Applying Business Principles This Year
A recent article made the case for applying traditional business elements of success to the entrepreneurial thought processes of today. The problem of how to start a business with a long term strategy and plan and be competitive from the starting gate when competing on a global scale can be daunting. Several “time tested” principles were used as foundational illustrations that should be applied to today’s entrepreneur.
But are these principles still valid?
The first principle that was offered was that of using a SWOT analysis to determine where to position your business in contrast to your competitors. If not done correctly, the SWOT can end up being a simple academic exercise. However, the SWOT analysis does have value.
But this is a formalized approach when more than a few Internet businesses have been formed and are successful simply by assembling key players who agree to work cooperatively and get things started. Maybe there is an informal analysis done along the way, but any idea an entrepreneur may have can be yesterday’s news if too much formality is injected into the process. This is not to say there have not been successful companies formed through the formal process, but the younger a person is the more likely they will skip the formalities and just get to work.
It can be asked whether this model has long term value. Recent history shows that small companies that have products that fill in niche needs of global giants will be bought up anyway. So the bottom line for the modern entrepreneur is to make money because any successful venture will either be swallowed up or crushed by the giants in the long term.
Another general concept is to differentiate yourself from the rest of the market. The problem with that is there are a vast number of companies in the global marketplace who can compete with price rather than quality. A unique product offering that has high quality will not be able to compete with a product of slightly less quality. This is more a matter of global economics than business, where the wages of workers continues to remain stagnant or rise so low as to be insignificant.
Consider the smartphone market. Many products have taken steps to differentiate themselves from the competition. Yet Android smartphones dominate market share because they are cheaper. Even Microsoft has changed it s strategy to focus on the low-end smartphones. As unique and high quality as Apple’s iPhone is, it has failed to make a significant dent in Android’s market.
Visibility, the idea that you need to get your product name in front of your target audience, is basically a no-brainer, especially on the Internet. But getting noticed requires that you adopt your business strategy to include SEO because if your company cannot make the first page of a search engine results list, then it probably will not be noticed by many people. Since Google created its search engine with the page rank concept, businesses have changed their marketing strategies to adapt to Google’s ranking formula. For Internet businesses, social media and page rank are two of the most critical components of visibility.
Creating a distinct personality for your company that makes it appear more human is another recommendation. Examples such as the Geico gecko are used as illustrations of successful corporate personalities that have entertained consumers and added to its brand. But that is yesterday’s news. If we use television as an example, the number of companies that create a memorable character to advertise their product continues to decline. They realize it is about the instant sale. No longer can companies rely on a long term, loyal following because many consumers see businesses the same way businesses see employees – how replaceable are they and what is the cost?
The only companies that can afford to create a corporate personality are the giants, and they do it to retain market share rather than gain it. Then there are companies like Apple Computer, who let the products market themselves rather than spend millions of dollars on creating a personality. Their corporate personality is a reflection of their product lines: stylish, pricey, innovative, and eccentric. This approach has served them well for many years.
The final recommendation on the list is vision. The problem is defining what vision is and what are the major differences between 2015 and 1985. The vision your company has today is more likely to he made into reality by a competitor or new business than seeing it become reality in 10 years. It is likely the best company visions are noticed by the giants and then either adopted and made better (building a better mouse trap) or simply buying the company. Attempting to remain a private concern is a good strategy, but if a giant decides to imitate the product and there are legal issues of trademark or patent, the litigation required to resolve it in favor of the smaller business will consume massive amounts of time and resources. There is no guarantee the courts will require the giant to reimburse the smaller company for the entire amount of its costs.
To be fair, there is a certain amount of validity to the old adages. But they need to be brought into the new millennium and the age of the Internet and technology. Visibility and vision are great concepts, but more often than not it is a reactive business environment, where a company needs to meet the changing market conditions, many times having to adjust its strategy. Microsoft, a giant, waited too long to get involved in the mobile industry and now finds it difficult to gain a foothold in competition with Google and Apple.
Technology has changed the speed of business, and that change of speed has caused consumers to change their buying habits. Whether 1985 or 2015, the customer is the one businesses have to adjust to with their product lines, profit margins, and marketing strategy. Pay heed to the principles, but make sure they are adjusted for the global speed which business conducts itself today.