It’s often said that success in business comes down to being ‘at the right place at the right time’. There is, almost always, an element of luck involved when a company experiences exceptional traction early on.
But luck will only get you so far. As McDonald’s founder Ray Kroc famously said: “The two most important requirements for major success are, first, being in the right place at the right time, and second, doing something about it.”
And the longer a company is around, the less of a factor luck becomes. A bit of luck might get you to the top fairly quickly, but it won’t keep you there for thirty, forty or fifty years.
Surviving in business is hard, and it’s only getting harder. Thanks to constant innovation (and disruption) and a highly competitive global marketplace, companies are disappearing at an alarming rate.
It was widely reported a few years ago that, based on research from Yale professor Richard Foster, the average lifespan of a company listed on the S&P 500 in the United States has decreased by an astonishing 50 years. In the 1920s, the average lifespan of a company was 67 years. Today? A mere 15 years.
The secret to (long-term) success
But it’s not all bad news, of course. There are plenty of examples of companies that have managed to stay the course for years and years. The vast majority of the world’s most recognisable brands have been around for decades. They have survived tough economic times, disruption, increased competition and changing demands from consumers.
How have they done it?
Here’s some great advice from great brands. Read on to discover how they have managed to stay relevant for so long.
Turn challenges into opportunities
Jane Wurwand, founder of Dermalogica, believes in looking at challenges and asking yourself how you can turn them into opportunities.
In the early days, for example, Dermalogica was trying to talk about skincare and health while the rest of industry was obsessed with beauty. A lot of people didn’t understand why the brand was taking such a ‘medical’ approach to skin products. Instead of succumbing to the peer pressure, though, Wurwand and husband Raymond were committed to their unique approach.
“The fact that the industry didn’t understand our approach was a challenge, sure, but we also saw it as an opportunity to carve out a very specific niche for ourselves,” says Wurwand. “We were doing something no one else was doing.”
Another challenge was the rise of the Internet. Dermalogica had relied on a sales model based on real-world relationships. The company embraced the challenge, however, and now runs a successful online store, boasting a vibrant online community. By embracing the challenge instead of ignoring it, Dermalogica was able to grow and flourish in a digital world.
“You have to look at a challenge and try to see how it could become an opportunity. That’s the true entrepreneurial mindset,” says Wurwand.
Customer first, always
Spitz is a well-known brand, and its elegant shoe stores can be seen in just about every high-end mall in South Africa. Today, it is owned by the JSE-listed AVI, but it started out as a simple family business.
Spitz was started by Anthony and David Spitz in 1968, right in the centre of Johannesburg’s business district. The brothers eventually sold the store and Anthony Spitz moved to London in 1989, but he rejoined the company in 2000 as a non-executive director. He is still there today.
When asked why he believes Spitz has grown so successfully, his answer is simple: “Because it is still run like a family business. We used to know and care about our customers. We valued them, and did whatever we could to keep their business. The same is true today of the Spitz stores. The customer still comes first.”
According to Spitz, this is the secret to long-term success. Once you stop caring about your customers, your business goes into decline.
“Companies spend millions to acquire customers, and then throw all that money away with bad customer service. A marketing campaign might bring someone through your door the first time, but it’s customer service that’ll keep them coming back. Care about your customer, and your business will flourish.”
Innovate your own way
Consider for a moment the forces of disruption currently impacting a manufacturer of high-end luxury goods
Gadgets such as the Apple Watch and Fitbit are making people swop their flashy watches for something that can count their steps, track their sleep and monitor their heart rate. Laptops and tablets mean that most business people need a stylus instead of a pen. And then there’s the fact that simple yet elegant luxury items are no longer good enough. Everything needs to be ‘smart’ and ‘connected’ these days.
So where does that leave a company like Montblanc?
Many companies in the same position would probably try to jump on the bandwagon — try to push out their own line of smart items. But emulating competitors and chasing trends rarely leads to long-term success. So Montblanc has done something different. It hasn’t ignored modern trends, but it hasn’t let them dilute its essence either.
When Olivier Laurian, Montblanc’s international director of business development, visited South Africa, he explained how the company is keeping up with the times.
“A Montblanc pen or watch is a timeless piece — not something that will become obsolete in a year or two. So in order to balance modern demands with our classic approach, we provide alternative solutions to customers’ needs. We still sell a classic watch, but we put the modern tracking technology in the strap. So it remains something that can be passed on for generations. Similarly, we have a pen with a tip that can be swopped out to turn it into a stylus — modern and functional, yet timeless. These are all modern items that stay true to the heritage of the brand.”
Take risks, but stay consistent
Innovation and consistency can seem like opposites, but great companies manage to take risks and innovate, while at the same time providing customers with a consistent and predictable experience.
If you’ve ever had a Big Mac in Europe or the United States, you’ll know that it tastes exactly like it does in Joburg or Cape Town. And that consistency keeps customers coming back.
At the same time, though, McDonald’s has been a great innovator. Over the years, it has greatly modified both its menu and its services. In the 1970s, the company created the drive-thru. Today, it delivers food. Its menu has grown massively, and McDonald’s now even sells breakfast and premium coffee.
The key to success when it comes to balancing these opposing forces is knowing where you can afford to take risks, and where you can’t.
Ray Kroc expected the following from every franchise: “Consistent restaurant operations, procedures, service, quality and cleanliness.” But when it came to the menu, Kroc allowed franchisees to experiment. The Happy Meal, Hot Apple Pie, Egg McMuffin and McFlurry were all created by franchisees. Even the Big Mac was created by a franchisee.
It all comes down to knowing where you can take chances, and where you can’t. Coca-Cola has changed the design of its bottles and cans, it has even added Coke Zero and Coke Life, but it’s only tried to change the formula of Classic Coke once. If it’s not broken, don’t fix it.
Be obsessed with the consumer
We live in an era of big data in which everyone is always telling you to crunch the numbers and look at the big picture. This is important, of course, but it brings with it a certain danger: If you’re not careful, you can lose sight of the consumer at the individual level, especially when your business scales quickly and real customers are replaced by dots on a chart.
According to Charl Bassil, marketing director for Pernod Ricard South Africa, you need to be obsessed with the individual consumer and understand what he or she expects of you, regardless of how large your organisation is.
“Consumers are not just stats on a page that need to be manipulated,” says Bassil. “For us it’s incredibly important to not only know consumers — understand that they’re real people with real needs — but also to have genuine empathy for them.”
This isn’t only the ethical and socially responsible thing to do, it also makes good business sense.
“By understanding and having empathy for consumers, we believe that our business will grow and increase its market share,” says Bassil.
“If you add real value to consumers’ lives, more and more of them will migrate to your brand, which means you will benefit commercially. Selling consumer products has to be a mutually beneficial relationship. We can’t just flog stuff. In the modern business environment, you need to understand consumers and give them what they need. It’s the only way to survive long-term.”
Always be humble
Humility is something that large and fast-growing companies often lack. When everything keeps going your way, you start thinking that you can’t lose. But even giants fall… or at least stumble, on occasion.
Starbucks, which opened its first stores in South Africa in 2016, is a good example of a company that, despite exceptional growth, has stayed humble.
Starbucks, like McDonald’s, is all about consistency, but it also knows that you can’t just replicate the exact same experience everywhere. You need to be sensitive to different cultures and countries.
Visit the Starbucks store in Rosebank to see how the company incorporated local culture into the design of the shop. Artwork in the store includes woven leather ceiling panels that pay homage to the South African tradition of basket weaving and a 3D recreation of the famous Starbucks Siren in wood.
Related: Taste Holdings: Carlo Gonzaga
“This store will not only offer amazing coffee and world-class customer service, it is a representation of our commitment to South Africa through its localised design,” said Carlo Gonzaga, CEO of Taste Holdings (Taste Holdings is Starbuck’s official partner in South Africa).
“We have taken inspiration from rich local colour palettes and designs, with materials and artworks produced by local artisans. It signifies the start of our coffee journey in South Africa.”
In addition to opening its first store in South Africa, Starbucks will also be entering another new market soon: Italy.
Having been inspired by the coffee shops of Italy in the first place, the company is acutely aware of the fact that it can’t barge in without a lot of respect. Selling an Italian experience to the Italians is risky, which is why Starbucks is only going there now, decades after it first started operating.
“Starbucks history is directly linked to the way the Italians created and executed the perfect shot of espresso. Everything that we’ve done sits on the foundation of those wonderful experiences that many of us have had in Italy, and we’ve aspired to be a respectful steward of that legacy for 45 years,” says Starbucks CEO Howard Schultz.
“Now we’re going to try, with great humility and respect, to share what we’ve been doing and what we’ve learnt through our first retail presence in Italy.”
6 Common Decision-Making Blunders That Could Kill Your Business
Among the logical errors nearly everybody makes is thinking only everybody else makes logical errors.
Humans are often very irrational. If you’ve ever explored behavioural economics or psychology, you may have found a host of examples demonstrating situations when we make objectively bad decisions.
Below are six of the largest decision-making blunders we all make. Avoiding them will dramatically improve your decision-making, your quality of life and success.
1. Sunk-cost fallacy
Of all the ones on this list, the sunk-cost fallacy is the most common. Many of the decisions we make are final or difficult to change. For example, let’s say you invest R1 000 in Facebook, and the price of the stock goes down to R600 the following day. The fact that you put in R1 000 initially is irrelevant to the situation at hand; you now have R600 worth of Facebook shares.
What this means is that once the decision is made and our cost is incurred, there’s no point thinking back. You already put in the time, money or other form of investment. Considering that in any future decision is illogical, despite how tempting it is. Instead, present yourself with the new options at hand — without considering the sunk cost.
2. Narrow framing
Would you take this bet? You pay me R1 000 if a flipped coin lands on heads and I pay you R1 200 if it lands on tails. Most people would say no. We tend to be risk-averse, unwilling to risk something like R1 000, despite the reward being a bit greater.
Now, what if I offered you that bet, but I promised we would flip 100 coins? Each time, the loser pays up. Would you take it then?
Almost certainly, right? The chances that you lose money, overall, are extremely slim. This idea can be applied throughout life. When we’re in situations that will repeat themselves over time, we should take a step back and play a game of averages.
3. Confirmation bias
Another common one in the worlds of psychological and behavioural economy is confirmation bias. It hurts our ability to keep an open mind and shift our opinion. When we have a held belief, we typically look for information that confirms our opinion while ignoring data points that tell the opposite story.
For example, if I’m really excited about a new software product that I just integrated into my business, with ten of my employees as users, I might have made up my mind about the quality of the service before we put it to use. I would then be more likely to listen to the three employees who enjoy it, not the seven who don’t.
There’s almost always information that will validate our opinions, no matter how wrong they might be. That means we need to always look for conflicting evidence and, from there, make judgements based on more well-rounded information.
4. Emotionally driven decisions
When we’re angry or upset, we’re much worse decision-makers. When you have to make an important decision and happen to be in a bad mood, you should hold off. Instead, wait until you cool down and can think more clearly. It will remove the outside influences and let you think more rationally.
5. Ego depletion
This one makes intuitive sense, but it’s one of the most common ways to make bad decisions. The idea of ego depletion is that when we’re drained, physically or mentally, we’re less likely to think critically. Think about the times you’ve been exhausted after a long day of work. In those moments, you don’t want to have to think hard about anything. Instead, you want your brain to work automatically.
What that means is that when you’re tired and faced with challenging choices, you’ll rely more on your instinct or automatic processes as opposed to analysis and thought. That can be extremely problematic in situations that require effort.
6. Halo effect
The halo effect says that once we like somebody, we’re more likely to look for his or her positive characteristics and avoid the negative ones. This is similar to confirmation bias, but it’s oriented around people.
Related: 10 Stupid Mistakes Smart People Make
For example, let’s say I just hired someone named John, who was great during his interviews. Through his first few weeks, John does a few things well at work, but he also does many things poorly. The halo effect — brought on by his wonderful interview persona — could cause me to ignore his poor attributes and emphasise his good traits.
This can be detrimental to our ability to make judgements about others. We have to realise our biases toward certain people and eliminate them.
These are a handful of the many decision-making errors we’re all prone to. Although it’s challenging to scrutinise your preconceived notions, doing so is worthwhile. It gets easier over time and will, ultimately, make you a more effective decision-maker — personally and as a business owner.
This article was originally posted here on Entrepreneur.com.
8 Reasons Why Failure And Focus Are Essential To Business Success
There are two Fs that define the long-term and sustainable success of your business – Failure and Focus.
There is an event that runs globally across countries such as the United States, Spain, France, Brazil and Israel. It is a conference that is aimed at the entrepreneur, the investor, the developer and the designer. It also caters exclusively for failure – FailCon asks the entrepreneur, specifically within the technology space, to embrace failure. However, this focus on failure isn’t about leaping blindly into the ball pit of collapsed dreams and wallowing in its sorrow as you shout ‘Bazinga!’. It’s about being comfortable with the idea that failure can happen and using it to drive your business focus and long-term success. These eight steps define exactly how…
1. Not big, iterative
Giving someone advice to fail big isn’t practical. It isn’t the kind of attitude that investors will be drawn to either. Instead, embracing failure is about being open to the fact that it may very well happen to you and some of your ideas. It isn’t necessarily going to be a gigantic failure on a scale of company-wide collapse. It could just be that you had an idea, and it wasn’t a very good idea so it failed.
2. Focus on your agenda
If you’re not focused on your end game and business agenda, don’t expect your staff to be. This level of focus is critical as it gives people direction. They then understand exactly where the business is going, what it hopes to achieve, and the role that they play in taking it there.
If you don’t have this level of focus, your staff don’t have anything to latch onto.
This is where your ability to fail is of value. You need to test your assumptions and ideas and then use their failures to learn more about how they could potentially succeed in the future. You have to learn from your mistakes. Don’t drown in self-doubt, take the mistakes and move them towards enhancing your business.
4. Success isn’t easy
Look, if being a hugely successful entrepreneur was easy, everybody would do it. You need to keep the focus and intensity you brought on your first day all the way through to today. Create short term goals and objectives that give you endless purpose and a sense of achievement and use their success to drive you onwards towards your final destination.
5. Build in plenty of goalposts
Justify every decision and long-term goal through relentless measurement to ensure they are the right decisions. The last thing you want is to hit your goal in 10 years and discover that it wasn’t the right one, your business hasn’t gone anywhere and you’ve worked incredibly hard for nothing. The effectiveness of your time, decision making and execution is critical.
6. Define failure
What does failure mean to you? Understand how you define it and then use this as a barometer to define your idea of success. As long as you have clear objectives for both, you can assess your business, its effectiveness and your results. As mentioned in above, always set goals and objectives so you give your company and people a sense of purpose.
7. Your ideas aren’t always that good
Some of your ideas are not going to fly. They’re going to collapse with an embarrassed sigh. The lesson is that you should be constantly questioning yourself so when you are in a situation where your ideas don’t work, you can objectively examine why they failed and use these learnings to change and adapt.
There needs to be a healthy tension between learning through theory and practice. The latter is learning to win and to handle defeat in real time with real results.
Related: Your Business Failure is Your Fault
8. Get over it
It’s quite easy to wallow in your failure misery and lose years to personalised anguish. It’s harder to just get over it and move on. The thing is, it’s moving on that counts. Those who get up, dust themselves off and start again are those who end up thriving. The ability to compartmentalise and learn is invaluable as you take your business from your first idea through to a sustainable, epic enterprise.
How To Embrace An Exponential Mindset For Your Business
In the age of exponential technologies, it’s a risk not to take a risk.
Think global and exponential
If you’re an entrepreneur trying to establish a successful business, it’ll be dead before it even takes off, if you don’t build it for the future. You have to think three to five years ahead, so when it launches, it’s still relevant.
Think like former Canadian pro ice hockey player Wayne Gretzky, who said: “I skate to where the puck is going to be, not where it has been.” And these days it’s easier for entrepreneurs to predict the future thanks to technology and data insights.
Consider what Singularity University co-founder Ray Kurzweil calls The Law of Accelerating Returns. He says the only thing that’s constant is change and that change itself is accelerating exponentially. As per Moore’s Law, information-enabled industries are doubling their performance and halving their price every 18 months, according to the price-performance ratio. The field of biotechnology has managed to surpass that.
There’s no time to slow down, your business has to constantly evolve, and you have to keep asking “what’s next”. Encourage experimentation and innovation in your company. Innovation focuses on incrementally improving your already existing products and services, while experimentation allows for fresh outlooks and breakthrough strategies that leapfrog old ways.
We should reprogramme our linear mindset into an exponential one. Don’t aim to grow your business by 10 per cent year-on-year, but rather 10 times. The first thing I learned at Singularity University is the potential of exponential growth. If you take 30 linear steps, you only move 30 places, but if you move 30 exponential steps your place doubles with each step and by the 30th step, you’ve moved over a billion places.
We’ve seen this happen with unicorns – not the magical creatures, but start-up companies that are valued at over $1 billion within their first year – like Slack (cloud-based team collaboration tools and services) and Square Inc. (a mobile payment company). It once took around 20 years for American companies to reach the billion-dollar valuation mark, now it may take less than a year.
In the early stages – until your third step – your progress may seem linear. Many exponentially-geared companies give up at this point – just as their growth rate is about to explode. Persevere!
A few decades ago it was unthinkable for an individual or start-up to disrupt entire industries. Start thinking globally, not locally. Use staff-on-demand and crowd souring to propel your business ahead of the competition. It’s unlikely that you have the world’s smartest minds working for you, however with the power of the crowd, you just might.
If you’re struggling to find a solution, turn the challenge into a game and offer prize money. You’ll have thousands of people attempting to solve your problem, but will only pay for the best solution. Kaggle is a platform for predictive modelling and analytics competitions. It lets statisticians and data miners compete to produce the best models for predicting and describing data. Mining company Gold Corp placed its geological data online and offered money to anyone who could locate gold at their Canadian mine. Four of the five winning entries struck gold. And in 2011 it took a team of gamers 10 days to solve an enzyme riddle that could hold the key to curing AIDS.
The six Ds of tech
As companies become information-enabled they should internalise what Singularity University co-founder Peter Diamandis calls the six-step growth cycle of digital technologies. These Six Ds of Tech Disruption are digitisation, deception, disruption, demonetisation, dematerialisation, and democratisation.
The first step is digitisation. Once something enters the digital realm it gains the potential for exponential growth. Think of the radio and CDs. You no longer need either, instead you can stream online, listen via YouTube or download music. After digitisation, growth appears slow, even deceptive. Sadly that’s when many companies opt out. Be patient!
No one imagined Kodak would disappear after a century. Kodak thought they were in the business of printing photographs, while they were in the business of memories. Think about the need your business solves. Kodak invented the digital camera, but was too scared to disrupt its own industry. It didn’t realise that people were no longer taking photographs in the same way, so their competitors disrupted the industry instead.
Today, the camera has become part of the smartphone and photographs are predominantly shared via social media. Instagram epitomises the next step in the equation: demonetisation. With time technology becomes cheaper and even free. Instead of printing photographs, many people instantly share them on a free smartphone app like Instagram.
Next comes dematerialisation. The radio, camera, video recorder, GPS, calculator and calendar are disappearing from the physical world as they’re being built into the smartphone. The wallet will dematerialise next with the advent of online transactions and cryptocurrencies.
Finally, democratisation happens when government, corporates and the wealthy no longer hold control and masses of people have access. Just think, the average South African with a smartphone has access to much more information than the president of the United States of America had 20 years ago.
In the age of exponential technologies, it’s a risk not to take a risk.
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