Why Good Businesses Fail and How You Can Avoid It

Over the last 15 years, I have had diverse roles such as consultant, product manager, account director, and executive; and through the lens of these roles, I have seen many businesses succeed and fail. The reasons for success vary and depend on a number of factors such as technology, timing, team, and just plain luck. Fortunately (or unfortunately), the reasons for business failure typically come down to a few common areas: market, product/service, sales, and technology.

Market

The first and most important element to business success is the market. Specifically, how large is the market and is it growing? If you happen to find a large market, add 1-point for the good guys. If you have a market that is growing, even better. If you are in a market that is growing, with minimal competition, you have potentially hit the jackpot. I say potentially because any lucrative and growing market will attract competitors like flies to dung. I don’t say this to discourage you. I say this to make sure that you are aware of both the market size and your competitors. Any time you speak with bankers, investors, or potential customers, you should know these items in detail:

  • What is the market?
  • How large is the market?
  • Is it growing or shrinking? If so, by how much per year?
  • Who are your competitors?
  • What are their strengths and weaknesses?
  • What are the alternatives to your product or service?
  • How would you rank your product/service against your competitors and alternatives?
  • What advantages do you have over your competitors?

If you have straightforward, simple, and quantitative answers to these questions, you should be in good shape.

 

Product/Service

Every business can be simplified down to providing a product or service in exchange for a fee. For example:

  • Grocery Stores: groceries
  • Construction Firms: labor and expertise for new buildings or renovations
  • Consulting Firms: expertise and advice on a range of topics and industries
  • Software Development Firms: software engineering and labor
  • Creative Agencies: design and creative expertise

Each of these examples comes down to finding the right niche for your product or service, but most importantly, it requires the business managers to find the right product or service at a sufficient profit margin to sustain and grow the business. If you cannot sell your product with the right margins, your business will stagnate and eventually fail. If you cannot sell your product at all, maybe you should consider that no one wants what you are sell and there is no market. There are times when you are creating a new market and over time sales will come, however, the most likely outcome is a zombie business: there is still movement but no meaningful activity.

 

Sales

As I always tell my clients, sales are the lifeblood of a company. If you aren’t properly nurturing your leads, prospects, and sales, you will soon find yourself in a dying organization. Every day, you should be gathering new leads on the Internet, over the phone, by email, and/or in-person. These leads should be tracked in what is called a Customer Relationship Management (CRM) system. What you sell will determine how you qualify each lead to make a decision on whether to move forward to try and make the sale. Once you have made the decision to move forward, you will estimate the labor, price the product, or write a proposal (your industry will determine what is appropriate) and close the deal. This is a simplified overview of what needs to happen but gives you a good idea of what you should be doing to manage your sales effectively. I teach teams to review their sales pipeline each week to make sure that each lead and deal is moving along and nothing is stagnant. If you do find that a deal is not moving along, you will need to do some digging around with the salesperson, estimator, account manager, etc. to uncover the issue.

 

Technology

I group all of the systems, and tools that are needed to improve a business’ survival under the term “Technology.” First and most importantly is the company’s website. Not only should the site be visually appealing, it should be easy to navigate, find information, and clearly show the purpose of the business, products, and services. A key element that I see overlooked even in 2018, is a lack of focus on lead generation on many companies’ websites. As stated previously, lead generation is a key element in the sales process and needs appropriate attention at the most senior levels of the business. Another element to the website is to ensure that the site is secure using what is called SSL (the little green padlock in the browser address bar). Given that SSL can now be set up for free or very low cost, there is no longer a reason to have an insecure site.

Another element that is critical is the CRM as previously mentioned. The CRM is the central place for all of your customer, lead, and deal information. In other words, the CRM will contain all of the information about your customers leading up to you closing the deal. I have found and set up free and low-cost CRM options for my clients that have resulted in both in millions in new revenue and a detailed record of what led to the new revenue.

There are many other systems that are critical to a business but the website and CRM are the two that I find provide the largest ROI for every business that I have personally worked with in the past.


Daniel is a venture architect and advisor specializing in technology strategy, investment, and implementation. He has helped clients as diverse as the US government and automobile manufacturers manage their technical needs and endeavors. Formerly management consultant at Booz Allen Hamilton, he helped launch a $200+ million enterprise collaboration line of business. Daniel also doubled automotive vertical revenue to $25 million in less than 2 years. With B.S. and M.S. degrees in Computer Science and Technology Management respectively, he has become an expert in vendor management and business development utilizing technology and strategy skills.

 

U.S. Treasury awards $3.5 billion, New Markets Tax Credit allocations

Back in February, the U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund) announced the awarding of $3.5 billion in allocations of New Markets Tax Credit (NMTC). For those of you that are not familiar with NMTC, it is a program run by the Treasury Department that allocated tax credits to community development entities (CDE). Those CDEs then go out and attract investors to their fund and in-turn, the investor gets a tax credit allocation of 39% on the total investment over 7 years.

According to the CDFI Fund, NMTC awards have historically generated $8 of private investment for every dollar invested by the federal government. Since 2001, NMTCs have generated more than $44.4 billion in investments in low-income communities and businesses, resulting in the creation or retention of more than 750,000 jobs, and the construction or rehabilitation of more than 190 million square feet of commercial real estate.

This year’s NMTC allocations were made to 73 community development entities in 29 states, the District of Columbia, and Guam. Read the list of entities known as Community Development Entities (CDEs) in the NMTC award book [PDF 5.2 MB]

I am working on a new project called Urban Deal Flow that is focused on NMTC and a new program that was created at the end of 2017 via the tax bill call Opportunity Zones (OZones). When I first learned about OZones in February and researched the program in more detail, I correctly guessed that the OZones would be managed by the CDFI Fund given that both programs had similar characteristics and objectives. I will be posted here about the project over the next few weeks. In the meantime, you can sign up for early access to Urban Deal Flow.

10 Ideas For Disney

As part of my personal self-improvement, I have been following James Altucher’s 10 ideas per day mental ritual. As a part of my process, I decided to share my ideas as part of a series of posts that I am calling “10 Ideas.” This is the first post in this series.

Disney is one of the world’s iconic brands and my family’s favorite amusement park in the last few years. We aren’t big on spending at parks (Disney World and Disneyland) but we do enjoy the rides and the overall experience, especially now that we have a son that can enjoy it with us. During our last trip to Disneyland a few weeks ago, I thought about a few areas of improvement and innovation that they could implement fairly quickly.

1. Mickey’s Loft: a luxury condo development at Disney World

Disney has built several high-end communities in Orlando and attracted some fairly wealthy residents to the development. I would like to see them build some high-end condos that are family-friendly with easy access to the parks and attractions.

2. AR/VR app that simulates an MCU battle in the viewer’s city or town

I would like to see Disney (or an AR/VR team) develop an app that would show a simulated Marvel Comics Universe battle in their own city. You would simply view the battle through your phone’s screen (similar to Pokémon Go).

3. Disney World Monopoly

Create a game using Disney Characters but use the Disney parks locations as the real estate. If the game is online, you could sync it with the real ride and visitor data and have the players earn in-game cash based on that day’s data.

4. Dystopian Disney: Black Mirror Spoof of Disney Characters

Although the relationship between Disney and Netflix is not as strong as it once was, I would love to see a Black Mirror episode with the traditional Disney characters. It could be an amazing episode incorporating the usual tech and cultural surprises that Black Mirror has come to embody.

5. AI Mickey

I would personally love to see an AI Mickey that can answer questions, reenact any Mickey Mouse scene, and learn from human interaction.

6. Jedi Training videos and content

Video content showing young Jedi in training with their masters. It could have fictional registration for new students, with the winners being selected to be trained as Jedi’s.

7. Sith Training videos and content

Similar concept as the Jedi training except for Sith. This would have a darker feel to it since it is, of course, the dark side of the force.

8. Knights of Ren Training videos and content

Similar concept as the Jedi and Sith training except for Knights of Ren. This would have a much darker feel to it.

9. allow families to know where everyone is in the park by Adding family users to Disney app

On our recent trip to Disneyland, I found the app extremely useful in navigating the park and seeing the actual wait times for the rides. However, I was quite frustrated when we got separated at the end of the day and found everyone in our party through trial and error (in the rain). I would have loved to open the app and it shows where everyone was located and put a pin on the map where we should all meet.

10. Add the ability to do FastPass in the Disney app

This is a big request and I think I understand why this doesn’t exist, but it would be great to be able to do reserve FastPass a limited number of times in the app then simply show and scan a barcode on my phone.

Strategy: 10 Steps to Building a Multimillion Dollar GovCon Business

US CapitolI spent over 10 years in Government Contracting/Consulting (GovCon) in roles ranging from software development, web development, project management, and product development to leading capture and proposal teams. I helped build a $25 million per year enterprise collaboration software practice supporting civil, military, and law enforcement agencies across the federal government.I say all of this a show that it is possible for anyone to successful sell products and services to the government. This is not just for technology and services. I personally know multiple founders of GovCon businesses that generate $25-50 million in annual revenue.

Most people believe that winning government contracts is difficult full of hurdles and paperwork. Nothing could be farther from the truth. The key is understanding the details and building a network of contract officers, consultants, peers, mentors, and other experts in the GovCon market. Below are 10 steps from the FDIC guidance on bcoming a government contractor. Over time, most motivated entrepreneurs can build a multimillion dollar GovCon business.

1. Decide what you are going to sell.

The first thing you’ll need to do is figure out what products or services you will sell. To start, investigate ways that your business can fill existing needs in the federal government. Then, find out how federal agencies can purchase these products and services. If you sell something the government buys routinely, it probably appears in a GSA schedule. For less common products, log on to the Federal Procurement Data System, which records detailed information on most of the government’s past purchases. Additionally, each agency produces a procurement forecast with contact information; you can find these forecasts at FedBizOpps.gov (fbo.gov), the government’s exhaustive contract solicitation website.

2. Gain an Understanding of the Basics.

Do your homework. Make sure you understand the whole process of government contracting so you know what you’re getting into and can be well-prepared. The intricacies of government contracting can be overwhelming. It’s easy to get mired in the details, but if you want to be a government contractor, you need to master and move beyond the basics. To gain a command of the basics, seek out expertise from the Small Business Administration (www.sba.gov), consultants, peers, mentors, and others to learn how government contracting works.

3. Register Your Business.

If you do not already have a “DUNS Number,” contact Dun & Bradstreet at http://www.dnb.com to obtain one. Your DUNS Number is an important “identifier” that is used for a multitude of purposes by the federal government in the contracting arena. Next, you must be registered in Central Contractor Registration (CCR) database to be awarded a federal contract. The CCR database holds information relevant to procurement and financial transactions. Help government procurement officers find you by including the optional federal codes for your product categories and keywords that indicate past performance. Once registered in the CCR database, businesses that meet the government’s definition of small are prompted to create a profile, which procurement officers and others can then find using the Small Business Administration’s Dynamic Small Business Search database. Lastly, go to Online Certification and Representation Application (ORCA) at http://www.bpn.gov in order to enter your business’ representations and certifications, which is mandatory for submission of sealed bids or requests for proposals.

4. Get Certified.

The federal government sets aside contracts under $100,000 for certified small businesses, and regulations often encourage procurement officers to reserve larger contracts for small businesses, as well. Determine if your business qualifies for local and federal small business certification programs. The Small Business Administration has three contracts-related certification programs:  8(a) Business Development, Small Disadvantaged Business (SDB), and HUBZone certification. To learn more about these programs and to determine if your business qualifies, go to the appropriate SBA website at http://www.sba.gov/8abd, http://www.sba.gov/sdb, or http://www.sba.gov/hubzone.

5. Build and Grow Your Network.

Networking is an important part of government contracting. To do it well, you need to learn that it isn’t always about what you want, but how you can help someone else. Learning to listen and find out what others need is critical. Take advantage of events hosted by the SBA, the Department of Labor, and other agencies to meet Contracting Officers and learn what their needs are. Depending on your product or service, don’t hesitate to lend it out or do a demo at the agency—the more they can see, the more inclined they will be to buy. At the same time, selling to the government is different from selling to the private sector. Extreme aggressiveness can be perceived negatively, and might be a deterrent rather than an incentive. Consider giving government buyers a concise capabilities statement for your business. From there, try to get as close to the person using the product as possible so that the user becomes your advocate. Networking is critical to finding out about new opportunities and meeting strategic partners and advisors.

6. Develop Your Strategy

Once you’re organized for growth, identify and target specific agencies and decision makers with whom you want to build relationships. To really add value, resist the temptation to give them a product pitch; instead, go into listening mode. Identify the challenges the agency is facing and the emerging trends that may affect the organization. Then, determine whether your offerings resonate with the audience, and, if not, why. Ask decision makers to share what they are looking for, and how your business could be of value. With this information, you can build a detailed profile of your target and hone your value proposition accordingly. Then, it’s important to define your expected sales capture/win rate, and measure it weekly to gauge your performance.

7. Prepare Your Team.

Before your business is awarded its first contract, prepare your team to support the government’s needs. Identify internal skill sets that could be leveraged once your business begins doing business with the federal government. Next, improve workflows to ensure that the right systems and processes are in place to quickly deliver as promised. Lastly, find talent that can fulfill both the sales and the “capture management” roles of your contracts. Your talent is not likely to be one individual. Your best salesperson should be charming and adept at connecting with people. Yet once the opportunity is identified, a different person should execute the bid strategy to ensure that you meet requirements and are poised to win.

8. Identify Opportunities.

Many contract opportunities worth more than $25,000 are published on www.FedBizOpps.gov. In 2008, some 45,000 solicitations appeared on the site. If your product or service is either off the shelf or widely used across the government, chances are it’s listed on a Federal Supply Schedule managed by the General Services Administration (www.gsa.gov). With GSA schedules, the government negotiates low prices with a variety of sellers, typically for five-year periods with options to renew. State and local governments may also use GSA schedules for technology and disaster-preparedness products. A business can apply to become a scheduled vendor by responding to the schedule’s standing solicitation. As part of your solicitation, you will have to submit to a “past performance evaluation” of your commercial sales. However, even if the government accepts your offer and lists you on a schedule, it won’t guarantee a purchase. You will still have to market yourself as you would with any prospective client.

9. Explore subcontracting.

Subcontracting represents a huge opportunity in many sectors. As the number of businesses selling to government agencies grows, there may be more of a need for the product or service you sell. Some small businesses begin working with the government through subcontracting because it allows them to gain experience while preparing to bid on their own contracts. To find out more:

10. Place your bid.

Government bid solicitations can be daunting. With attachments, they can easily run a hundred pages. Read them carefully. The government takes all its rules seriously, and you can be disqualified from participation for submitting an offer that is, for example, too long. Additionally, make sure you understand all the terms of the proposed contract. Many of these will be stated in the solicitation, but many others will be incorporated from other sources, particularly the Federal Acquisition Regulation (FAR), the set of rules that governs procurement. Don’t waste your time with the entire FAR, but be sure to read the contract provisions that are referenced in the solicitation. If your offer is not accepted, ask for a debriefing from the contracting agency. Most times, they will give it to you, and they will tell you why you weren’t chosen. Debriefs are important in helping you grow, and you should take advantage of the opportunity. Finally, be realistic about your capabilities. The government relies on past performance when deciding to award a contract. If small businesses get in over their heads on their first government contract, then chances of repeat work are slim. Start with a smaller project you know you can do well and prove yourself.


Daniel is a digital consultant specializing in IT advisory on technology strategy, investment, and implementation. He helps companies solve complex and strategic problems across multiple industries and domains. His drive to find solutions for clients and attain personal growth for himself is what keeps him at the forefront of innovation and helps him guide teams and organizations to cultivate amazing products and services. He can be found on Twitter at @dewilliams.

Strategy: 3 Reasons Why You Should Not Ask Potential Investors or Partners to Sign an NDA

NDAAs I have continued to advise startups and other businesses over that last few years, I have seen a common theme arise: startups and entrepreneurs asking me and others to sign an NDA. I will first say that I understand the need to protect your intellectual property (IP). I also understand the fear that someone may try and steal your idea. However, I personally feel that an NDA is mostly useless and is the telltale sign of an amateur.

There are a few things to remember about your idea that may help you in the future and steer you away from asking investors and partners to sign an NDA.

  1. Your idea probably isn’t that good.
  2. If it is good, there is a really good chance that multiple people or teams are working on a similar idea.
  3. Most people are too lazy or caught up in the there own lives and businesses to steal your idea.

Your Idea Probably Isn’t that Good

Most people have an inflated sense of how good their ideas are (I am guilty of this every day). Some of it is due to the superstar status that successful startup founders can now achieve and the belief that one idea is the ticket to stardom. What many entrepreneurs need to understand is that ideas in themselves are not what is valuable. It is the ability to execute on those ideas. History is filled with teams that had an initial idea and another team came along with better execution (see Facebook vs. Harvard Connect; Google vs. Bing; Microsoft vs. Sun). My advice is always to just focus more on the execution of the idea and less on getting signatures for NDAs. How long do you think you could survive if all of your energy goes to enforcing an NDA while your competitor is closing more deals, winning more customers, and acquiring more users?

If it is good, there is a really good chance that multiple people or teams are working on a similar idea.

There is a quote that I will paraphrase that says “Every good idea has at least 10 other people working on it somewhere else in the world. Every great idea has at least 100 people working on it.” For proof, just look at some of the greatest inventions in the history of mankind. Calculus was invented simultaneously by Sir Isaac Newton and Gottfried Leibniz in the 17th century. Charles Darwin and Alfred Russell Wallace discovered that they had developed theories of natural selection separately in 1858. If some of the greatest discoveries in history were being worked on simultaneously, you can bet that your social cloud image-sharing app is not unique in the world.

Most people are too lazy or caught up in the there own lives and businesses to steal your idea.

Most people really have no interest in stealing your idea. I truly believe that after almost 20 years of technology, consulting, and advising. I attribute most of this to pure laziness. In addition to laziness, people have their own lives and work to deal with that have nothing to do with you or your idea. If more people had the drive or real interest, they might steal your ideas, execute on them, and become the next startup billionaire. However, it is more likely that you will share your idea, they will tell you how great it is, then move on to the next topic. If they truly want in on the idea, they will ask you what you need from them and proceed to tell you how they can help bring your vision to reality (through funding, introductions, coding, design, etc.).

I say all of this simply to show you that an NDA is not the path to protecting your idea or success. It simply shows potential investors and partners that you may have talent, but you are still playing JV ball. I follow James Altucher’s advice and simple life strategy to just give ideas away to others every day with no expectation of anything in return. If you are coming up with new ideas every day, then no single idea will hold any significance for you. You get rid of the fear of someone stealing your ideas and focus on executing only on the ideas that give you pleasure and match your interests.


Daniel is a digital consultant specializing in IT advisory on technology strategy, investment, and implementation. He helps companies solve complex and strategic problems across multiple industries and domains. His drive to find solutions for clients and attain personal growth for himself is what keeps him at the forefront of innovation and helps him guide teams and organizations to cultivate amazing products and services. He can be found on Twitter at @dewilliams.

Strategy: The What and the How of Technology Strategy

compass-imageImagine I tell you that I want to go to San Francisco from LA. You then begin plans to determine the best way to travel to SF by either car, plane, or boat. After careful analysis, you select flight as the most efficient way to get us to SF and begin working on travel plans and booking flights. About midway through your work to get us to SF, I come back and say actually, Toronto is a much better destination. How would you feel if the tickets had been purchased and lodging booked? This is what many clients do to their teams by believing that the project objectives are fluid and can be a “living document” to be changed anytime. This the “what” part of tech strategy (what are we doing, what is the destination etc.) that I believe is critical to defining before you get to the “how” (how are we building this, how are we getting to the destination, etc.) of any project.

Let’s be honest, defining the “what” part of tech strategy is hard work and is commonly avoided or giving very minimal attention from managers and executives before they embark on that high-profile digital initiative. It is what causes many tech teams, designers, and PM’s to pull out their hair as they attempt to lock down the objective of a project while being simultaneously pushed to “just build the damn thing and get it launched.”

So how do we avoid this headache and get stakeholders to agree on objectives that provide the team with a compass to find the project’s “True North?” My advice is to be honest with managers, executives, and clients. Let them know that by “evolving” goals, they are forcing the team to constantly find a moving target. This typically results in increased costs, delayed or canceled projects, and a huge hit to team morale. By defining the objectives upfront, the success metrics can be defined and measured upfront. If the metrics dictate a pivot, you have the data to back up a change in strategy. This is why it is critical to define the “what” in your tech or digital strategy.

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Daniel is a digital consultant specializing in IT advisory on technology strategy, investment, and implementation. He helps companies solve complex and strategic problems across multiple industries and domains. His drive to find solutions for clients and attain personal growth for himself is what keeps him at the forefront of innovation and helps him guide teams and organizations to cultivate amazing products and services. He can be found on Twitter at @dewilliams.

Problem Solving: Fix the Toxic Corporate Culture that is Stifling Innovation and Market Value

It was years ago, but I can still remember the madness that surrounded me. The IT organization was a complete mess and filled with chaos. They were kept at arms-length by the business and marketing teams. They were not included in the detailed discussions involving new innovation. The digital marketing team even created their own little IT team to avoid the toxicity. Coming out of this environment (and similar situations over the last 15 years, I have learned how to identify and navigate the murky waters to solve multimillion dollar challenges. Using a model similar to Maslow’s Hierarchy of Needs, which many people should be familiar with (or at least remember bits of it from high school or college). As a refresher, the hierarchy is more of a theory that lists the stages of growth that humans go through generally in life. The stages identified by Maslow are:

  • physiological needs (basic physical requirements for human survival),
  • safety needs (personal, financial, health, etc. security),
  • belonging and love needs (friendships, intimacy, family),
  • esteem needs (respect from others and self-respect)
  • self-actualization (a person’s full potential and realization of that full potential), and
  • self-transcendence (focus on a higher outside goal, altruism, or spirituality).

As I have spent the last 18 years in and around technology, I noticed a familiar theme in dealing with IT organizations, digital teams, and IT acquisitions, what I call an “IT Hierarchy of Needs.” This hierarchy is a stack of needs that can increase the likelihood that your IT strategy, implementation, and ongoing innovation will succeed. Although, this theory is not a guarantee of success, ignoring these organizational needs will increase your probability of failure.

  1. Physiological Needs (working space, offices, open working environment, collaboration spaces)

    The physiological needs for an IT organization focus on providing an open working space that is collaborative and fosters the sharing of ideas. If your IT team is walled off from the rest of the organization or is kept out of the loop during digital strategy, technology assessments, and vetting of new solutions, then you are handicapping your ability to build real value for your customers.

  2. Safety Needs (IT security, cyber capabilities, security awareness, information safety best practices)

    Once the basic physical needs are met, and your IT team is in physical proximity to the business teams, the next step if security and safety. Recall that “a chain is only as strong as it’s the weakest link,” well an organization is only as safe as it’s the weakest point. To strengthen the weak points, educating staff on security best practices is key. Many cyber programs implement ongoing security testing across the organization, randomly sending decoy spam and phishing scams via email. More organizations need to implement these practices especially in light of the 2016 election hacking by Russia on political organizations in the U.S. Contact and communications from unfamiliar sources should be immediately forwarded to cyber personnel for review and evaluation.

  3. Belonging and Love Needs (friendships, trust, real collaboration)

    Once staff feels like they are safe and secure in their physical environment, they can start to build relationships within their group and across the organization. These relationships, collaboration, and information sharing should be encouraged visibly from the CEO down to facilities staff. I remember working for a client where it was actively encouraged for their employees to not share insights and data across divisions. The leaders of this organization assumed this would create competition and lead to better performance. The actual outcome was decreased market share, disgruntled employees, and an environment where the only people able to get work done were the consultants billing $200-$500/hr. This reminds me a saying that rings true: “There is always money to be made in chaos.” In order to save time and money, break down the silos and incentivize staff to build connections. I have personally benefited from building relationships everywhere that I have worked or consulted, getting to know the business, technology stack, and key decision-makers. This approach allowed me to identify the top pain points and problems across the organization and share these insights with anyone that would listen (not hoarding knowledge like a secret pot of gold).

  4. Esteem Needs (respect from others and self-respect)

    Once real relationships have been established based on mutual trust and friendship (not the passive-aggressiveness common in the corporate world), information is being shared, and problems and being identified and solved collaboratively, 2 interesting things happen: 1) respect starts to build between people and groups, and 2) self-respect starts to grow among individuals based on their positive impact on their team, department, the organization, the industry, etc. As proof, look at the reviews of any company on Glassdoor. You will see a common theme develop. Organizations that foster positive physical environments, safety, and security, and encourage real collaboration, relationship-building, solicit problem-solving and innovative ideas have the highest ratings. Companies that do none of these activities will have the poorest ratings.

  5. Self-actualization (organizational full potential and realization of that full potential)

    For many organizations, there is a wide gap between their full potential and the value that they actually create and deliver. As stated in the previous section, most of this can be identified by not implementing the practices outlined here. When staff and leaders are focused on dealing with silos, internal fighting, employee morale, and lack of new ideas, they can’t focus on what the organization’s full potential and how to get there. Many times, it never occurs that there is a better way to operate. However, once the previous steps are in place, this opens the door to a wide world of new ideas, problem-solving, value, innovation, and market share.

  6. Self-transcendence (focus on a higher outside goal, altruism, social/societal good)

    Once an organization is thriving internally, increased market share, customer value, staff morale, etc., they can then turn outward to more altruistic activities. These activities transcend the organization, founders, and executives by focusing on one or more societal challenges that can and should be addressed. For example, the Gates Foundation was formed after Microsoft and Bill Gates had accomplished most of the activities outlined here (Microsoft went through a period of malaise after Gates stepped down as CEO, but has since returned to its former glory). Warren Buffett is focused on his Giving Pledge now that the legacy of Berkshire Hathaway is established. There are many, many other examples that I can give of organizational self-transcendence, but hopefully, this is enough for now.

Daniel is a digital consultant specializing in IT advisory on technology strategy, investment, and implementation. He helps companies solve complex and strategic problems across multiple industries and domains. His drive to find solutions for clients and attain personal growth for himself is what keeps him at the forefront of innovation and helps him guide teams and organizations to cultivate amazing products and services. He can be found on Twitter at @dewilliams.

How to Differentiate You Product Using a Competitive Matrix

beat the competition

Every business that provides a product or service needs to differentiate themselves from their competitors or alternative solutions. For purposes of this article, I don’t really make a distinction between competitors and alternatives since both will keep customers from using your product or service. For example, Amazon Books technically competes with Barnes and Noble (B&N), but an alternative to Amazon and B&N would be your local library where books are free.

 

When developing your differentiation strategy, you should look at the problems that your target customers have and how your product or service solves those problems. List each problem in a table or spreadsheet down the first column as in Table 1:

Competitive Matrix
Table 1: Competitive Matrix

When scoring your product, try to be as objective as possible, not overvaluing your product and undervaluing competitive or alternative products that solve your customers’ problems. Also, prior to putting together this matrix, your should already have a firm grasp of the problem(s) you are solving and who are your target customers.

The next step in this process is to do a quick calculation comparing your product against the average score of your competition’s ability to solve your customers’ problems. The process involves pretty simple math:

  • Take the average of your competitors/alternatives for each problem line (ex for line 1: (1.00+1.00+3.00+2.00+3.00)/5 = 2.00)
  • Subtract the average for each line from your product’s score for that line (ex: for line 1: 4 – 2.00 = 2.00)
  • Take the average of the difference for each line.

Table 2 below shows how this fictional “Fancy Problem Solver” stacks up against the competition with an overall score of 1.53.

Competitive Score
Table 2: Competitive Score

In my experience, anything less that a 1.5 has some serious competitive problems. Also, anytime you have this many competitors and alternatives, you should consider solving a different problem or creating a new category that doesn’t exist. This does not mean that you are making up a BS category to avoid the hard work of competing. What it means is that you create a new category in the minds of customers so that they no longer associate your product or the problems you solve with any other alternatives.

I have personally helped may clients define their product, competitive landscape, and how to position their solution in the minds of their customers. For example, I have a client that provides a luxury, high-end service. They were have trouble defining the services and attracting customers on a recurring basis. In looking at what they offered, I first determined that they were defining their services in the sports therapy category, when they should be defined in the luxury therapy category. Once we had a new category definition, we then reached out to multiple luxury car dealerships in the area (this is a very posh, well-to-do community in Southern CA) to offer memberships to the dealerships’ customers. All they need to do is show up with their key fob and they were treated like royalty. This has translated into an increase in foot traffic and most importantly, an increase in sales and profit margins.

If you would like to discuss how I can help with your product or service strategy, feel free to contact me via the comments or LinkedIn.

Life Strategy: Mental Models

I discovered the wisdom of Charlie Munger a few years ago and have been obsessed with his concept of Mental Models for solving both complex and everyday problems. I’ve been slowly working through mastery of each mental model recently as a refresher and to tackle some new challenges in life and business. I highly recommend going through the list and rank you knowledge of each from 0-5 (0 being no knowledge and 5 being mastery of the mental model). While I wouldn’t call myself a master of any of them yet, I have self-ranked 3-4 on a few of them that I find most useful and use frequently. Hope you enjoy!

Mental Models