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9 Ways to Learn From Your Customers Without Spending a Fortune

9 Ways to Learn From Your Customers Without Spending a Fortune | Florida Economic Gardening | Scoop.it

Your customers are the lifeblood of your business. Their needs and wants impact every aspect of your business, from product development, to content marketing, to sales, to customer service.

This means you need to constantly be learning from your customers, and adapting your strategies based on what you've learned. Forrester Research calls this becoming "customer-obsessed", and they aptly describe what's at stake for businesses who don't take this path: "Simply put, customers expect consistent and high-value in-person and digital experiences. They don't care if building these experiences is hard or requires a complex, multifunction approach from across your business. They want immediate value and will go elsewhere if you can't provide it."

Learning about and from your customers isn't always easy, and requires a commitment to continual observation. This post will look at 9 ways you can become "customer-obsessed", learning from your customers at every point of contact.

1. Social media monitoring

It's not enough just to monitor your own social media properties for customer research purposes. While important conversations will certainly take place there, these only represent a small fraction of the online conversations you need to be aware of.

Some key ways you can engage in social media monitoring are:

Using tools like Social Mention and Brand 24 (above) to track conversions happening in real-time.

Setting up Google Alerts for mentions of your brand or products.

Monitoring review sites to see what customers are saying about you.

A tool like Reputology can help with this.

Keeping an eye on what your competitors are doing on social media. This can help you figure out what's working (and what's not working) for your target market. For more on this, check out my post How To Use Social Media To Ethically 'Stalk' Competitors And Job Candidates.

2. Ethnographic research

If consumers knew (and could clearly articulate) what they need and want, it would make our jobs as marketers so much easier.

Now, I'm not saying that people are dumb, or that they're incapable of expressing their opinions and desires. But sometimes observing how someone lives and works in their native environment can give us different insights than simply asking them.

This type of observation is called ethnographic research, and it can give us critical insights into the real-world habits and needs of our customers. Anthropologist Ken Anderson explains it like this: "Unlike traditional market researchers, who ask specific, highly practical questions, anthropological researchers visit consumers in their homes or offices to observe and listen in a non-directed way. Our goal is to see people's behavior on their terms, not ours. While this observational method may appear inefficient, it enlightens us about the context in which customers would use a new product and the meaning that product might hold in their lives."

While most businesses won't have the budget to formally observe customers using their products in real life, many of the strategies outlined here will help you observe your customers' behaviors online. While not a perfect substitute, it can still give you key insights into the everyday activities and habits and search patterns of your target customers.

3. Website analytics

Your website analytics offer far more information than just pageviews, bounce rates and conversions - if you know where to look.

Using Google Analytics, you can learn everything from which devices your customers use, to how they navigate around your site, to what products or services they're searching for on your site. In the demographics section, you can discover the percentage of males versus females who visit your site, along with their average age.

Beyond just this basic data, Google Analytics can also give you important insights into the interests, "affinities" and habits of your audience. A great place to start is in the Audience -> Interests section of GA.

This data, known as psychographic data, can offer important insights like what types of products they're in the market to buy (look at 'In-Market Segments'), along with an overview of visitors' very specific interests (found under 'Other Categories').

4. Blog and social media comments

Perhaps the #1 way to learn from your customers online is to regularly read and respond to comments, questions and criticisms shared on your blog and social media posts.

This is the place your fans and followers are most likely to be honest, telling you about themselves, and sharing their thoughts and opinions about your business.

One reason these "customer conversations" are so important is that they can show you what your customers actually care about...as opposed to what you think they care about.

It can also reveal mistaken assumptions your company may have about your customers. Peter Friedman, CEO of LiveWorld writes, "Customer conversations can also reveal that the message the brand intends to transmit via its marketing is not the message being heard. Either the marketing needs to be improved, the target audience changed, or a fundamental product change is needed."

5. Keyword research

Keyword research is a task often left to SEOs and content marketers. However, it can be a powerful tool for anyone in your organization who wants to learn what your target market wants to read, learn and buy.

The process usually starts with coming up with a list of seed words. For instance, in the world of content marketing, some seed words and phrases might be content marketing, SEO and traffic generation. Using these as the foundation of your research, you can dig deeper to find other, related phrases your audience might be interested in.

Ubersuggest can reveal terms related to your seed keywords Your research could reveal some very important insights about your customers and prospects including:

The words they use to describe your products or services

Products or services they're actively searching for (but that you're not offering)

Specific problems they're looking to solve

Competitor products they're searching for

If you want to learn exactly how to do keyword research, either for content optimization or customer research, start here: The Startup's Guide to Doing Keyword Research Like The Pros.

6. Surveys and questionnaires

When you think of customer research, chances are you think of surveys. Used alongside other strategies, they can be an important way to learn more about your customer's needs, wants and habits.

Surveys and questionnaires are often completed anonymously, which has its pros and cons. Customers tend to be more honest (often brutally so) when their identity isn't attached to their responses; however, this can also make it difficult to ask followup questions or to rectify situations.

Some tips for making the most of your surveys include:

Explain exactly why you're conducting the survey, and how it will benefit your customers

Consider offering an incentive for completing the survey (e.g., Entering their name into a draw)

If you're asking questions related to purchase experience, invite participation as soon as possible following purchase

Don't ask more questions than necessary; or at least don't require that all questions be answered before submitting

Use progress bars to increase completions. SurveyMonkey recommends including them at the bottom of each survey page for maximum effect.

7. Ask questions at every touchpoint

There's a Chinese proverb that says, "He who asks a question is a fool for a minute; he who does not remains a fool forever". If you're serious about improving your business and offerings, become a lifelong student by constantly asking questions.

Asking questions can be scary, as it can potentially reveal problems and criticisms. But those problems exist whether you know about them or not; and wouldn't you prefer to be able to fix them?

Disney understands the importance of constantly asking for feedback, and have integrated questions at each customer touchpoint. Dave Frankland, Principal Analyst at Forrester research writes, "At Disney, every touchpoint is an interaction... they're driven by two customer-focused elements: 'know me' and 'be relevant'." In each customer interaction, the company is constantly asking questions that give them a better picture of their customer's needs and wants; it's a process that's built into the way they do business."

8. Online communities

Forums, Reddit and Facebook and Linkedin groups can be treasure troves of customer information. These are places your target market hangs out, and the depth of information you find there may just surprise you. Monitoring relevant subreddits gives you insights into what your customers are talking about

Here's why: When you directly ask your customers about their needs and desires, you get an answer that's restricted to a moment in time. They'll answer based on what they think and need in that moment.

However, by paying attention to conversations happening over time, you start to identify themes that come up again and again from various sources. This can provide important insights into topics of interest and common problems that you can address via your products, services and content.

9. Customer complaints Bill Gates once said, "Your most unhappy customers are your greatest source of learning." Given that for every 1 customer who complains, there are probably 24+ others who remain silent, we should therefore be very grateful for those who have the guts to share their criticisms!

You'll likely receive criticisms and complaints via many of the avenues mentioned in this post: on social media, in online communities, in blog comments, etc. Some other sources of customer complaints you should pay attention to include:

Email unsubscribes: Be sure subscribers are able to leave comments for you when they unsubscribe

Your frontline staff: VA's, receptionists and your sales team are all well-positioned for understanding the most common customer complaints

Review sites: Monitor sites like Yelp, TripAdvisor, Angie's List and Google My Business to see what people really think of your business

Final thoughts

Learning from your customers is imperative to the success of your business. Remember that they aren't static, one-dimensional characters, but are always growing and changing. It's your job to continuously learn from them so you can keep up..

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Expert Corner: Get Your Marketing House in Order

Expert Corner: Get Your Marketing House in Order | Florida Economic Gardening | Scoop.it

For a lot of my clients right now, sales is not the issue, but I’m a believer in getting ahead of the curve. Figure out what’s working, get on the same page with the whole team, inspire everyone to cement client loyalty and identify new prospects! And give your team the tools they need.

The first place most people go at this point is to design a great website or something to hand to people, but those are actually the last things you should do. I once worked in marketing for a company that created a brilliant, yes, brilliant, radio advertisement. The funny script was delivered by Dick Cavett, a very wry, late-night comedian. And famous. The commercial made me laugh out loud as I was driving home. Six months later, we did a survey (that’s how it was in the prehistoric times before data mining and Google stats).

78% remembered the commercial and were positive about it.

Less than 20% remembered who the commercial was for.

This is what happens when you don’t take the time to clarify who your target market is and what they need to hear so they’ll reach out to you. Wasted time and (a lot of) money and energy.

Getting Alignment in Marketing and Sales Want to use sales time effectively and efficiently throughout your organization? As a leadership team, get on the same page about these 4 points – then share!!

- Who is your best client? Where are they? How do they think and what do they want? (We call this the demographic, geographic and psychographic.) Is your team’s answer clear enough that you can make a list of names that fit? Can everyone in your company describe and, most important, recognize that profile?

- What makes you unique? What do you do to meet the needs and wants of that demo/geo/psychographic profile that is better than all your competitors?

- How do you deliver excellence every time? What steps do you take? Does everyone in the company know the five stages a customer experiences from the moment they decide to buy until they write the check? (And decide to come back for more or refer their friends!)

- What do you promise they will get or experience?

You can answer the 4-part Marketing Strategy question as part of the EOS process by downloading our powerful 2-page business plan (the Vision/Traction Organizer)

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Getting Teams with Different Subcultures to Collaborate

Getting Teams with Different Subcultures to Collaborate | Florida Economic Gardening | Scoop.it
The term “organizational culture” can obscure an important truth: An organization often contains many cultures. This is true even if your organization is located entirely in one country, or even at one site.

Because each business unit or team may have their own subculture, working effectively across the organization requires skill in working across cultures.

Doing this requires three steps: understanding what culture is and how it works, identifying the cultures of your team and the teams you work with, and designing how you and the other teams will work together.

Understand what team culture is and how it works. A team’s culture is its shared values and assumptions, and it results from a mix of elements: the organization, industry, geographic region and nation, and profession or function the team represents. Values are things we consider worth striving for, such as honesty, accountability, and compassion. Assumptions are beliefs we hold about how the world works or how things are related. For example, you may assume that people generally want to do a good job, or that people are more committed to a decision when they are involved in making it. A team manifests its culture in many artifacts, including norms that lead members to act in certain ways and to create structures, processes, and policies. It’s important to distinguish between a team’s espoused culture and the one it operates from. The values that team members say they operate from are the espoused culture — which may or may not be what they actually operate from.

Identify your team’s and other teams’ cultures. To determine how cultures differ, you need to identify the values and assumptions that constitute them. And to do that you need to operate from the assumption that differences are opportunities for learning; if that thinking isn’t already part of your culture, your joint exploration may quickly devolve into conflict as each team describes how the other’s culture is a problem. To avoid this, consider finding a facilitator or consultant to help you.

Start by identifying artifacts that strike each team as notably different from its own. This includes norms, behaviors, structures, and processes. For example, you may notice that the team you’re working with spends significant time trying to agree on what important words mean, while your team considers these detailed conversations to be a poor use of time. Or the other team may point out that your team deals with inter-team conflicts by raising the issue in the full inter-team meeting, while their team discusses conflicts in private.

Next, identify the assumptions and values that generate these artifacts. In the example above, your team raising conflicts in the full group may reflect your belief that conflict can best be resolved in the setting where all the information exists. The other team may assume that conflicts are best resolved in private where people are less likely to become embarrassed or defensive. I have found that organizational function is a significant part of team norms. Professions such as engineering and medicine, which are rooted in the scientific method, may value precision and logical reasoning more than other functions, for instance. To perform this step well, it’s critical that you get curious about the other team’s values and assumptions, instead of assuming you know the values or assumptions that explain the artifact. You can infer a team’s culture from its artifacts, but you can’t figure out whether your inference is correct without asking the team’s members.

Finally, determine whether each artifact is shared, different but congruent, or conflicting. Conflicting artifacts are the most important to address because they present the greatest challenge to working together effectively.

Jointly design a solution for the different and conflicting values and assumptions. Focusing on the values and assumptions rather than on the artifacts is important both because it helps everyone understand the reasons behind each team’s artifacts and because it helps you design solutions for norms, structures, and processes that are based on the same values and assumptions.

There are several options for designing a solution. If one team is particularly bound to its values and assumptions in a certain situation, the other team may decide simply to adopt that team’s approach. For example, the team that discusses conflict privately may begin doing it in meetings if the other team makes a compelling case for it. Or the teams can develop a solution that integrates their cultures when the two are not necessarily incompatible. For example, the teams could agree to initially raise a conflict in private with the person who is most involved in solving it, and then jointly raise the issue with the larger team. Lastly, the teams can compromise when other options don’t work. This may be the best solution you can develop, but because compromises don’t resolve conflicting values and assumptions, they tend to leave everyone somewhat dissatisfied, so they may not create sustainable solutions. For example, the teams might agree to let each member decide on whether to raise a conflict privately or in the team.

Just as an effective team invests time and effort agreeing on how members will work together, so do teams that work effectively with each other.
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Why Defining Content Campaign Success is Harder Than It Sounds

Why Defining Content Campaign Success is Harder Than It Sounds | Florida Economic Gardening | Scoop.it

Content marketing has quickly become one of the most important digital marketing strategies out there. But how well does it really work for brands? An overwhelming number of content marketers couldn’t actually tell you. In fact, 55 percent of B2B marketers don’t have a clear picture of what content marketing success looks like in their organization.

The reason? Content marketing has little to do with the bottom line. It’s about creating awareness, offering value and building relationships to drive behaviors that produce ROI.

I know firsthand that content marketing is a bit messy to measure. Here are a few factors that contribute to a content marketing campaign's success.

Focus on your defined audience(s).

Content marketing is about offering value to a specific audience. So a big aspect of defining success is understanding how well you’re speaking to this core group. If you offer a diverse range of products and services, it’s likely you’ll have several unique buyer personas to target. I recommend defining success by evaluating your reach to, and impact on, each of them.

Does your content offer provide value to the right groups of people?

Make sure your content is relevant.

You need to be sure that you’re delivering the right information at the right time to the right person.

You can do this by tracking the buyer journey and aligning the most relevant content to each segment at each stage in your sales cycle.

Track the level of engagement.

Engagement is another important factor in determining the success of content marketing. It can tell you how well your content resonates with your target audience and how capable it is at driving people to action.

Some metrics you should consider paying attention to are:

- Consumption (Average time on page, pages per session)

- Social shares

- Comments

Measuring engagement will help you define your campaign's success overall. Plus, you’ll have opportunities to improve your success by producing more engaging content.

Define your strategy.

According to Content Marketing Institute, the most effective B2C marketers have a defined content marketing strategy. HubSpot’s survey of successful content marketers also backs this up.

If you don’t have a set strategy, I recommend developing one. If you do have a defined strategy, then evaluate how well you’re sticking to the plan.

Analyze your content team’s ability to:

- Delegate responsibilities

- Choose topics

- Produce content

- Distribute content

- Carry out other components of your content plan

If your content campaign is failing, it’s not necessarily because it was ineffective. It may be due to organizational issues that prevent you from executing it properly.

Measure your brand's influence.

Is your content making an impact and helping you gain influence? Content marketing success is also based on the overall influence of your content on the web.

Individually segment your content marketing projects, and see if any or all of them are helping improve your influence month to month.

Here's a few metrics to consider:

- Number of social followers

- Number of blog feed subscribers

- Number of email subscribers

- Overall site traffic

- Links back to your content

Does the campaign support your long-term goals?

Individual content campaigns can be considered successful based on improvements in engagement and influence, but they should still be seen as building blocks for overarching business goals.

Overarching goals may include:

- Building brand authority

- Generating leads

- Encouraging customer loyalty

Identify and measure key performance indicators (KPIs) that align with your long-term goals, such as:

- Lead form completions

- Organic brand impressions

- Repeat purchases

Evaluate your campaign’s ability to drive toward - or even achieve -- these goals in combination with your other marketing efforts.

Measure the ROI.

Particularly if you work as part of a larger organization, where marketing tactics require buy-in from senior executives, you’ll want to demonstrate real financial impact from your content campaigns.

In my experience, proving ROI can bring clarity to your campaign. It can also help you unlock a bigger budget.

There are a lot of ways to measure the ROI of your content. Tools like Salesforce CRM or Oracle can track the financial impact of your content for you. If you don't have access to these tools, you can also measure it by hand with either of the following methods.

Determine the value of your organic web traffic.

- How much organic traffic is your content campaign bringing in?

- How much would you need to spend in Adwords to get equivalent traffic?

Calculate the ROI per campaign.

- Determine the cost of a content campaign.

- Calculate the sales increases during the campaign.

- Subtract one from the other to determine ROI.

Content campaign success is made up of a number of interrelated factors, including: audience segmentation and targeting, execution, engagement, influence, impact on long-term goals and financial ROI. Measure your results in all of these areas to have a clear understanding of your content campaign's success.

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What's the Best Way to Legally Structure Multiple Businesses?

What's the Best Way to Legally Structure Multiple Businesses? | Florida Economic Gardening | Scoop.it
Most entrepreneurs I know are driven, curious and never content with the status quo. These traits are probably why so many of them dabble in multiple ventures. A restaurateur may open a wine shop; a personal trainer may launch a line of fitness apparel. There’s always a new opportunity out there somewhere, and diversifying your income can be a sound strategy.

If you are running multiple businesses or thinking about starting a second one, you may be wondering what is the best approach for legally structuring each business: should you have separate corporations/LLCs for each one or a big umbrella company to hold them all? Are there any limits to the number of companies one person can form?

Generally speaking, there are three different ways to structure multiple businesses. There are advantages and disadvantages for each approach -- and the best structure will depend on your personal situation. Here’s some general advice to consider, and you can always discuss your specific needs and details with a CPA or attorney.

1. Create individual corporations/LLCs. First, there’s no limit to how many corporations or LLCs one person can form. Many entrepreneurs opt to file a new LLC or corporation for each of their start-up ventures. For example, you can form an LLC for your landscaping business and another LLC for the golf course you purchased.

The main advantage of this approach is that it isolates the risk to each individual business. Should a client sue your landscaping business, your golf course business will be protected. Likewise, if your golf course has a few down years, your landscaping business won’t have to share in any of the liability.

The main downside with this approach is that it involves additional maintenance fees and paperwork. For example, you’ll need to pay to incorporate/form an LLC for each business, as well as any annual maintenance fees/forms to the state. You’ll also need to get separate business licenses and EINs for each business, and file tax forms for each corporation. For some entrepreneurs, all this separate paperwork can be a pain. But for others, the added fees are well worth it in order to protect each individual business from the others.

In particular, real estate investors often form an LLC for each property in order to shield each investment. If “Property A” is sued, you won’t be risking any of the assets belonging to “Property B” or “Property C.”

2. Put DBAs under one corporation/LLC. Another common option is to file one LLC or corporation, and then set up multiple DBAs (Doing Business As) for each of the other ventures. Keeping with the previous example, you may have an LLC for “Ken’s Landscaping Services.” Then, if you start a golfing business, the LLC can file a DBA for “Ken’s Golf Course.” From a marketing perspective, you can run each business as if they are separate companies -- use each individual business name, accept checks written to each business name, etc.

With this approach, each business venture can use the right branding and company name, while you simplify some of the annual maintenance. You just need to pay your annual LLC/corporation maintenance fees for the LLC/corporation (and not each individual DBA). If you need and/or use an EIN, you’ll just need one EIN. And when it’s time to file your taxes, you can take the income earned from each DBA and report them in a single tax filing under the main LLC or corporation.

Each business venture (DBA) enjoys the legal protection of the main LLC/Corporation. For example, if something should happen to one of your DBAs, your personal assets will be shielded (assuming you filed the DBA under your LLC/Corporation). But, each DBA isn’t protected from the other DBAs. So if one DBA is sued, all the other DBAs under the main LLC/corporation are liable.

3. Create a business under the holding company. In the third approach, you can create individual corporations/LLCs for each of your businesses and put them under one main holding corporation/LLC.

This scenario is common in a few situations. One, for companies that are looking to be acquired or potentially spin off one of their businesses. Two, for established companies that are looking to start a new business (and the established company will fund the new venture). As expected, this scenario can have complex tax and legal implications -- and it’s best to consult with a tax adviser or attorney on the best way to structure a holding company and subsidiaries.

The bottom line is there’s no (legal) limit to how many business ventures you can start and run. Just make sure that you properly account for your liability risks when structuring these ventures.
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How to Put the Right Amount of Pressure on Your Team

How to Put the Right Amount of Pressure on Your Team | Florida Economic Gardening | Scoop.it

While the popular press talks of stress as a negative to be avoided, seasoned managers know better. If you’re trying to drum up new business, get a customer’s order out on time, or hit your numbers for the quarter, a little stress goes a long way. It’s even more important when you’re trying to transform your business or revitalize a sagging culture. That’s when you need enough stress to motivate action.

In its most positive form, stress results when an employee tries to do the same old things in a new environment. Those out-of-date behaviors produce subpar results and the growing gap in performance creates tension. It’s exactly the kind of stress you want, because it counteracts the powerful inertia of habit.

If you’ve been around the management block a time or two, you’ve probably also seen the other side of stress. As stress gets too high, instead of increasing momentum, it can counter-intuitively start to decrease it. You can immobilize people with too much stress: You stifle the creativity required to come up with new ideas, trigger fear of taking a wrong step in a high-stakes situation, or unleash frenetic but ineffective activity.

Somewhere in between these two extremes is the ideal level of stress; one that creates positive pressure in the direction of change without causing debilitating worry. This magic zone is what John Kotter referred to as the “Productive Range of Distress.” This is an extremely useful concept for managers who are leading through change, but how do you take it from being conceptual to being real? How can you alter the levels of stress on your team? How do you know when you should intervene?

Your first step is to assess the current state. There are signs that the stress levels on your team aren’t sufficient to create meaningful change. Watch for people who are too comfortable with the status quo — either resisting the need to change, referring incessantly to the “way we used to do it,” or generally not applying themselves to get the job done (i.e., coming in late, taking long breaks, and Yabba Dabba Do-ing like Fred Flintstone at the end-of-day whistle).

The bigger challenge is to identify the people who are burdened by too much stress. It’s tricky because some people will have an obvious, frenetic, or panicked stress response, whereas others will withdraw and direct their stress inward. Because there is no single pattern, you’re looking for deviations from an employee’s normal behavior. Is someone working considerably longer hours, failing to take breaks or to get lunch, behaving irritably with coworkers? On the other end of the spectrum, is someone becoming disturbingly quiet? Are they interacting with you noticeably less frequently? Is their body language demonstrating fatigue or cause for concern? Those changes might suggest too much stress.

Once you have a sense of the stress levels on your team, you’ll know whether you need to dial the heat up, or bring it back down from a boil to a simmer. There are several techniques you can use for each scenario.

If you believe there is too little stress on your team and that it will take a little more discomfort before your employees are in the productive range of distress, you have a variety of options to choose from. To make the suggestions concrete, I’m going to use the example of the introduction of a new sales culture. This is a common transformation and one that will stall with too little heat and blow up with too much.

Increase the frequency and pointedness of coaching. It’s easy to stick to the status quo when no one is watching. The moment that an employee knows that you’re noticing her behavior, the stress levels will naturally rise. The secret to coaching toward an optimal level of stress is to increase the frequency of the feedback you provide, but decrease the intensity. Imagine you have rolled out new sales management software but you’re struggling to get all of the salespeople to input their activity. Try simple feedback such as, “It’s Wednesday and I’m only seeing three opportunities in the funnel for this week.” Pair the feedback with a question such as, “What time of day works best for you to input your meetings?”

If you don’t see improvement, dial it up, “I’ve made three requests for people to input and I’ve only seen two new entries. This has become a problem. I’d like each of you to come to me today and share how you’re going to change your routine to include your responsibilities for tracking sales activity daily.”

Connect the person’s behavior to something bigger and more important. Sometimes an employee hasn’t made the link between how they perform and the organization’s ability to achieve something critical. The salesperson who is consistently delinquent in entering opportunities needs to know that big decisions are made using real-time pipeline data. Pricing, products, and promotions might all be affected by a pipeline that appears tepid, when in fact there are just opportunities missing. Help your team understand the trickle-down effects, by saying something like: “I had to go into the Regional Leadership Team meeting today with a pipeline that shows only about 30% of what it should show. The VP was alarmed and started talking about a few drastic actions. I had to assure him that the data aren’t representative, but I won’t get away with that again.”

Allow a natural negative consequence for a lack of action. Often, as a manager, you’re so invested in the performance of your team that you’re willing to pick up the slack from poor performance to avoid a bad outcome. That only reinforces the employees’ perceptions that they don’t need to change. Instead, allow poor performance to lead to a natural consequence.

In the sales example, if you ask the Regional VP not to discuss any opportunities that are not in the system, your technology hold-outs will be left out of the discussion. Salespeople are fueled by posting wins and this loss of recognition might just spur some action. Given that the missing pipeline numbers will also reflect poorly on you and your whole team, you have the added benefit of a little peer pressure to get them on board.

Knowing how to turn up the heat is valuable, but sometimes you have the opposite problem. When the pressure mounts, you might need to do one of the following to settle things down:

Provide frequent positive feedback. In the low-stress scenario, you were coaching frequently to increase the sense of accountability. In the high-stress situation, you should still be spending considerable time coaching and providing feedback, but you need to change the content and tone. Your content should be focused more on recognizing and reinforcing small victories and on helping to problem solve to create momentum. Your tone should be calm and reassuring. You want your team to feel that they’re making headway. In the sales example, you can pivot a conversation about a new prospect to “Hey, let’s enter that into the system together now.”

Break the problem into smaller pieces. Our language is full of metaphors for the sense of overwhelm we get when we try to tackle something too large. Whether they’re swallowing elephants or boiling oceans, your employees are signalling that they’re shutting down because of the magnitude of the challenge. At that point (or hopefully before), help each person zoom in on a specific part of the project. You can divide the project among a group of people so each person has a more manageable chunk.

You can also break the project into sequential steps and focus on one at a time. The goal is to make the next task seem surmountable. You’re not climbing Everest; you’re just getting to basecamp. “This week, we’re going to focus on the automotive sector. Let’s get all of our automotive leads into the system.”

Add structure to the problem. One of the worst things you can do when stress levels get too high is to jump in and solve the problem for your team. That can send all the wrong messages and leave you with accountability issues over the long run. The alternative is to go a little further than normal in helping your team think about how to tackle the problem.

Many people get stressed in the face of too much complexity. If you can give them a path, they can wrap their heads around it. For example, you could say, “First solve for how you’re going to roll out the new pricing, then you can go back and apply that to direct sales. Don’t even worry about the indirect channel until later.”

Model confidence. Whether you believe the hype about mirror neurons or not, you know from experience that emotions in the office can be contagious. The simplest way you can turn down the heat for your team is to show them with your words and your body language that you believe everything will work out. If you’re running around like a chicken with its head cut off, you’ll incite panic in everyone else. If you are calm, deliberate, and decisive, you’ll help keep employees’ stress levels from getting too high.

In some cases, the stress levels of your team members will be uniformly high or low. That allows you to use one common approach for everyone. Unfortunately, it’s more likely that different people will be in very different head spaces; some thriving on the heat of the moment and others shrivelling in it. When different team members are experiencing the stress of the change differently, you’ll need to have more targeted one-on-one conversations that give you the opportunity to adjust the heat. If you’re accustomed to huddling your team and sharing direction with everyone at once, this might require a temporary shift in approach.

Regardless of whether the heat needs to go up or down, your job is to monitor constantly and to make the course corrections that will keep your team in the productive range of distress. That’s the magic zone where change happens.

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A CEO’s Guide to Navigating Brexit

A CEO’s Guide to Navigating Brexit | Florida Economic Gardening | Scoop.it

The Leave campaign’s victory, with a margin of 3.8 percentage points, has likely ushered in a protracted phase of uncertainty for the UK, EU, and global economies. A systemic shock cutting across industries and borders, Brexit poses significant strategic challenges for business leaders as they navigate the fallout. Judging by our interactions with CEOs around the world to date, some of their burning questions are:

What are the elements of uncertainty created by Brexit?

How can leaders develop a specific view of the industry- and firm-level implications?

What are the first-response imperatives for corporate leaders?

What structural changes to the business environment are triggered by Brexit, and how do we adapt to them?

This is how we recommend CEOs approach these difficult questions:

Identify the sources of uncertainty

The uncertainties that come with Brexit can be ordered into four categories. While the overall directional impact is generally clear, it’s the magnitude, duration, and differential that are more critical to determine.

Political process. There are significant drivers of uncertainty domestically and abroad. At home, the UK faces dissolution pressures if Scotland seeks to salvage its EU membership, while the EU has every incentive to make Brexit a painful experience to deter other defectors, making the outcome of negotiations difficult to predict. These unknowns have the potential to influence the evolution of the financial, institutional, and real economies.

Financial economy. The directional impact on key prices was widely predicted — and strong corrections to the pound (-11% verses the dollar) and to equities (-13.6% FTSE250) were indeed recorded in the first two sessions after the vote. The Bank of England will likely lower policy rates, or even adopt negative interest rates. What drives uncertainty are the magnitude and duration of these corrections; as prices guide resource allocation, their volatility and uncertainty interferes with planning and investment decisions.

Trade regime. The reconstruction challenge for the UK’s trade regime is clear. The EU represents 47% of UK exports, facilitates an additional 13% through non-EU trade deals, and currently negotiates with countries worth an additional 21% of UK exports. While the UK would need only eight bilateral trade agreements to cover 80% of its current exports, there is a long tail of 18 additional countries worth more than $1 billion in UK exports and an additional 132 countries to cover all existing exports. Both internal and external factors drive uncertainty about the duration and outcome of the reconstruction challenge — for example, the UK’s ability to negotiate agreements, having outsourced this task to Brussels for 40 years, or trade partners’ willingness to engage with Britain in a constructively and timely manner.

Real economy. The transmission mechanism to the real economy is primarily via delayed or canceled investment decisions or the anticipatory redeployment of employment or production assets. Here, too, the directional impact has been analyzed credibly, with estimates ranging from 3%–9% of GDP loss. Here it is the speed, depth, and duration of these effects — on demand, consumption, and employment across industries — that drive uncertainty.

Determine the specific industry- and firm-level implications Industries and individual companies vary widely in terms of the impact on the uncertainties outlined above, due to their differential dependence on UK and EU production, demand and trade, global trade, regulation, and integration into EU structures (e.g., R&D subsidies, EU norms and standards, etc.). Therefore each company needs to carry out (or take to the next level) its own specific impact analysis.

It is impossible to forecast precise impact with confidence, given that exit terms, timing, and knock-on implications are all uncertain. A scenario-based approach to planning, modeling, and preparing for multiple outcomes is therefore recommended. This can be done in four steps:

1. Attach a “value” to each source of uncertainty — strong vs. light currency depreciation, high vs. low future EU market access — along with your perception of likelihood (plausible, likely, unlikely) to build an “uncertainty map.”

2. From the map, combine various values to develop multiple scenarios. The scenarios should be made internally consistent by avoiding contradictions (e.g., by combining political uncertainty with lower volatility).

3. Consider the industry- and firm-level sensitivities to these scenarios. The key questions are about the impact on your firm’s business model, operating model, EU institutional arrangements and financial structures, and performance.

4. Use the scenarios and sensitivities that you’ve identified to test the resilience of your current plans, highlight risks, formulate response options, build capabilities, and reflect the results in strategies and initiatives and in risk management.

For example, a U.S. industrial conglomerate with a strong market presence in the UK and a spatially fragmented value chain may find its strategic sensitivity is highest to the UK’s potential failure to replicate the EU’s global trade access. Expecting growing protectionism, a plausible strategic response could be aggressively defragmenting its value chain and concentrating production in the UK (so as to counteract the rising cost of trade). In some cases companies will feel confident enough to bet on particular scenarios; in others they may wish to diversify measures to become scenario-agnostic or to create options and boost agility to be able to move decisively when matters become clearer.

Turn thoughts into action

In addition to initiating the strategic impact assessment outlined above, it is important that business leaders translate their insights into action. Immediate actions include:

Inform employees and stakeholders of the industry- and company-specific facts (e.g., liquidity, stability of existing trading arrangements, and so on). Create confidence by showing that issues are being carefully considered, and define the process.

Confirm that the impact will take time to play out. Emphasize that little is likely to change in the short term in legal and trading arrangements, although markets may be jittery until negotiation outcomes are clear.

Continually update the industry and company assessment as events unfold. Run scenarios. Design contingency plans and reflect any insights in your strategies for growth, geographical footprint, global supply chain, and risk management.

Don’t let a communication vacuum open up. Keep talking about progress against goals.

Adapt to the new post-Brexit business environment

Once a response to Brexit has been initiated, forward-looking business leaders will ask themselves, What’s the bigger picture? What structural changes does Brexit signal? How has the business environment changed and how must business practices be adapted for short-term survival and long-term advantage?

Brexit appears to be consistent with structural changes to the business environment that were already under way. While business has already become more sensitive to geopolitics, the politics of discontent and populism may prove to have an even bigger impact. Brexit highlights the plausibility of similar uncertainties unfolding in the U.S. and in other countries.

This calls for two conclusions as business leaders strive to make sense of the new environment. The first is a renewed emphasis on strategy under uncertainty, with a focus on flexibility, adaptiveness, and resilience. The second is that many businesses now need enhanced capabilities to effectively capture and translate the macroeconomic and political developments for industry- and firm-level implications. Conditions will likely be very different for different parts of any business, especially for large and global companies, making it even more imperative to select the right approach to strategy and execution for each segment.

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Strategic Plans Are Less Important than Strategic Planning

Strategic Plans Are Less Important than Strategic Planning | Florida Economic Gardening | Scoop.it
Mention the word “plan” to most managers and the image that springs to their minds might well be a travel plan. Drawn up by travel agents, these lay out in clear and certain terms the sequence of your trip and what to expect when, specifying: where you’re going from, your destination, where you’ll stay en route and when, how you’ll travel, and so forth.

Or they’ll think of the kind of plans builders employ, often referred to as “blueprints.” The result is much the same as with travel: a specific beginning and end with precise steps along the way. Both plans are neat, prescribed, determined — and manageable. You figure out what to do and then do it.

But not all types of plans have that level of precision. In a fluid, unpredictable environment you need to have a very different understanding of plans and planning. A case in point is military strategy.

Helmuth Karl Bernhard Graf von Moltke, also known as Moltke the Elder, lived between 1800 and 1891. He was a German Field Marshal and is credited with creating a new approach to directing armies in the field. This entailed developing a series of options rather than simply a single plan. Moltke the Elder held the view that only the commencement of any military operation was plannable. He famously stated that “no plan of operations extends with certainty beyond the first encounter with the enemy’s main strength.” This has also been popularly interpreted as “no plan survives contact with the enemy.”

Much later Winston Churchill (1874 — 1965) came out with this pithy statement: “Plans are of little importance, but planning is essential.” As a graduate of Britain’s elite Royal Military College at Sandhurst he would certainly have read or heard about Moltke the Elder’s insights on plans and planning.

The U.S. General Dwight D. Eisenhower (1890 — 1969) had a similar take: “plans are worthless, but planning is everything.” This statement came from a speech to the National Defense Executive Reserve Conference in Washington, D.C. on November 14, 1957. He went on to explain: “There is a very great distinction because when you are planning for an emergency you must start with this one thing: the very definition of ‘emergency’ is that it is unexpected, therefore it is not going to happen the way you are planning.” Like Churchill, Eisenhower appears to be channelling Moltke the Elder.

Like military strategy, business strategy is developed and applied in a fluid, unpredictable environment, and the distinction that Moltke, Churchill, and Eisenhower draw between planning and the plan is very pertinent for senior executives charged with crafting a company’s strategy. All too often, I find, executives seem to share the traveler’s and builder’s understanding of planning and the trick to helping them create a strategy that will actually work lies in getting them to rethink that view. What does that involve? Let me share with you a few principles I’ve learned from my more than 25 years of facilitating strategic planning sessions.

Think of the plan as a guidance tool. The problem for many managers is that their expectations are all skewed from what can be realistically achieved via a strategic plan. Their image is more of the house-plan type or travel itinerary. They anticipate that by doing the necessary analysis and writing down how their business will succeed the world will be converted from uncertain to certain. In their eyes the strategic plan becomes a device for control rather than one of guidance. They’re not comfortable with the fluid and uncertain Moltke-the-Elder concept. This can manifest itself as “we’ve given up on strategic planning.” This emanated from a CEO whose experience in writing “it” all down was that he got it all “wrong” as things changed rapidly. In other similar situations executive teams find themselves simply ignoring any document that is produced.

Look for disagreements and toward the future. Even though your plan is liable to become immediately irrelevant, you still need to invest in writing it up. Why? There are two reasons. The first is to surface disagreements that may otherwise remain hidden. You can have all the discussions you like with your fellow staff and think that your management team is in agreement, until you actually distill these discussions in a written document that people have to sign off on. It’s in the crafting of your organization’s position that you realize that, well no, we’re not all on the same page. The second reason is that it provides a platform from which change can be leveraged. This line-in-the-sand concept may seem paradoxical but the very process of preparing the plan has you thinking about the future and assembling resources. Moltke the Elder wasn’t advocating not having a plan to start with but that the plan itself and the planners needed to be flexible because it generates preparedness.

Focus on the organization and key stakeholders, not individual actions. A plan can’t be “strategic” if it’s simply about action by individuals. While action is fundamental to implementation and success, there’s another level above that — the organization level. In my experience most managers, operating as they do inside their organization, aren’t fully cognizant of this important distinction. This can have them launching prematurely into who, what and when or, at the very least, unconsciously crisscrossing between the organization and individual levels. Business strategy operates at the corporate level while action functions at the individual level. Remain aware of this underlying logic and keep a firm focus on your organization and its relations with its key stakeholders. Develop business strategy for each stakeholder in turn but also acknowledge the causal link between them.

Assume the plan is a work in progress. A strategic plan is not a set-and-forget instrument. It’s a living and breathing document that guides decision making and helps marshal resources. When managers talk about “giving up on strategic planning” I suggest that they haven’t thought through how to keep their plan fresh. The fact that circumstances are changing rapidly is a very good reason to visit their plan regularly. How regularly? This varies by industry, of course, but my general recommendation to most clients is monthly. Your executive committee may meet more frequently, perhaps weekly, so put aside the first meeting of each month for a plan review. This allows you to not only update the document due to changed conditions but to also go through the actions that were scheduled for completion as part of the execution process. Make your agenda item “progress against strategic plan.”

Moltke the Elder wasn’t in business nor born in the modern era. Yet my guess is he’d have made an excellent keynote speaker at a conference on our modern obsession, “disruption.” He understood that the world doesn’t stand still while we plan. He also appreciated the importance of planning’s role in preparing for change. Your strategic plan is an essential device in navigating disruption’s headwinds.
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How Entrepreneurs Can Keep Their Passion from Fading

How Entrepreneurs Can Keep Their Passion from Fading | Florida Economic Gardening | Scoop.it

Time and time again, passion has been cited as a key ingredient for entrepreneurial success. It’s what motivates people to start a new business. It’s also what helps them persevere when the going gets tough. It is the “fire in the belly” that makes entrepreneurs pursue their dreams and that makes the improbable possible. Or, like Anita Roddick, founder of The Body Shop, famously said, “To succeed you have to believe in something with such a passion that it becomes a reality.”

In recent years, academic research has also sought to understand how entrepreneurial passion really works. Most relevant to start-ups is being passionate about founding activities. Passionate entrepreneurs are those who feel excited about their identity as a venture founder and who consider being a founder as an important part of who they are. These are the people who will introduce themselves at parties as, “Hi, I’m the founder of X” and see start-up opportunities everywhere they look. In line with the popular view on passion, studies have shown that entrepreneurial passion really boosts entrepreneurs’ creativity and persistence.

Surprisingly, our research shows that passion among starting entrepreneurs tends to fade over time. We tracked a group of more than 100 entrepreneurs in the founding stages of their ventures over a period of 10 months’ time. Despite this being the phase where you expect enthusiasm to abound, we found the opposite: initial excitement about one’s identity as an entrepreneur dropped during this time. Luckily, there’s also good news. We discovered two behavioral strategies that may prevent entrepreneurs from losing their passion.

Don’t stick to the plan. When starting out, many entrepreneurs have developed a business plan clearly delineating what they want to do. Trying to forecast the future, these plans are by definition surrounded by a high degree of uncertainty. Will customers be interested in buying the product or service? Does the product really address their needs? What will they be willing to pay? Who should founders partner with? Some start-up founders deal with this uncertainty by rigidly sticking to the plan. They may spend two years on developing their product, making sure it’s an absolute technological gem, only to discover that the customers they envisioned aren’t quite as enthusiastic about the product. Insight Center Building Resilience Sponsored by SoFi Bring your best self to work.

Others are more flexible and engage in a trial-and-error strategy, continuously testing and adapting their ideas as new insights emerge. A company in our study had, for instance, developed unmanned aerial vehicles to provide aerial mapping services for mining and dredging companies. After a first test with a large mining company, they learned that while extremely satisfied with the results, the mining company had no interest in paying for their service. This floored the founders, as they believed that was the future of their start-up.

Rather than continuing down this path, they started exploring who else might be interested in their services. Eventually, they found a new market that ended up being a huge success for them; land surveyors, bringing back the initial excitement they had over being entrepreneurs. By flexibly changing and refining their ideas, founding entrepreneurs can make significant progress and build confidence. Rather than feeling misunderstood by the outside world, they gain a sense of control over events as they unfold. This was found to counter the decrease in founders’ passion over time.

Go out and get feedback. “How am I doing?” In the 1980s, New York City mayor Ed Koch became famous for walking the streets and asking people this same question over and over. This unorthodox feedback-seeking strategy attracted a lot of attention because we all recognize how important it is to receive feedback, and how difficult it is to actually get it.

Unlike employees, founders don’t have supervisors to tell them how they are doing. What they can and should do, however, is similar to Koch going out and seeking that feedback from others: Ask fellow entrepreneurs, investors, advisors, and industry experts for feedback. Be careful, however. People are naturally inclined to mostly seek feedback that will confirm their own preconceptions. While this might be helpful in boosting one’s self-esteem through positive feedback, it is important to seek feedback from a diverse network that challenges one’s own strongly held beliefs.

Getting feedback tends to motivate people, as they feel they are learning something. It also gives a sense of control. Feedback can help founders test and refine ideas, making goals more attainable, which gives a sense of fulfillment. This is particularly helpful when they’re confronted with the ambiguities that inevitably appear during the challenging journey of building a start-up.

Moving from idea to full-fledged venture implies making increasingly difficult decisions about how much time and energy to dedicate to the various roles one is performing as a founder (e.g., figurehead, leader, liaison, spokesperson, negotiator, fundraiser). This is the very essence of being an entrepreneur: Creating one’s own roles while the venture grows and matures. While this can be daunting to many and can put a significant damper on the passion of starting a venture, seeking feedback from people around you will safeguard this inner passion.

The stark reality is that most ventures fail. Things will go wrong and it’s very likely that entrepreneurs may lose some of their initial excitement over time. Being flexible in adapting ideas to changing circumstances and surrounding oneself with trusted people who can offer feedback will help in both surviving the start-up emotional rollercoaster, and in keeping that fire in the belly alive.

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What Marketers Need to Know About Chat Apps

What Marketers Need to Know About Chat Apps | Florida Economic Gardening | Scoop.it

The rise of social media changed marketing. Now, before some marketers have even fully adapted to that world, the social web is transforming again. The rise of private social networks and messaging apps will challenge the strategies that marketers developed for public social networks.

If your company is still trying to figure out how to make the most of Facebook and Twitter, consider:

- WhatsApp has rapidly become the biggest messaging service in the world with more than a billion users.

- Snapchat is a juggernaut with the 18-24 age group, now earning more daily check-ins than Facebook. The company founder insists it is “not a social network.”

- Facebook is the social network for most of the world, yet their major investment is in the development of private Facebook Messenger, including bots that would help companies scale “human” interaction through the service. More than 900 million people use Messenger now. Other private messaging services like Viber and Kik have attracted millions of users.

- Of the Fortune 100 companies, 77 use Slack. The average Slack user keeps the app running 10 hours a day, and is actively using it for over 2 hours a day.

- Instagram started private DM in 2014 that focuses on the sharing of content with up to 15 people in a threaded approach.

- Twitter has experimented with Snapchat-style doodles and photo editing and in 2015 expanded the character limit via private direct messaging.

The movement of consumers from public social media to private messaging has been so rapid that Business Insider reported that the combined usage of the top four messaging apps now exceeds the combined usage of the top four social media apps. Falling data prices, cheaper devices, and improved features are helping propel this growth.

Why the hunger for private messaging apps? Perhaps people are becoming more interested in actually communicating, rather than broadcasting. Maybe we don’t want personal and private lives merging any more and we want control over our different social circles within these messaging apps. As my 16-year-old nephew put it, “My friend posted on Facebook and we made fun of him. We only use Snapchat now because who wants to put everything in public all the time? This just connects me with my real friends.”

Social media won’t go away, but traditional social networks may become less important to certain groups. The rise of more intimate channels presents new opportunities, and perhaps perils, for marketers. Two of the tensions marketers will have to wrestle with:

Discoverability vs. interactivity — The challenge of a more private app is getting people to find you and interact with you. In an app people are primarily using to communicate with friends and family, what role does a brand have to play?

Although discoverability may present a challenge, private messaging could offer even more engagement for the brands that can figure it out. Consider that without the boost of ad support on Facebook, your organic reach for your content probably averages less than 1 percent (although this varies widely by business). The typical open rate for email is much better, but still not very high, at about 20 percent. The open rate for a private message? 98 percent. Smartphone users are also more likely to have push notifications turned on for a messaging app than for email, a branded app, or even for Facebook. But that means the expectations are high. How do we insert ads and brand messages in conversations in a way that isn’t disappointing… or creepy?

Content orientation vs. person orientation — Today a brand goal on social media is mass relevance. In this current “mass relevance” model, content is at the center of the experience. We want that cat photo (or white paper) to get as many likes, clicks, and shares as we can muster.

But in this new world, the goal is engagement through private, meaningful, conversational moments. In the future, content will still be important, but the individual will be the focus of the experience. Brand communications will have to be more immediate, expressive, and intimate.

How do you scale those interactions? Somewhat ironically, the answer may be algorithms and bots. Big Data will help us craft personalized, timely, location-based content and offers, and Facebook is working on smart bots that can hold human-like conversations and a system to analyze the conversations. Brand communications will be more immediate, expressive, and intimate.

Though my nephew may mock it, Facebook is an especially important player in this transition; this is the platform most brands have been married to, and this is where most of the marketing investment is still occurring. There is a comfort there. How will that relationship change moving forward?

Facebook Messenger will now support scannable codes, user names and links. This update allows the creation of a unique Messenger URL that will allow for greater discovery of users and businesses within the private sphere. Facebook is already positioning pages and ad units with a “message the brand” option and analysts believe Facebook is positioning Messenger as its primary commerce hub of the future.

But there is some good news in all of this. For most brands, 80 percent to 90 percent of all online fans communicate through “dark social media,” meaning text messaging, email, and other channels we can’t see or measure. These private communications are migrating to the private networks owned by Facebook, Snapchat and others. Will these companies eventually provide us insights from the greatest untapped source of consumer data on the planet? Businesses will no doubt try to navigate, and one day may possibly benefit from, these massive private networks.

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Why You Should Attend Conferences To Elevate Your Brand

Why You Should Attend Conferences To Elevate Your Brand | Florida Economic Gardening | Scoop.it
As a marketer you may think you don’t need to go to conferences because you have already established your brand. However, you may want to slow down for one moment, and take today to deeply review the idea of the consequences that follow those who attend events, trade shows, and especially conferences. We would like you to consider that you should be attending conferences to elevate your brand.

Conferences are very informative, but one of the major benefits is that a conference can help you take your brand to the next level. Let’s jump in and get started to find out why.

#1 You Get to Network Like Crazy

When you go to a conference which is being held, especially in your brands niche, you are able to interact with other likeminded individuals, in addition you are able to network with some of the “big names” in your niche. This is one of the easiest ways to build up new professional connections in a new place. People who know things about your space are at these conferences. The energy and inspiration you will take away with you is practically immeasurable.

Networking is always good for business and business owners, but the real triumph usually goes to the marketers who attend. When you as a marketer are networking at a conference, you may even be able to meet and bring on some new donors or mentors who are interested in helping a company like yours, or may be interested in you, personally. This is a great place to find those persons who are willing to take your brand to that next level. These donors and mentors are often at the conference for that very purpose – to find you – to find your brand. You may also be surprised at how many people have been able to get their foot in the door of something big, some big opportunity that’s been waiting just for them to scoop up – simply because they attended a conference.

#2 You Get to Get Ideas and Feedback

You may be popular in your local area, but chances are not everyone in the nation or world knows or even cares about your brand. If this sounds like the position you are in at present, attending a conference is a great way to get ideas and feedback from others who may have already mastered the marketing problem you are facing. Not only are you introducing a future fan, client, investor, or customer to your brand (by networking), but you are also getting the much needed advice on what it is going to take to take in terms of ideas, work, manpower, money, and effort to catapult your brand to that next level which you have been working on and chasing – possibly without success.

For example, say you are having trouble with choosing the right hashtag for your brand. Someone at the conference is going to be having a great hashtag success – and believe it – they want to tell you about it. Merely getting yourself to, and being in attendance at the conference, you are able to get some insider tips and knowledge for creating and implementing your hashtag plan. Further, once the conference is over this person who gave you a piece of themselves by way of knowledge on hashtags (or something else) is going to see if you actually took their advice to heart. If you did, you may have just landed yourself a customer and/or brand ambassador who is willing to help you get the word out about your brand even more. You recognized value and took action for your company.

#3 You Can Market Your Brand Shamelessly

As mentioned above, when you are at a conference you can market your brand shamelessly because everyone is there to connect and learn more about each other’s ventures, plans, and ideas. The people whom are there at the conference want you to market to them, which is why people will come to you and inquire more about your brand and exactly what it does.

The trick to turning shameless, no apology marketing into a way to elevate your brand is to make sure that your elevator pitch is perfect. Since hundreds, or thousands, of other marketers could be at the conference, you want to make sure that you are able to give a brief (30 seconds or less) yet memorable rundown on your brand to each person that enquires about it. Don’t use the words: a, um, ah, or well. Practice a straight forward presentation which include a couple of sentences that are straight forward and concise. Don’t waste anyone’s time.

Tips for Attending a Conference

NextCon16 is one of the conferences coming up which is happening in Arizona later this year that I’ll be attending. This conference is about business and of course, for businesses. This conference is bringing in speakers such as Oli Gardner, Darin Brown, and Steve Wozniak, who have signed up to share insider tips and knowledge to marketers. During this three-day event marketers are able to learn about various topics such as,

- Customer Engagement in Today’s Digital Age

- Automate & Integrate: Bringing Your Data Together Become an

- Email Marketing Expert

Tickets for this event ranges from $79 for students to $299 for general admission.

If you plan to begin your journey of building yourself and your brand through conference attendance, such as NextCon16, make sure you keep the following tips in mind.

1. Don’t be afraid to network

2. Have business cards and other branded promotional material on hand

3. Enjoy the amenities where you are staying

4. Interact outside of the conference at the special events, such as nightlife and entertainment.

Closing Thoughts – Conferences are One of the Best Ways to Elevate Your Brand

Great strides for your company can be yours by attending conferences. I have heard people use words like, “wonderful,” when describing a conference. But, the best word and image I heard at a recent conference was, “magical.” The person who said this word was not in my group, but I looked around to see who had said it. There is so much to see and learn and do at a conference – so many ways to have the conference be an investment in yourself and in your brand. As I stood there and looked around at the venue and the people around me, I thought, “You know what? This is magical.”

Which conferences do you plan on attending this year?
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17 Tips for Entrepreneurs Who Blog

17 Tips for Entrepreneurs Who Blog | Florida Economic Gardening | Scoop.it
Blogging the right way can make or break a new business. A powerful blog positions you as an authority and brings in new customers.

But effective business blogging takes work. Lose focus, and you’ll waste years on blogging with nothing to show for it.

To get started with blogging, here are my top 17 tips for creating content. I’ve organized them into six major categories. One: Systematize your content creation. Two: Use outlines. Three: Write compelling content. Four: Know your audience. Five: Make your blog a must-read. Six: Spread your ideas.

1. Systematize your content creation.

Be consistent. To build and keep an audience, you need to set expectations around the quantity and frequency of articles.

Commit to a publishing schedule. Plan it so that it works for you and for your readers. Seth Godin blogs daily. But not everyone is Seth Grodin. Don’t overstretch yourself. A Moz study found that daily blogging had little added benefit.

2. Use outlines.

Commit to outlines. Using outlines for your blog posts prevents you from writing aimlessly and speeds up your editing. Instead, follow proven blueprints. Don’t waste your time reinventing the wheel. Most blog posts follow straightforward structures.

Remember that questions = blog posts. Smart bloggers begin by answering questions. Questions are a huge opportunity to help solve immediate problems. When a customer asks a question, add it to your list of blog post ideas.

Embrace the tomato. Use a timer to work in short sprints. This is known as the Pomodoro Technique: Studies show that you’re most productive when working in short bursts of 30-to-40 minutes, with short breaks in between.

3. Write compelling content.

People aren’t interested in your sales pitches and recycled listicles. If you’re ready to build a business blog, then start by publishing great stuff. Like really, really great stuff.

Write seductive headlines. Your headlines should be so good that people can’t help but click through them. Great headlines have some of the following characteristics:

Have emotional wording.

Use numbers.

Incite curiosity.

Visit popular blogs. Check their top content to see which headlines perform best.

4. Know your audience.

What are they proud of? What are their burning desires? What makes them tick? Know your readers’ pain points and offer solutions.

What is the purpose of your blog? Once you know your audience, think about what you’re helping them to achieve (big picture). A blog is not just about you or your business. It’s a way to get exposure for your business, and connect with your audience. Blog posts should be top of the funnel content, generating brand awareness without directly selling.

Open strong. From the start, you must captivate the reader. Follow these steps to write killer first paragraphs:

1. Empathize.

2. Promise to make life better.

3. Reassure your reader that your tips are easy.

Focus on your niche. Be okay with stepping on toes. To blog effectively, focus on your audience and no one else.

Be proud of the audience you don’t write for as much as the audience you serve. You’ll turn some people away, but strengthen the bond with the ones that count.

5. Create a must-read blog.

To create a blog that people love, take a stand for what you believe in. Rehashing content won’t cut it. Follow these tips for creating a must-read blog:

Use your own (personal) name. Blogging under your name is about more than sharing your personal musings -- it can support your core business. Consider what Kristi Hines said: If I started from scratch, I would build all of my profiles and main blog using my real name instead of my blog name.

Or follow the lead of Jordan Fried, founder of Buffered VPN, who blogs in virtual private network (VPN) space on his personal and business blogs. Fried has created a strong sphere of influence in the VPN industry.

Case in point: Whether on my personal blog or my business blogs, I’m always writing about marketing.

Eliminate the fluff. Keep things simple. The best business bloggers write with clarity. Why? When you write clearly, people listen. Prune the fluff from your content garden. Cut out ifs, buts and maybes. Scrap jargon. Quit stating the obvious. Start adding value with every word you write.

Quote experts. Beyond simply showcasing your industry knowledge using expert quotes builds social proof: Edward Hallen of Buffer said: If [an influencer has a] positive reputation, anything else they are involved with is seen more positively by association. This is why influencer testimonials work.

Tell your story. Headlines get clicks; stories get shares. Open up to your readers and share stories about your life. Peter Gruber said: Telling purposeful stories to win is a game-changing business proposition that anyone can do and start seeing results immediately. -

It’s okay to be a little vulnerable, even on a business blog.

6. Spread your ideas.

To spread your ideas, stop selling. Stop selling yourself and your product. Instead, start connecting. Use these tactics to connect with your readers and spread your ideas:

Build your list. Regardless of your blog’s purpose, you need to build an email list. It’s not an option. It’s a must. Start building your list from day one. It’s the best way to share content with your audience. Your list is your direct line of communication with your readers, and as such it’s your most valuable asset.

Optimize your posts. Use SEO to your advantage. Don’t get stuck in the weeds of SEO tactics and updates; just hit the basics. Follow a simple SEO checklist so that search engines can quickly find and index your posts.

Guest blog. If you’re just getting started, guest blogging is the quickest way to get more traffic and new customers. Guest blogging is simple. Here’s my process:

1. Contact sites in your industry.

2. Write guest posts.

3. Pitch to stronger sites.

4. Repeat.

Create a sharing army. When connecting with readers and other bloggers, keep track of your relationships in a spreadsheet or CRM tool. This is your “sharing army.” When you publish new content, let everyone know about it. As your army grows, more people will link to and share your new content, creating a snowball effect.


You can follow all these tips, checking every last box and creating the “perfect” blog posts. Ultimately, business blogging success boils down to one thing: Have ideas worth spreading. I’m sure there are lots more business blogging tips for entrepreneurs. What’s your favorite?

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Social Entrepreneurship Is Growing Globally, a New Study Finds

Social Entrepreneurship Is Growing Globally, a New Study Finds | Florida Economic Gardening | Scoop.it

What’s the point of pursuing your dreams if you can’t help others do the same?

This sentiment is becoming more common, according to a report released by the Global Entrepreneurship Monitor (GEM) assessing social entrepreneurship worldwide. The program, sponsored by Babson College and partnering institutions, has found that interest in social entrepreneurship has grown exponentially over the last decade.

Researchers conducted interviews with 167,793 adults in 58 different economies in 2015. To gauge the prevalence of social entrepreneurship broadly, the researchers found a global average rate of 3.2 percent of individuals were in the startup phase of social enterprise last year.

Social entrepreneurs not only focus on what goes into their pockets, but also on how they can use their platform to give back. In the U.S., many socially focused companies, such as Yoobi and Toms, have become household names. But trend trickles down to smaller economies. The study goes on to explain how the social entrepreneurship trend transcends education level in many regions.

"Social entrepreneurship is about people starting any initiative that has a social, environmental or community objective," says Siri Terjesen, a professor at American University who co-authored the report, in a press release. "It could be students who are starting a product that's based on recycled materials, or a group working to find a solution to irrigation problems in their neighborhood."

Though the trend seems to be far-reaching on the global scale, some countries were more entrepreneurial on the social side than others. For example, of the population in Senegal, 18.1 percent were pursuing social entrepreneurial activity. In contrast, Taiwan had a dismal rate of 1.3 percent. The U.S. and Australia were among the nations with the highest levels of activity, each at around 11 percent.

The frequency of commercial startup pursuits was of course found to be a bit higher, with all regions studied averaging about 7.6 percent. But some nations lead in both categories: Peru has a 10.1 percent rate of individuals working to launch social startups and a 22.2 percent rate of those who are in the process of getting commercial enterprises off the ground.

A gender breakdown also provided interesting insights, as the researchers discovered the world’s social entrepreneurs are 55 percent male and 45 percent are female -- a significantly smaller gap compared with commercial counterparts.

"The social entrepreneurship gender gap is less pronounced than in commercial entrepreneurship where men trump women as business leaders 2:1," Terjesen says. "In social ventures, both genders are equally represented, suggesting that social entrepreneurship is a top business field of interest for women worldwide."

How these business-folk get their start seems to be in a similar stride, as most use personal funds to get the wheels turning. For instance, the majority (about 60 percent) of those in this part of industry used their own funds to invest in their business in Southern and Eastern Asia, the Middle East and North Africa. However, sub-Saharan Africa had a low personal investment rate of about 30 percent.

So, what’s the reason for the social entrepreneurship boom? Terjesen attributes it to the limited ability governments have to solve the increasingly prominent social issues in today’s society. Although the growth in the number of socially minded companies is a big step toward achieving those goals, Terjesen says it’s important to “determine the most appropriate ways to support social entrepreneurs and scale up their solutions.”

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Assess Whether You Have a Data Quality Problem

Assess Whether You Have a Data Quality Problem | Florida Economic Gardening | Scoop.it
Decision makers, leaders, data scientists, and managers often must make quick assessments about whether they can trust a set of data, whether they can include it in an analysis, or whether they need it to take a new direction. While there are thousands of variants, their basic question is, “Do I have a data quality problem?”

I’ve created a simple method that helps anyone answer this question. I call it the “Friday Afternoon Measurement” (FAM), and it’s aimed at managers at any level whose job depends on data. (In fact, FAM is a good exercise to know if you hope to be what I call a data provocateur.) The method helps you to easily measure the current level of data quality, develop a high-level estimate of its impact, and synthesize the results. It is fungible, meaning it adopts itself well to different companies, processes, and sets of data. To follow its methodology, take these four steps.

Step 1. Assemble the last 100 data records your group used or created. For example, if your group takes customer orders, assemble the last 100 orders; if you create engineering drawings, assemble the last 100 drawings. Then focus on 10–15 critical data elements (or attributes) within the data record. Lay these out on a spreadsheet or large sheets of paper.

Step 2. Ask two or three people with knowledge of the data to join you for a two-hour meeting. (The FAM takes its name because many people set up these meetings on Friday afternoon, when the pace of work slows.)

Step 3. Working record by record, instruct your colleagues to mark obvious errors in a noticeable color, like red or orange. For most records, this will go incredibly quickly. Your team members will either spot errors — the misspelled customer name or information that’s been placed in the wrong column — or they won’t. In some cases you’ll engage in detailed discussions about whether an item is truly incorrect, but usually you will spend no more than 30 seconds on a record.

Step 4. Summarize the results. First, add a “record perfect or not” column to your spreadsheet. Mark it “yes” if there aren’t any errors and “no” if red or orange appears in the record. Total the number of perfect records.

Interpret the “number of perfect records” as follows: Of the last 100 data records our group completed, we only completed two-thirds — 67 out of 100 — properly. Almost everyone will recognize this as poor performance indeed. (As a note, I frequently use this exercise in teaching and consulting assignments, and I’ve seen many poorer results and a few better ones. A data quality of 67% is on the high end of typical.)

This finding confirms you have a data quality problem. To see how it impacts your business, go one step further. Bad data causes all sorts of trouble — good decision making is harder, customers are angered — and it adds costs. The so-called “rule of 10” provides a simple means to estimate these costs. It is based on the observation that “it costs 10 times as much to complete a unit of work when the input data are defective as it does when they are perfect.”

Thus, in the example above, someone using the data will be able to do so without added effort two-thirds of the time, but one-third of the time it will cost about 10 times as much to make corrections and to complete the work. As a simple example, suppose your work team must complete 100 units per day and each unit costs $1.00 when the data is perfect. If everything is perfect, a day’s work costs $100 (100 units at $1.00 each). But with only 67 perfect:

Total cost = (67 x $1.00) + (33 x $1.00 x 10) = $67 + $330 = $397

As you can see, the total cost is almost four times as much as if the data was all good. Think of the difference as the cost of poor data quality. Most companies can’t, and shouldn’t, tolerate such costs.

Now that you know you have a data problem and know the costs associated with it, you may wish to make some actual improvements! The spreadsheet indicates which attributes have errors, and by looking at that data you can see which attributes need fixing first. Tally the number of errors in each column, and focus on two to three attributes that have the highest totals. Find and eliminate their root causes. In most cases you should expect those responsible for the creating the data (either your team or another, depending on the data you selected) to make these improvements as part of their day-in, day-out jobs, with little to no capital investment. But you’ll see the error rate decline and the associated costs diminish significantly.

Everyone should make data quality a part of their job, and this exercise provides one easy way to take steps toward improvement. This process isn’t meant to be a one-time exercise — you can do the FAM regularly to assess your data quality. By spending time with the FAM, you can not only identify whether you have a data quality problem but also know where to target your efforts to fix it.
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5 Steps to Creating a Killer Marketing Strategy

5 Steps to Creating a Killer Marketing Strategy | Florida Economic Gardening | Scoop.it
Not every marketing plan is a good marketing plan. There are certain qualities it needs to meet to be able to do what it is supposed to do and be considered an effective plan that will convert customers and be successful.

It is easy to tell a "potentially successful" marketing plan apart from a mediocre marketing plan. Generally, there is a framework that a killer marketing strategy would follow. This article will look a five qualities of such a plan. I’ll be using example of a fashion brand since it is easier to follow.

1. Focus on the market. Your target market should be narrowly defined. You can't please everybody. Doing so will actually put more pressure on you and may result in losses. A fashion brand’s target market can be anyone, but it has to be narrowed. You have to first decide between genders (male or female) and then the age factor.

Everything else in your plan will be essentially based on your target audience. Other factors that need to be taken into consideration are your target audience’s likes and dislikes and purchasing power. The formula lies in choosing, dividing and then conquering.

2. Focus on the product. This goes hand in hand with the market focus, but needs its own heading. If you’re targeting working women in their 50s then offer quality, formal and semi formal dresses. Also, explain what a certain product does. For example, if you offer shoes that help gain height, explain how they work. Such a product will further narrow down your target audience to shorter women, allowing you to market even more effectively.

3. Have measureable specifics. Everything should be quantifiable and ideally in numbers. Include all major and minor details with proper dates since a timeline is important. A good marketing plan is driven by strategy, but the details and tactics will give it the push it needs.

The plan has to show result of each activity so that it becomes easy to measure ROI.

A fashion brand cannot have vague goals like "product quality clothes" or "make clients happy." While, it is important to produce high-quality products and have happy clients, such goals are not quantifiable and hence should not be a part of such a plan. Instead, have solid goals like "reach $1 million sales in five years.” This again, depend on the timeline if your marketing plan is for one year or five years.

If you are starting a new business you can have both short-term and long-term marketing plans. Both these plans need to be interconnected, i.e: your short term marketing plan should help you attain your long-term goals. However, make sure your goals are attainable.

4. Accountability and responsibility. Do not count on people to do their job, especially in groups. The truth is that groups get done very little when compared to individuals. To get better results, have a specific task for every individual and ask them to work on it.

Take care of the accountability factor and keep an eye on results to make sure all individuals are putting their best foot forward. Be sure to reward achievement and reprimand for failure to meet the desired goals.

A good marketing plan needs more than just involvement -- you need to be committed to it. Everyone should know their job and be aware of the outcomes of performing or not performing their part well.

5. Revisions and reviews. A marketing plan is really a planning process and not a plan. We live in a dynamic environment and cannot afford to have static marketing plans. A good marketing plan will do everything from setting goals to tracking performance and measuring it in quantifiable units. It requires to be reviewed regularly and revised as necessary.

The marketing group should sit together to see how their plan is working and if anything needs to change. Even if is a five-year plan, it does not mean you will sit down and talk about it at the end of the five-year period. You have to discuss the plan regularly and see if it is going as planned.

For example, in case of a fashion brand, your prices may change within a few months due to high demand or change in the prices of raw material. This would require your marketing plan to change as well since your goals will need to be revised.
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Where Financial Reporting Still Falls Short

Where Financial Reporting Still Falls Short | Florida Economic Gardening | Scoop.it
In a perfect world, investors, board members, and executives would have full confidence in companies’ financial statements. They could rely on the numbers to make intelligent estimates of the magnitude, timing, and uncertainty of future cash flows and to judge whether the resulting estimate of value was fairly represented in the current stock price. And they could make wise decisions about whether to invest in or acquire a company, thus promoting the efficient allocation of capital.

Unfortunately, that’s not what happens in the real world, for several reasons. First, corporate financial statements necessarily depend on estimates and judgment calls that can be widely off the mark, even when made in good faith. Second, standard financial metrics intended to enable comparisons between companies may not be the most accurate way to judge the value of any particular company—this is especially the case for innovative firms in fast-moving economies—giving rise to unofficial measures that come with their own problems. Finally, managers and executives routinely encounter strong incentives to deliberately inject error into financial statements.

In the summer of 2001, we published an article in these pages (“Tread Lightly Through These Accounting Minefields”) designed to help shareholders recognize the ways in which executives use corporate financial reporting to manipulate results and misrepresent the true value of their companies. Enron imploded the following month, prompting the passage of the Sarbanes-Oxley regulations in the United States. Six years later, the financial world collapsed, leading to the adoption of the Dodd-Frank regulations and a global initiative to reconcile differences between U.S. and international accounting regimes.

Despite the raft of reforms, corporate accounting remains murky. Companies continue to find ways to game the system, while the emergence of online platforms, which has dramatically changed the competitive environment for all businesses, has cast into stark relief the shortcomings of traditional performance indicators. This status report looks at the most important developments of financial reporting in recent years, particularly the impact of the new rules governing revenue recognition, the persistent proliferation of unofficial performance measures, and the challenges of fairly assessing asset values.

We also look at the more insidious—and perhaps more destructive—practice of manipulating not the numbers in financial reports but the operating decisions that affect those numbers in an effort to achieve short-term results. Finding ways to reduce such behavior is a challenge for the accounting profession—but one that new analytic techniques can address. Let’s examine each of these problems in turn.

Problem 1: Universal Standards

Back in 2002, the world seemed to be on the verge of an accounting revolution. An initiative was under way to create a single set of international accounting standards, with the ultimate aim of uniting the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) that European countries were in the process of adopting. By 2005, all public companies in the European Union had, in theory, abandoned their local accounting standards in favor of IFRS. Today, at least 110 countries around the world use the system in one form or another.

But in a broad sense, convergence has stalled, and further substantive changes seem unlikely in the near future. To be sure, progress has been made, but understanding the true value of a firm and comparing company accounts across countries continue to be major challenges.

Consider the implications of failing to reconcile GAAP and IFRS. The analysis of investment targets, acquisitions, or competitors will in many cases continue to require comparison of financial statements under two distinct accounting regimes: Pfizer versus GlaxoSmithKline, Exxon versus BP, Walmart versus Carrefour—in each case, one company uses GAAP and the other uses IFRS. The impact on results is hardly trivial. Take the British confectionary company Cadbury. Just before it was acquired by the U.S. firm Kraft, in 2009, it reported IFRS-based profits of $690 million. Under GAAP those profits totaled only $594 million—almost 14% lower. Similarly, Cadbury’s GAAP-based return on equity was 9%—a full five percentage points lower than it was under IFRS (14%). Such differences are large enough to change an acquisition decision.

To further complicate matters, the way that IFRS regulations are applied varies widely from one country to the next. Each has its own system of regulation and compliance, and in many countries (especially in the fastest-growing emerging regions) compliance and enforcement are weak. The quality and independence of the accounting profession are also often patchy.

Just as troubling is the fact that many countries have created their own versions of the IFRS system by imposing “carve outs” (removal of offending passages) and “carve ins” (additions) to the official standard promulgated by the International Accounting Standards Board (IASB). India and China are notable examples. So while several countries, among them Australia and Canada, have adopted the complete, unadulterated version of IFRS, it’s always worth checking to see if a company of interest has adopted a truncated or bastardized version.

Problem 2: Revenue Recognition

Revenue recognition is a tricky piece of the regulatory puzzle. Suppose you sell a smartphone or an internet service or a $30 million software package to an individual or a company. The contract for that product or service often includes future upgrades whose costs cannot be predicted at the time of the sale. Therefore, it is impossible to determine how much profit the sale will generate.

Under current GAAP rules, if there is no objective way to measure such costs beforehand, a business is not allowed to record any revenue from that sale until all upgrade requirements have been delivered and their costs are known—which could take a few years. This regulation has prompted some software companies to write contracts that carve out and separately price upgrades and other hard-to-value services. In doing so, the companies solve an accounting problem—but compromise their ability to adopt a conceivably more attractive bundling strategy. The result is a perverse system in which accounting rules influence the way business is done, rather than report on companies’ performance.

The shortcomings of revenue-recognition practices have also caused companies to increasingly use unofficial measures to report financial performance, especially for businesses operating in the virtual space. The colossal success of social networks such as Facebook, Twitter, and Ren Ren; fantasy sports and game sites such as Changyou and Zynga; and online marketplaces such as Amazon, eBay, and Alibaba quickly demonstrated that traditional guidelines for the recognition and measurement of revenue and expenses were preventing them from truly reflecting their businesses’ value in reported accounts. Unsurprisingly, these companies soon began to adopt alternative ways to report on earnings. For example, in 2015 Twitter reported a GAAP net loss of $521 million; it also offered not one, but two non-GAAP earnings measures that showed positive income: adjusted EBITDA of $557 million and non-GAAP net income of $276 million.

A change next year in the rules under both IFRS and GAAP should alleviate the perversities of current revenue recognition practices. The new rules will allow companies that bundle future goods and services into contracts to recognize revenue in the year it is earned by using estimates of future costs and revenues.

How will this work? Consider a company that offers a $30 million software contract composed of two parts: software and upgrades for five years. The software component, which cost $4 million to develop, sells for $20 million. The upgrades, whose costs are unknown, are bundled into the price for an additional $10 million. Current GAAP rules would have the business recognize no revenue for the upgrades until the end of year five, when full cost information is available. But under the new rules (and under current IFRS rules), the company may estimate the cost of delivering those upgrades to allow it to recognize revenue. If, say, it estimates the costs at $5 million, IFRS will allow the company to recognize a profit $5 million spread out evenly over the five years.

But the change will not completely eliminate problems. After all, estimating costs requires managers to exercise judgment, introducing yet another opportunity to make good-faith errors or to deliberately tilt estimates in such a way that the resulting revenues are closer to meeting financial targets. Therefore, as these new revenue-recognition standards are adopted and implemented under GAAP and IFRS, investors will need to examine closely the assumptions and methods used to estimate costs and report revenues.

Problem 3: Unofficial Earnings Measures

Although unofficial measures of revenue are relatively new for many companies, all types of businesses have been employing non-GAAP and non-IFRS measures of earnings for a long time. Perhaps the most popular is EBITDA (or earnings before interest, taxes, depreciation, and amortization), a particular favorite among private equity investors because it’s thought to provide a quick proxy for the amount of cash flow available to service debt. In the tech sector, non-GAAP measures are rife; during the first dot-com wave, companies began using “eyeballs,” “page views,” and so on to convince analysts and investors that their businesses had value despite the absence of profits (and sometimes even of revenue).

Today, Sarbanes-Oxley requires companies on U.S. exchanges to reconcile GAAP measures of earnings to non-GAAP measures, and IFRS has a similar requirement. In addition, the SEC requires that management be able to support the reasoning behind including an alternative measure in its financial disclosures. For example, a company might justify the use of a non-GAAP measure by noting that it is required by one of its bond covenants.

Although these changes are steps in the right direction, they haven’t solved the problem, and huge discrepancies in reporting remain. For example, in 2014, Twitter reported a GAAP loss per share of $0.96—but a non-GAAP profit of $0.34 per share. In 2015, Amazon reported GAAP earnings per share of $0.37 and non-GAAP EPS of $4.14. The alternative measure yielded a relatively modest price-to-earnings ratio of 106, rather than the mind-boggling 1,192. This suggests that unofficial measures may be a better representation of earnings.

The danger, however, is that alternative measures are usually idiosyncratic. Even commonly used measures such as EBITDA can be noncomparable from business to business—or in the same company from one year to the next—because of differences in what’s included or excluded in the calculation. Investors and analysts should continue to exercise great caution in interpreting unofficial earnings measures and should look closely at corporate explanations that might depend on the use (or abuse) of managerial judgment.

Problem 4: Fair Value Accounting

Executives and investors have two measures at their disposal for determining the value of a firm’s assets: the price originally paid (that is, the acquisition cost or historical cost) and the amount those assets would bring in if sold today (fair value).

Some 25 years ago, before the rise of the internet, corporate financial statements relied on the former, which has the important virtue of being easily verifiable. Today, however, companies use fair value for a growing number of asset classes in the hope that an examination of balance sheets will yield a truer picture of current economic reality. But since not everyone agrees on what “fair value” means, the measure has injected enormous subjectivity into the financial reporting process, creating new challenges for both preparers and users of financial statements.

As the financial crisis took hold in 2008, a myriad of adjustments to the methods of applying fair value were adopted by the U.S. Financial Accounting Standards Board, the SEC, the IASB, and the Public Company Accounting Oversight Board—a nonprofit corporation created by Sarbanes-Oxley to oversee the audits of public companies. The goal was to guide auditors on how to verify fair value, but the result has been more confusion, not less. The measurement process has proved difficult, often highly subjective, and controversial.

Consider the accounting treatment of Greek bonds by European banks in 2011, during one of a seemingly endless stream of crises involving government debt in Greece. Write-downs of the bonds varied from 21% to 51%—a striking discrepancy when one considers that all large European financial institutions have access to the same market data and are audited by the same four accounting firms. The Royal Bank of Scotland, for instance, recognized a charge to earnings in the second quarter of 2011 of £733 million, after a 51% write-down from the balance sheet value of £1.45 billion for its Greek government bond portfolio. In doing this, RBS followed the IFRS (and GAAP) fair value hierarchy, which states that if observable market prices are available, they must be used. On that basis, RBS noted that market prices had dipped by just over half the price paid for those bonds when they were issued.

Meanwhile, two French financial institutions, BNP Paribas and CNP Assurances, looked at the very same data and chose to write the bonds down by only 21%. They rejected the market prices on the questionable grounds that the market was too illiquid to provide a “fair” valuation. Instead, they resorted to so-called “level 3” fair value estimates in a process known as mark-to-model (in contrast to the mark-to-market valuations used by RBS).

If such difficulties arise with tradable securities, imagine how difficult it is to apply fair value principles consistently to intangibles such as goodwill, patents, earn-out agreements, and research and development projects. Making matters worse, disclosures about how intangible assets are valued must offer only basic information about the assumptions that generated the estimates. It’s hard to see how the situation could improve: One can rarely find an SEC annual report (10K) under 150 pages as it is. If these reports included full disclosure of the assumptions behind fair value estimates—were such a thing even possible—the length of reports would be overwhelming.

Problem 5: Cooking the Decisions, Not the Books

When accountants, analysts, investors, and directors talk about accounting games, they usually focus on how costs are accrued in a company’s reports. Managers may, for instance, choose to overprovision—that is, deliberately overstate expenses or losses, such as bad debts or restructuring costs—to create a hidden cookie-jar reserve that can be released in future periods to artificially inflate profits. Or a company might underprovision, deliberately delaying the recognition of an expense or a loss in the current year. In that case, profit is borrowed from future periods to boost profit in the present.

Recent changes in GAAP and IFRS rules have made such activities less egregious than they once were, although overprovisioning will most likely always be with us. Managers want the accounting flexibility that comes from having hidden reserves, and external auditors will let them get away with it (within limits) because companies are unlikely to be sued for understating profits. Auditors are much more fearful of their clients’ underestimating costs (and thus overstating profits).

In general, regulations have weakened companies’ ability to manipulate financial reports—and in response, the gaming of results has moved to a place that accounting rules will struggle to reach: corporate decision making that serves the interest of short-term reporting but undermines long-term performance.

A study published in the Journal of Accounting and Economics surveyed more than 400 senior executives on how their companies managed reported earnings. The researchers asked the executives to imagine a scenario in which their company was on track to miss its earnings target for the quarter. Within the constraints of GAAP, what choices might they make to reach the target?

The study revealed that managers tend to manipulate results not by how they report performance but by how they time their operating decisions. For example, nearly 80% of the respondents said that if they were falling short of earnings targets, they would cut discretionary spending (such as R&D, advertising, maintenance, hiring, and employee training). More than 55% said they would delay the start of a new project even if it entailed a small sacrifice in value. Nearly 40% said that if they were in danger of missing targets, they would provide incentives for customers to buy more in that quarter.

Managers also goose the numbers by manipulating production. If a company has substantial excess capacity, for instance, mangers can choose to ramp up output, allowing fixed manufacturing costs to be spread over more units of output. The result is a reduction in unit cost and, therefore, lower costs of sales and higher profits. But this practice also leads to high finished-goods inventories, imposing a heavy burden on a company in return for that short-term improvement in margins, as one study of the automobile industry shows. When huge numbers of unsold cars sit on lots for extended periods, bad (and costly) things can happen to them: Windshields and tires may crack, wipers break, batteries wear down, and so on. The company has to ramp up marketing spend, slash prices, and offer expensive extras such as 0% financing just to get customers to buy. And the very act of cutting prices can sacrifice an automaker’s hard-won brand equity.

What makes these findings so disturbing is not just that gaming practices are widespread but that such actions are not violations of GAAP or IFRS. Corporate executives can do as they please in the comforting knowledge that auditors can’t challenge them. What’s more, such destructive behavior is exceedingly difficult to detect under current disclosure rules.

New Analytical Tools Can Help

Investors and board members understand that manipulating operating decisions in order to report higher earnings in the short term introduces the very real risk of compromising a company’s long-term competitiveness. It’s also clear that as accounting regulations continue to improve and prevent more accounting fraud—but executives’ incentives to hit short-term targets stay strong—companies will be increasingly likely to cook decisions rather than books. So investors and directors will have to demand more disclosure on those operating decisions that are most susceptible to manipulation in order to determine whether they are being made for sound business reasons or to artificially boost financial results.

Of course, that will create practical problems in terms of the sheer volume of information being reported and will still involve hard-to-verify assumptions. In fact, regulatory requirements that produce ever more lengthy reports may be an exercise in diminishing returns. What we need, perhaps, are smarter approaches to analyzing the data available. The good news is that new techniques are increasingly being applied by analysts and investors.

Benford’s Law.

One approach to the analysis of company reports that has recently gained favor in financial markets is based on Benford’s Law, about the frequency distribution of leading digits in numerical data sets. The law has been around for a long time, but only recently has it been applied in accounting and in the financial sector: Insurance companies have started using it to detect false claims, the IRS to detect tax fraud, and the Big 4 accounting firms to detect accounting irregularities.

Named for an early-20th-century British scientist, the law states that in lists of numbers from any naturally occurring data source—credit card charges, procurement entries, cash receipts—the first digit for each number will be 1 (for example, 1, 157, 1,820) about 30% of the time. The first digit will be 2 about 18% of the time, and each successive number will represent a progressively smaller proportion, to the point where 9 will occur as the first digit less than 5% of the time. This distribution has been found to hold for a practically limitless array of data sets: The length of rivers (in feet and in meters), the population of cities and countries, trading volume on stock exchanges, the number of ranking points for tennis pros, the molecular weights of chemicals, the height of the world’s tallest buildings, and so on.

Accounting variables should also be distributed in accordance with Benford’s Law—and they are, as long as there has been no conscious gaming of the data. In fact, the distribution holds even if the figures are converted from one currency to another. If a set of accounting data deviates from Benford’s Law, that can be taken as evidence of manipulation.

Suppose that an accounting firm is reviewing a company’s financial statements. If an unusually high number of first digits in the accounting data are 7s, 8s, or 9s, it may indicate a conscious effort by managers to finesse the numbers to achieve desired financial results.

Verbal cues.

Another tool for detecting unscrupulous practices has emerged from the research of two accounting academics who analyzed the transcripts of nearly 30,000 conference calls by U.S. CEOs and CFOs from 2003 to 2007. The researchers drew on psychological studies that show how people’s speech patterns change when they lie. They discovered several verbal cues that could have tipped off a listener that something was not quite right with the company’s accounts. For example, in companies that were later forced by the SEC to make major restatements of key financials, deceptive bosses displayed the following patterns:

- They referred to shareholder value relatively seldom (perhaps to minimize the risk of a lawsuit).

- They used extremely positive words (for example, instead of describing something as “good,” they’d call it “fantastic”).

- They avoided use of the word “I” in favor of the third person.

- They used fewer hesitation words, such as “um” and “er” (which might suggest that they were coached in their deceptions).

- They used obscenities more frequently.

Of course, the problem is that managers who intend to deceive can be taught to avoid those markers. But in the meantime, verbal cues can be a useful tool for board members and other interested parties to ferret out dishonest practices.

The first years.

Manipulation of financial results is most prevalent in the early years of a CEO’s tenure and decreases over time, a recent study shows. A possible explanation is that the early years are the period of greatest uncertainty about a CEO’s ability, so CEOs may distort earnings in an effort to keep their jobs. The lesson for board members and investors is that they should be especially vigilant regarding a company’s accounting practices when a new chief executive takes over.

In order for financial statements to fulfill their important social and economic function, they must reveal the underlying economic truth of a business. To the extent that they deviate from that truth, scarce capital will continue to be misallocated and wealth—and jobs—will be destroyed.

Of course, we will never reach a world in which all reports are perfectly and reliably true, but an understanding of their shortcomings and the availability of new tools to detect manipulation can help us continue to strive for that ideal. As companies increasingly use the timing of operating decisions to artificially boost performance numbers—a practice that is harder to detect and regulate—vigilance becomes vital.
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The Dos and Don’ts of Working with Emerging-Market Data

The Dos and Don’ts of Working with Emerging-Market Data | Florida Economic Gardening | Scoop.it

Executives are usually taught that data is an objective and critical input for strategic planning and operations. Applying this, however, is much easier said than done — especially among companies operating in emerging markets.

Emerging-market data can be challenging to work with due to significant data gaps, biased data, and outdated or incorrect numbers. Of course, these issues can cause a headache for any company, in any market. But because they are so prevalent when it comes to emerging-market data, the challenges are exacerbated. They can lead executives to make misguided investment decisions, and put a company’s reputation and jobs at risk.

As multinational companies seek to strengthen their emerging-market portfolios, they must have a better understanding of what their data can and cannot do, and when to trust it. The margin for error in business has become substantially smaller as global growth slows.

Based on my research at Frontier Strategy Group, I’ve found that companies can avoid the pitfalls of evaluating emerging-market data, and successfully use it to support strategic decisions, if they follow a few key do’s and don’ts.

Emerging markets’ data have considerable gaps. To understand a product’s sales potential, executives want industry-specific indicators. For example, if a company sells toothbrushes, it uses toothbrush sales forecasts to determine yearly targets. However, the more specific the information, the less likely it is that data will exist, especially in less developed markets.

Yet companies still expect their data providers to offer this industry-specific information. In order to bridge the gap between what companies need and what data are available, data providers sometimes use models to create the data, which can lead to serious data quality issues. And executives are often not cautioned to take those models with a grain of salt.

For example, the alcoholic beverage company Beta decided to prioritize Iran as an opportunity market for its drinks. According to available data, Iran’s alcohol consumption was comparable to that in India. However, alcohol consumption is illegal in Iran. The numbers were based on outdated statistics from the 1970s, when Iranians, prior to the Iranian Revolution, were emulating Western lifestyles. Growth forecasts were placed on top of these outdated numbers, without taking decades of conservative rule into consideration. As a result, Beta had to restart its market prioritization process without the erroneous industry-specific data.

The solution is to be creative in gathering data. Finding the right proxy indicators can help fill in gaps. For instance, in order to understand potential demand for cables in Kenya, companies should not try to look for an indicator that specifically quantifies cable sales; instead, they should draw on macroeconomic numbers for government spending and investment in infrastructure, where such cables could be in demand.


- Don’t expect your approach to developed-market data to be applicable in emerging markets

- Do be creative and critical about your use of industry-specific indicators

Data is biased, particularly in emerging markets. Data can be biased for a variety of reasons. First, organizations tend to use local governments’ historical data, which typically reflects whatever agenda the government may have. While developed markets have stronger institutions that can challenge government estimates, this often is not the case in emerging markets, leaving data more susceptible to political interference.

Furthermore, many organizations have stakeholder-driven agendas that occasionally add political bias. For example, as Greece returned to financial crisis in 2015, the IMF forecasted 2.5% YOY GDP growth in its April World Economic Outlook. (Greece’s actual 2015 growth was -.8%.) While it was clear that the Greek economy would not grow, the IMF was involved with the country’s bailout program, giving it a disincentive to forecast recession. The IMF’s intentions were good — a negative growth outlook would have made Greece’s circumstances worse —but the forecasting process was not objective, undermining the ability to devise realistic business plans.

Companies must ensure that their data have been collected by sources with no interest in dressing up the numbers. Find out whether the numbers were reviewed by analysts with in-depth market knowledge. And when looking at forecast data, consider that it faces the same challenges as historical data, with regards to bias, gaps, and lack of comparability, but there are even more assumptions built on top, and therefore more opportunities to make mistakes.

- Don’t blindly trust data, even when it comes from a reputable source

- Do question potential motivations behind numbers

Data in emerging markets can be incorrect. Erroneous data, often based on missing information, creates various planning difficulties for companies. It can lead to executives to miss investment opportunities or to develop faulty strategies.

One case I came across was logistics company Omega. Their China team conducted an analysis to understand which provinces in China might offer the best opportunities. Examining provincial data from the Chinese government, Omega’s China team felt that growth was reported at higher levels than it saw on the ground. The team learned that because provincial governments were evaluated on their economic activity, they overstated the economic figures. The official national figure was actually only 7% YOY for 2014, while the combined official provincial statistics figure added up to nearly 10% YOY GDP growth. So not only was the data biased, it was also wrong. Had Omega’s China team used the provincial data, the company’s targets would have been far overstated.

If official numbers contradict your understanding of the market and actual sales performance, do not ignore it. Wrong data is likely responsible for the misrepresentation of realities on the ground. Base sales expectations on local market dynamics and sales performance numbers, and adjust your strategy and targets if you notice something amiss.

- Don’t take numbers at face value if they make no sense

- Do investigate further by checking data sources against local market observations and expectations

Data is used and interpreted in different ways across an organization. Many different individuals and teams require data for different reasons. For example, local executives use data to make the case for a good opportunity, while corporate executives frequently use data to pressure local teams to deliver on expectations.

One illustrating case of this was technology company Alpha, whose industry-specific data provider predicted computer sales growth of 90% in Ukraine for Q1 2015. Alpha’s U.S. office set aggressive sales targets for Ukraine, based on a data source that was reliable for most Western countries. However, on the ground, Ukraine was facing a war, a devalued currency, and a drop in spending across all industries. Alpha’s local team faced an impossible target.

While the use case for data can vary substantially by stakeholder, so do the skills of the individuals interpreting that data. Many executives understand this but do not appreciate the extent to which it happens. The result is often a culture that ignores data and relies on hunches and guesses that contradict the data focus at headquarters.

To avoid bias and analyze data objectively, executives have to provide clear guidelines and training for data collection, usage, and interpretation across the organization—not only for market monitoring staff but also for the executives regularly using data to make business decisions.

- Don’t assume your team uses data consistently

- Do establish clear organizational standards for gathering and interpreting data

Companies often use outdated data to make forward-looking decisions. Many companies are turning to macroeconomic indicators, such as consumer spending or industrial production, to get an idea of how demand for their products may evolve over time. These data points are key for understanding how external economic developments could affect business plans and targets.

However, companies frequently misinterpret indicators as “leading” when they are actually lagging, as most official data are released on a lag. It’s important to understand the timeline you’re working with to get a sense of how macroeconomic changes, such as slowing growth, and industry changes, such as regulations, can impact your bottom line.

For example, consider consumer goods company Vega, which had long used consumer spending as a leading indicator to understand consumer demand. This was not helping Vega set targets and deploy resources across markets because it was outdated. To solve this problem, Vega engaged in a predictive analytics exercise to understand the real demand drivers for its products. The results showed that while some countries’ demand was driven by income and other spending factors, others countries’ demand was driven by larger factors that impact consumer purchasing power, such as inflation. By identifying the true leading indicators of demand in key markets Vega was able to rightsize targets and reapportion its marketing spend to the most attractive growth opportunities.

- Don’t focus on outdated, lagging indicators

- Do identify forward-looking demand drivers

Understanding data and using it correctly is essential for a company’s success in emerging markets. There will be several practical challenges to doing so, but they are not insurmountable. On the contrary, with the right mix of critical thinking, questioning, and creativity, most data problems can be overcome.

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4 Steps for Launching Corporate Social Responsibility at Your Business

4 Steps for Launching Corporate Social Responsibility at Your Business | Florida Economic Gardening | Scoop.it
Corporate social responsibility (CSR) has become a hot topic in the business world. Companies of all sizes are being encouraged (and sometimes forced) to become more responsible in their communities. Being a responsible “corporate citizen” includes two important components: 1) things an organization does to society and 2) things an organization does for society.

The first component of CSR requires companies to do no harm to the communities in which they operate. It’s not acceptable to pollute the environment, sell unsafe products, promote unhealthy practices, or mistreat employees. In our new world of social transparency, organizations that do harm in any way won’t survive.

While this first component of CSR is a responsibility of all organizations, the second component is an opportunity. In other words, organizations have the basic responsibility to do no harm, but they also have the opportunity to make a difference in their communities. There are huge advantages to building an organization that does much more than just make money. The entrepreneurs I’ve met across America are passionate about serving their communities and feel the benefits of doing so far outweigh the effort, time, and cost.

Having worked with hundreds of entrepreneurs who are making significant contributions to their communities, I’ve observed a simple process they follow for getting involved.

1. Clarify your values.

Your “why” or purpose for being in business is the foundation for everything you do. Having a clear purpose naturally leads to a set of related values. For example, Richard Chaves’s driving purpose is to create jobs in a city he loves. Consequently, he values projects for his company, Chaves Consulting, that lead to more jobs. He also values excellent training, ongoing education, and community building.

Based on your purpose, what are the things you and your teammates value most? Do you value education, continuous learning, innovation, exceptional service, technology development, health and wellness, teamwork, or ethics and integrity? Clarifying your values is an important first step in linking your business with your community. You want to support initiatives that are consistent with your purpose and values, while avoiding things that aren’t consistent with your purpose and values. Your community involvement should always enhance your overall company brand and reputation.

2. Assess your skills.

After clarifying your company values, the next step is to reflect on the key skills and core competencies of your organization. What are you really good at? What do you do better than other companies? What things can you contribute that other people cannot? Then, looking at this list, which ones are you the most passionate about? For example, you may be great at calculating your taxes but not very excited about this skill. On the other hand, you may be very good at and very enthusiastic about solving technical problems. The key is to list your core competencies that you’re most passionate about sharing. What are you most interested in? What kinds of activities bring you the most joy? What contributions do you want to make? After answering these questions, you’ll be ready to identify potential community projects or organizations you want to support.

3. Find potential projects.

As your business grows, many people will approach you about supporting their initiatives. It’s great if you can help them, but it’s better to select potential projects in advance based on your purpose, values, skills, and passion. Otherwise, you’ll end up with a hodgepodge of projects that aren’t directly related to your brand or community of customers. Creating a list of potential projects is easy: Do a Google search on nonprofits, charities, and social organizations in your area. Many cities also have a nonprofit association that can help identify community needs, or you can call various government agencies and ask which organizations are working on certain problems that interest you: education, human services, workforce services, or rehabilitation. To find the best matches, start with a broad list of projects before narrowing down your options.

4. Select the best matches.

Now you need to select one or more projects to support that are great matches with your overall company brand, including purpose, values, skills, and passion. I recommend you work with organizations that serve the same community you do. For example, our customers in the food business were interested in health, nutrition, and fitness. Consequently, we supported running events, fitness fairs, and athletic teams. If you’re in the food industry, you might support various hunger organizations. If you’re in construction, you might get involved in housing projects. If you’re in computer services, you might support a school computer literacy program. While serving constituencies outside your community is admirable, it doesn’t help you build a consistent brand and reputation.

In addition, you should get involved with local projects and organizations whenever possible. The more interaction you have with people in your own area, the more rewarding the service will be for you and your team. This is easy if you’re building a geographical community but harder if you’re building a niche community. However, you might support national organizations that have a main office or regional presence in your area. While it’s great to send money to causes elsewhere in the world, that doesn’t always bring you and your team together in a community effort.

Creating your community strategy

The organizations we build can play a huge role in addressing the challenges we face in our communities. While we have a responsibility to do no harm, we also have a tremendous opportunity to make a real difference. I encourage all the aspiring entrepreneurs I work with to build a social component into their business plan from day one. At first, the contribution may be time, skills, and expertise. Later on, it may include financial resources as well. Using business models to address community concerns provides great solutions to our challenges as well as tremendous benefits to our businesses. The questions below will help you create a sound and well-planned strategy for making a difference in your community:

1. What is your purpose and the brand you’re trying to build in your community?

2. Based on your purpose, what values are most important to you, your team members, and your organization?

3. What are five to 10 key skills and core competencies that you, your team, and your organization have to offer?

4. From the list of skills above, which ones are you and your team most passionate about sharing with your community?

5. What are some potential nonprofits, charities, social organi­zations, or government organizations in your community that may benefit from your company’s involvement?

6. Select several organizations from your list that you’re most interested in supporting. Why is each a great match with your overall company brand?
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4 Automation Techniques That Will Make You Rethink Recruitment

4 Automation Techniques That Will Make You Rethink Recruitment | Florida Economic Gardening | Scoop.it
The boom in technology is rapidly impacting every aspect of business, allowing companies to automate a lot of different practices, including the recruitment process.

However, many companies are still resistant. A 2016 Deloitte study of more than 7,000 respondents found that only 38 percent of companies are thinking about using technology for HR processes, and only 9 percent are fully ready. That doesn’t mean the change won’t be happening. Nearly three-quarters of companies believe this is an important priority, and 32 percent define it as very important, so it’s a major area of opportunity for HR.

Is the resistance logical? Of course. Companies need to tread lightly, especially in HR, to avoid removing the human element from something as personal as recruiting.

Here's how to best use automation in the recruitment process.

Automate the application experience.

Refer to the employee experience to build an attractive recruitment process. The first step is an important one. When employees submit applications, companies need to make a great first impression to continually attract top talent.

A September 2014 study from Jibe found 23 percent of the 1,000 job seekers surveyed agreed that if they had issues filling out an online application, they would never apply for a job at that company again. Additionally, 60 percent of job seekers say they’re deterred by technology hurdles.

When offering a streamlined application process, companies are engaging candidates with their brand in a positive way. Automation makes it simple for job seekers to set up profiles on a talent network, sign up for job alerts and quickly apply through their social media accounts. Convenience and simplicity are key to a good employee experience so providing mobile capability is another must.

Integrate features.

Integration is an employer’s best friend. When platforms are integrated and bidirectional, the employer experience is vastly improved. Integrated features reduce paperwork and the labor used for filing and tracking applications.

For instance, a strong talent acquisition platform, like RolePoint Connect, links applications with applicant tracking systems (ATS) and CRMs, utilizing middleware to bridge the gaps and allow for an easy flow of information. When importing pertinent details and information, HR professionals don’t hassle with ensuring the data is stored properly or that everyone has the information they need.

Additionally, visual dashboards make it simple to access essential information at a glance. Nobody has to dig through file cabinets and sift through external hard drives anymore. The dashboard moves the entire talent acquisition process along quicker. Companies can even customize the flow of information as they scale.

Utilize analytics.

Technology provides the opportunity to track everything. This is important because when business operations like the recruiting process are tracked, organizations can gain a deeper understanding of the health of their talent acquisition program.

Analyzing data and statistics opens the door to solutions. When using analytics, companies can improve when processes need improvements. Data can provide a reading of what kinds of talent are coming from each source of hire and accurately measure the time it takes to process candidates and offer positions and even identify the success rates of employees.

Additionally, predictive analytics can forecast how talent will perform when they start their role. The advantage to knowing this cannot be overstated. These powerful tools ease the burden, and minimize the guesswork involved with recruiting.

Map skills.

Building an internal talent pipeline has never been more important than now. With so many companies struggling with retention, providing talent mobility is the ultimate tool for keeping employees engaged and satisfied. The 2014 Global Workforce Study by Towers Watson found that career advancement opportunities are among the top driving forces for employees, according to more than 32,000 respondents.

Technology paves the road for a successful talent mobility program. Map skills and interests between current employees and new roles to find the perfect pairing. By adopting this feature, organizations can focus their recruitment process within and help their A players move up the ranks and grow professionally.

These methods of automation save companies time, money and headaches from excessive paperwork, filing and manual tracking. It also simplifies the process of building a convenient candidate experience that will continually attract top talent.
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Why Companies Are Becoming B Corporations

Why Companies Are Becoming B Corporations | Florida Economic Gardening | Scoop.it
The landscape of American corporations is changing. Since the financialization of the economy in the late 1970s, corporate governance practices have tightly linked the purpose of business with maximizing shareholder value. However, as the 21st century pushes on, there has been an increased emphasis on other stakeholder values, particularly social and environmental concerns. This trend in corporate governance – which has led to the growth in “triple-bottom line” thinking – has fueled the emergence of a new organizational form: the Certified B Corporation.

Certified B Corporations are social enterprises verified by B Lab, a nonprofit organization. B Lab certifies companies based on how they create value for non-shareholding stakeholders, such as their employees, the local community, and the environment. Once a firm crosses a certain performance threshold on these dimensions, it makes amendments to its corporate charter to incorporate the interests of all stakeholders into the fiduciary duties of directors and officers. These steps demonstrate that a firm is following a fundamentally different governance philosophy than a traditional shareholder-centered corporation.

The first generation of B Corporations was certified in 2007, and the number of firms earning certification has grown exponentially ever since. Today, there are more than 1,700 B Corporations in 50 countries. Although any company, regardless of its size, legal structure, or industry, can become a B Corporation, currently most B Corporations are privately-held small and medium-sized businesses.

Identifying as a B corporation is a way to publicly claim an identity as an organization interested in both shareholder and stakeholder success. Having a clear identity can help firms communicate their values to customers, which is particularly beneficial when they are claiming an identity different from the industry norm. For instance, a study by Kellogg Professor Ned Smith reveals how a clear “nonconforming” identity among hedge funds beneficially influences investors’ capital allocation decisions—investors rewarded nonconforming funds (defined as hedge funds with atypical trading strategies, relative to the norm, for their overall fund style classification) with greater investment after short-term success and penalized them less after poor performance.

Indeed, as highlighted in ongoing research by one of us (Matt Karlesky), the individuals who make up a firm’s audience (including potential investors, customers, or partners) cognitively categorize businesses according to their similarities and differences. An unconventional identity – such as a B Corporation – helps individuals clearly distinguish between traditional firms and those that are committed to a broader set of stakeholder values.

So why do certain firms (and not others) choose to identify as B Corporations? Individual leaders are partly why some organizations broaden their purpose beyond maximizing shareholder value. We might look to Sir Richard Branson, who in 2013 co-launched the “B Team,” publicly decrying corporations’ sole focus on short-term profits and calling for a reprioritization of people- and planet-focused performance. We might also consider leaders of firms like Ben & Jerry’s or Patagonia (both B Corporations) that have prioritized societal and environmental agendas.

Clearly, such leaders can be important catalysts of social change. However, the explosive growth of B Corporations seems also to be driven by broader trends and changes in the corporate landscape that cannot be explained by individuals’ actions alone.

Two of us (Suntae Kim and Todd Schifeling) conducted research to build a more robust understanding of the rise of B corporations. By qualitatively examining the internal motives of firms in the process of becoming a B corporation, and quantitatively testing key factors in these firms’ external industry environment – including the shareholder- and stakeholder-focused behaviors of their corporate competitors – we found that there are at least two major underlying reasons why firms choose to seek B Corporation certification.

First, as large established firms have ramped up their corporate social responsibility efforts, small businesses that have long been committed to social and environmental causes want to prove that they are more genuine, authentic advocates of stakeholder benefits. For instance, certifying firms often highlighted how B corporation certification would help them stand out “in the midst of a ‘greenwash’ revolution” among large companies, and “help consumers sort through the marketing hype to find businesses and products that are truly socially and environmentally responsible.”

This suggests that one key driver of the emergence of B Corporations was the increasing efforts of more conventional profit-driven companies to be seen as ‘green’ and ‘good’. To test this theory, Kim and Schifeling measured the mainstreaming of corporate sustainability and social responsibility efforts in a given industry (e.g., sustainability-related terms in the trademarks of large public firms and acquisitions of sustainability-focused small businesses), and found that the prevalence of these broader, generic CSR efforts in an industry positively predicted the number of new B Corporations emerging in that industry.

At the same time, the data highlighted a second reason driving B Corporations’ rise. The qualitative evidence, gathered from firms’ B corporation application materials, revealed that certifying firms believed “the major crises of our time are a result of the way we conduct business,” and they became a B Corporation to “join the movement of creating a new economy with a new set of rules” and “redefine the way people perceive success in the business world.”

This social movement-like motive suggested another important predictor of a firm’s likelihood to certify as a B Corporation: large competitors’ persistent use of practices that maximize profits. Correspondingly, the quantitative analysis revealed a positive relationship between the number of “hostile” shareholder-centric activities in an industry – such as mass layoffs and high levels of income inequality between top executives and average workers – and the emergence of B Corporations in that industry.

These findings suggest that B Corporations are not just a function of a leader’s will – they are also responses to the common “way” business is conducted in an industry. In other words, we can better understand the recent proliferation of B Corporations, as well as other social entrepreneurship and mission-driven businesses, by carefully examining the environment in which these organizations are embedded. The evidence suggests that key elements of the industry environment—ranging from CSR initiatives and sustainability trademark applications to layoffs and growing income inequality—provide fertile soil for the growth of alternative organizational forms.

Increasingly, corporations are donning the persona of a responsible citizen, while continuously performing practices to maximize profit. These contradictory tendencies motivate traditionally “green” and ethical businesses to unite and stake a claim to their authentic difference, fueling the growth of B corporations and other new types of organizations. For mission-driven businesses, these alternative forms of organizing provide an opportunity to better communicate their commitment to society and to the natural environment in a world where everybody claims to be “green” and “good.”

For corporate society, this steady but solid growth of alternatives represents an emerging challenge to the historic dominance of the shareholder-centered incorporated entity. If the public corporation is no longer the default organizational form for businesses, but rather one of many alternatives, how can managers be prepared to ensure long-term competitiveness? How might leaders think about their fundamental organizational structure when they seek to communicate their values in a noisy marketplace of more conventional companies? As the rise of B Corporations among pioneering firms demonstrates, efforts to reform and evolve industry standards increasingly require changes to the fundamental purpose and legal form of an organization.

The traditional corporate form has in many ways monopolized our understanding of how we think and talk about “business.” The rise of new forms of organization will require re-imagining what (and who) are the fundamental building blocks of business. Indeed, the advance of new forms such as B Corps may herald the advent of what sociologist Jerry Davis has called the “tectonic shift” to an era where “local and democratic forms of organization could address the needs formerly met by the corporation.”
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How to Use Social Media to Improve Your Organic Search Engine Ranking

How to Use Social Media to Improve Your Organic Search Engine Ranking | Florida Economic Gardening | Scoop.it
There's one thing every business with an online presence, especially a website, wants most, and that's ranking high in search engine results - either to be number 1 for specific industry keywords, or just simply rank higher than their closest competitor. Trust me, many businesses surprisingly don't care as much about conversions.

And what more? It's most desirable to achieve this (high ranking) without having to spend a dime online.

I don't blame anyone that has such dreams. It's actually the way to go - eventually. No matter what your marketing strategy looks like online, when it comes to search, your ultimate aim should be ranking high organically, that is, without having to pay for it.

There are countless ways to improve your organic search results, but I'd like to discuss with you a very overlooked way: social media.

Everybody knows the social media is now as important and popular as the website was in the early.

But the question is: are they consciously using their social media presence to positively impact their website's search engine ranking?

I believe a more important question is: do you even know it's possible to improve your search engine ranking through social media? In case you don't know, it's very possible, and that's what you should be doing.

Don't worry if you're not (consciously) doing it yet. That's what this post is all about: to teach you how to use social media to improve your search results. Stick with me.

Relationship between Search Engines and Social Media

It's understandable if you're wondering by now what the correlation is between your activities on social media and your ranking on search engines. Well, let me explain.

There are tons of factors Google and other search engines use to determine and serve the most relevant answer to a searcher's query (because that's their goal), and great content is among the major ones.

How then do they identify great content?

One of the most important identification factors is: social shares, that is, how much a post is shared on social media.

It's simple logic. Search engines assume the more shares a post has, the more useful and important readers deem it. Naturally people love sharing great content, and great content is what search engines are always looking to serve searchers. It's like allowing people to decide what they want to see more of.

Guess it's beginning to make some sense to you now.

One thing you should note, however, is that what majorly influences your organic search ranking is how much your content is shared on social media - not the social signals you get. In other words, the number of likes or retweets you get for an update you posted on social media doesn't influence your search rankings - or that of the update.

Being an authority or influencer on social media doesn't mean your content automatically ranks high on search engines.

Now that you understand the relationship between social media and SEO, let's discuss how to take advantage of social media to improve your search ranking.

Here are 5 tips to Improve Your Search Rankings with Social Media.

1. Write stellar content.

Now you'd agree with me more that content remains king - more so with recent search engine (especially Google) updates. All you have to do is write great, engaging and shareable content on your site so that people would so much love it and be more than willing to share it with their friends. And in essence, signal to Google that they want more of you.

2. Use Your Keywords

In Your Posts Keywords aren't only important on your website and paid ad campaigns, they are also important in your posts on social media. Social media search engines are also as important as traditional search engines (Google, Bing, Yahoo, etc). For instance, if your keyword is credit repair reviews, be sure to use it in your snippet so the keywords will make your post popup when users search for relevant topics.

More so, social media sites like Pinterest and YouTube enjoy search engine love. Posts on them usually show up in traditional searches too, and your keywords will definitely come in handy.

3. Encourage Social Sharing (aka viral marketing) in your content

Writing great content would naturally encourage people to share your content, but there are other things you can do to get more people to share your content, and they are simple:

- Include social sharing buttons. This goes without saying, or nobody will be able to share your stuff. (Sure you don't expect everyone to copy and paste your link in their updates!) Include sharing buttons of the major social media sites - or those ones relevant to your business - around your content (especially below), so that readers can easily share with just one click.

- Ask readers to share with their networks. It's also not enough to just include the buttons and expect readers to automatically know what to do with them. Even if they do, they still might not share.

Humans like being told what to do. Simply tell them to share your post on their social networks with the buttons you've provided.

4. Grow your followers Even though it's been said that your influence on social media doesn't affect your ranking, you still need to keep growing your followers to make your follower-base huge.

This will translate to search engine love for you when you share your link and people share it further, or people visit that link and then share it with their friends. Moreover, more targeted followers equals more site visits, and then more site visits translates to higher ranking in SERPs (search engine result pages).

5. Include Your Links In Your Social Channels

However insignificant (some argue) its influence might seem on your search ranking, it's good practice to always put links to your site on social media, both in your profiles and within posts.

Search engines crawl social media sites, albeit not completely, like every other website. Social media sites however generally have high online authority, so links on these sites are considered to be of higher quality - than most other websites. And so can improve your SEO.

Follow these 5 tips, and gradually you'll begin to see the impact your social media presence makes on your search engine ranking and overall site visibility. Whatever you do, always remember value is key. Give immense value, and watch your social media followers spread the news and grow your business for you.
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Ways Entrepreneurs Can Stretch Their Capital

Ways Entrepreneurs Can Stretch Their Capital | Florida Economic Gardening | Scoop.it

With IPOs almost nonexistent and venture funding slowing down, the environment has suddenly become awful for startups. In fact, the only hot buzzword in Silicon Valley is “profit.”

Granted, it’s impossible to know how long the downturn will last. Yet for entrepreneurs, it’s probably best to assume that the trend is not a blip – but could last a couple years, if not more.

So what can be done to make sure the capital does not run out? Well, here are some strategies for entrepreneurs to consider:

Create A Frugal Culture

Even though Stuart Wall has recently raised $20 million in venture capital for his firm, Signpost (which operates an online marketing platform), he still runs his business as if it were bootstrapped.

“The team is expected to use every dollar as if it were their own,” he said. “This drives thousands of small decisions that add up.”

Part of this involves ruthless negotiation with vendors. To this end, Stuart decided to cut Salesforce.com CRM -1.24%, saving more than $200,000 per year.

But he has also been focused on structuring the right kinds of employee incentives. “The sales and go-to-market teams should not only be compensated on revenue growth but also profitability,” said Stuart. “We look at the net present value (NPV) generated from a customer. So upfront payments are valued more highly than month-to-month payments. In other words, reps that generate higher NPVs will earn higher commissions.”

Beware Of Marketing

Marketing is usually a large budget item. More importantly, much of the spending can be a waste!

This is why Paul Kraus, who is the CEO and founder of Eastwind Networks (a cloud-based cybersecurity operator), uses relentless ROI (return on investment) analysis on marketing. “I believe that marketing — in a startup — has just one purpose: generating high-quality demand,” he said. “You need to iterate to determine what combination of channel and message generates the most high-quality leads. Failing fast is key. Being honest about the success of a campaign is more important than being right.”

But for him, the ROI is more than just looking at the metrics like the cost of acquisition. He also follows closely the customer satisfaction and churn, which are critical for building a sustainable business. “Happy customers can create an amazing network effect,” said Paul.

Transparency + Your Own Sacrifices

In startups, there are really few secrets. Employees generally know when there are serious problems.

This is why an entrepreneur needs to be upfront about the company’s strategy. Hiding things will only make the situation worse.

Let’s face it, when it comes to cutting costs, the biggest savings come from laying off employees. Making this choice is extremely difficult but often necessary for many entrepreneurs. But there will inevitably be ill-will and hard feelings.

This is why being transparent can be critical.

For example, look at the recent case of Joel Gascoigne, who is the CEO of Buffer. When he laid off 11% of his workforce, he wrote a detailed blog post, which was brutally honest. He noted that the company’s growth was more about ego than reality and that he had made the “biggest mistake” of his career.

But the layoffs included a 40% cut in his own salary as well as his co-founder’s. Oh, and both also agreed to loan money to the company, at a low interest rate.

No doubt, having skin-in-the-game – along with providing transparency — can go a long way when it comes to making major changes in a startup. And it can mean that there will ultimately be a stronger foundation for the long haul. According to Joel: “Through this experience I’ve learned to re-focus on what truly matters. Our values and mission are so much more valuable than the size of the team.”

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10 Creative Ways to Improve Your Conversion Rates

10 Creative Ways to Improve Your Conversion Rates | Florida Economic Gardening | Scoop.it

Remove form fields! Change your value proposition! A/B Test! Sound familiar? Most conversion rate tips have been repeated countless times. By now, you’ve probably implemented most if not all of the best advice. However, if you’re looking for more unique ways to boost conversions, then you’re in the right place.

Here are a few unconventional conversion rate hacks that you can use today to get more conversions:

1. Use form field examples

Sure, we all know the importance of reducing form fields to improve conversion rates. But you can take it a step further and add light-gray examples in the form fields themselves. This way, there’s no confusion about what users should enter in the field (nor is there a need to use “?” tooltips to explain each form.

2. Share your discounts

Customers love coupons. In fact, for most products and services online, one of the most common search terms is [BRAND] + [coupon / promo]. Rather than hide your coupons, use them to your advantage. On your cart page, include a link to your latest coupon codes for any items in the customer’s cart. They’ll be more likely to buy your product if they feel that they’re getting it at a discount.

3. Create urgency with a countdown timer

When time is of the essence, people are more likely to convert. Create a sense of urgency by adding a countdown timer next to your checkout forms, optins and registration pages. In a case study done by Conversion XL, conversions increased more than 300% using a combination of urgency tactics.

4. Add testimonials next to form fields

Testimonials are an effective way to create social proof and build trust with a potential customer. However, few brands use them to their full potential. Place testimonials next to sign-up and check forms so that users can’t miss the glowing description of your product or service.

5. Use powerful action words

When creating your CTA (Call To Action), remember that it should do just that: move your visitors toward a desired action or outcome. Weak or vague phrases won’t get clicks. Here are some effective call to action words I use to convert my blog visitors into subscribers:

- Verbs: Start, Build, Grow, Join, Learn, Hurry

- Urgency: Today, Only X Days Left, While Supplies Last, Last Chance, Now, Ending Soon

- Make it personal: You/Your, Me/My, Our Value: Want, Need, Free, Save

- Exclusivity: Request An Invite, Now Closed, Members Only, Pre-Order, Limited Availability, Exclusive Access

Don’t overhype your product or service on your registration page. These days, customers are so overwhelmed by ads that they are sick of being “sold to”.

6. Be real

Don’t overhype your product or service on your registration page. These days, customers are so overwhelmed by ads that they are sick of being “sold to”. Explain your product and the problem it solves in clear, simple terms. Then, let the customer decide whether or not to convert. Case in point: Buffered increased conversions by 54% by simplifying their registration page, removing everything except pricing tables and customer form fields. In the words of Albert Einstein “Everything should be made as simple as possible, but not simpler.” To get more conversions, think: less is more.

7. Test different color combinations

Color psychology plays a huge role in marketing. Different colors trigger different emotions, thoughts and behaviors. Further, colors guide our eyes, changing where we look and what hold sour attention. As marketers, we often overlook the importance of color, relegating it to the world of graphic design. Recognize the importance that color plays in conversions, testing everything from font color, button color, background color and even border color. Small changes to any one can have a big impact on conversion rate.

8. Death to CAPTCHA

Improving conversion rate is about lowering resistance between you and your customers. CAPTCHAs do the opposite, raising a virtual barrier. What could be a more lovely invitation to buy or subscribe than a CAPTCHA field?


CAPTCHAs like this one drive people away. A Moz study revealed that CAPTCHAs reduce conversions by more than 3%. Ditch the CAPTCHAs and start getting more conversions today.

9. Add live chat

Live chat boxes are a way to quickly connect with customers and guide them through the conversion process. Adding a Live Chat tool can have a huge impact. VWO client EZ Testing added live chat and saw a 31% increase in conversions. Incredibly, LiveChat client Jerome’s Furniture saw a 1000% increase in sales after adding live chat, showing the power of live chat for Ecommerce stores. Conversion rate benefits aside, live chat is a simple way to solicit feedback and uncover customer pain points. When your customers connect to live chat, they may reveal crucial issues with products, services, or the checkout process. Fixing those problems can have downstream conversion rate benefits.

10. Move fast

In 2016, there’s no excuse for being slow. Slow load times hurt SEO and increase bounce rate. Your landing page must load quickly or visitors will leave. Further, there’s more to speed than faster page loads. You can also improve conversion rate by reducing the time customers spend in the checkout process. Stripe knows this, as evidenced by their lightening-fast checkout process. In 2014, the payments platform added a super-simple checkout process to enter your credit card information. Compare this to the standard PayPal checkout experience, where you’re redirected two, three or even four times before finalizing payment. As a result of implementing the simple checkout feature, sites like SendOwl increased conversions by more than 30%.

Your Turn

Hopefully, your creative juices are flowing after reading this list. Of course, you don’t need to implement all of them to see an improvement. If you can take just one tip from this article and implement it immediately, then you’re better off for having read it. These are a few creative tactics I use to improve conversion rate on my websites. Do you have any unique CRO tips?

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8 Questions for Assessing Your Website

8 Questions for Assessing Your Website | Florida Economic Gardening | Scoop.it
Whether you’ve just completed your first website, or you’re trying to re-assess an existing site to see where it can be improved, it’s important that the questions you ask are both representative of your brand as well as results-driven. Here are the top eight questions -- with action steps -- for assessing your business’s website, all with an eye lent towards leveraging your brand and gaining more clients.

1. Who am I really trying to reach? There are any number of exercises you can use to define your answer, but I ask my one-on-one consulting clients to whittle it down to its simplest elements -- “I/we help people who struggle with [blank] to stop [blank] and start [blank].”

Action step -- Write out, longhand, what your business helps people with, making it as detailed as possible. Then bring it into one simple, straightforward sentence. Make sure that sentence is visible on your website.

2. Is it “me?" I’m of the belief that a person’s website should be as visually representative of who they are the messaging. It’s like putting on the clothes that make you feel most like yourself. If all black and a moto jacket are how you like to roll, you’ll feel completely out of place in a dress. The same goes for websites. Does it feel like you, visually? Does it “sound” like you, when you write or create ongoing content?

Action step -- Make a list of ways that your website doesn’t feel like you, and create an action plan to start shifting things.

3. Does my "about" page talk about me-me-me or about how I help? Focus on the latter, and tell people about how what you do translates to helping them as your clients/customers. Yes, people are interested on some level about you and your company’s values, but only because they’re trying to get a sense of what it would be like to work with you. “Is this business ‘my’ kind of business? Do they sound like someone I’d want to receive help from?” That’s what someone is unconsciously or consciously asking themselves when they read an about page.

Action step -- Rewrite your business about page from the perspective of how your underlying values will help people.

4. Is my "services" page streamlined? For product-based sites, the product -- and its price -- needs to be simple to view and purchase. For client-based businesses, I suggest avoiding tiered packages. They provide an incentive for undercutting your own pricing, and that lends to a sense that your work isn’t as legitimate as is the work of those who stand behind one solid rate for what they do.

Action step-- For product-based businesses, find 10 people who are new to your product and ask them how easy it is to find the information they need online. For service-based businesses, see if you can easily fill in this sentence -- “I charge [blank] per [hour/session], and we work together for an initial commitment of [blank] weeks or months.” Overly-complicated tiered pricing structures won’t fit into that sentence.

5. Am I speaking to client/customer needs? Sometimes businesses get stuck using industry jargon or flowery language, and that means more work for the client to decide if you’re right for them.

Action step -- Review your blog, services pages and newsletter opt-in incentives. Ask yourself if you are clearly identifying, in the client or customer’s words, what they struggle with or need help with.

6. Am I articulating the solutions that I provide? A lot of businesses get so focused on putting up “Buy now” buttons that they forget to clearly communicate what the customer is specifically looking for -- a solution. If I have a sink of dirty dishes, my solution is having clean dishes in less time and with less stress. Speak to the solutions the customer desires, instead of inundating them with “Buy now” language.

Action step -- Review your website, keeping an eye out for where you can speak to the customer or client’s desired solutions.

7. Are there multiple ways for customers to engage? If someone’s only option for engaging with your work is to hire you or buy something, you’re limiting their long-term interactions with your business. Give them reasons to hang out with you for awhile on social media, join your newsletter or otherwise engage with your brand.

Action step -- Create multiple points where people can sign up for your newsletter or engage with you on social media.

8. What’s your ongoing approach for engaging people? You need a reason for people to regularly come back to your website. Many small business websites have blogs that just showcase their latest features. If someone is in the tech industry, this can be helpful. If I’m using your newsletter service, for instance, I like knowing that you rolled out a new feature that will help me. But for service-based industries, a blog post about new appointment availability isn’t as engaging.

Action step -- Create an ongoing approach for reaching your people, and particularly note how this approach will help your clientele with what they struggle with and offer them solutions.

There’s so much that goes into branding and reaching customers. These eight questions hit the big notes for how you can create a website experience that encourages people to get to know you or your company a little bit better. In the long-term, building that customer engagement is the key to regularly reaching your right people and growing what you do.
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The 4 Main Ways to Innovate in a Digital Economy

The 4 Main Ways to Innovate in a Digital Economy | Florida Economic Gardening | Scoop.it
Over the last 20 years, digital design and collaboration tools have fundamentally altered how firms approach innovation. In the pre-digital era, product and service development was usually conducted by experts working inside firms or through expert vendors hired by those firms.

Today, aided by digital design and fabrication tools on the one hand and social networking communities and collaboration/sharing tools on the other, an expanded “innovation landscape” is marked by new forms of participation and ownership, with new participants entering new markets and new arrangements of collective innovation.

The good news, of course, is that this expanded landscape creates an opportunity-rich environment for firms to innovate. The bad news is that these opportunities also create some new challenges. Managers need a framework for navigating this new landscape and harnessing the power of these new tools.

To help make sense of the opportunities and challenges ahead, we have identified four distinct innovation modes. Each mode is characterized by its own set of stakeholders and interaction dynamics, along with specific ways that companies can achieve a competitive advantage.

The specialist mode

In the specialist mode, companies will create new products and services by pushing the envelope of product performance, with improvements allowed by digital design. In this mode, high-risk, high-reward projects are typically developed and commercialized by formal organizations, using either hierarchy (in-house) or markets (out-sourced) as organizing mechanisms. Companies such as Volkswagen, Boeing, IBM, and Apple are active in this mode.

One challenges with the specialist mode is that companies must build these technical capabilities in-house to prevent imitation from competitors; to attract and retain top talent; and to maintain process rigor in the an era of increasing design churn. Tesla’s effort to develop its battery Gigafactory is an example of a specialist developing internal capabilities for competitive advantage.

The venture mode

The venture mode expands the flexibility and speed with which innovators act. These can be individuals inside corporations, but also entrepreneurs, tinkerers, and do-it-yourselfers who tend to assemble the necessary resources by using intermediate services which provide access to specialized tools and skills. Advancements in digital design tools have drastically lowered the entry barriers and allowed many more to participate in this mode. For managers of more established firms, this mode can allow small, entrepreneurial teams to develop new product and service ideas and test them at low cost. These internal “startup” teams can help seed traditional concept funnels with ideas that are more advanced in terms of design and concept testing than traditional methods.

One challenge for firms active in the venture mode is to quickly identify, select, and assemble necessary resources. These markets are often moving fast, and the ability to protect the business through intellectual property is often limited, so the most powerful competitive advantage is high velocity.

The community mode

The third mode of the new innovation landscape attracts large numbers of new entrants due to the low barriers of entry and includes — at least in part — a trust-based form of organizing. For this reason we label this the community mode. Similar to open innovation, the setting of organizational and decision-making boundaries becomes substantially “fuzzy” as collaborating with like-minded strangers becomes an integral part for some business models. The spectacular rise and fall of Quirky, Inc., one of the first social product development companies, is an example of this mode. The opportunities for firms operating in this mode are potentially new forms of market development and user engagement. New ideas and closer ties with consumers can be the result of open innovation efforts.

Managers operating in the community mode need to understand the challenges of maintaining, incentivizing, and capturing true value-added contributions from these communities. If the opinion of 1,000,000 community members has to be considered, for example, then the decision-making authority of the firm is more constrained.

The network mode

The network mode is characterized by the high performance product design expertise seen in specialist firms with trust-based sharing behavior typical of communities and close vendor networks. The opportunity in this mode lies in the chance to build an innovation system where the whole is more than the sum of its parts. Bringing together the expertise from a wide range of disciplines and geographies, supported and enabled by advanced digital tools, allows the emergence of entirely new solutions, potentially one which would never emerge in traditional organizational set-ups. Rearranging organizational boundaries and new incentive structures are part of this opportunity.

The challenges lie in how to successfully develop and manage the processes, which requires more coordination due to the greater levels of complexity. Building social norms, ensuring sufficient overlap, or at least information flow between designer and user communities, and orchestrating the actual work are no easy tasks.

To win in this larger, more diverse landscape, we advise managers to do the following:

Use the right managerial logic in each mode. For example, the specialist mode demands an internal incentive system, promotion rules, and organizational culture that values capability development. In contrast, an organization active in the community mode must build relationships with a large, distributed community, through both monetary and non-monetary incentive mechanisms. This in turn has consequences for the internal culture, which needs to be open-minded to input and suggestions from outside the company; it must not exhibit a ‘non-invented-here’ syndrome. You must create an alignment between your internal structures and the external innovation modes in which you engage.

Cultivate modes that have not been used yet. For example, established firms can benefit of learning how to operate in the venture mode. Today, for many firms, innovation efforts start and stop at innovation spaces and granting ‘free’ time for people to work on personal projects. However, to truly develop an internal venture culture, substantial effort needs to be put into developing a systematic process of coaching, mentoring, internal funding and executive support — and have this effort supported over a long period of time, and not just be a corporate initiative of the month. An example of a highly successful program is at EMC, who have spent the last decade implementing a system of innovation that spans incremental process improvements to more radical ideas. Their Innovation Network program has spanned 176 challenges and generated over 17,000 innovation ideas.

Learn to play in multiple modes simultaneously. This is especially relevant for larger organizations that might leverage different modes in different business units. General Electric is an example of a company that has experimented with modes such as the community in its relationship with Quirky and the venture mode in its GE Garages efforts. Decide and define when and where different modes might be applied during the innovation process. For example, communities can be the source of insight on new product features or ideas at the front-end, while the network mode can be valuable during complex engineering and design projects.

In a world of new innovation, familiarize yourself with these core focuses to establish understanding in your journey towards becoming a more innovative organization. Know when to use each mode, and what its purpose will serve your team.
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