Three ways for family businesses to stay entrepreneurial

The owners of Book City, one of Toronto's independent book chains, announced recently that they would be closing the doors to their flagship store after 40 years. As a final salute, CBC Metro Morning interviewed the store’s third generation owner, who shared the heaviness of that heart wrenching decision.

The reporter reminisced about how stores serve as land marks in our neighbourhoods and Book City was no exception: its iconic yellow logo brand was appreciated by Torontonians.

While in recent years customers have migrated to online book stores, the question remains: is there anything the family business could have done differently? Could succession planning have helped preserve the company’s legacy?

“For the most part it is easier, and generally more fulfilling to work ‘in’ your business than ‘on’ your business, so entrepreneurial families continue to dwell on the day-to-day tasks that come from operating a business,” says David Simpson, founder of the Ivey Business Families Centre. “Planning for future transitions, while always somewhere on the planning horizon, never seem to get done.”

Many first generation - let alone third generation (3G) - business owners have gone the same route. They stick to a dated business model that served them well in the past; after all, change is risky.

Those who step into the family business, may become trapped by a significant and public brand created and developed by generation one and two. They put grandpa on a pedestal, his oil painting is in the boardroom and refuse to refresh the model.

Mr. Simpson agrees: “There may also be a tendency for second generation (or third) to have guilty feelings if the challenging questions that come with considering transitions – including potentially selling a business. This comes in conflict with the feelings of protecting a legacy that was provided by an earlier generation.”

Yet, the entrepreneurial first generation would probably be the first to say “sell the business.”
“I tend to remind this generation that the greatest legacy is to remain as entrepreneurial as the founders, and ensure a strong family tradition that includes knowing when a business doesn’t fit the times,” adds Mr. Simpson.

To help business families remain entrepreneurial, he offers the following advice:

1. Once a year, ask the hard question: “If we were starting out today, would this be the business our family chooses to be in?” This forces a family to remind themselves that a business takes time, energy, talent, capital and most of all relevance. Take out the emotional attachment. If your family was in the buggy whip business as cars were arriving on roads, there would be little point in continuing as is. This question provides the nudge to reinvent the business, perhaps into a travel accessories and suitcase retailer.

2. If we conclude that this is a good business to be in, ask yourself this: “Are we the right ones to manage or steward the business further?” To survive in the global market, growth is vitally necessary. Expansion capital is available for companies over a revenue size threshold, and a family business can bring on board a professional CEO capable of managing a larger enterprise. There is no need to remain stagnant. The skill-fit question forces families to think like owners, and be less concerned about viewing the business as a
source of family jobs. The best leadership of a business will change over time as requirements change, and families need to look to what serves the business best.

3. Let outsiders inside your tent. Mr. Simpson says outside eyes are critical: “Overall, remember that families often view their businesses as their babies, and human parents tend to be ill-equipped to value their babies. We either overestimate the ‘uniqueness’ of our child or are often too hard on our kids and overlook their hidden value as a result.” Yet, so few family businesses take on an advisory board because they believe no one will understand their business as well as they do. Ensure that the business has an outside advisory board, or an active fiduciary board or at least a mentor with skills in the particular field. Engaging an advisory firm early and sharing your hopes and dreams will also ensure that a competent firm with transition experience can give you the hard reality of the day which helps families make decisions.

Jacoline Loewen is a director at Crosbie & Company, which focuses on succession advice for medium-sized enterprises, family businesses and closely held private companies. Crosbie develops customized strategies, particularly in relation to sale of companies, M&A, financing and corporate strategy matters. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business.

CASE STUDY: ACHIEVE AND MAINTAIN COMPETITIVE ADVANTAGE

By: Richard Peters
http://ca.linkedin.com/in/richardpeters2/

Competition is a reality for every business. Even when a company introduces a revolutionary new product or pioneers an innovative technology, the window of opportunity provided by being first-to-market is limited. In my experience, in both corporate and small business environments, when I examine an organization’s competitive strategy, I am constantly amazed at the lack of innovative thinking in terms of anticipating increased competition and planning for it.

If you want to maintain competitive advantage, you should constantly be vigilant of the following:

1. The success of your product or service will attract competitors. There is always room and opportunity for a competitor.  
2. You create the window of opportunity for a competitor to exist and to thrive.

To assess your competitive vulnerabilities assume: 

• Whatever values or benefits your product or service brings to the market, someone else can do it better.
• Your product’s success could create a market demand that you will eventually lack the capacity to meet.  In other words, assume your product will eventually increase demand at a pace which will exceed your ability to supply. 
• Your product or service has weak points. You are not meeting the market’s entire need. Your competitor(s) will use your product or product strategy shortcomings or omissions as their point of entry and their competitive advantage. 
• Product or service innovation needs to be a constant and done on a proactive basis rather than reactive. (Note: This applies to products and services of all types not just technology products. This a major area of vulnerability for most companies. Being first-to-market with innovations is as important to maintaining competitive advantage as being first-to-market with the initial offering. Employ tools such as social media to keep apprised of how your market is reacting to your product and to those of your competitors. Through the effective use of social media tools, your market will give you heads-up regarding opportunities for innovations.)

 

Admittedly these observations are based on hindsight. Over the years, I have gained the benefits associated with developing and implementing successful and not so successful competitive strategies. Having spent time in leadership and executive positions in a variety industries including media, software, insurance, consumer packaged goods, digital and social enterprise, I feel qualified to say that competitive strategies and tactics are highly transferable.

Over the next week, I would like to share with you a few case studies that are based on situations in which I have been involved. These are cases that I have often referred to when implementing and advising on competitive strategies. I have found that the lessons they contain are transferable to just about all industry verticals.

CASE  STUDY - KEEPING ONE STEP AHEAD

A number of years ago, I co-founded a venture that provided branding and marketing services to the software industry. The clients comprised recently launched B2B software companies or B2B software products that targeted the office automation technology requirements of companies operating across an array of verticals. For the most part, the technology being marketed was innovative and leading edge. A primary tool for selling these products was “in-your-face-marketing” which involved assembling 100-150 corporate decision makers in a room and having the client organization pitch its wares. My organization branded itself as best-in-class when it came to designing and delivering roadshow programs for B2B software companies.

When we entered this market, new or early stage software companies were plentiful and well financed; however, they were largely being ignored by the major ad agencies and the more established marketing services groups. Very few agencies even targeted software companies as a potential market, especially B2B focused software companies. For the first year, business was good and we seemed to be establishing ourselves in the industry. Then things got a bit more challenging. Our success drew the attention of others who decided to give this market increased attention.  We found ourselves pitching new business against much larger, more established industry players. Our closing rate was diminishing. Competitors were starting to gain a foothold on our turf.

Another significant development arose with one of our lead clients. We recognized that this client issue while specific to one client had the potential to be the harbinger of future client difficulties. The client in question called us to a meeting to inform us that they were considering dropping our company from their service provider list. Their explanation was that despite our services the timeline for their sales cycle had not declined, sales had not increased and therefore they were considering other options.

 

Basically we were threatened with losing our key competitive advantages:

·         First-To- Market Advantage:  Others had awakened to the opportunity we had identified. While our existing clients were reasonably secure, we had neither the track record nor resources to compete against large agencies when pitching new clients. Anything we said we could do they could easily sell a new client on how they could do it better.

·         Brand Positioning – The threat of losing a major client had implications far beyond this one client. We had neglected a fundamental principle - “never lose sight of the client’s measure of success.” Our criteria for measuring “best in class” differed from what mattered most to the client.

“GIVE THEM MORE OF WHAT THEY WANT AND LESS OF WHAT YOU THINK THEY NEED!”

We had an outstanding reputation for developing and delivering well organized, memorable events using unique venues attended by “A” list corporate prospects. But the client’s measures of success were increased sales and shorter sales cycle.

Note: This “want versus need” is an issue about which we all need to be more diligent. I have seen and experienced situations where the users or consumers of products or services and the providers were quite a distance apart on this matter. I have found it tremendously enlightening to get out from behind my desk and spend face-to-face time, one-on-one, with users or consumers of products and services my organizations were providing getting their feedback on how well we were providing value and meeting their needs. I discovered significant issues and opportunities that never surfaced through research studies or focus groups. Senior executives need to do more of this, the perspective it provides is remarkable.

SOLUTION

We reinvented ourselves repositioning our company or brand as being “partners” rather than merely “service providers” and in so doing accomplished the following: 

• Mitigated the threat posed by increased competition.
• Ensured that the clients’ objectives were clearly understood and always the pivotal influence on everything we did.

How we did it:

We reviewed the chain of events that clients, in this case a software companies, go through to move a product from a concept to a sale.  We identified what elements in that chain we were better suited to handle than the client and redefined our value-add as being able to take these tasks from the client allowing them to focus their resources on their core strengths.

This involved transitioning from merely providing implementation services to working with the client to develop their branding and marketing strategy and then taking ownership of the client’s entire marketing program. A consulting division was added to our company and tasked with working with the client’s leadership team, facilitating branding and marketing strategy sessions, creating not only strategies but also the associated tactics. From the client’s perspective, we became their marketing department developing brand and marketing strategies as well as creating the marketing assets.

This reinvention successfully separated us from the competition in a number of ways: 

•  Our company was repositioned as a leading provider of IT, more specifically, software branding and marketing expertise. Software was the only market we dealt in and, therefore, despite our small size,  we had credibility that our competitors could not duplicate… no one – at the time- was putting all their eggs in the IT basket. 
• All new client relationships began with 1 or 2 day facilitation session held at the clients’ location with their senior executive team participating. During these sessions the client’s marketing and branding strategies would either be created, if none already existed, or reviewed and enhanced. The client’s willingness to accept our consulting involvement was predicated on their acceptance of the fact that because of our IT focus, which was further substantiated by our IT client base, we could bring a level of expertise and experience to these sessions that they could not get elsewhere. The irony was that we actually knew very little about computers or software. What we needed to know was easily acquired through the consulting and facilitation sessions with the client. However, we did understand marketing and branding which were the key values to be added.

Note: I find it interesting that so many organizations continue to place significant importance on industry experience for recruiting senior executives when industry knowledge is seldom, if ever, the issue or challenge they face. In my experience, as the senior executive recruited to develop and deliver growth strategies for companies operating in an array of industries, understanding the industry and its products or services was seldom my greatest challenge. As a matter of fact, often the greatest challenge I faced when trying to get executives in underperforming organizations to take risks and accept change was their inability to think out of the box and be less inhibited by industry norms and accepted practices. This reminds me of Einstein’s quote: “We cannot solve our problems with the same thinking we used when we created them.”

• Essential to the success of this strategy was our requirement that we handle all elements of implementation, every nut and bolt.  Our pitch to new clients was that the only way we could guarantee quality of deliverable was to be in total control of supplier sourcing and relationships, media buying, creative services, call-center operations, printing etc.  If anything was taken out of our control, we could not ensure the quality or schedules.  We strongly discouraged clients from wanting us to use their preferred suppliers. Surprisingly, with only one or two exceptions, all clients gave us total control over the implementation process.

This new strategy delivered a number of benefits

• It separated us from the competition. We were in a league of our own. No one was in a position to replicate the turnkey operation we put in place. 
• The consulting/facilitation service, which was profitable on its own, virtually guaranteed we would get to deliver the much more lucrative branding and marketing programs and created a significant barrier to entry for competitors. 
• Consulting allowed us to bond with the client’s management team early in the chain-of- events leading up to the actual provision of their marketing services. By the time the client arrived at the stage (i.e. link in the chain) where they would normally make the service provider decision we had already secured our status as “partners” and had proven our “value-add” to their marketing and branding strategy. It was extremely difficult for competing service providers to get their foot in the door. 
•  In addition to the competitive benefits associated with the consulting services, taking ownership of a larger piece of the client’s marketing chain-of-events also created numerous barriers-to-entry. Competitors had very few client access points and when a competitor did identify a gap in the chain we could quickly close it. 
• We avoided much of the anguish associated with the “race-to-the-bottom line” pricing competition that can occur when you are in a competitive market. 

After we had executed dozens of programs, I did an informal survey with a few of our more loyal clients. The purpose of the survey was to review our pricing and cost structure with particularly emphasis on our printing services.

In should be noted that printing was a significant ingredient of every contract. We printed very high end marketing pieces. Some of which, capability brochures for example, could cost the client $10 - $15 each. Clients spent hundreds of thousands of dollars annually on printing. We relied on the services of only one printing supplier who handled all our printing requirements.
 
I asked the clients: “Since printing was such a major portion of the costs for their programs and knowing that we only used one printer, why had they never asked us to show them competitive printing bids?” Their response was that they rationalized the cost of doing business with us against the totality of what we provided not the individual parts. One client stated concisely what others had told me:

“I pay you to take a large monkey off my back. Because of the scope of the services you provide and the fact that you helped create the strategy that you are delivering, I do not need to dedicate extensive internal resources to the supervision of your contract. I can allocate a junior staff member to managing our relationship with you and devote my more senior people to other tasks.” Being able to project price versus service price greatly simplified managing our margins and provided flexibility in our pricing strategy. 

• Regarding the client who wanted to drop us. With this new strategy, we were able to introduce innovations into their sales strategy which their sales force embraced and which resulted in reduced sales cycle times. The opportunity for these innovations would never have been identified much less introduced had we not been able to sit with the client and their marketing department as part of the team to review their strategy, identify issues, make recommendations and execute .

Other case studies by Richard Peters include:

• Competing In Retail - David vs Goliath
• How Your Site R.A.T.E.S.
• Owning The Client Relationship
• The Anatomy of a Turnaround
• Ancillary Business Opportunties

CASE STUDY: ACHIEVE AND MAINTAIN COMPETITIVE ADVANTAGE

By: Richard Peters
http://ca.linkedin.com/in/richardpeters2/

Competition is a reality for every business. Even when a company introduces a revolutionary new product or pioneers an innovative technology, the window of opportunity provided by being first-to-market is limited. In my experience, in both corporate and small business environments, when I examine an organization’s competitive strategy, I am constantly amazed at the lack of innovative thinking in terms of anticipating increased competition and planning for it.

If you want to maintain competitive advantage, you should constantly be vigilant of the following:

1. The success of your product or service will attract competitors. There is always room and opportunity for a competitor.  
2. You create the window of opportunity for a competitor to exist and to thrive.

To assess your competitive vulnerabilities assume: 

• Whatever values or benefits your product or service brings to the market, someone else can do it better.
• Your product’s success could create a market demand that you will eventually lack the capacity to meet.  In other words, assume your product will eventually increase demand at a pace which will exceed your ability to supply. 
• Your product or service has weak points. You are not meeting the market’s entire need. Your competitor(s) will use your product or product strategy shortcomings or omissions as their point of entry and their competitive advantage. 
• Product or service innovation needs to be a constant and done on a proactive basis rather than reactive. (Note: This applies to products and services of all types not just technology products. This a major area of vulnerability for most companies. Being first-to-market with innovations is as important to maintaining competitive advantage as being first-to-market with the initial offering. Employ tools such as social media to keep apprised of how your market is reacting to your product and to those of your competitors. Through the effective use of social media tools, your market will give you heads-up regarding opportunities for innovations.)
  

 

Admittedly these observations are based on hindsight. Over the years, I have gained the benefits associated with developing and implementing successful and not so successful competitive strategies. Having spent time in leadership and executive positions in a variety industries including media, software, insurance, consumer packaged goods, digital and social enterprise, I feel qualified to say that competitive strategies and tactics are highly transferable.

Over the next week, I would like to share with you a few case studies that are based on situations in which I have been involved. These are cases that I have often referred to when implementing and advising on competitive strategies. I have found that the lessons they contain are transferable to just about all industry verticals.

CASE  STUDY - KEEPING ONE STEP AHEAD

A number of years ago, I co-founded a venture that provided branding and marketing services to the software industry. The clients comprised recently launched B2B software companies or B2B software products that targeted the office automation technology requirements of companies operating across an array of verticals. For the most part, the technology being marketed was innovative and leading edge. A primary tool for selling these products was “in-your-face-marketing” which involved assembling 100-150 corporate decision makers in a room and having the client organization pitch its wares. My organization branded itself as best-in-class when it came to designing and delivering roadshow programs for B2B software companies.

When we entered this market, new or early stage software companies were plentiful and well financed; however, they were largely being ignored by the major ad agencies and the more established marketing services groups. Very few agencies even targeted software companies as a potential market, especially B2B focused software companies. For the first year, business was good and we seemed to be establishing ourselves in the industry. Then things got a bit more challenging. Our success drew the attention of others who decided to give this market increased attention.  We found ourselves pitching new business against much larger, more established industry players. Our closing rate was diminishing. Competitors were starting to gain a foothold on our turf.

Another significant development arose with one of our lead clients. We recognized that this client issue while specific to one client had the potential to be the harbinger of future client difficulties. The client in question called us to a meeting to inform us that they were considering dropping our company from their service provider list. Their explanation was that despite our services the timeline for their sales cycle had not declined, sales had not increased and therefore they were considering other options.

 

Basically we were threatened with losing our key competitive advantages:

·         First-To- Market Advantage:  Others had awakened to the opportunity we had identified. While our existing clients were reasonably secure, we had neither the track record nor resources to compete against large agencies when pitching new clients. Anything we said we could do they could easily sell a new client on how they could do it better.

·         Brand Positioning – The threat of losing a major client had implications far beyond this one client. We had neglected a fundamental principle - “never lose sight of the client’s measure of success.” Our criteria for measuring “best in class” differed from what mattered most to the client.

“GIVE THEM MORE OF WHAT THEY WANT AND LESS OF WHAT YOU THINK THEY NEED!”

We had an outstanding reputation for developing and delivering well organized, memorable events using unique venues attended by “A” list corporate prospects. But the client’s measures of success were increased sales and shorter sales cycle.

Note: This “want versus need” is an issue about which we all need to be more diligent. I have seen and experienced situations where the users or consumers of products or services and the providers were quite a distance apart on this matter. I have found it tremendously enlightening to get out from behind my desk and spend face-to-face time, one-on-one, with users or consumers of products and services my organizations were providing getting their feedback on how well we were providing value and meeting their needs. I discovered significant issues and opportunities that never surfaced through research studies or focus groups. Senior executives need to do more of this, the perspective it provides is remarkable.

SOLUTION

We reinvented ourselves repositioning our company or brand as being “partners” rather than merely “service providers” and in so doing accomplished the following: 

• Mitigated the threat posed by increased competition.
• Ensured that the clients’ objectives were clearly understood and always the pivotal influence on everything we did.

How we did it:

We reviewed the chain of events that clients, in this case a software companies, go through to move a product from a concept to a sale.  We identified what elements in that chain we were better suited to handle than the client and redefined our value-add as being able to take these tasks from the client allowing them to focus their resources on their core strengths.

This involved transitioning from merely providing implementation services to working with the client to develop their branding and marketing strategy and then taking ownership of the client’s entire marketing program. A consulting division was added to our company and tasked with working with the client’s leadership team, facilitating branding and marketing strategy sessions, creating not only strategies but also the associated tactics. From the client’s perspective, we became their marketing department developing brand and marketing strategies as well as creating the marketing assets.

This reinvention successfully separated us from the competition in a number of ways: 

•  Our company was repositioned as a leading provider of IT, more specifically, software branding and marketing expertise. Software was the only market we dealt in and, therefore, despite our small size,  we had credibility that our competitors could not duplicate… no one – at the time- was putting all their eggs in the IT basket. 
• All new client relationships began with 1 or 2 day facilitation session held at the clients’ location with their senior executive team participating. During these sessions the client’s marketing and branding strategies would either be created, if none already existed, or reviewed and enhanced. The client’s willingness to accept our consulting involvement was predicated on their acceptance of the fact that because of our IT focus, which was further substantiated by our IT client base, we could bring a level of expertise and experience to these sessions that they could not get elsewhere. The irony was that we actually knew very little about computers or software. What we needed to know was easily acquired through the consulting and facilitation sessions with the client. However, we did understand marketing and branding which were the key values to be added.

Note: I find it interesting that so many organizations continue to place significant importance on industry experience for recruiting senior executives when industry knowledge is seldom, if ever, the issue or challenge they face. In my experience, as the senior executive recruited to develop and deliver growth strategies for companies operating in an array of industries, understanding the industry and its products or services was seldom my greatest challenge. As a matter of fact, often the greatest challenge I faced when trying to get executives in underperforming organizations to take risks and accept change was their inability to think out of the box and be less inhibited by industry norms and accepted practices. This reminds me of Einstein’s quote: “We cannot solve our problems with the same thinking we used when we created them.”

• Essential to the success of this strategy was our requirement that we handle all elements of implementation, every nut and bolt.  Our pitch to new clients was that the only way we could guarantee quality of deliverable was to be in total control of supplier sourcing and relationships, media buying, creative services, call-center operations, printing etc.  If anything was taken out of our control, we could not ensure the quality or schedules.  We strongly discouraged clients from wanting us to use their preferred suppliers. Surprisingly, with only one or two exceptions, all clients gave us total control over the implementation process.

This new strategy delivered a number of benefits

• It separated us from the competition. We were in a league of our own. No one was in a position to replicate the turnkey operation we put in place. 
• The consulting/facilitation service, which was profitable on its own, virtually guaranteed we would get to deliver the much more lucrative branding and marketing programs and created a significant barrier to entry for competitors. 
• Consulting allowed us to bond with the client’s management team early in the chain-of- events leading up to the actual provision of their marketing services. By the time the client arrived at the stage (i.e. link in the chain) where they would normally make the service provider decision we had already secured our status as “partners” and had proven our “value-add” to their marketing and branding strategy. It was extremely difficult for competing service providers to get their foot in the door. 
•  In addition to the competitive benefits associated with the consulting services, taking ownership of a larger piece of the client’s marketing chain-of-events also created numerous barriers-to-entry. Competitors had very few client access points and when a competitor did identify a gap in the chain we could quickly close it. 
• We avoided much of the anguish associated with the “race-to-the-bottom line” pricing competition that can occur when you are in a competitive market. 

After we had executed dozens of programs, I did an informal survey with a few of our more loyal clients. The purpose of the survey was to review our pricing and cost structure with particularly emphasis on our printing services.

In should be noted that printing was a significant ingredient of every contract. We printed very high end marketing pieces. Some of which, capability brochures for example, could cost the client $10 - $15 each. Clients spent hundreds of thousands of dollars annually on printing. We relied on the services of only one printing supplier who handled all our printing requirements.
 
I asked the clients: “Since printing was such a major portion of the costs for their programs and knowing that we only used one printer, why had they never asked us to show them competitive printing bids?” Their response was that they rationalized the cost of doing business with us against the totality of what we provided not the individual parts. One client stated concisely what others had told me:

“I pay you to take a large monkey off my back. Because of the scope of the services you provide and the fact that you helped create the strategy that you are delivering, I do not need to dedicate extensive internal resources to the supervision of your contract. I can allocate a junior staff member to managing our relationship with you and devote my more senior people to other tasks.” Being able to project price versus service price greatly simplified managing our margins and provided flexibility in our pricing strategy. 

• Regarding the client who wanted to drop us. With this new strategy, we were able to introduce innovations into their sales strategy which their sales force embraced and which resulted in reduced sales cycle times. The opportunity for these innovations would never have been identified much less introduced had we not been able to sit with the client and their marketing department as part of the team to review their strategy, identify issues, make recommendations and execute .

Other case studies by Richard Peters include:

• Competing In Retail - David vs Goliath
• How Your Site R.A.T.E.S.
• Owning The Client Relationship
• The Anatomy of a Turnaround
• Ancillary Business Opportunties

Company Survival 101: You Must Continually Reinvent and Redefine

 

As a CIO, you are keenly aware that rapid change in business and technology is the “new normal.” However, in the 21st Century, “change” is actually too weak a descriptor.

Today, it’s all about transformation. This means you can’t go backward, and you can’t stand still. You can’t rest on your laurels and you can’t keep doing what you’ve always done — even if you do your best to keep doing it better.

The only way for your company to survive, let alone thrive, is to continuously reinvent and redefine.

Reinvent and redefine what? Everything.

Today’s transformation is an accelerated, magnified force of change. Redefining and reinventing is a way of harnessing that wild horse and hooking it to a product, a service, an industry, or a career.

In a sense, transformation is a hard trend (a Definite), while reinvention is a soft trend (a Maybe). Transformation is going to happen, all around us and to us, whether we want it to or not. Reinvention, on the other hand, will happen only if we make the decision to do it. If we don’t, someone else will.

In the coming years, dramatic new developments are going to be flying at you so fast, from so many places and so many competitors, that it will be easier than ever to become overwhelmed. In a transformational time, disruption multiplies. The only solution to this increasing dilemma is to become experts at reinventing our companies, our products, our services … essentially everything we do.

Lee Iacocca and Hal Sperlich reinvented an entire marketplace in 1983 when they redefined the family station wagon. At the time, station wagon sales were not growing, even though baby boomers were in their prime childbearing years and the nation was bursting with new families.

A puzzle: why, if they needed the product, were they not buying the product? Because purchases are more emotional than logical, and are often statements of identity as much as—or more than—a rational act of fulfilling a practical need. Baby boomers may have needed a set of wheels with substantial family room, but they did not want to look and act just like their parents, even if that’s exactly what they were doing most of the time. Baby boomers did not want to identify themselves as a generation of people who drive station wagons.

But vans? They were kind of cool (at the time)—and more important, their parents never drove vans. Chrysler introduced the Dodge Caravan in November 1983, creating an entire automotive category—the minivan—that they would continue to dominate for the next quarter century. It was a stroke of flash foresight, based on the hard trend of baby boomers and their needs (along with the eternal insight that people don’t want to look or act like their parents).

 

It used to be that corporate and product reinvention was an option; today it is an imperative. We live today in a unique context, an environment we’ve never seen or experienced before. We have never had this kind of processing power and bandwidth, this kind of runaway acceleration in technological capacity, and it has completely transformed our relationship to the concept of stability. 

In the past, stability and change were two contrasting states: 

• When you achieved stability, you did so despite change. 
• Today change itself has become an integral part of stability.
• Today you can achieve stability only by embracing change as a continuous and permanent state.

In the past, great companies and great figures like Iacocca might have innovated and then gone for another decade before doing anything innovative again. In those days, that worked. It doesn’t work anymore. The world has changed, and more important, change itself has changed.

Information and new knowledge now travel around the world at the speed of light, and technological innovation proceeds at close to the speed of thought. Today you cannot just reinvent now and then: to survive and thrive in a time of vertical change, you have to be redefining and reinventing yourself continuously.

You now have an urgent question in front of you: are your customers changing faster than you are? Are they learning faster than you are? Because they are changing and learning fast—and if you are not already designing and providing the solutions to the problem they are going to have next week and next year, you are behind a curve you cannot afford to be behind.

Reinvent Everything
Realize that redefine and reinventis not only about transforming the products and services we offer; it’s about transforming how we do everything.

For example, Amazon redefined not only the bookstore but also the shopping experience itself. Southwest redefined the air travel experience, transforming our expectations of something costly, inconvenient, and irritating to something inexpensive, easy, and enjoyable. Apple redefined the PC and has continued to redefine everything it touches, from phones to how we listen to music to how we purchase entertainment.

Reinventing is not the same thing as adding a feature, a tweak, or a twist. Once something is reinvented, it never goes back to being the way it was before because reinvention harnesses the power of transformation. Blogs redefined the news industry. Twitter reinvented blogs and communication. Mark Burnett (creator of Survivor, The Apprentice, et al.) reinvented television.

Now here’s an interesting question: when the American auto industry collapsed in 2009, instead of giving federal bailouts to bankrupt GM and Chrysler so they could go back to doing business the same old way, why did we not use the catastrophe as an opportunity to completely reinvent the American automobile?

Unfortunately, it’s human nature to dig in our heels, protect, and defend our existing turf. How do we get past that reflex and build our businesses and our lives on a foundation of continuous self-reinvention?

Forget the Competition
One way to get past the protect-and-defend impulse is to jettison some of our most cherished core principles of the competitive marketplace—principles that used to work. In fact, we need to redefine and reinvent the concept of competition itself.

When it comes to the competitive environment, there are two things you can be sure of: (1) competition is more intense today than it was a year ago, and (2) a year from now it will be even more so. How will you survive in an increasingly competitive world? By not competing.

The old rule was to do what the other guy is doing, only do it either cheaper or better. Price and quality: these are the two great classic parameters of competition. But in a world gone vertical, this entire concept is obsolete. As change accelerates and pressure increases, there is a natural tendency to focus on what the competition is doing, but doing so is a recipe for disaster, because it mires you in a futile and never-ending game of catch-up while distracting your focus away from where it needs to be: on the visible future.

Trying to compete is a scarcity-thinking game; the organizations that are winning in the new century don’t bother competing. Instead, they leapfrog the competition by redefining anything and everything about their business.

For example, Marlin Steel Wire Products, a Baltimore-based manufacturing company, faced stiff and growing competition from China and its incredibly low labor costs, until president Drew Greenblatt decided to stop trying to play the competition game. Leaving the low-margin end of the market to the Chinese, Greenblatt automated his production line and began specializing in more high-end products like antimicrobial baskets for restaurant kitchens, finding customers for his higher-priced product line in places like Japan and Belgium. Marlin’s sales grew from $800,000 in 1998 to $3 million in 2007.

 

Earlier I mentioned that Amazon redefined both the bookshop and the shopping experience. Brick-and-mortar bookstores that compete on price have been, for the most part, driven out of business by online bookstores like Amazon and BarnesandNoble.com, which offer an unbeatable combination of price, convenience, and book availability. In the late nineties, people were predicting that the huge Barnes & Noble superstores would disappear. But they didn’t. The brick-and-mortar Barnes & Noble stores survived because they provide an experience that online shopping cannot.

Barnes & Noble decided that a bookstore should be more than a place to shop and buy books. Before Amazon and the Web came along, Barnes reinvented the book-buying experience based on a blinding flash of the obvious: most people who go into bookstores love books and reading. So why not provide them a place to do that? They created a unique and total experience focusing on the joy of reading, lifelong learning, and discovery, a place where you could relax, read, and learn, and not just shop.

Amazon used technology to redefine how we shop for books. But Barnes & Noble found and focused on their uniqueness, doing what their competitor couldn’t.

Note that Barnes & Noble competed based not on price but on customer experience. Shopping at Wal-Mart is not a great experience, but you can’t beat their prices: they compete on price. Ben & Jerry’s ice cream tastes good, but they don’t compete on just taste, or on price—they compete on values: Ben & Jerry’s has been a strong advocate (and financial contributor) for various social issues from their earliest days in business. Zappos competes on customer service. Apple competes on design, customer experience,and innovation. Here is a partial list of all the things you can compete on:

• price
• reputation
• image
• service
• quality
• design
• time/speed
• values
• customer experience
• innovation
• knowledge
• loyalty

And there are more. You could compete on just one item from this list, or two—but why not use reinvent and redefine to compete on them all? Look at each one and ask, “How can I redefine how we compete on _____” and then fill in the blank. If you don’t, someone else will.

DANIEL BURRUS is considered one of the world’s leading technology forecasters and business strategists, and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients understand how technological, social and business forces are converging to create enormous untapped opportunities. He is the author of Flash Foresight.

The Rise of the Digital CMO

by Jake Sorofman

Fact: When it comes to marketing spending, analog still outstrips digital by a factor of three to one. How could this be?, you ask. Digital marketing provides targeted reach and measurable impact. Innovative digital marketing approaches in social media, CRM, and other areas dominate the discussion. Nevertheless, analog spending still rules, as confirmed by Gartner's 2013 digital marketing spending report. Shouldn't CMOs and all marketers be shocked by this? Sure, an ample pile of dollars can be attributed to big spending on a few analog media channels, like Super Bowl ads, for example. But I would suggest that there is something more fundamental happening behind the numbers; something lurking in the very nature of digital marketing and what it asks of leadership and what it means for accountability.

The Digital Disconnect
First, there's a digital disconnect in the executive ranks, a leadership vacuum created by a mismatch between expertise and authority. Like so many other revolutions, digital marketing has taken hold from the bottom up. Here, we find digital natives steeped in digital culture and practice — twenty- and thirty-somethings who came of age on the social web. Squint your eyes and you see tomorrow's CMOs. But today's CMO is different: the corporate attire may be gone, but the assimilation to the new digital culture is incomplete. 

You can see a strong precedent for this in the open source software movement, which didn't go mainstream until its early adopters progressed through the ranks. Yesterday's Linux hackers are now the chief architects and CIOs of the largest enterprises. Unsurprisingly, open source has become a key part of most enterprise IT architectures. But open source only crossed the chasm once its champions came of age. Many CMOs see their digital future, but struggle to make the case across the executive ranks, where resistance is born of unfamiliarity, fear, or misperceptions about what digital marketing means for the brand. "But we're a traditional company" is no longer a credible line of defense, though, unbelievably, it is still a more common one than you'd think. 

Perhaps digital marketing won't go native until the natives occupy the executive suite. But I'm betting it will only accelerate because, unlike the open source movement which was initially about cost, digital marketing is plainly driven by revenue. Digital experiences and engagement draw consumers closer to a brand and more efficiently drive conversions and transactions, both online and off. 

The Consequence of Measurement
Second, digital marketing is illuminating in ways both powerful and problematic. Analog practices leave room for ambiguity. The numbers matter, but can't always be counted with precision. ROI is often ambiguous and anecdotal, which can relieve the CMO of true accountability. To be fair, many CMOs do want greater visibility. They're tired of the murkiness clouding the space between investment and impact.

Others, however, long for the bygone days when the big idea was sufficient. The CMO could tap dance through the average board meeting, as long as revenue tracked up and to the right. Like Mad Men's Don Draper, the CMO became the master of the soft-shoe performance. 

But with digital techniques, everything is measurable. Feedback loops tighten, segmentation becomes microtargeting, and optimizations can happen on the fly or even in real time. The relationship between investment and impact becomes correlated and causal — and the CMO becomes accountable down to the dime and moment by moment. Light dawns on the marketing spend! This transparency is powerful when quarters are turning into dollars for the business — but potentially perilous when the opposite is the case.

The Digital CMO
Now, a few CMOs may feel unfairly implicated here. Apologies! Of course, there are indeed strong examples of digital converts who have completed this assimilation successfully and built world-class digital marketing organizations that reimagine brand engagement, and even reinvent business models.

What do these "digital CMOs" do differently? They experiment aggressively. They hire smart digital natives — and empower them. They partner with great agencies. They have the humility to admit what they don't know, the courage to toss out the old playbook, and the confidence to allow digital metrics to illuminate the results. 

Some hire a chief technologist. Sometimes it's a peer to the CMO, perhaps a chief digital officer, which Gartner predicts will be present in 25% of enterprises by 2015. Sometimes it's a chief marketing technologist reporting to the CMO, which Gartner already finds in 70% of marketing organizations today. In both cases, this role is the designated left brain to the CMO's right. 

Digital CMOs also think beyond digital marketing. They look for opportunities to create digital experiences and revenue streams enabled by the nexus of forces, which is Gartner's description of the convergence and mutual reinforcement of social, mobile, cloud and rich information. The collision of these factors unlocks opportunities to reach and engage with consumers across the physical and virtual worlds, drawing them closer with targeted, contextually relevant experiences and offers. Further, it can allow brands to redefine how value is created and delivered — the way Apple has with music, Amazon has with IT infrastructure, and Netflix has with movies.

Last year, Gartner predicted that by 2017, the CMO's technology budget will exceed the CIO's. Why? Because more often than not, it's the CMO who is expected to drive this digital transformation, which is deeply dependent on technology. Is the average CMO ready to step up to this challenge? 

Some CMOs are preparing for the digital revolution by filling the gap between expertise and authority. In other words, they have the self-awareness and the confidence to take bold action even when the context has shifted beyond their sphere of influence and scope of expertise. That is leadership. Others are afraid of the digital disruption — or exhausted by what it will take to convert digital resistors in the executive suite. 

But as we've witnessed through the economic and technological upheavals of recent years, and the resulting creation and destruction of business models, markets and careers — disruptions can be swift and unrelenting, and it is much better to be a disruptor than one of those being disrupted.

Jake Sorofman

Jake Sorofman is a research director with Gartner for Marketing Leaders, from Gartner, Inc. Read Jake’s blog and follow him on Twitter @jakesorofman.