Are you a small business owner or entrepreneur with your own bookkeeping system? Are you behind on your books? Are you struggling to find solutions for nagging problems with your system? Do you want your books to work harder for your business?
NABI’s Lunch and Learn on May 18th will help you learn to use your bookkeeping system to your fullest advantage, with less time spent and more results gained. Lloyd Spencer, President of The Bookkeeping Guru, offers insight into his innovative bookkeeping strategies, and will answer all the questions you have about your in-house bookkeeping.
Bookkeeping is something no one wants to spend (or waste) time on. It can be hard to maintain organization when you have so many other priorities and projects on the go. Between setting up your books, keeping track of expenses, and data entry, you might be shaving off more time than necessary from your billable hours.
Lloyd Spencer from The Bookkeeping Guru will explain how to set up, maintain, and streamline your bookkeeping process in the cloud for better integration and ease, while also fulfilling your tax, payroll, and investment obligations. Most importantly, Lloyd will demonstrate how you can use your bookkeeping to make better business decisions. Using simple and straightforward analytics and reporting techniques, you can determine where your business is, and how to reach your goals. By the end of the talk, you will feel confident in your knowledge of bookkeeping processes, and know how to use your books for better business evaluation.
The event will be Mac, PC, and tablet friendly, for business owners with any preference. Come armed with any specific bookkeeping questions you may have, as Lloyd will leave plenty of time to address these in detail.
Lloyd’s presentation will take place at NABI’s Mission Centre location on Thursday, May 18th. To register for the event, click here, or for more information, click here or call 780-460-1000.
Entrepreneurs and Entrepreneurship, Alberta, Circa 2015 (4615 words from my diary, perhaps best tackled after a glass of wine.)
By Dar Schwanbeck, CMC, Managing Director, Northern Alberta Business Incubator (NABI)
First, thanks to all who shared a “congrats” note on my 10th Anniversary at the Northern Alberta Business Incubator (NABI). It’s a living lab for entrepreneurship and great place to work! Over the last 10 years I’ve engaged some 2,000 start-ups and small businesses. This is on top of 25 years as a practicing Management Consultant and another 1,000 client/prospect discussions.
With 3,000 conversations under my belt one might ask, “What have I learned about entrepreneurs (Part 1), the entrepreneurial playing field (Part 2), and what’s next? (Part 3).
PART 1 - ON BEING AN ENTREPRENEUR: Hurdles to Small Business Success and How to Overcome Them. (Note: This list is not exhaustive; rather a set of challenges we see over and over again. The point is, ignore any 2 or 3 of these and your business will not endure!)
1. Your business has to succeed as a business. Even if your intended service or product is as world-changing as you imagine, it will not produce, promote and sell itself. It is remarkable how many entrepreneurs underestimate the importance of basic financial literacy and business acumen: organizing and managing resources; planning marketing and sales; and thinking sober thoughts about finance and cash flow. Every business will die from upside-down priorities and lack of execution. Take time to discover what you need to know to succeed.
Success doesn’t always follow from knowing the right things to do and finishing them, but it sure won’t if you don’t.
2. Really have a competitive advantage. I still marvel at how difficult it is for entrepreneurs to be objective about this, especially given how critical this issue is!! I think the essence of the problem lies in the age-old asymmetry of the marketplace: producers make products and consumers want problems solved. Unlike the General Motors and Proctors & Gambles of the world, entrepreneurs are especially prone to being infatuated with their own stuff and underestimate how ruthless consumers are in their decision-making.
Competition is defined by market behaviour, period. Unless you understand your customers’ problems, why they buy and their options as they see them, you have no idea how easy it will be to ignore you.
3. Your willingness to sell is (still) a key. When I ask a room of aspiring entrepreneurs which of them enjoy selling, I ask those who haven’t raised an arm to give serious thought to leaving the room. For many people, selling isn’t natural, easy or enjoyable. For entrepreneurs, though, selling has to be a way of life. So you see the problem… Whether the entrepreneur was Thomas Edison, Steve Jobs or Elon Musk, success was directly related to their expressed passion. All three of these guys, and many like them, were tireless promoters. An entrepreneur without passion is unlikely to be successful. An entrepreneur with unexpressed passion has failed to harness the best and cheapest asset they have.
As a founder or small business owner, you will have to persuade all kinds of people–customers, investors, suppliers, staff, landlords, etc.—to do things they otherwise wouldn’t. Steve Wozniak, the co-founder of Apple, was happy giving his invented technology away. Steve Jobs, less technically proficient, made a point right from the beginning, to ask for a premium over the alternatives already available and touted the differences justifying the price. He sold ease of use to customers and the value of charging for it to a reluctant Woz. That general orientation- total ease of use- has remained unchanged as a differentiator for what is now the biggest public company (by capitalization value). Sales aptitude, training and experience are useful, but (as in many pursuits) self-confidence and blind optimism are often passable substitutes for wisdom and ability. Rejection, whether deftly avoided or just swallowed, is something you have to contend with. (Just be very careful if you find yourself perpetually surrounded by idiots who say ‘no’…you might be holding on to the wrong end of the confidence stick.)
4. Know - and articulate - the worth of the problems you are solving. Long-term success depends on your ability to align the products you offer and the processes that create and deliver them with customer-desired outcomes. Ideally, those outcomes would be important, enduring and universal and your product would be the only or by far the best means of achieving them. Successful businesses identify opportunities and strategize responses at this most fundamental level of value-creation.
Are you planning to deliver enough value to enough customers? Put another way, is the pleasure of using your new product or service indisputably far better than the known pain customers are experiencing? It is important to understand that a prospective customer who is not in pain (they recognize) is not ready for what you have. Everybody hates New York taxis. That presented the perfect opening for Travis Kalanick, CEO of Uber. On the other hand, if acquiring or using your solution merely exchanges a new set of pains for the ones they already have, you have not created compelling value.
5. Technology is one (but not ‘the’) key. Entrepreneurs have to do a lot of different things. Technology can transform almost any of them into push-button joys or time - and/or money-sucking nightmares. Everything from websites and social media, to accounting software and point-of-sales systems are in play. (This is all on top of your actual production or service delivery challenges. Chances are there are one or two key technological hurdles facing you there, too.)
The delusion to avoid is that Technology Will Everything. Too often, I’ve seen entrepreneurs investing tears and treasure in low - or negative-value solutions. When technology seduces you into solving the wrong problems, you lose the war, even when you win the technology battle.
6. Think technology application and distribution, not creation. Contrary to popular culture, very few new (successful) businesses are based on the introduction of novel gadgets. Most entrepreneurs introduce business process or market innovations. True, prosperity is fueled by innovation, but this is mostly about technology application and distribution, not creation. Small businesses excel at the former, not the latter.
7. Think global, act local. Most small businesses do not export, yet many face global competition. Ignoring this does not make it less true. But neither does indiscriminate promotion of ‘export readiness’. Businesses that are not competitive at home are unlikely to find more favorable conditions elsewhere. For many small businesses, the appropriate strategic response is to make their product more localized, not less. For example, imported solar system components could easily be bundled with non-importable local services – but local service policy needs to meet or exceed what global competitors are offering. In solar world this often includes free engineering and design services. And here’s one that even surprised me – last week I ordered 5 new dress shirts and 3 ties from an online vendor based in London, England (I live 6,801 km away in Sturgeon County, Alberta, Canada). Charles Tyrwhitt offered a very unique promotion in the Economist and offered a way-too-friendly, web-based shopping experience which cost me C$650!
8. Have a clear vision (goal) for your business. (Is it Big and Smart?) If you don’t have a firm and tangible commitment to achieving some future state of affairs, how can you make decisions, assign resources and coordinate action? In my experience, the right time horizon is three years and the (vision) measure is closely linked to a priority customer-desired outcome. Don’t pretend you know what the world will be like in five years. Do constrain yourself to a realistic objective. Hockey stick growth is as rare as it is desirable; fiction is not your friend.
In this regard, I find cold, hard numbers sobering. Decide what the really key numbers are – number of accounts, unit sales, profit, customer satisfaction, whatever – and drive the stake. One key measure I like to see for every entrepreneur is their version of “VMG” – velocity (and direction) / made good (toward your specific BIG goal). “VMG” is a term borrowed from Orienteering.
Spoiler alert: there is a 50% chance these metrics will serve as early indicators of failure, but that’s okay. Pilots use altimeters at night because they are preferable to the other way of finding out where the ground is…
9. Make sure to have your (whole) story nailed down. There’s no harm in following this or that trend when it comes to your pitch; good ones fit into anything – elevators, decks, tweets, etc. but beware that fondling the disruptive sex appeal of your concept doesn’t distract you from the fundamentals. What category are you doing business in? (Lots of people have tried to convince me that they are breaking entirely new ground. So far, none have.) What is your competitive advantage? Who makes up your supporting ecosystem? How do the members of your team complement each other? Where’s the money coming from and going to? When? What is your basis for believing your product has a market?
Tweet pitches are poetic distillations of your concept, enigmatic products of a spiritual journey within. Business planning is more like workaday journalism – answer the basic ‘W5+H’ questions and you’ll have told anybody interested everything they want to know.
10. Be curious or don’t bother. Great entrepreneurs are typically information junkies – they need to know what’s happening in their industry, with their competitors and especially with their customers. They get irritable and eventually jittery if they aren’t in touch. Markets are only getting bigger and faster, so even maintenance updates aren’t enough – you have to learn about new stuff. Plan to spend 30-60 minutes every day. (That’s half a day a week, for those of you wondering where entrepreneurs spend their evenings and weekends...)
11. Be prepared, equipped with a strong work ethic and discipline. Are entrepreneurs naïve, lazy, or both? Many entrepreneurs seem unwilling to do the work necessary to succeed. The love affair with their products continues, but the need to understand the complexities of doing business does not get anywhere the attention it deserves. If you’re not willing to do the work, don’t start. And, until you understand how much, and what kind of work will be necessary, that “yes” doesn’t count.
Spoiler alert: You might spend as little as 10% of your time doing that thing you love so much you decided to build a business around it. Bookkeeping is a long way from pie baking. Remember that one definition of an entrepreneur is it refers to the person willing to work twice the hours at half the income to avoid working for someone else. Let’s be clear, we are all working for someone else. Love it and know which of those you work for are most important to satisfy in the long run.
12. Investors want return-on-investment, and you should too! Best-selling author Seth Godin sums it up nicely, “They (investors) want you to put the money to use building an asset, something that works better and better over time, something that makes your project more profitable and more efficient. And, they want you to use that asset to create value that will pay them back many times over.
Most small businesses ignore both of these desires. There's so much stress from being on the edge, it feels like money will relieve that stress. And in the short run, it will. But if it doesn't build an asset, soon you'll be back to the edge, with the added problem of having an unrepaid investor as well.
Assets (buildings, machines, powerful brands, new technologies) are less essential than ever before. For many organizations, a laptop is worth more than a building or a punch press. That's great if you're getting started, because the connection economy has made the cost of entry lower than ever before.
It also means, though, that the easy-entry business you're in might not respond well to the investor's money. If there isn't an asset you can buy and build and defend and monetize, you're much better off not chasing one.” (Source: Seth Godin post, February 6, 2016)
13. Money: have it, grow it, keep it. Everyone knows that it takes some sort of money to start a business (equity investment, loan, etc.). And most realize it takes other sorts of money to sustain a business (revenue, cash flow, profits, etc.). What too many entrepreneurs get wrong is how much of all of these their business will need, now and down the road.
The physicist Richard Feynman once said: “If you think you understand quantum mechanics, you don’t understand quantum mechanics.” For start-ups, money is like that. Find a Third Grader and demonstrate your pro forma with monopoly money.
PART 2 - ON ENTREPRENEURSHIP IN ALBERTA: The Playing Field is Muddy, Competition is Tough and We Need to Change Our Game. Ideas for those who support entrepreneurs.
Startup Canada, on the launch of the Canadian Entrepreneurship Institute, said "there is a lot we can do to create an entrepreneurial government that will create the conditions for startups and small businesses to scale as large, job-creating anchor companies in Canada." This is a great idea; what are the implications for Alberta?
1. Leadership is the engine; technology is the enabler. Recent revolutionary transformation has been enabled by industry application of technology, not technology by itself. Information technology is a good example of technology that enables innovation; innovation comes from industry leaders (Steve Jobs, Elon Musk, Travis Kalanick and others) who understand how to use technology strategically….and who can figure out business models that work for all stakeholders.
2. Small companies should get big company help to commercialize technologies. Big Fish are increasingly either necessary allies or overwhelming opponents. And the ally now who really loves you is likely to be the overwhelming opponent later unless you are highly nimble and somewhat paranoid. You are hoping your business might possibly scale. Scale is what they already are and already do. In mature, well-capitalized industries (and name one that isn’t), freestanding innovations are difficult to exploit and are easily smothered. Patents are generally worth far less and eclipsed far sooner than independent inventors expect. Getting paid requires creating value, which depends on making sales, which means reaching consumers, which follows from achieving distribution…
3. We may be too focused on shiny new things. The reality is that we will address the widest scope of the economy by supporting service-based entrepreneurs (50%+ of fast growth), not ones based on technology commercialization. Most of our GDP (both produced and consumed) is in services. The vast majority of small businesses are in services and so are most of the new ones.
Services, services, services! However, to understand how tricky it is to be successful in service, see if you can find agreement among any ten people on what “service” means. If we can’t agree on what it means with practical utility, how will be achieve success? (Good thing there is a way to solve this. See “What’s Next” below).
4. Emphasis should be more on entrepreneurial performance and less on economic diversification. Diversification is a complex, emergent market response to exogenous factors (economist speak for ‘stuff beyond our control’). There are a lot of reasons why various efforts to ‘diversify’ economies come to naught (most of them involve magical thinking about shoulder-checking existing markets and large pools of policy-compliant consumers).
What we can influence and support is the capacity and performance of the entrepreneurs that show up. (The breadth of opportunities they perceive and chase determines the diversity of an economy. How innovative, productive and successful they are determines its strength.) An engineering firm that addresses a known customer pain-point has a much greater chance of creating a sustainable job than yet another “compass app” for a smart phone.
5. Let’s fix the economic engines. Re-training workers may not be the right emphasis in an economic downturn. Perhaps we should be working to improve the efficiency and performance of the economic engines (i.e. businesses). There’s no point in training the drivers (or subsidizing the passengers) of an underperforming fleet of vehicles.
6. Finance repairs with money shifted from technology R&D funding. Are we making sufficient progress with the money almost totally allocated to technology R&D in Alberta (about $800 million annually)? How are these R&D projects doing on the Velocity Made Good measures? And when, if ever, are projects killed? Are there plans and milestones associated with R&D? Should some of the investment allocated to R&D be redirected to entrepreneurial capacity building?
7. Let’s choose better and faster (entrepreneurs) over both more and cheaper. It is a rare small business in Alberta without untapped opportunities to innovate. Many are suffering from low competitive advantage, whether they are in a fragmenting market or a consolidating one. Without the differentiation created by innovation – whether it lies in product, process, organization or market strategy – price is the default basis for competition and market entry. A race to the bottom of that barrel is bad for everyone (even consumers, in the long run). And, (entrepreneur) improvement efforts need to be company focused, not sector, program or geographically based (e.g. the Alberta Voucher program addresses market validation for technology, yet comes up short addressing the human potential to commercialize).
Entrepreneurs are typically domain experts (or, at least, enthusiasts) and business neophytes. We need to lower barriers to entry, but also gate-keep and build business capacity. Simply increasing the number of entrepreneurs will probably increase failure rate. We want better, not more, entrepreneurship.
8. Entrepreneurs often don’t know what they should know to succeed. This is an extension of the old four quadrant “competence” and “awareness” window which proposes that there might be critical skills or variables that must have our attention if we are to succeed. An example is outlined.
This window suggests a couple of very critical challenges for any entrepreneur improvement intiatives: 1) Any surveys in which we ask the entrepreneur what he/she needs to grow his/her business has a high probability of delivering incorrect results, and 2) in online-based training, entrepreneurs will most-likely pursue topics of interest, or what they think they need to know.
9. Entrepreneurs deserve high quality, specific advice. Alberta has a lot of advice/support for small business, but is it up to the quality it should be? Frankly, we can’t do very much to alter the number or composition of those eager-to-be entrepreneurs. Entrepreneurship has always been a largely individual response to a perceived socioeconomic environment and personal situation. There are things we can do to help some of them survive and thrive. But maybe we should also strive to be more honest with those considering it. Early, high quality advice would help reduce the personal and social costs of entrepreneurial failure.
Intervening in infeasible concepts and faltering businesses pays diverse socioeconomic dividends. ‘Prevention’ and ‘palliative care’ are neglected aspects of community-centered, real-world entrepreneur support.
High-potential, committed competitive swimmers deserve competent coaches; they have the aptitude and ability to make good use of them. But, recognizing that we don’t turn away people who want to try swimming, isn’t posting lifeguards even more important?
10. Entrepreneurs can benefit from personal coaching. Entrepreneurship is like fitness…it benefits from direct, professional guidance that takes a very specific, approach to working on identified weaknesses, leveraging existing strengths toward attaining individualized goals using a conventional set of tools. Global trade is like the Olympics, and how many Olympians do you know that have not had professional coaching? This can be done in a shared environment; some work is possible, or even best done, in small groups.
Expecting individuals to achieve success on their own with inexpensive, one-size-fits-all, pre-packaged materials is to indulge in the kind of self-delusion that fuels after-hours infomercials. Results will vary, and we all know in what direction...
11. Let’s help our entrepreneurs give their customers what they want: Why food courts work and why we should apply the same rules to food trucks! Its simple: customers know where to go to get fed; they want choice and to be able to buy dessert right next to the main course. Choice and entertainment sell more. If you doubt that, check out retail big box sales per square foot. There is so much more we can do to help our entrepreneurs connect with their customers (regulations, traffic, zoning, process cycle, etc.).
12. Are we asking the right questions? Alberta is still a heavily resource-based, export-dependent economy. Or, at least, the economy we want to have (back) has a carbon-based foundation. Is pain-free diversification away from oil the right dialogue? Isn’t the pertinent question either “How much can we produce at $20 per barrel?” or “What does (or should) Alberta’s economy eventually look like if we sell (a lot) less oil?”
How does entrepreneurship and innovation policy respond to those questions? (And, setting aside a presumption of 100% congruence between policy and reality, how about the entrepreneurs and innovators, themselves?)
13. We need clear, specific outcomes. We (our governments) need to clarify and prioritize economic outcomes we want to achieve and avoid. There are different types of growth - some are mutually exclusive (e.g., increasing productivity may diminish investment and/or jobs). “Growth” and “jobs” are frequently glued together as sound-bites, but they don’t suffice as a clear road map for the direction we want to go. It’s time to be specific about what we want without the juvenile pretence that we can have it all. Alberta needs to envision and create the future it wants. Conventional approaches will not be sufficient. This future needs to be communicated as part of activities that motivate existing and potential entrepreneurs.
14. Business incubation is based on self-selection. Clients cannot be lead to the entrepreneurial waters nor made to start. A conventional political mantra is “we shouldn’t be in the business of picking winners” – that may be true, but the reality is that we can’t predict or manufacture winners, even when we try.
So we ought to apply ourselves at supporting a broad base of interested citizens and offering specific kinds of help to small businesses.
15. Bureaucratic-led initiatives for entrepreneurs seldom work. The job of government is to reduce/avoid risk; the job of the entrepreneur is to take risk; a mismatch between policy objectives and entrepreneurial interests. The role for government is to create an approachable, reasonably safe playing field that does not, itself, create barriers or dangers.
This is more about installing high-quality neighborhood jungle-gyms than devising a high-visibility, ‘own-the-podium’ gymnastic program.
16. Government’s job is to create the playing field. Governments can be much more entrepreneurial and supportive toward helping local business succeed - purchasing, product trials, etc. - but notice that they are here acting as market participants, not masterminds. Also, governments should work much harder to reduce regulation and shorten cycle times. Economic development strategy that is focused on growth from within will have much more success than any attraction strategy.
17. We get the entrepreneurs we deserve. Enhancing the performance of Alberta’s entrepreneurs requires a significant change in thinking as well as a significant shift in how we invest support resources. Today we support products and technology (i.e. highly scalable Silicon Valley thinking); what we need is acknowledgement that we live in a services-based economy, where we need investment in human capital and capable firms. And, we probably don’t need more investment, just a shift in focus and resource allocation.
PART 3 - WHAT’S NEXT? Lets try a pilot program to build entrepreneurial capacity.
If we want to be successful at innovation and diversification in Alberta, on a significant scale, start-ups, small businesses, big businesses and government all need to work together to address market access, regulations and finance. Conversation is full of platitudes, yet little advice on how to practically start working on this agenda. Below is an agenda for action.
1. A pilot program to connect entrepreneurs, intrapreneurs and government agencies (all levels) to create enthusiasm and develop entrepreneurial skills through a structured program of transformation. The idea is to demonstrate that we can materially enhance the capacity of our entrepreneurs. An initiative of this scope needs to involve many Provincial departments and should probably be sponsored at the Executive Branch level.
2. Develop core program delivery capabilities in Alberta using existing resources that have demonstrated exceptional results in other jurisdictions.
3. Dramatically increase the number of new non-petroleum businesses that survive more than 5 years and grow an average of over 50% per year, and size increases beyond 20 employees.
4. Provide a new business excellence system, skills and tools to 2,020 entrepreneurial leaders by the year 2020. The idea is to showcase/plant the seeds of excellence province-wide. Perhaps something like a “Growth Voucher” (similar to a technololgy voucher) could be used as a catalyst to attract the attention and engage firms with growth potential (the “cheese” in the growth machine).
5. Establish and support up to 20 entrepreneurial business projects in 2016, likely to have a marked impact on business success and economic diversity, beyond what would otherwise be achieved.
6. Establish and support up to 10 intrapreneurial demonstration projects with Provincial government agencies in 2016 to make measurable, sustainable, innovative improvement that benefits its business and citizen customers, especially those involved in pursuits that will result in economic diversity for Alberta.
7. Generate at least 5-to-1 ROI across all projects (intrapreneurial and entrepreneurial) within the first 18 months.
8. If steps 1 to 7 are successful, scale it up and do it again for as long as it takes. My hunch is that over 5 years we could impact at least 2,000 entrepreneurs and generate $1 Billion in incremental sales.
File: Entrepreneurship in Alberta Circa 2015 (06 March 2016)
Every year thousands of business professionals gather to recognize and celebrate entrepreneurship across Canada during BDC Small Business WeekTM (SBW). Small business should be honoured in all communities, which is why the Northern Alberta Business Incubator and St. Albert and District Chamber of Commerce are hosting a series of SBW events:
Schedule of Events for Small Business Week
Wednesday, October 12: Business@Lunch Kick off this year’s celebration with a St. Albert Chamber luncheon where the 2016 community award nominees will be acknowledged. This is the perfect opportunity to congratulate the nominees and connect with local business professionals over a delicious lunch spread.
Thursday, October 13: NABI Octoberfest - Scavenger Hunt Join NABI, Chamber members and more for a unique networking event where you’ll learn about “Marketing Done Right” during an interactive scavenger hunt. A combination of learning, connecting, beer tasting and cheese pairing... What more could you want?
Wednesday, October 19: NABI Venture Lab Orientation In the spirit of entrepreneurship, see if your business idea has what it takes to be successful during NABI’s Venture Lab orientation. Learn how NABI coaches can help bring your idea to life so you can become a coveted SBW award winner one day.
Thursday, October 20: 2016 Small Business Awards of Distinction, Presented by Audi Edmonton North Held in the Arden Theatre, the Business Awards of Distinction features the presentation of numerous awards to deserving businesses in our community. Strap on your heels and slip into your best dress shoes for an evening of proud recognition, live entertainment and tasty cuisine.
Also, stay tuned for the announcement of NABI’s next SEO-focused lunch and learn, which will be hosted during SBW. Learn how to improve the search rankings of your small business so you can become the next community success story.
To see the full schedule or register for a SBW event, visit www.stalbertchamber.com and nabi.ca.
By Dar Schwanbeck, CMC Managing Director, NABI
Last week I attended a meeting where several large organizations were exploring the topic of innovation. I expected that groups, such as these, would be at the forefront of implementing new ideas and managing change. After all, aren’t our competitive advantage, economic growth and social well-being dependent on constant innovation? Our discussion revealed otherwise; we’re not as “innovative” as we’d like to be. There’s no shortage of ideas or good intentions, yet all lamented about how little innovation they experienced and how hard it was to make change. So what’s going on?
WHAT IS INNOVATION ANYWAY?
I found many definitions of innovation, ranging from
· “any project that is new to you or the organization and has an uncertain outcome,” (Govindarajan, Trimble),
· “the implementation of ideas to create value,” “a new method of production or handling,” “opening a new market,” “a new organization,” (Schumpeter),
· “the application of an existing technology (or technologies) in a new and useful way” (Hirsch), to
· “making desired outcomes easier to achieve” (Lawton).
So innovation reaches well beyond just technology. It applies to products, processes and services; technical invention and social invention. Henry Ford, for example, is famous for the model T, but also instrumental for implementation of the assembly line and use of part-time, seasonal workers to work on the assembly line. NOTE: Some writers distinguish “inventions” and “design improvements” from the definition of “innovation,” but my quick review suggests our bigger problem is in getting stuff done, and less so with a precise definition of “innovation.”
WHY IS INNOVATION IMPORTANT?
Why should we care about innovation in the first place? The dumb answer is probably that we are either, “moving ahead, and at least staying competitive, or, falling behind. In a global economy, nothing stands still. Todd Hirsch, in The Boiling Frog Dilemma offers 3 reasons:
1. This is how economies progress – otherwise we’d still be watching TV by candlelight, wrapped in animal hides; to improve our standard of living
2. We must compete or become irrelevant on the global stage; it’s necessary to long-term survival
3. Because we can. We have a well-educated, intelligent population, and it takes such attributes to drive innovation.
WHY IS IT (INNOVATION) SO HARD?
The business literature offers a host of reasons that individually and collectively might be getting in our road. The summary below is not presented in any particular order.
Lack of Clear Goals
Gregg Fairbrothers says its “key to understand why an individual (or organization) wants to innovate in the first place - to get what you want, you need to know what you really want; what is the real problem we are trying to solve? The goal sets direction, marshals resources, focuses learning, and provides criteria for decision making and measuring progress. The dilemma might be that organizations have too many, un-prioritized goals….and none specifically around a particular idea and getting it implemented. We expect our employees to be innovative, yet we don’t establish specific goals for implementing ideas.
Unwilling to Take Risks
Our organizations are often cultures of “devils’ advocates” versus idea builders. We fail to create a distinct culture that embraces calculated risk-taking. We conform (any innovation must fit within existing organization standards and measures). The “status quo” is a powerful force and innovation is known to be “risky.” Combine these factors and people usually run from innovation.
Funding for innovation usually means taking money from other parts of the business, hence competition, and of course, the timing of the funding is often a problem. Money doesn’t match the needed timing.
Beyond minor innovations or small design improvements, many innovations cross organizational boundaries and may create new categories. Further, because the pursuit of innovation requires human resources, there is conflict with the “day job.” Each of these factors sets up competition for resources and disputes around authority and decision making. As a rule, innovations don’t get their share, either of resources or anticipated benefits. Dedicated teams, separated from day-to-day operations might be the best choice to drive important innovations. Increasingly complicated environments in which to get change done (more complicated organizations, more procedures and regulations).
Innovation requires a time investment, and time is often a scarce commodity in many organizations. Further, in contrast to day-to-day operations, innovations often don’t behave according to a predictable schedule. Put these two together and it’s difficult to show innovation as a return on investment.
For many ideas/innovations it’s hard to quantify potential return on investment; potential costs, revenues, market share, impact on competitive advantage, etc. are simply unknown. And, potential innovations must compete within existing budget cycles for resources. Value propositions may not be clear for each group of stakeholders. New or different measures may be necessary to give innovations the chance they deserve.
Ideas Lack WOW!
“WOW” refers to the sum of an idea’s overall potential and likelihood of success. By definition, organizations should only pursue those ideas that have real competitive advantage, solve a burning problem and have a chance of implementation. If a new idea can’t deliver the table stakes (key benefits) and if the idea is not different from the competition, it should be killed. Unfortunately, it seems that many organizations are relentlessly pursuing ideas that will never deliver any significant value, either to customers or themselves.
Unaware or Disinterested in the Innovation Process
Over the last couple of years a number of new books have explored the topic of innovation.
These references offer valuable insight into why we struggle with innovation and what a new approach might look like; seems that a commitment to the right process matters. Like diets, fitness, smoking cessation and business strategy implementation, the innovation process requires dedication, preparation and commitment. We only get out of a process or plan what we actually put in, and expecting day-to-day business operations to drive major innovations (versus a separate team), is like expecting the pick-up hockey league to win the Stanley Cup.
HOW TO INNOVATE: Four Different Approaches
So where to look for help? Similar to the range of definitions for innovation, there is a wide variety of methods for getting it done. However, almost without saying, the selection of the tool box should align with the nature of the innovation challenge. Are we looking for new competitive direction? [Kim and Mauborgne, Blue Ocean Strategy] Do we know the direction, but are struggling with implementation? [Govindarajan and Trimble, Other Side of Innovation] Do we have real competitive advantage? [Wendy Kennedy, So what? Who cares? Why you?] What really needs to be fixed? [Lawton, Customer-Centered Culture] Regardless of the approach, our success will depend on our commitment and follow through.
In the Blue Ocean approach, Kim and Mauborgne propose that we should “systematically look across established boundaries of competition and reordering the elements to serve new markets where new demand is created. The authors pose 4 critical questions to help us identify new market space and opportunities:
1. What factors that the industry has taken for granted, can be eliminated?
2. What factors should be created that the industry has never offered?
3. Which factors should be raised well above the industry’s standard?
4. Which factors should be reduced well below the industry’s standard?
In Creating a Customer-Centered Culture approach, Rob Lawton offers a number of robust themes.
1. Organize everything by specific products and classes of customers; without these we can get our assumptions about value propositions wrong
2. Performance, perception and outcomes are the basis for customer satisfaction
3. Customers are always loyal to outcomes, not process
4. Always assume customer expectations are unmet
5. What me measure is what we value
6. Process improvement not positively experienced by customers is a competitive mirage
7. Vital lies are constraints on any change initiative.
An understanding of Lawton’s framework is critical to any innovation; innovation starts with an understanding of prioritized [product] outcomes, with a goal of making these easier to achieve or avoid. Lawton offers the tools to do this.
Vijay Govindarajan and Chris Trimble provide a comprehensive guide for solving the [innovation] execution challenge. Their 2010 book, the other side of Innovation, provides a road map to 1) Build the right team for an innovation initiative, and 2) run disciplined experiment. The first part addresses who will be on the team, how it should be structured, and how it can partner with ongoing operations. In the second part they talk about testing assumptions, translating results, measuring progress and combatting sources of bias.
Wendy Kennedy in So what? who cares? why you, propose a handful of steps to commercialize new technology ideas. And of course, if we stretch our thinking just a little, we can apply this approach to any business process or social invention.2
1. Scope out your idea in clear and simple terms; if you cannot communicate your idea in plain language, you have a problem]
2. Frame your idea in terms of the business problem being solved (and ideally it represents a “bleeding from the neck problem”).
3. Pinpoint the sustainable competitive advantage that makes your idea distinct
4. Build a financial model that is defendable
5. Pitch a compelling value proposition to a business backer or customer (and he or she might be in the next cubicle)
Kennedy sets the entrepreneur or innovator up with the information he/she needs to examine the value proposition around his/her proposed innovation. And if there is no value proposition that we can execute, there is no innovation, merely ideas and inventions. Don’t give up, but stop beating dead horses.
To sum up, as Randy Thompson, an Alberta based venture capitalist says, “it’s never the idea that really matters, it’s all in the execution.”
Andrews, Peter, Five Barriers to Innovation, IBM Global Business Services, 2006
Fairbrothers, Gregg and Winter, Tessa, From Idea to Success, McGraw Hill, 2011
Govindarajan, Vijay and Trimble, Chris, the other side of innovation, HBR, 2010
Heath, Chip and Heath, Can, Switch, Random House, 2010
Kennedy, Wendy, So what? who cares? why you?, Wendy Kennedy, 2006
Kim, Chan W. and Mauborgne, Blue Ocean Strategy, HBR, 2005.
Lawton, Robin, Creating a Customer-Centered Culture, ASQC, 1993.
See for example - Govindarajan and Trimble, “the other side of innovation,” HBR, 2010; Fairbrothers and Winter, “From Idea to Success,” McGraw Hill, 2011; Kim and Mauborgne “Blue Ocean Strategy,” HBR, 2005; Andrews,
Peter, IBM Executive Technology Report, “Five Barriers to Innovation,” IBM Global Business Services, 2006; Heath and Heath “Switch,” Random House, 2010.
 The Kennedy methodology is what NABI uses. We complement Wendy’s work with the tools provided by Lawton and Vijay and Goldsmith.
Guest blog article written by Edmonton Chamber of Commerce for more information, visit @EdmontonChamber.com Chamber blogs click here
As a small business owner, you have probably heard the term ‘Brand’ or ‘Branding’ before. You would have touched on branding when you decided on the name of your business and designed your logo. But there is so much more to branding, and by understanding more about what branding is, the better positioned you will be to discover your authentic brand and add value to your small business.
So what is brand? Your brand is like a personality. Its attributes define who and what your business is all about. Your brand should inform your customer about your business, your employees, and your core values – and in a memorable way.
To understand your brand, you need to define:
The promise and experience you will consistently deliver on, and reflect in all you do and say.
Randy Cronin from RED The Agency, a marketing services company in Edmonton, says “Small businesses and start-ups may not think branding is for them, but whether you are an entrepreneur, a new small business, or have been in business for many years, branding plays an important role in your business proposition.” As the Director of Strategy, Randy is in the businesses of helping organizations better understand and articulate their unique value proposition and their brand DNA.
How can branding support your small business?
Branding helps people identify and recognize your products and services, and differentiates you from your competitors.
Your brand helps to position your business against competitors, capture customer loyalty, build consumer trust, and help you be top of mind when customers are looking to purchase a product or service.
Branding can include:
The most powerful brands tap into emotions, so when you are thinking about the value your business provides, consider the benefits on an emotional level that your brand should portray.
Randy explains that this takes a bit of self-examination. “When we work with clients, we find that most organizations already understand their vision, mission, and purpose, but through a process of self-examination, we help clients to define their ‘authentic self’ and the ‘promise’ that their brand represents.”
The price of value
In a world full of endless choices, branding is key to ensuring consumers remember your products and services. With so many options on offer in-store, online and worldwide, branding can be a significant differentiator for your business.
When your brand holds value in the eyes of your customer, you gain a competitive advantage in the marketplace, and this goes a long way in creating a profitable small business.
If you are interested in discovering how to create or strengthen your brand for your small business, contact member businesses today, by visiting edmontonchamber.com/business-directory.
Article written by Dar Schwanbeck, Managing Director at Northern Alberta Business Incubator (NABI)
"Snagging customers for small business" Read article on LinkedIn
Great marketing and selling required.
A lack of customers routinely undermines business success, and for start-ups, it is often the difference between survival and failure. From our work at the Northern Alberta Business Incubator (NABI), we estimate that three-quarters of all small businesses could use more customers and/or increased revenue from the ones they already have. In the turbulent, rickety markets going into 2017, even keeping the sales we have would be a good thing. Either way, sustaining and/or increasing sales is the BIG goal. Achieving this requires a combination of marketing and selling … and the self-confidence to make it happen. Marketing and selling are not the same. They are skills and processes to be developed and honed. Just showing up at the next networking event, unprepared, will not accomplish much. And, our sympathy in advance, this business of marketing and selling is never done; the notes below reflect some proven ways to help with your journey.
First the Marketing
Marketing establishes the foundation for all of your selling efforts. It defines your product, identifies key markets and determines how you will position your company in the mind of the customer (i.e. your brand). At NABI we use a model from Wendy Kennedy, known as So what? Who cares? Why you? to help businesses focus on the key elements necessary to grow their business. Highlights from Wendy’s tool-set follows.
1. Set goals. We all know that goals help us navigate on a path, and marketing goals are no different. We suggest about 3 “SMART” goals to focus your efforts and establish a context for making decisions about which marketing and selling activities will best help you to get the results you want. For example:
a. Add 250 new customers within product category “X” within the next 36 months;
b. Add 750 “prospects” (qualified buyers) and 2,500 “suspects,” (people we “suspect” will be buyers.);
c. Add $1 million in new sales within 3 years. And here’s a goal that you might not have included:
d. “Be recognized as a local thought leader in my area of practice or business.” You might measure this by the number of hits or likes on a website.
(Note: For each of the above, think about the mini-goals you need to achieve in the next 90 days.)
2. Prepare a crisp, simple description of the product you are selling (e.g. ladies custom leather boots.) Folks often say they are selling a “service” or “solution.” These are fuzzy words that lack shared meaning. Customers care about what we provide to help them achieve some desired outcome. These things are products. Service products might include financial statements, plans, specifications, repairs, diagnoses, presentations, etc. If you are not specific about your product you cannot identify specific customers and markets. Have a look at Rob Lawton’s work, C3 Excellence if you really want to do this well. 
3. Identify the “Category” or “Market Space” that your product or idea fits in….and be able to articulate two key drivers that customers might use to decide which product or supplier they will select. “Drivers” may refer to the outcomes to be achieved (by using your product) and/or specific technical functions/features of your product. You need to be able to clearly identify “why” customers will buy your product. Price is not a good driver, unless you are a discount store. The identification of drivers will also help identity competitors – and where you/they fit in the market.
4. Complete a market segmentation analysis for your product. A segment is a homogeneous group of buyers who share common characteristics (e.g. income, buyer behavior, geography, watering holes, heroes, etc.). When the segmentation is finished, choose about 2 “hot spots” (i.e. specific target markets) for your product.
5. Build a Strawman for each of the above target markets. A Strawman is Wendy Kennedy’s term for a semi-detailed description of your ideal customer. This includes definers, descriptors, context, compatibility…and information on their persona (jobs, lifestyle, heroes and watering holes – the places they hang out, the magazines they read, etc.).
6. Determine your path to market. Consider where your product fits in the “product life cycle stage.” Innovative, disruptive new products will require different tactics than mature products. Next, identify a short list of top customers, describe how you will contact them, how you will measure success, and timing. In today’s on-line world you will likely need to create a “Content Marketing Strategy.” This is about driving the right “suspects” and “prospects” traffic to your website. It’s about establishing your company as a thought / product leader and earning customer trust. It will also involve everything from email connections, to speeches, to writing articles and stories around your area of expertise.
7. Understand the eco-system for your business. The idea is to describe each type of participant (suppliers and vendors upstream and downstream of your place in the market) and who the key players are in your region. The trick is to see if/who/where you might find partners and/or competitors to work with. If I had an idea for a new hammer, for example, I might check with the local Home Depot or Canadian Tire to see if they might work with me to broaden my reach in the market.
8. Map your channels to market. A marketing channel (sometimes called a distribution channel) is a set of practices or activities necessary to transfer the ownership of goods, from the point of production to the point of consumption. It is the way products and services get to the end-user or final consumer. Start with the channel that best suits your target customers, but don’t forget other possibilities (e.g. on line sales, wholesale, cross-selling, etc.).
9. Identify the Competition and plot your competitive advantage. Go back to your category map and consider how you and your competition stack up on the key drivers in your market. Clearly identify how your product is different or unique.
10. Develop the Packaging and Labelling for your product. The list of tasks at this step in your marketing journey can be as daunting as creating the core product. It may include protection of the product for shipping, instructions for use, food content, expiry dates, language requirements, display considerations, safety warnings, regulatory and health certifications …. and don’t forget to check with your distributors and retailers; they will certainly have ideas about displays and quantity packaging.
11. Determine the Pricing for your product. Save this task for almost last. The reason is that there can be many hidden or unknown costs that surface as you develop and package your product. Packaging can often cost more than the core product; you will also need to consider retail pricing, wholesale pricing, quantity discounts, advertising allowances, etc. There will likely be different prices for different channels.
12. Identify a team of advisors. These should include technical, financial and channel/market advisors. The best ones are “mavens” (well connected) within your industry…. which can then help with initial sales.
13. Create your Storyboard (Pitch), highlighting key themes and 3 specific take-a-ways about your Product. Your Pitch has to be crisp and delivered confidently. (e.g. At NABI we help start-ups and small enterprises grow their business while managing the risks. Office Spaces. Coaching. Inspiration.)
14. Document the above info as your Marketing Plan. You are now ready to start “selling.” You should revisit your marketing plan at least every 3 to 6 months, or at any time you get wind of a competitive move; you should be monitoring sales activity/results monthly. (Also see #7 below.)
And then the Selling
1. Prospecting and lead generation. A “lead” is someone (or a company) who may be able to use your product to achieve a desired outcome. Leads can come from anywhere: speeches, articles, cold calls, email inquiries, referrals (that you receive), introductions, networking, lists, videos, blogs, newsletters, hallway conversations, line-ups at the grocery store, sophisticated email drip campaigns, web-site research, etc. The purpose of any/all of the above communication tools is to “alert” your suspect/prospect/customer to a potential problem (pain point) or opportunity. This might involve your website and/or face-to-face contact. For in-person or telephone selling we are fans of Sandler Sales Training - a set of non-traditional selling skills.
2. Initial conversation with prospect to establish rapport, gain acceptance to move to next step(s), and, confirm the outcomes that the client wants to achieve by using your product. At this step you will also want to identify who (within an organization) needs to be involved in the purchase decision.
3. Data gathering and research to confirm needs, that your product is a fit for your client, and some idea of the client’s budget. Best to talk budget early!
4. Presentation of product/solution and any options, with immediate follow-up. Ask what the client would like to do next. Push for clear next steps…and challenge the “wimp” replies (e.g. “I’d like to sleep on it.” “Send me a brochure.”)
5. Deliver/implement the product/solution. Remember that the product purchase/acquisition process may be as important as the product itself. Monitor progress.
6. Retention, ongoing service and follow-up. It’s far cheaper to retain customers than to continuously be looking for new ones. First, confirm if customer outcomes are being/were achieved. See if there are additional needs. Observe product usage trends. Keep an eye on function and feature use. Track customer satisfaction (the best thing to do is to have a conversation). Reach out with value-added ideas. Ask if there are any customer contacts who might have a similar problem that you could have a conversation with. You are not asking for a referral, only an introduction to another prospect who might have a similar problem.
7. Monitor Progress. Reassess marketing and sales strategies. Go back to the beginning. In today’s hyper-fast markets, nothing should be taken for granted. This means routine monitoring of results, industry trends, competitors and customer needs. A great tool for assessing/shaping your marketing and sales strategy is what we refer to as the Decay Model (see below). It’s called that because each subsequent box in the model is a smaller set than the previous one – and depending on the relative size of each box, you know exactly what needs the most attention in your overall customer acquisition strategy. For example, the Total Market (100%) is your Target market (as you have defined it). One hundred percent refers to every possible customer that has the ability and interest in buying your product. The “% Aware,” refers to the percentage of the total market who are aware of your company as a supplier. If this percentage is low, then that’s where the marketing effort needs to be invested. Percent “Trial” refers to the percent who have bought your product one-time. If this percent is low, then you have to think about the things you could do to get prospects to try your product the first time (e.g. a coupon, product sampling). Percent “satisfied” is just that – and if its low you have a product quality or delivery issue. Finally, if satisfaction is high, but repurchase is low – you likely have a competition problem. A competitor is offering the same product experience, but at a lower price.
Henry Ford said, “Whether you think you can or whether you think you can’t, either way you are right.” You have to believe in your product and committed to on-going marketing and selling. To this end, you might ask, what are the characteristics of successful sales people? According to Tom Hopkins : Look the role, take personal pride, show warmth & compassion, be self-confident, show enthusiasm, identify and overcome fears, driven by achievement & money, don’t take rejection personally, and, embrace continuous education.
In this blog we’ve tossed a lot of stuff at you. The main reason is that we see a lot of small businesses that either fail or do not come close to their potential; these situations can easily be avoided. In a nutshell, acquiring customers is first about marketing, then selling …. and having the right attitude, confidence and drive to keep going. Happy to help! Drop us a line. You can reach the author at firstname.lastname@example.org
See Wendy Kennedy, So What? Who Cares? Why You?, http:wendykennedy.com
Robin Lawton, http:C3excellence.com
See http:Blog.Buffer.Com, Content Marketing Strategy
See Sandler Sales Training
Launch into Small Business Week armed with tools for marketing your business in a tough economy. Just because times are tough, doesn't mean your business can't succeed and grow! Get inspired by our keynote, Randy Brososky, brainstorm solutions to your marketing challenges with our marketing experts, connect with small business resources available in your city, AND walk out with a professional head shot!
3:00pm: Registration, Community Business Resource Fair & Networking
3:15pm: Keynote: Randy Brososky, Group of Rogues
4:00pm: Marketing Challenge Stations, Community Business Resource Fair, Networking & Head shots
6:00pm: Event Ends
Hear from Keynote Randy Brososky, from Group of Rogues on marketing in this economy and the important role branding and strategy plays in business success.
Take advantage of our Marketing Challenge Stations to collaborate with your peers to brainstorm solutions on how to market in this economy with one of our marketing experts.
Browse our Community Business Resource Fair and speak to representatives from non-profit organizations, government supports, and other small business support services in Edmonton.
Boost your branding with a professional head shot! Limited spots available. Reserve your ticket for a head shot when you register.
Presented by a collaboration of community business service providers.
Cost: $10.00 (limited spots for challenge stations and head shots)
To register, click here.
Northern Alberta Business Incubator Society (NABI)
13 Mission Avenue
St. Albert, AB T8N 1H6
200 Carnegie Drive
St. Albert, AB T8N 5A7
Hours of Operation:
Monday to Friday 8:00am-4:30pm
Mountain Standard Time (MST)
Closed Saturday, Sunday and Holidays
Directions to NABI: Click Here