’t survive if people don’t know about it. For example, Contour, a company in the wearable camera industry, failed because they didn’t promote their product, while GoPro thrived through effective marketing. Remember, the best product doesn’t always win; it’s about awareness.
Secondly, uniqueness matters. The more distinctive and difficult to copy your product, the longer your business can thrive. Trade secrets are often better than patents for protection because they’re free and last indefinitely. Ferrari, for instance, used trade secrets to successfully protect its innovations.
Lastly, adaptability is crucial in a changing world. Stay ahead of your competition by embracing technological advancements and evolving with shifting consumer needs.
To sum up, safeguard your customer base, maintain your uniqueness, and stay adaptable to secure your business’s lasting success.
The importance of rivalry awareness
Imagine a company comes up with a fantastic idea for a new product, but they forget to consider what their competitors might do. This can be a problem because the company might create a product that’s easy for their rivals to copy and even make better. This happens when a company focuses on making a product that customers will like but doesn’t think about what their competition might do.
On the other hand, think about making a product that doesn’t really match what customers want and need. For example, those super-expensive carbon fiber wheelchairs we mentioned earlier are a good example. The company didn’t think enough about what customers actually needed.
It’s also important to know that when you change one thing in your business, it can affect other things too. Let’s say you decide to outsource some of your work to another company to save money. At first, it might seem like a great idea because you’re cutting costs and making more money. But if you look closer, you’ll see that it can also make it easier for your competitors to take your customers.
This is exactly what happened to the computer company Dell. They wanted to save money, so they had another company called Asus make their products. But then Asus used what they learned from Dell to make their own computers. Dell didn’t realize it until it was too late, and Asus became even more successful. So, outsourcing made Dell vulnerable and helped their competition grow stronger.
In conclusion, to ensure your company thrives, it’s essential to analyze your strategy from various angles. For instance, from your customer’s standpoint, you must think about their needs, product costs, and desires. Conversely, in terms of development, you should assess how unique your products are and what your competitors are providing. By addressing all these aspects, you’ll be on the path to achieving success.
Inspired by a book “The Grid”; Gretchen Bakke”