Attention Entrepreneurs; You Can’t “Manage Fruit Ripe”

 

 

 

They say that which makes us strong can also be our biggest weakness. Entrepreneurs are no exception to this rule as our driven, confident, and focused nature can often inhibit new product success. Entrepreneurs often have such confidence in their personal abilities based on past success they take shortcuts in launching new products and when sales fail to meet plan they believe they can “manage fruit ripe.”

“When it comes to new product sales; you can not manage fruit ripe”

 

After my last post I had a number of people reach out to me saying: “ Ok we get it, we should do research prior to launch …but what should we do if we are in a launch that is not hitting plan?” As I have shared in past posts…I have made a number of mistakes over the years.I have kicked off new products and then had to figure out how to make it work; “make it happen ” on the fly.  So I thought I would do a follow-up post and share what I said to those who contacted me directly.

Entrepreneurs who launch on gut and not market truth often start trying to “manage fruit ripe”. They are so tied to their  plan their failure to achieve goals has to be a sales problem. Based on my experience, over 90% of new product sales falling short of plan are not the result of “poor sales execution” but the result of not having good current data  and or understanding of your market, and is actually a marketing problem. Without current accurate market data one if not all of your four P’s of markting are probably wrong. Entreprenuers are smart people. If given good information they make decisions that grow businesses profitably. If given old or wrong market data one or more of your four P’s will be wrong.

As the owner, leader,you are the boss… so if you want to try to manage the fruit (sales) of your new products ripe… go for it. I have seen many try ( heck, I have tried) and I have yet to see this approach correct new product sales below plan and create sales velocity. 

If you find yourself in a launch based on gut and old or poor data, what should you do?

 

1. Assess what you have learned ( experienced) during launch so far
2. Conduct win loss interviews
3. Identify common roadblocks to sales and bust through them with new sales tools
4. List what you still need to know and assign priority and timelines
5. Adjust your strategy based on the current market data you gather
6. Test new strategies before you scale them
7. Repeat what works
8. keep asking questions, determine why customers are buying and not buying
9. Challenge your four P’s of Marketing ( at least one is off)

 

( or put another way; get the data to answer the four yes’s …as quick as possible)

 

 

So how about you…have you launched a product without having four yes’s first?

 

What did you experience ?

 

What corrective action did your team take?

 

Does it take longer to do research on the front end? Or fix roadblocks during launch?

“Pushing Mud Uphill” …Launching a New Product or Service Without Four Clear “Yes’s”

 

 

One of the most exciting things you can do in business is launch a new product, service, or entire business for that matter. As high as six out of ten US adult consumers are thinking about launching a business at any given time. If you chose to take the leap yourself, you will experience what I refer to as the “50 ugly truths…” but in so doing you will become stronger, and if you survive you will ultimately help people solve problems.

I can’t imagine anything more rewarding than helping someone solve a problem they thought there was no solution for. If this is true, then why do over 70% of new products (businesses) fail?

They fail because they failed to answer “yes” to four simple but key questions.

 

                                                             Question 1

 

Do you clearly understand the problem you are trying to solve and does your product (service) solve that problem completely? (if you have already said “no” stop, gather more data)

 

                                                             Question 2

 

Are there enough people, a market of people, with this problem to meet your desired ROA? ( if your answer is “I think so” stop and validate)

 

                                                             Question 3

 

Do the members of the market you validated as big enough have the ability to pay to solve their problem? (there are all kinds of problems we all have, but we are not willing to pay to fix)

 

                                                             Question 4

 

Are the members of the market you validated that is big enough, with the problem you solve, and ability to pay, “willing” to pay now? (there are many problems we have, and we have the ability to pay for, but not the willingness to pay for)

 

If you answered “Yes” with current market data (not data from three years ago when you first came up with this idea) go for it!

But remember; An Idea is not a product and it’s definitely not a Business.

Where most entrepreneurs blow it …as Jim Collins refers to it is; Hubris. They believe because they have launched products in the past and they were very successful they trust their gut and intuition that there new endeavor will also be a huge success.

 

 

So what happens if you launch based on emotion and Hubris?….

 

Your sales may come, but slowly

 

You will miss ROA targets

 

Need to add investment, instead of cutting bait

 

Your sales team (who trusted you) will push mud uphill each day…the good ones will leave due to frustration

 

You strain your entire organization (who is probably already multi tasking) morale suffers

 

You demonstrate to your market you do not know them

Personally you will become frustrated, aggravated, distracted, and you will loose focus

 

 

 

How can I rattle the above off so quickly?…Because I have done it. I have experienced the rush of growing companies by launching new products and or new divisions and when I find what feels like a huge unsolved problem in a market ….I get excited (emotional).

Instead of gathering current market date, I used to move into; validate my gut mode.

Instead of admitting what I did not know… and finding answers…I relied on past experiences to get me through the unforeseen roadblocks.

 

I have felt the emotion that builds, and heard that little voice in your head that says; “I don’t care what engineering, marketing, operations, and sales thinks we should do, or the more information they want to gather…we need to launch before someone else beats us to market”

 

What I lacked back then was a filter…simple filter that quickly cuts through the emotions and feelings and quickly lets you know if you have an “idea” or a “business”. The above four questions are the filter I recommend everyone use PRIOR to launching your new product, service, or business.

 

 

How about your company….

 

Have you ever had to push mud uphill?

While your team loyally pushes mud uphill, what is the opportunity cost of their time?

Do you have other questions to add to the filter to insure the products you launch do not fall into the 70% of those that are an expense without a ROA?

Again, having launched products, services, even new businesses in my career I understand that inner rush of adrenaline that makes your creative juices fire on all cylinders…I do. Maybe it’s an age thing…but I now highly recommend a pause, a strategic pause, before you launch and ask yourself the above questions.

To insure you maximize your percent of wins and your ROA for new products, make sure you use a filter, get the four “yes’s” prior to launch.

 

If you do not use mine above, I have also used the economic value added model back in the day. This model helps insure decisions are not made of Hubris.

Whatever you do, do not rely just on your gut, and or your key accounts, friends, and family members saying “go for it”.

If you would like to read more about this topic, I recommend you read;

Tuned In

How the Mighty Fall

Delivering Happiness

 

Delivering Happiness; Proof …the “Golden Rule” is Profitable !

  

 

Does your business (do you) solve your customers’ unresolved problems? Does your team’s culture promote serving your internal and external customers to ultimately deliver happiness in their lives? Or, are you like the 90% of businesses out their hunkered down, focused on your numbers…driving costs out of your business…achieving your objectives…striving to hit your bottom line?

Businesses who passionately deliver happiness through solving their customers’ unresolved problems grow rapidly and are significantly more profitable than those with an inward focus.

 

Market leaders passionately serve their market’s needs and experience greater shareholder value than those inwardly focused.

 

If you read my blog, you know I enjoy reading. Some time ago one of my mentors said “leaders are readers” and this gave me a ravenous appetite to read and learn. I just finished: Delivering Happiness ;A Path to Profits, Passion, and Purpose by Tony  Hsieh the founder of Zappos. The book is a quick read as it is written in a conversational tone that makes its overall message and stories connect. What I enjoyed most is you cannot argue with Zappos success having just recently been acquired by Amazon for $ 1 billion.

We know the “Golden Rule” is something we should all live by….” Do onto others as you would have others do onto you”, however many business leaders are afraid of weaving this into the very culture of their businesses due to fear. The first fear usually comes from the CFO types out there…are you crazy, do you know how much that will cost us? (they are quickly won over when sales and profits grow exponentially)

Then there’s the hard-driving, what DISC would say is a “Driven” personality types, who says…serve my market? I want to drive results through my market.” (they can be convinced)

Lastly we also have the old school (market loser) mentality that says; I win you loose and the delivery of goods and services is about their personal needs and is not in any way connected to their customer’s needs or problems. They look at each day as a competition to sell their product or service, to overcome the buyer’s objections, and create a need for their product in their market. (they rarely change their beliefs and are often removed due to poor overall team performance)

The first two examples, the concerned CFO and the Driven leader can be convinced, however the business leader who is out for his own personal goals …well he or she will take a great deal of convincing and may never see the light based on my experience. The sad reality is this last type often looses what they are working so hard to create since they are focused on the wrong self-serving outcome.

I enjoyed this book as it truly captures the thoughts and emotions involved in the minds of entrepreneurs in the start-up phase of the business. Tony shares those bleeding edge of decision moments that brought me back to a number of personal experiences I have experienced. If you have launched a business or even a new product to some degree, you may have experienced;

Will we have enough cash?

 

Will that promised big order come in?

 

I now know what we need to do but can we truly afford to do it?

 

Will that big receivable we have been waiting on arrive in time for us to make payroll?

 

Should I continue to personally invest in this business or cut bait?

Can we find the funding we need in time?

 

I particularly enjoyed Tony’s account of the roadblocks and the corresponding emotions we all face in launching anything new. In the past 26 years of launching new products, new businesses, I cannot recall one that we did not encounter unforeseen roadblocks. What we must quickly do is identify the issue with unfiltered data, focus on the solution, the objective we plan to achieve, and take action.

Businesses that face roadblocks like the proverbial deer in the headlights get run over.

 

What stands out most is how Zappos is a current example of a business that intentionally has woven the golden rule through their culture and their brand. Far too many organizations launch with an unintentional disconnect between what they say in their mission and value statements and what they actually do. This disconnect is felt internally as well as in their market and in both cases violates trust.

Establishing trust is the most critical foundation in building win-win relationships with your internal and external customers.

 

Zappos intentionally set out to create their culture and clearly defined their culture in terms of 10 core values;

1. Deliver WOW through service
2. Embrace and Drive Change
3. Create Fun and a Little weirdness
4. Be adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do more with less
9. Be passionate and Determined
10. Be humble

 

Tony goes on to say; “many companies have core values, but they don’t really commit to them. They usually sound more like something you’d read in a press release….We believe that it’s really important to come up with core values that you can commit to.”

 

So how about your company….

 

Do you have core values? Can everyone on your team rattle them off…or just HR?

 

Are your core values intentionally woven into how you serve your market…or are there exceptions to the rule?

 

Have you intentionally set out to build trust with your internal and external customers?

 

Does your team authentically live the core values of your organization in all they do…or are their very actions breaking trust with your internal and external customers?

 

Do your team members have the freedom (and sense of safety) to boldly challenge practices not in align with your core values?….even if one of your senior leaders is violating them?

 

As I mentioned in a blog that discussed Delivering Happiness, this is not just a book…

 

Delivering Happiness is more than a business model …it’s a Movement

 

So I ask you again;

Is your business, (you), your team, delivering happiness to your internal and external customers?

What is the cost to your bottom line if one of your competitors intentionally sets out to serve their market when you continue your inward focus on your goals and your bottom line?

How Can Marketing Make Your Company Wealthy?

 

Being diagnosed as an entrepreneur does not have to be terminal. Far too many entrepreneurs launch with unrealistic expectations, and if they are members of the 1/3 of companies that do survive more than 18 months, they fall prey to “the entrepreneurs’ dilemma”.

As an entrepreneur you probably were working for someone else and found a market opportunity, a need, and a problem that needed to be solved. Chances are you brought the opportunity to your company and they quickly dismissed your idea. So what are you to do? Do you keep trying to convince your “hippos” the size of this opportunity or do you break out on your own on a quest to solve this problem so obvious to you?

If you are wired to be an entrepreneur you set out to solve the problem, and if you truly understood the problem and designed something that solved it completely, you start experiencing sales. This is a fun time because if you did your research before launch, your marketing message clearly explains what your product or service does and buyers instantly get it.

At first your biggest challenge is how to make more…quicker. The next thing you know you are hiring others and you now have a “team”. You now have a CFO instead of your wife paying the bills. You are hiring others from the industry and training them to meet with the customers you once served personally.

Then it happens one evening, usually after 7:00 pm on the drive home (late for dinner again) you do a gut check; “Am I having fun anymore?” If you are honest with yourself the answer is often “no” as you is now “running “a company. Your days of meeting with customers and potential customers are replaced with meetings, planning, and holding your team members accountable. (You became a hippo) You begin noticing a decrease in the incremental sales growth per new employee hired.

The days of you jumping out of bed at 4:30 am long before your alarm goes off are replaced with the ring of an alarm at 6:30 a.m. and …dread, another day of work. If it sounds like I have been there I have…”been there… done that….have the t-shirt”.

The good news is being an entrepreneur does not have to be terminal. There is a great book I finished not long ago titled: Energize Growth Now, the marketing guide to a wealthy company by Lisa Nirell. If you find yourself in the entrepreneurs’ dilemma or want to avoid it, I recommend you buy this book for yourself and all your leaders within your organization.

I found the book provided high level strategies for plugging back into your market as well as tools and rules that are applicable the day after you read this book.

It is not too late to energize growth in your company.

I particularly liked her chapter on increasing your company’s wealth quotient and seven principles to position your company for higher valuation.

It is time we rethink how we “do “business and break the entrepreneur’s dilemma. This book reminds us how critical it is to stay focused on creating value for your buyers and market , and in so doing your wealth quotient as an organization will continue to climb.

Are you in the beginning to experience the entrepreneur’s dilemma?

Do you find yourself needing the alarm in the morning, longing for the days you did not need an alarm?

Are you looking for a road map on how to increase your organizations’ wealth quotient?

I highly recommend Energize Growth Now.

Start-up’s….Like Wiring a House With The Power On…and getting zapped

The start-up phase is often one of the most difficult phases for entrepreneur as they often try to gain market knowledge while trying to meet sales goals. You know you should gather market data, but you often have limited cash, you are the chief cook and bottle washer, and you need to make sales to fund your future growth.

Start-up leaders need a strong emotional intelligence as many days you feel like you are; wiring a house with the power on and you keep getting emotionally zapped.

 

A number of years ago my wife was redesigning our upstairs bathroom and asked I change the electrical outlets from a cream color to a solid white. So we turned the lights on in the bathroom and I went to the fuse box and flipped switches until the bathroom light went out. I started to remove the outlet and saw a small spark. I thought to myself…”That’s odd as I know the electric power was off…” (My perceived truth) so I continued removing the old outlet. Zap! Next thing I knew I received a shock that sent me up against the wall and I fell into the bathtub. I latter found a new truth…the lights were on a separate circuit than the outlets so I was trying to change the outlet with the power on.

One of the most exhilarating as well as frustrating things you can do is launch a start-up company. Like I discussed in a previous post you feel like a plate spinner with more to-do’s than hours in a day. I go on to discuss how we can’t let the most important plates drop. I have discussed in earlier blogs how 2/3 of start-ups fail within 18 months. The main reasons we are all aware of for start-up failure include;

• run out of cash

• lack of a market driven plan

• if you have a plan, your sales expectation is too high, too soon

• if you have a plan, you have an unrealistic understanding of the buying process and cycle

• trying to sell the need for a product you launched because you could and not because you should

• market is not large enough

• customers do not want to pay to solve the problem you solve

• stress

 

Assuming your product and or service solves an unmet need, and you have a large enough market who are willing to pay you to solve their problem, the real danger for entrepreneurs is getting zapped by stress during the start-up season of your business..

To keep you from getting emotionally zapped from stress during the often hectic start-up phase, there are five key Biblical lessons I learned from a sermon recently.

1. Don’t wear yourself out – build the discipline to determine what is important, urgent, and focus on what is :urgent and important

2. Don’t shut out others – the reality is you can’t do it alone. Now more than ever you need your network, family, and friends

3. Don’t just focus on Negatives – that’s what market losers do. Keep your eyes on the prize and look for bright lights of opportunity as you launch.

4. Focus on your physical and Spiritual health – far too often those mounting to-do’s make us drop or delay other key areas of our lives. If necessary put time on your calendar for your fitness and faith.

5. Anxiety and fear are the product of looking back or too far into the future , focus on what is in front of you now, and leverage what you have. The quickest way to stop creatively solving roadblocks is to become fearful.

 

 

What about you? Have you experienced stress during the start-up phase?

What advice do you recommend to entrepreneurs in the start-up phase of their business?

What zapped you most in your start-up?