“Are they ready to buy?”

“Are they ready to buy?” Have you heard this before? “We talk and talk but nothing happens. They won't get off the stick and buy!” When people are ready to buy, it is a delightful experience. They reach out toward you. They relish the interaction. But they won't buy your product, your service, or your idea if the four conditions have not been met. 

Condition 1: Is there a problem or opportunity? Ask the person questions such as: “What is this costing you right now?” “If you don't fix this problem, what will the consequences be?” “What do you think this opportunity is worth?” “Is this one of your highest priorities?”

Condition 2: Does the person “own” the problem? Ask them questions such as: “Who owns this problem?” “Are you responsible for fixing this?” “Who would authorize an expenditure to address this?” “Who needs to be involved in a solution to this issue?”

Condition 3: Does the buyer have a healthy dissatisfaction with the current offering or the rate of improvement? Ask them: “Is this a minor irritant or something you're truly fed up with?” “What would you say is missing?” “Why do you feel that now is the time to put extra resources against this?” “How effective have your own efforts been to address this?”

Condition 4: Does the buyer trust you and believe you're the best alternative they have? Ask questions such as: “What other solutions are you looking at?” “How do you feel about our capabilities in this area?” “What concerns do you have about us or our approach?”

Sobel, Andrew; Panas, Jerold (2012-01-05). Power Questions: Build Relationships, Win New Business, and Influence Others (p. 22). Wiley. Kindle Edition.

A Secret to Creative Problem Solving

 

Ever find yourself going over and over a problem in your business, only to hit a dead end or draw a blank?

Find an innovative solution with one simple technique: re-describe the problem.

"The whole idea behind creative problem solving is the assumption that you know something that will help solve this problem, but you're not thinking of it right now," explains Art Markman, cognitive psychologist and author of "Smart Thinking." Put another way, your memory hasn't found the right cue to retrieve the information you need.

Changing the description tells your mind that you're in a different situation, which unlocks a new set of memories. "The more different ways you describe the problem you're trying to solve, the more different things you know about that you will call to mind," says Markman.
Ask yourself two questions:

1. What type of problem is this?
Most of the time, we get stuck on a problem because our focus is too narrow. When you think specifically, you limit your memory and stifle creativity.

Instead, think more abstractly. Find the essence of the problem.

Take vacuum cleaner filters, for example. Vacuums used to have bags that were constantly getting clogged, so innovators focused on how to make a better filter.

James Dyson realized that the problem was actually about separation, or separating the dirt from the air, which doesn't always require a filter. "That freed him to try lots of different methods of separation," says Markman. Hence: the Dual Cyclone vacuum that led Dyson to fame and fortune

2. Who else has faced this type of problem?
When you think about your problem abstractly, you realize that other people have solved the same type of problem in radically different ways. One of their solutions may hold the key to yours.

For example, Dyson realized sawmills use an industrial cyclone to separate sawdust from air and modified that technology to create the first filter-free vacuum.

"When you begin to realize that the problem you're trying to solve has been solved over and over again by people in other areas, you can look at the solutions they came up with to help you solve your own," Markman says.

You may not use one of their solutions exactly, but you free your memory to retrieve more information, making that elusive "aha" moment easier to reach.

By re-describing the problem, you're much more likely to find inspiration for a truly creative innovation.

Nadia Goodman

Nadia Goodman is a freelance writer in Brooklyn, NY. She is a former editor at YouBeauty.com, where she wrote about the psychology of health and beauty. She earned a B.A. in English from Northwestern University and an M.A. in Clinical Psychology from Columbia University.

The New Dynamics of Competition

by Michael D. Ryall

Photography: Courtesy of Pace Gallery

Artwork:Tara Donovan, Untitled (Mylar), 2011, Mylar and hot glue, Tara Donovan: Drawings (Pins), Pace Gallery, New York

In his book Innovation and Entrepreneurship, Peter Drucker made this observation about industries that rely on knowledge-based innovation: “For a long time, there is awareness of an innovation about to happen....Then suddenly there is a near-explosion, followed by a few short years of tremendous excitement, tremendous start-up activity, tremendous publicity....Later comes a ‘shakeout,’ which few survive.”

The problem, Drucker argues, is that knowledge-driven innovations are “almost never based on one factor but on the convergence of several different kinds of knowledge.” The initial breakthrough generates a spate of activity, but meaningful progress occurs only after all the pieces are in place.

I cannot attest to the scientific merit of Drucker’s claim, but I consider it to be a remarkably accurate description of the field of strategy. In its early days strategy was a loose affair. Content originated either from commonsense approaches such as SWOT analysis or from frameworks like the Boston Consulting Group’s growth-share matrix. In 1979, however, Michael Porter’s five forces model changed the field forever. It masterfully synthesized the practical implications of economic research on industrial organizations from the 1960s and 1970s. Knowledge-based innovation put strategy on the map as a field of study, virtually overnight. Competitive Strategy, Porter’s practitioner-oriented book, became an enormous success.

Porter’s ideas generated immediate excitement. They prompted interest from researchers in other fields and the establishment of the Strategic Management Society and the peer-reviewed Strategic Management Journal. A flurry of papers made informally reasoned claims about the causes of persistent performance differences across firms. Theories such as the resource-based view, dynamic capabilities, and transaction-cost economics appeared, and an avalanche of empirical work quickly followed. Another seminal concept, though not as popular with practitioners as Porter’s proved to be, came in 1996, when Harvard Business School’s Adam Brandenburger and Harborne Stuart Jr. proposed “value-based business strategy.” That work has bred an extensive body of literature on strategy by mathematical economists.

From that backdrop, a general model of competitive strategy, which I call the value capture model (VCM), has emerged. It uniquely applies the mathematical concept of cooperative game theory to research on business strategy. (“Cooperative” is a misnomer, as the math focuses on competitive dynamics.) As such, the VCM has an explanatory, predictive potential that no other theory of competitive strategy, including Porter’s, can claim. The model is a work in progress, but scholars are starting to use it to explain the dynamics of competition and to identify practical implications for strategic decision making. At the VCM’s core is this axiom: “The value that any party can capture from engaging in transactions with a given set of parties is bounded by the value each of them can add to parties outside the set.”

In this article I will explain the axiom and its implications for how we need to think about strategy.
 
Redefining Competition: From Five Forces to One 
In most industries, a firm, its suppliers, and its customers all have choices about how and with whom they create value. To produce more value, they may change how they engage in transactions with existing suppliers and customers or may switch to other suppliers and customers. Those agents, in turn, have similar alternatives in how they transact with the original firm and with their own suppliers and customers.

That reality suggests a formal definition of competitiveness that applies equally to all the firms, suppliers, and customers in an industry: a tension between the value generated from transactions that a firm undertakes with a given set of agents and the forgone value it could have generated from transactions with other agents. That definition enables you to assign formal identities to the agents involved; to place them in a mathematical game-theory model; and, with given measures of competitive tension, to examine the payoffs from their investments in resources and capabilities. You can also bring big data—from enormous databases that track consumer behavior and spending, stock prices, company accounts, and so on—to bear on this work. No other current theory of strategy offers the ability to model the effect of strategic decisions so precisely or to use data to test hypotheses about what kinds of management processes or investments improve a given firm’s ability to capture value in its industry.