Ninety-five percent of businesses in any given industry are stuck achieving average to below average results. Working harder or putting in longer hours usually doesn’t change that.

However, the top 5% of performers in your industry are able to earn above-average margins with the same or oftentimes less effort.

Here’s how they do it:

1. They don’t copy their competitors–that would make their product or service more of a commodity and then force them to compete on price.
2. They segment their market one level lower than their nearest competitor— they know that specialists can charge more than generalists.
3. They don’t focus on growth for growth’s sake— they focus on getting even better at what they already do better than anyone else.
4. They don’t get distracted by shiny things— new opportunities or markets or product ideas that don’t fit their strategy are quickly dismissed.
5. Every activity directly supports their strategy–the activities that don’t are either outsourced or are eliminated.
6. They execute brilliantly–they live and breathe their strategic plan.

Great strategies are measured by their ability to give you the right to charge more and/or earn higher average margins than your competitors.  And great strategies start with discovering what you can do better than anyone else–its choosing to be different in a way that is highly valued by your customers.

But the key is to be honest with yourself.  A recent survey found that 80% of companies felt that they were already highly differentiated yet only 10% of their customers agreed. My guess is that most felt that their differentiation was their “people”, or high quality or, my favorite, “we partner with our customers”– all of which are important but are fundamental requirements for being in business. They are not a strategy.

So, what makes your company stand out from crowd?

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Be sure to try my new Big Strategy Assessment. It only takes five minutes and you might learn a thing or two.

There are several lessons in this article from Booz & Co. that I thought would be of interest to  business owners. For me, the point about moving beyond sloganeering as a strategy is important.  I hope you find it helpful.

–Tony Collins

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Strategy or Execution: Which Is More Important?

Many business leaders think they’d rather have great execution than superior strategies, but you can’t have the first without the second.

by Ken Favaro, with Evan Hirsh and Kasturi Rangan

I once heard a business leader say, “Strategy is results.” He meant that strategy doesn’t matter as long as you are producing results. Many other business leaders feel the same way. Often, this is because they associate strategy with analysis and execution with getting things done, and they attribute more value to doing than to analyzing. From that perspective, a strategy is a lofty, self-evident statement such as “Our strategy is to maximize customer value” or “Our strategy is to become the market leader.” Such “strategies” don’t contribute much to producing results. Possibly, they motivate the troops, although even that is highly debatable.

On its surface, this view that strategy is less important than execution is hard to refute. If that’s all strategy is, execution is clearly more important.

But any seasoned strategist knows that strategy is not just sloganeering. It is the series of choices you make on where to play and how to win to maximize long-term value. Execution is producing results in the context of those choices. Therefore, you cannot have good execution without having good strategy.  >> Read More Here

Reinvention.  Innovation.  Product extensions.  To a business owner, these topics have a certain sex appeal that’s hard to resist. Pursuing the new and the different is fun. Staying the course and just executing is boring and ho-hum. But, struggling companies often feel they must quickly and significantly change their entire business or be overtaken by new upstarts.¹  

Other times, companies feel compelled to innovate or reinvent when they sense that their advantage in the market is being undermined by their competitors. But a recent study at the Harvard Business School found that very successful companies do not reinvent themselves through periodic strategic transformations. Instead, they continue to build upon what makes them better than their competitors. Its what I call focused innovation.

So, before you start down the road of innovation — creating new products or services or entering new markets — get crystal clear on how your company serves your core customer better and more profitably than the competition. Then get even better at it by focusing your innovation on that advantage. Otherwise, all these new ideas become distractions that make your business more complicated without a corresponding increase in profits.

If you want help defining what makes your company unique,  I have a one page exercise that many businesses have found valuable in documenting their uniqueness. Email me at tony@tpstrategy.co and I will send you a copy.

–Tony Collins

¹The Great Repeatable Business Model–By Chris Zook and James Allen

This is a guest blog from my friends at TricomB2B.  I thought it did a nice job explaining why it makes sense to get crystal clear on the value you are really delivering to your customer.

I hope you enjoy it!

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My “Solution” to the Solution Revolution: JUST SAY WHAT YOU DO, ALREADY!

I saw a commercial last night that nearly made me spit out my Cheerios. A man is riding a bicycle with tower of bread loaves stacked upon his head, happily tossing loaves to various people at every corner of the globe. It was mildly intriguing, in that I had no clue what they were selling, and then I saw the payoff tagline: Solutionism. The New Optimism. What? Solutionism? As a grammar-phile, writer, and one who generally cares about the words people use to express themselves using the king’s English, I was everything but optimistic about another solution spin-off word.

It seems that everywhere I turn, the word “solution” keeps popping up. Or, as I like to call it, the “s” word. Just last week, somebody asked me to endorse them on LinkedIn, and suggested that I refer to him as a “solutionist.” Come again? Why the obsession with referring to everything as a solution? In marketing communications, such as the commercial mentioned above, “solution” usually is a code word for “We do some rather technical, ordinary, practical (or sometimes even revolutionary) stuff, but we don’t want to talk about that.” Instead of telling you exactly what it is that they do, and risk sounding like a company that offers regular old products and services, companies today are falling into the solution trap, erroneously thinking that they’re making themselves sound more sophisticated than they really are.

Say “NO” to the “S” Word. Say “YES” to Keeping It Real.

Look, I realize that we all want to talk ourselves up a bit, and there’s nothing wrong with that. But in my opinion, you’re kidding yourself if you think dropping the “s” word is going to elevate your status in the world. Take me, for example. I’m a writer, b2b marketing professional, drummer and musician. No question what I do, right? What if I started dropping the “s” word instead? I’d be a publishing solutionist, marketing solution incubator, rhythmic solution provider and auditory sensation solutioneer.  Sounds great, right? No, it’s utter nonsense.

I’ve got nothing against the word “solution” itself. I’m just not a fan of how it’s been appropriated to solve the world’s insecurity crisis. Whatever happened to just saying who you are, talking about what you do, demonstrating your actual value with words that accurately describe what that is? Solutions do not differentiate. Solutions confuse, obfuscate and homogenize. Unless you’ve just found the solution to a nasty calculus equation, or are cooking up a solution in a chemistry lab, just say “no.” But if you’re leaning heavily on a solution to tell your story, I would recommend looking at a few of the other 1,013,912 words currently available to you in the English language.

Join the Solution Resistance Movement

If you’re a reader of this blog, you know that this isn’t our first salvo against the solution revolution. Chris, Jack and I have all weighed in on the subject, so I’m sorry if we sound like a broken record. But, when solutionism ruined a perfectly good bowl of cereal, I thought it was time to keep the solution resistance movement alive.

I’d love to hear your thoughts on the subject. You could start by telling me who you are and what you do.

–Jon Berry, TricomB2B

There’s a restaurant near me that makes this promise on the front of their menu:

Food is what we are all about.

We buy only the best.

We cook from scratch.

We cut our own meat.

We make our own soups.

We take pride in our craft.

We will never be the cheapest, only the best.

If you are not happy in anyway let me know. We will make it right.

This restaurant is always packed and its not cheap–but its not too expensive either: think world class meets slightly-higher-than-small-town prices. But no matter the price, after reading their promise, I don’t expect “diner” pricing. I just expect the food to be good. . .  Really good. (And trust me, it is.)

Go to the restaurant next door? Not a chance.

And this promise is not just a piece of marketing fluff. This is the owner/chef’s strategy. Everything he does reinforces it.

For example, the restaurant is tiny–a bar and about 5 small booths in an old building. There’s always a wait. But getting bigger would require a more expensive location, higher rent and more support staff. Costs would creep up. Prices would then have to increase, which this small town would not support. Or, they would have to cut back on the best ingredients, which means they could not live up to their promise. Their promise runs deep and is reinforced everyday by how they operate and what they choose not to do.

At your next management meeting, ask the following:

• What would the front of our company’s menu say?
• What are we promising our customers that really matters to them and our competitors can’t match?
• Can we list the things our company does that directly reinforces our promise?  (If you can’t, your promise just might be an empty piece of marketing.)
• Can we list the things we should stop doing that does not support our promise?

–Tony Collins

As business owners, we’re always striving for better performance or faster growth. But oftentimes our efforts don’t deliver the higher profits we expect. So, we try something else. . .  and then something else. Instead of improving performance, our margins begin to slip.

Growth efforts can take us into unfamiliar territory which ends up blurring what competitive advantage we might have had. We get off track, our performance suffers and running the business just gets harder than it needs to be.

If this sounds like you, pull your team together and work through the following four steps to reconnect to your strategy and get your business back on track:

1. First, set aside your current target markets and your list of products and services. Just forget about them as you work through the next two steps.
2. Then start listing the capabilities (specific approaches, activities, etc.) that you are good at (not necessarily better than your competition) or great at (something your competitors can’t beat.)  Things like “our people” or “better customer service”,  while important, don’t count as they are requirements to be in business.
3. Ask: What do we do well that has gotten us to this point? Could these capabilities be central to our strategy? Which customers value these capabilities  and which ones do not?  How different are these capabilities from our rivals?
4. Finally–and this is the hard part–bring your current target markets and products/services back into focus and start making choices. Which ones are you going to emphasize and which ones will we you de-emphasize or even eliminate?

Give this a try at your next management team meeting and please let me know how it goes.

I’ve been called many things in my professional life: One client calls me Jiminy Cricket–who was the official conscience for Pinocchio–for my habit of nudging business owners back on strategy. Another refers to me as  the strategy whisperer for being able to help owners see a clearer and simpler strategic path. But what about being a Strategy Shrink?

This recent article from PSYBLOG speaks to power of planning from a psychological perspective. The message is simple–strategic planning can help us be more creative AND less distracted. And distractions are one of the key reasons that businesses fail to achieve their goals.

Here is the full post from PSYBLOG:

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New research shows that making specific plans creates mental space, allowing us to avoid distraction.

On average each of us has 15 personal projects ongoing at any one time. It might include planning a trip to Europe, spring cleaning the house, getting a new job or any number of other goals.

Plus there’s all the stuff we’re doing right at the moment like working, shopping or reading.

But, to what extent do all these thoughts about goals interfere with one another? Do you get distracted while working on your resume by thinking about your trip to Europe?

Psychologists have known for a century that incomplete goals rattle around in our minds until they’re done. It’s called the Zeigarnik effect.

Specific plans free the mind

The down side is that we can be distracted by incomplete goals while we’re trying to pursue another goal. And according to new research this is precisely what happens unless we have made very specific plans.

In a series of studies researchers found that while trying to enjoy reading a novel (amongst other tasks), participants were frequently interrupted by intrusive thoughts about an unfinished everyday task (Masicampo & Baumeister, 2011).

But when researchers told participants to make very specific plans about that unfinished goal, while reading they experienced less intrusive thoughts about the other activity. In fact the intrusive thoughts lessened to the same level as a control group. This finding was repeated in the lab with other activities.

Making plans helps free up mental space for whatever we are doing right now, allowing us to be more efficient in the long term.

Specific goals include the how, what, where and when of whatever we want to achieve. For example if you’re planning a trip you might decided that during a quiet moment in the evening after supper you’ll draw up a list of hotels and flights to discuss with your partner. Then you can book them online on Saturday morning when you’re fresh (make sure, though, that you focus on the process and not the outcome).

If the plan is specific enough, it is automatically activated when the right circumstances arise. The rest of the time our minds should be freer from the other 14 goals that we’re not currently pursuing.

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Here is the original link to the blog: http://www.spring.org.uk/2011/09/how-to-avoid-being-distracted-from-your-goals.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+PsychologyBlog+%28PsyBlog%29

My brother, an industrial-design executive in the cell phone industry, recently sent me a blog post that touched on many of the principles that I teach in my workshops and work on with business owners. As is often the case, some of the best examples of strategic thinking—both the good and the bad—come to us from much larger companies.

The article by Alex Goldlfayn is called 7 Marketing Lessons From RIM’s Failures. In my first blog post, I will comment on the first two lessons.

Throughout this series, I will post the original article with my comments in bold to help relate the lessons back to the world of small business. A link to Alex Goldfayn’s original post can be found at the end of this post.

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7 Marketing Lessons from RIM’s Failures

You remember, don’t you? The emails magically appeared while you weren’t looking. That blinking light turned us into addicts. And that keyboard — copied often, but never matched. It was the BlackBerry, the glorious, beloved, and life-changing BlackBerry. It made us feel good, and it never let us down.

Long before the iPhone  took the world by storm, and before Google even dreamed about getting into the phone business, Research in Motion was on top of the consumer electronics mountain.

Today, sadly, it is buried under it, and industry insiders everywhere wonder whether RIM will survive.

What happened? Harmful strategy. Unforced errors. And, mostly, really bad marketing. On this, RIM is in good company in the consumer electronics industry, where so many manufacturers market poorly. But few have made so many marketing mistakes so quickly.

Here are seven marketing lessons from RIM’s dark and difficult journey.

1. Make Great Products

Consumer electronics success begins with excellent products. The BlackBerry was once perceived as the very best smartphone — or, at least, “emailing phone” — available. It was exciting, emotional and it made people feel good. RIM sold BlackBerries on the strength of word-of-mouth recommendations. BlackBerries were aspirational, and people wanted to own one because friends and colleagues were so passionate about them.

Now, fast-forward to today.

Consider the excitement and energy around the iPhone and all those Android handsets. RIM enjoys none of that today. Not one percent of it. In part, it’s because it stopped making good smartphones in favor of a poorly received tablet called the PlayBook.

Successful marketing begins with having a tremendous product or service to market. Nothing happens without this.

My Comments: For small businesses, distractions like those experienced by RIM are all too prevalent and can be costly. Tablet-like opportunities—ones that appear new, exciting, glamorous—oftentimes appear much more interesting than executing your current strategy, which might seem ho-hum and boring. But if you don’t have a clear and widely understood strategy that defines what you do best and a strategic plan that keeps you focused,  you might  just find yourself in unfamiliar territory. You end up spending more than you thought you would spend and earning less revenues than you thought you would earn.  Know where you are going and you won’t end up somewhere else.

2. Build on Strengths Instead of Improving on Weaknesses

I’m constantly telling clients that they should build on strengths instead of trying to improve their weak areas. For RIM, the BlackBerry was a great strength, and they all but abandoned its development and marketing for a year or longer to create the tablet. RIM did this to try to prevent the world from passing it by in the tablet space — which it did anyway. Tragically, as a result of diverting talent, attention, resources, investment and innovation from the BlackBerry to the Playbook, the consumer smartphone world has also passed RIM by.

It doesn’t matter what business you’re in. If you focus on developing weaknesses, your strengths will atrophy due to neglect. If you want to market well, identify your strengths — products, services, techniques, approaches, relationships — and exploit them relentlessly. This technique overcomes nearly all weaknesses.

My Comments:  What you say? Don’t work on my weaknesses? What do I do with that list of things we uncovered in our SWOT analysis? 

Of course you should work on your weaknesses, but a distinction must be made between weak areas that are a requirement to be in business (better customer service, more efficient operations, stronger leadership, better financial controls and so on) and those weak areas that are intentionally weak because their are not central to your strategy. Pick your customers, markets, products and services in a way that builds upon what you are already great at is how you achieve high, above-average margins. For RIM, the tablet did none of this. But it was so shiny and new that it took their eye off the ball.

For more on focusing on your strengths, see my blog post https://tpstrategy.com/2012/01/the-power-of-saying-no/

To Be Continued . . . .

Questions or comments? Send Tony an email: tony@tpstrategy.co

More information on Tony Collins.

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Here is the link to the full article: http://mashable.com/2012/02/10/marketing-lessons-rim-blackberry/

Alex Goldfayn’s new book is called Evangelist Marketing: What Apple Amazon and Netflix Understand About Their Customers (That Your Company Probably Doesn’t). He is CEO of the Evangelist Marketing Institute, a marketing consultancy with clients that include T-Mobile, TiVo and Logitech.