Posts Tagged ‘Marketing and Business Development’

by Richard Martin

Readiness can be reduced to this essential component: the intrinsic motivation to be ready, willing, and able to accomplish the mission no matter what.

My daughter Elizabeth works as a salesclerk in a men’s and women’s clothing boutique. She was telling me that the floor manager assembles the team at the start of each day and at shift changes to give them the day’s sales target.

Elizabeth tells me that this quantitative target is little motivation to her. She gets her drive from helping the clients find the right clothing and leaving the store satisfied. To her, the most important thing is the client’s experience and whether they will depart in a good mood, having achieved their aim and willing to come back and recommend the store to others.

As I reflected on this, I realized that it highlights the distinction between intrinsic motivation and extrinsic motivation. Sales targets are a form of extrinsic motivation. They may influence some people to perform, but most people don’t get their drive from such externally measured objectives.

The willingness to help clients and the satisfaction that comes from doing so is a form of intrinsic motivation. Intrinsic motivation is the stronger form of influence. It comes from within and gives people the inner strength to overcome obstacles and motor past resistance.

Remember Richard’s Business Readiness Process in 2017!

  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Call me for a Business Readiness Briefing!

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

In my last two posts under “Ideas” I introduced the concepts of the S-curve and Power Law (a.k.a. Pareto’s Law, Zipf’s Law, or the 80/20 rule).

In this post I discuss the concept of self-similarity. I view it as an adjunct to the S-curve and Power Law that multiplies their effectiveness for anticipating change and other dynamic interactions in society, businesses, and other forms of organization.

According to Wikipedia: “In mathematics, a self-similar object is exactly or approximately similar to a part of itself (i.e. the whole has the same shape as one or more of the parts). Many objects in the real world, such as coastlines, are statistically self-similar: parts of them show the same statistical properties at many scales.” The term fractal is also frequently used to characterize self-similar structures.

Furthermore, self-similarity is characterized by scale invariance. Again according to Wikipedia: “In physics, mathematics, statistics, and economics, scale invariance is a feature of objects or laws that do not change if scales of length, energy, or other variables, are multiplied by a common factor.

(My emphasis in both quotes.)

In practice, this means that it is difficult or even impossible for an observer to detect the system level depicted just by looking at a picture. As mentioned above, coastlines are the paradigmatic illustration of this phenomenon. You can look at satellite image of a coastline at various scales and, barring the presence of a scale indicator (e.g. a boat or a human on the picture), you can’t determine the scale with any certainty. Moreover, this is also a statistical effect, as the underlying math is the same or very similar at all levels of magnification.

There are many phenomena in nature and society with this characteristic structure. However, for business and strategy, the most crucial realization comes from the self-similar (or fractal) nature of power curves and s-curves. Take any distribution governed by a power law. If you hone in on any particular segment of the distribution, you find that it is also governed by essentially the same power law. In other words, the distribution looks basically the same at all levels of magnification, or scale. The follow diagram shows this effect.

self-similarity-in-power-laws

No matter what you’re measuring or tracking–it could be total sales, the performance of your salespeople, the relative impact of your clients–you are likely to notice a power law working at all scales. This was illustrated in my Power Law article last week by the example of real estate agents in the Greater Toronto area. I’ve reproduced those two graphs here, as they show how a power law is in evidence at two different scales.

treb-6-and-under treb-gif

Although not as stark at the level of agents with only 0 to 6 deals, we can see that the two scales are broadly similar. What about practical applications? Well, for one, we can see that the effect is likely to be similar at all levels and in all categories of agents. For instance, if you break out each category (7-12 deals all the way to 201 plus deals), you will probably find the same pattern. A small number of top performers skewing the results of the group upward.

This type of distribution plays havoc with our basic assumptions of normally distributed performance or effects. If we were to assume a normal distribution (Gaussian distribution in technical statistical terms) for real estate agents, we could easily be fooled into thinking that there is an “average” performance, a “typical” real estate agent. But this could not be further from the truth. In a normal distribution, the mode, median, and mean are all very close to having the same value. This means that the arithmetic mean could give a false understanding of the performance distribution for a sales group. In actuality, the mode (most frequent value), median (the middle value), and the actual mean could be different, with the latter possibly heavily skewed in the direction of the highest performing class of sales people. This is what we see with the distributions of real estate agents above.

Would the arithmetic mean of this distribution truly represent the average or typical performance of a real estate agent in the Greater Toronto area? Obviously not. If we look at the numbers of deals, 0-6 is the modal value, and represents about 50% of the total number of agents! This means that the largest number of real estate agents are actually sluggish performers, and even don’t participate in any deals at all! If you’re looking, say, to providing products and services to real estate agents–at least in the Greater Toronto area in 2011–then you’d be better to look at the actual performance distribution at varying scales so you can segment the market properly.

These relationships tend to hold across time and space for any particular phenomenon. We can safely assume that the distribution of real estate agent performance is broadly similar no matter when and where you build your sample. While it’s ultimately a question for empirical investigation, in my experience, self-similar power laws are ubiquitous in market dynamics and human performance. You can apply this insight to all market and performance numbers and you will get similar results. This enables much better analysis, planning, and strategy to gain and sustain a competitive edge.

I’ll explore scale-invariance and self-similarity in s-curves in my next “Ideas” post. In subsequent ones I’ll also look at the broader implications of self-similarity, particular as they relate to hierarchy in organizations, specifically what I call “nested hierarchical planning” and “nested hierarchical vigilance.”

© 2016 Alcera Consulting Inc. This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

The “Power Law” is one of the most useful concepts for making predictions and decisions in business and management.

The power law shows how two variables–one dependent, the other independent–covary. Mathematically, one varies as a function of the other by being raised to a certain power (exponent).

The following diagram shows this type of relationship. Often these are depicted on log or log-log graphs, but I show the “power curve” as an asymptote on both axes of the graph to highlight the non-linearity of the relationship between the two variables.

power-law-basic

A concrete example will help. The great majority of earthquakes are of very low magnitude. High magnitude earthquakes are much rarer than low magnitude earthquakes. In fact, their magnitude varies in inverse exponential proportion to the total number of earthquakes. In practice, this means that there are literally thousands of earthquakes every day around the world, but magnitude 6, 7, and 8 ones are much rarer. The most powerful earthquakes of all, over 9 on the Richter, scale are very rare. They can happen only a few times a century, or even less. This doesn’t mean that the magnitude of any particular earthquake can be predicted. It does however imply that given a sufficiently large sample, we will eventually see a frequency-magnitude distribution that resembles the graph above.

This type of relationship is ubiquitous in nature, and that includes our human and social natures. There was a whole book written on this topic–The Long Tail, by Chris Anderson–with emphasis on the right side of the graph. In his book, Anderson described how the internet has made many businesses or ideas viable which would not previously even have been known. He called this the long tail because there are musicians, artists, artisans, crafts workers, professionals, etc. who can provide their productions and services to people around the world, even though they can’t compete with the more traditional providers who dominate markets by occupying the left side of the power curve. This makes for much more diversity and many more opportunities to get known and appreciated, and to develop a following because it lowers traditional barriers to entry and long-term viability.

This type of relationship is also depicted in the following diagram. I show the relationship between number of clients and the number purchases, interactions, or value of each category of client that characterizes the market and product distributions of most, if not all, companies (including my own clients).

power-law-of-clients-and-value

For instance, I’ve been working with a banking client. This graph shows the relationship between number of clients and the number of products/services that each client has with the bank. The total market size for this bank is about 80,000 potential users of its services. Of these potential users of its services, the great majority, about 85 %, have no business relationship with the bank. Of the 13,000 or so that do use the bank’s services, the majority only use less than 3 of over 20 products and services. As we move to the right, there are less clients, but their interactions with the bank are more intensive. In other words, there are are many fewer clients in categories to the right, but they use many more of the bank’s services, which in turn generate much greater value. On the other hand, there are no actual clients who do all of their banking and meet all of their financial needs and objectives, much less use all of the bank’s services. This is why we can depict the lower right part of the curve as an asymptote. You never actually reach complete saturation or use.

We’ve all noticed these types of power-law relationships in our professional and personal lives, our management and business experiences, and even in some natural phenomena. This relationship is often referred to as the 80/20 law, Pareto’s Law, or Zipf’s Law. It shows up in such truisms as: 80 % of my problems are caused by 20 % (rates can vary) of my people; most of my sales and profits come from a small number of sales reps; only a few of my clients provide most of my revenue and profits; this product category accounts for 45 % of my sales, but 70 % of my profits; etc., etc.

The following diagram is a further illustration of the principle. It comes from an online article by Mark McLean of the Toronto Real Estate Board (TREB) and shows an almost perfect example of a power-law distribution in the number of deals done by different categories of real estate agents who are members of TREB.  We can see that only a very small number of agents in TREB can be considered highly successful, prolific even.

treb-gif

Of those agents having completed 6 or less deals in a year, a similar relationship holds, although it’s less stark:

treb-6-and-under

Whatever we wish to call them, power-law distributions and relationships underlie much of the correlations and dynamics that surround us. We can use them in making general predictions and, along with the S-curve phenomenon I described in a previous post, we have two very powerful tools and concepts for understanding the world around us. Moreover, power laws and S-curves are not only ubiquitous, they tend to show what’s called “self-similarity,” or a fractal pattern. I’ll discuss that third powerful concept next week.

© 2016 Alcera Consulting Inc.

This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

Je ferai un « Briefing de préparation au combat » lors du Kickoff Motivation 2015, organisé annuellement par Michel Bélanger de La Zone Vente (lazonevente.com). Voir le billet descriptif de Michel…

  • You learn more by moving than by staying put. The normal impulse is to stay put and defend your position when you don’t know where to go or what to do. Unfortunately, this leaves you open to rapid change in the market as well as competitive threats. Moving gradually into a new market or a new product or service category gives you time to learn and adjust your approach without over-investing at the beginning. You also get to pull back if, as often happens, you’ve made a mistake or misjudged the situation.
  • Advance on a wide (or wider) front. It’s best to send scouting parties to report back about the lay of the land and the enemy’s positions, then to follow up with more forces if you’re successful. In business, this can mean trying many, small experiments with new products or markets to see what will happen, and then preserving those that succeed.
  • Don’t put all your eggs into one basket. If you can’t make accurate and timely predictions to know what will succeed in the long run then it stands to reason that you need to diversify investments and assets. This doesn’t mean becoming a conglomerate. It is preferable to experiment in a controlled manner at the edges of the business while using profits in existing business lines to fuel that exploratory work.
  • Always cover your moves. When I was a young infantry officer, we were taught to cover our moves with a firebase that could provide support in case we came under enemy fire. It’s better to move gradually over time into a new market or with a new strategy by small steps. This can be done remarkably quickly if you keep up the pressure by making incremental changes in a deliberate and consistent manner.
  • Reinforce success with backup forces. Once you have made it through the enemy’s front lines, apply resources to reinforce the initial breakthrough. The same notion applies to experimental business efforts. Success with one or some of them can be reinforced with new resources or with resources transferred from existing business lines. The result can be better positioning for the future.
  • Maintain reserves to exploit success. All of these principles require some level of resources, first to experiment and then to reinforce success by investing in the winners. This requires the maintenance of cash reserves or access to capital either from an existing business line, by borrowing, or by attracting new investors.
    I’m never too busy to discuss your needs or those of anyone else you feel may benefit from meeting or talking to me. So feel free to contact me at any time!

I was recently discussing different approaches to strategy formulation and implementation with my good friend Phil Symchych. Phil is an expert in wealth building for owners of mid-market enterprises. When I presented some of the military principles of strategy, Phil enthusiastically endorsed them and encouraged me to create an approach around the four most important ones.

As a result, I’ve just developed a quick and easy model for applying military principles of strategy and tactics to achieve business success. I’m calling this new model, MOME. It stands for Morale, Objectives, Mass, and Economy. Naturally, I’ve leveraged these principles with my near decade-long experience of applying this philosophy to help businesses grow and prosper in the face fierce competition and rapidly changing wants and needs. Let’s look at each in turn and then at some of the ready applications for the model.

Morale. Military strategists and leaders have long known that MORALE is THE critical human factor in war and conflict. However, it is also foundational for business and strategy. The simplest definition of morale is the “will to victory.” It is the willingness to make sacrifices, persevere, and focus on achieving one’s aims despite setbacks, obstacles, and opposition. Morale is driven by the quality of leadership, the mission, and vision of the organization, and the level of engagement of employees and members to its foundational principles and goals.

Objectives. All military strategists agree that selection and maintenance of the aim is THE most important of all the principles of war and conflict. You need a clearly articulated end state—what does victory or success look like—as well as a specific and concrete mission to get everyone aligned and working to the same end. Moreover, when you communicate these throughout the organization, telling people what outcomes to achieve and not how to achieve them, they become motivated to use their initiative and leadership to overcome obstacles and adapt on the fly to the inevitable changes in situation and conditions. This is why a business needs a concrete vision of where it is heading as well as an engaging mission for customers and employees. The important thing is to be as concrete as possible and to operationalize the vision into a hierarchy of subordinated goals and missions to maximize alignment and focus at all levels of the organization.

Mass. In the British and Canadian military, this principle is known as concentration of force, mainly because they are small forces. But in the US forces and other large forces, they simply come right out and talk about MASS. The fundamental point here is that you must put your money where your mouth is. You have to concentrate for the “big push” or main effort so you attain your objectives as quickly and efficiently as possible. Businesses must be aware of their strengths and weaknesses and focus them to out-manoeuvre competitors in order to offer greater value for targeted customers.

Economy. This is the flip side of mass and concentration of force. There are never sufficient resources to accomplish everything that you want. You have to prioritize. In fact, the best definition of economy is the one developed by economists: Economy is the allocation of scarce resources that have alternative uses. You may have to take a defensive or maintenance posture in some areas of your business so you can free up the resources to invest in the business lines where you want to be on the offensive. By the same token, you have support your objectives and lines of advance with adequate logistical and financial means. There is also the “economic” and financial aspect of your strategy. Whatever you decide to do, it has to be “economical” in the sense of presenting a strong and valid business case.

To see how the MOME model applies in practice, let’s look at the example of an acquisition:

  1. How will this affect MORALE and other group factors in the acquiring company and the acquired? Does this change the combined units’ fundamental mission? Who will stay on and who will be let go?
  2. What are the OBJECTIVES of the acquisition or merger? Have these been clearly articulated and communicated to all stakeholders? What outcomes are you expecting? Are they realistic or more like wishful thinking?
  3. Will the acquisition allow you to generate more MASS for high-growth opportunities or are you just throwing good money after bad? Is this just an ego trip or is it a viable opportunity? What is the main effort of the acquisition process and what are the supporting actions? What is your plan to out-manoeuvre and surprise your competitors, and to apply your center of gravity—i.e., your key strengths—to achieve your objectives?
  4. What are the ECONOMICS of the plan? Where do you need to ECONOMIZE in order to free up lower priority resources so you can create mass on the main effort? How will you prioritize these resources and what are the supporting functions and tasks?

These are just some of the specific questions your plan and strategy must answer so you can create the conditions for success and victory. You can’t leave anything to chance, and where there are uncertainties, you have to guard your flanks and rear areas with sound risk management.

How do YOUR strategy and plans measure up to the MOME model? How is morale in your company? What are your objectives? Do you have mass? Are you economizing in the right areas, and what are the economics of your business? I can help you answer these questions.

I’m never too busy to discuss your needs or those of anyone else you feel may benefit from meeting or talking to me. So feel free to contact me at any time!

Richard Martin is The Force Multiplier. He brings his military and business leadership and management experience to bear for executives and organizations seeking to radically improve performance, grow, and thrive in the face of rapid change, harsh competition, and increasing uncertainty.

© 2015 Richard Martin. Reproduction and quotes are permitted with proper attribution.

I have developed a quick and easy tool to help you determine and evaluate your offensive posture. Ask yourself the following questions:

  1. Do you pick and choose the best customers or do you take what you can get?
  2. Do you set your price and deal with early adopters, or do you take the price the market sets and deal mostly with late adopters?
  3. Do you innovate new or modified products and services or do you imitate your competitors’ ones?
  4. Is your brand admired, a trendsetter; or do you just blend into the background?
  5. Are you constantly surprising competitors and customers–in a good way that is–or are you often the one with the deer in the headlights look?

If you can’t answer positively to at least 3 of these 5 questions, then you’re letting others take the lead and have lost the initiative. You’re a commodity, not a brand.

Contact me if you want the evaluation tool I’ve developed. We can also discuss how you can seize and maintain the initiative so YOU can be on the offensive.  I’m never too busy to discuss your needs or those of anyone else you feel may benefit from meeting or talking to me. So feel free to contact me at any time!

Richard Martin is The Force Multiplier. He brings his military and business leadership and management experience to bear for executives and organizations seeking to radically improve performance, grow, and thrive in the face of rapid change, harsh competition, and increasing uncertainty.

© 2015 Richard Martin. Reproduction and quotes are permitted with proper attribution.