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To Survive Your Business Must Try New Things

If you want to survive, you have to keep trying new things – and you won’t always get them right.

Allon Raiz

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A few years ago, I met up with my mentor at a small game lodge in Mpumalanga to spend time working on my business. The weekend’s agenda included reflecting on the last year, and finalising my strategy for the year ahead.

Business had been great and I was confident that my competitors were still lagging far behind us. However, to maintain that position, I’d also gone into ‘protective’ mode.

Related: Cash is King: Managing Cash Flow for Business Survival and Growth

Going into protective mode

As your business grows, you will experience higher levels of competition, both directly and indirectly. When this happens, most entrepreneurs, including myself, inadvertently put their businesses into ‘protective mode’ and defend their position through the likes of exclusivity agreements, trademarks, patents etc.

If your business stays in protective mode, one of two things will happen. Either your competition will slowly eat away at you, one nibble at a time, until they are strong enough to be able to challenge you.

Or, after spending time hunkered down in a protected position, you’ll eventually look over the perimeter wall, only to find that the whole market has changed, your business is no longer relevant, and your customers have gone to your competitors who have moved with the times.

By remaining too focused on defending yourself, you will miss the changing context.

A sign of survival

“If you want to survive, you’ve got to keep bleeding at the right pace and depth,” my mentor said.

“Your business will only survive in an ever-changing business environment if you are continually trying new things. Sometimes as a result of not getting these things quite right, you must be prepared to lose money, resources, or even confidence in order to survive in the long term.”

It’s a natural instinct to cushion yourself with protective padding so that you don’t feel pain. The downside to this is that your business will stagnate and cease to be relevant.

The right pace and depth

The trick to trying new things is to not get cut too deeply. In other words, make sure that the size of the risk that you are taking is not potentially fatal to the business if it doesn’t work out.

You also need to manage the pace at which you are trying new things, so that you don’t bleed to death from too many ‘paper cuts’ at once.

Getting it wrong is okay

It’s okay to make mistakes along the way, as long as you are learning from them. When you launch a new product and it doesn’t work according to plan, listen to the feedback, finesse your product or service, and then reintroduce it back into the market.

Related: Shifting the Business Model of Survivalist Entrepreneurs

Repeat this process until you have either created a product that the market actually wants, or if you are unable to meet those needs profitably, scrap the idea.

When your business starts doing well, be honest with yourself as to whether your business is still ‘bleeding’ at the right pace and depth. If it’s not, start experimenting again and bleed a little.

Your shift questions

The secret to shifting your mindset and therefore your business, is asking yourself the following questions, and answering them honestly:

  1. Are you stuck in ‘protective mode’?
  2. Are you prepared to ‘bleed’?

Allon Raiz is the CEO of Raizcorp, the only privately-owned small business ‘prosperator’ in Allon Raiz is the CEO of Raizcorp. In 2008, Raiz was selected as a Young Global Leader by the World Economic Forum, and in 2011 he was appointed for the first time as a member of the Global Agenda Council on Fostering Entrepreneurship. Following a series of entrepreneurship master classes delivered at Oxford University in April 2014, Raiz has been recognised as the Entrepreneur-in-Residence at the University of Oxford’s Saïd Business School. Follow Allon on Twitter.

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Compete to Win

How Netflix Is Now Disrupting The Film Industry By Embracing Short-Term Chaos

One wrong move and Netflix could have been nothing more than a footnote in the history of entertainment. But by staying ahead of the curve and embracing disruption, the company is threatening some very entrenched competitors.

GG van Rooyen

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Attendees of the annual Cannes Film Festival are typically not afraid to be vocal in their dislike of a new film — booing and hissing are both surprisingly common — but the recent film Okja possibly set some sort of record. The crowd was booing and jeering before the film had even properly begun. In fact, all it took was the name of the studio behind the film: Netflix.

Why the animosity? Netflix is disrupting the film industry, and the traditionalists aren’t happy. After debuting at Cannes, Okja wasn’t released in cinemas. No, instead it was released right to Netflix, free to stream as long as you have an account.

Of course, few would have guessed a few years ago that Netflix would ever get into the business of making its own television shows and movies. According to industry lore, entrepreneur Reed Hastings launched Netflix because he was annoyed with the exorbitant late fees of video/DVD store Blockbuster.

Instead of having to return a movie once you’ve watched it, he conceived of a business that would ship DVDs right to your door through the mail.

Related: Meet The 40 Richest Self-Made Entrepreneurs On Earth

It was a clever idea, but not one that seemed terribly disruptive. The whole process could be a bit of a hassle, and it required you to schedule your entertainment well ahead of time. Blockbuster even had a chance to buy Netflix, but decided that it wasn’t worth it.

The rise of streaming

Even as Netflix was hitting its stride in the early-2000s, the tide was already turning. It was becoming increasingly clear that the Internet was going to be an incredibly disruptive force, but many companies failed to notice. Or, if they did notice, they failed to take adequate action.

By 2007, the potential of streaming TV shows, films, music and books online was clear, but the DVD business was still doing well. However, Netflix decided to prepare for the future (and disrupt its own operations) by launching a streaming service. It did this by going to the traditional movie studios and television networks, and asking to licence their old content.

In the view of these studios and networks, old pieces of entertainment had run their course, so they were pleased with the new revenue stream.

This brings us back to Okja. Netflix has been creating its own content for the last few years because it realised that studios and networks would eventually catch on. At some point, they would understand that they were giving Netflix the ammunition needed to disrupt the industry. Why have Netflix stream your content if you could create your own streaming service?

“The goal is to become HBO faster than HBO can become us,” Hastings said of one of the most popular American cable channels back in 2013.

In a mere 20 years, Netflix has gone from a low-tech operation that sends DVDs through the mail to one that not only streams content online, but is also producing its own content — content from some of the most respected actors, producers and directors in the world. All of this is costing Netflix hundreds of millions of dollars, and it remains to be seen if this strategy will ultimately pay off, but betting against Netflix is risky.

Related: How To Make Money Investing, According To Ashton Kutcher

Netflix has shown itself to be uniquely capable in drastically shifting its business model. Here is how Hastings explains it: “Short-term optimisation about being efficient is the death of long-term success and innovation. Building Netflix, we created a company that tolerated some short-term chaos, and we manage right at the edge of chaos. The value of that is keeping and stimulating the amazing thinkers, so when the market shifts, like DVD to streaming, or licence to original content, we have in Netflix all kinds of original thinkers, and that is the long-term optimisation that all of us in organisations want.”

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SME Leaders: How You Can Manage Growth

Fresh growth is all around us this Spring – find out how you can powerfully manage growth as you provide leadership to your SME.

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In the transition from start-up to scale-up, a critical factor for a growing business is the quality and strength of its leadership team.

Learning to trust and empower staff is a crucial step for SME leaders who wants to grow their business upwards.

As a business grows, one of the biggest challenges for the business founder and leader is the hand-over of an idea from the founder to the people who work there, The brand moves from being one person’s idea to being the professional focus of a whole group of people.

Without effective leadership, small businesses will be held back, more than three-quarters of SMEs provide no leadership development for their staff. What does this mean for you?

Related: We Went up Against A Highly Regulated, Entrenched Industry. Here Are 4 Tips For Getting Your Foot In The Door

If you lead your business with vision and clarity, you set yourself apart from your competition. Here’s how.

Lead the pack

A growing business creates more work than a leader can handle alone.

As the team grows, founders often react by micromanaging the details of their business. In trying to take on everyone else’s job, the founder often leaves the most critical position vacant: strategist and vision-setting.

Learn to trust and empower others in the organisation and you will find you have room to innovate, which is critical for business growth.

Related: What I Learned About Dating That Will Transform Any Business

Steady the ship

An effective leader will also engage others in the business to embrace and adapt to change as growth continues.

  1. Vision: First, plot the course for where the business should go in the short term, and the long term.
  2. Change: Understand what needs to be put in place to grow the business. You might need to source better business operating systems to streamline this growth, or change a few internal business processes, or rethink how you calculate your hourly rates.
  3. People: Growth equals change, and change equals pain, so if you want growth, budget for pain. Understand that you will need to guide and coach the staff into changing their mindset and adapting to these growth changes.

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We Went up Against A Highly Regulated, Entrenched Industry. Here Are 4 Tips For Getting Your Foot In The Door

Focus on creating value, not disruption.

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Multibillion-dollar legacy industries don’t make it easy for entrepreneurs to step in and create value. There are huge barriers to entry – licensing, pricing, regulations, and cultural/brand significance – that come with being around for a century or more.

However, those barriers shouldn’t stop you from innovating.

Take the utility sector for example, which is perhaps most frightening of all: A trillion-dollar taxpayer subsidized network of poles and wires set up through franchised municipal monopolies. Otherwise known as, our power and energy industry. It’s a mouthful of protection, and as a result, utilities make for a great investment (just ask Warren Buffet), since the likelihood of disruption is tough to even think about. To most reasonable entrepreneurs, the regulated utility sector, similar to the financial and healthcare industries, is tantamount to a “NO TRESPASSING” sign.

But, that is exactly what makes the effort so worthwhile. If you can successfully work with or alongside a monolith industry and produce value, instead of being focused on “disruption,” you’ll be able to achieve massive results.

When we first started trying to provide consumers cleaner and better energy options, getting to market proved difficult as we were trying to break into a utility-customer relationship (paying a power bill) that hasn’t really changed for the last half-century. But, with a clear mission in mind and the understanding that we would have to work in unison with utility providers, we were able to start making our mark.

Related: How to Create a Winning Mindset, to Crush the Competition

Here are a few tips for getting your foot in the door:

1Create value, not disruption

There are some industries where the Silicon Valley catchphrase “disruption” falls flat. Some industries just aren’t meant to be disrupted in the way that people in the tech community are used to. Nearly our entire economy depends on the power grid and we couldn’t come in and totally upheave that. When you’re going after a big industry, you first need to provide value to the customer or the provider. 

Show instead of tell that you have a strong customer base and that people need what you’re offering. And build relationships – working together with the big players in the space will get you much faster and better results for your company and your customers.

2Focus on the customer experience

When you’re a startup, you already have the advantage of being years ahead in your digital experience compared to traditional companies in your space. Own that and hone in on it to make it the best customer experience possible. We looked across sectors to bring modern design, UX and data elements to the home energy experience.

Traditional companies aren’t necessarily thinking that way, and you’ll win people over by offering self-service customer tools, easy payment options and notifications they actually understand. Good communication with your customers goes a long way.

3Start small, build toward the vision

A lot of start-ups begin with very lofty goals – disrupting whole industries and changing the entire way a process is done. We certainly had a broad vision to be the trusted home energy advisor for everything from solar to batteries. But, you’ll never be able to achieve anything if you try to tackle everything all at once in a highly regulated and old-fashioned industry. Instead, to get started, focus on one thing.

For us, it was offering clean energy via renewable energy certificates (REC). By starting small, you’ll be able to learn about and understand the space you’re going into, and will be able to see if there’s a market for what you’re offering. As you learn, you can slowly expand step by step and tackle more complex products in the industry.

Related: Why Flame-Grilled Chicken Franchise Galito’s Opened Up Shop Right Next To The Competition

4Use best practices from other innovative industries.

No industry has a monopoly on good ideas, and the boom in direct-to-consumer brands across apparel, food, finance and healthcare provides a great roadmap for how to build a modern customer experience. Look to other industries that have been there and done it. For example, Mint.com has created an innovation through the consumer interface – in their case to manage finances – while leaving the existing banking and credit card infrastructure in place.

While the thought of breaking into an established industry is definitely intimidating, in today’s entrepreneurial environment it is definitely possible and innovation is desperately needed. Success depends on the ability to shed your typical idea of disruption, and stay patient and persistent.

This article was originally posted here on Entrepreneur.com.

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