Brian Vellmure

Lithium bets big and acquires Klout: Published deal size in question

Posted by on Apr 1, 2014 in Brian Vellmure | 0 comments

When Kara Swisher broke the story last month, it seemed implausible, and perhaps even ridiculous to many at first. I theorized shortly thereafter why it might make sense for Lithium Technologies, known primarily as a customer community vendor, to acquire Klout, often considered both “the standard” and that laughing stock of online “influence”.

This brief exchange between Joe Fernandez, Klout CEO and Marshall Kirkpatrick, CEO of Little Bird frames this dynamic beautifully.

JoeFernandez_MarshallK

Yesterday, Fortune broke the story that the deal indeed was done for $200 million of cash and stock. Inside sources tell me that the transaction details are WAY off.

However, Lithium did make the official announcement today, and it appears that much of my theory was correct. You can read what I proposed back in February here.

What it means

Lithium acquires both a platform and capabilities that will enable them to better understand the dynamics of digital interactions for a broader set of individuals than exist within their more than 300 customer communities.

Connecting digital behaviors on a broader scale to digital behaviors within a narrower context of a brand’s community holds significant promise.

At the center of many customer focused activities, is understanding the customer better, not just based on transactional data, but psychographic, behavioral, and sociographic data. Gaining a deeper understanding of these individuals and the impact of their actions on digital networks will potentially allow Lithium to make better sense of the world, and theoretically craft new value propositions for both brands and consumers, as the lens narrows on their respective interests.

Two core components of making communities work are content and gamification. It is the content that helps continually stoke interesting dialogue, info exchange, and transactions within the context of a community and using gamification techniques helps to incentivize the desired behavior of community participants.

Klout’s recent pivot to include capabilities to discover and share content is an interesting twist here. Klout’s perks program potentially adds another layer to Lithium’s gamification capabilities, both in terms of function and scale.

By understanding who people are, what they’re interested in, who they’re connected to, and allowing them to discover and share interesting content with their “communities” (both branded and those that span other digital networks), Lithium may be able to enable better paths of knowledge and value exchange across previously siloed domains.

Leveraging perks as another way to incentivize desired behavior to provide new pathways of discovery, stoke existing community interactions, and amplify tangible business benefits with more intelligent and efficient allocation of resources may also prove to be a valuable lever for brands to create and extract more value from their customer communities.

The road ahead

It’s a bold move, and one that holds promise, from my view. Of course, world renowned data scientist, Dr. Michael Wu is undoubtedly ecstatic about the new found treasure trove of data he gets to explore with the Klout team. Data is a very key element here, as is the data science talent they’ve acquired.

However, there are significant hurdles to overcome

Klout is a bit of a conundrum. For a while, they were indeed the “standard of influence” for many of the social medialites, who were all excited about their new found place in the world. All of a sudden, someone was saying they were important, and that sharing photos on instagram and funny quips on facebook really mattered. People in the social media world were indeed being hired, fired, and promoted based on their Klout score. However, they’ve come under a lot of scrutiny, for obvious reasons. The category and territory of digital influence is an important one, but Klout’s approach and branding has not often won me over. As a user, the “perks” that I’m offered as an influencer are rarely interesting or enticing, and I’m not quite sure how many repeat (brand) customers they have or how effective and meaningful the perks program is for brands or for consumers. Because of the challenges and the brand perception of Klout, Lithium will need to work hard to craft a story that helps to clearly articulate the benefits of these new capabilities. This will be a significant exercise in itself.

In parallel, the real work begins of integrating and leveraging these new found capabilities. Lithium now has a green field of opportunities to consider. This is not a slam dunk, obvious play. Choosing the right paths, and then successfully executing will be no easy task. If able to execute, this may propel Lithium to be a meaningful player that bridges the consumer web with brands and enterprises, instead of just a community platform provider. This play has arguably much greater upside than their current business model, but the complexity could also lead towards an absolute mess of a business model, market perception, and the difference between ultimate success and failure.

Disclaimer: At present, I have no paid working relationship with Lithium Technologies or Klout, though I have been invited several times in the past to Lithium events where my travel expenses have been covered.

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Demand for speed driving investment in customer analytics & marketing technology

Posted by on Mar 31, 2014 in Brian Vellmure | 0 comments

The cabbie welcomed me and we started on our way to Dulles. The snow had been falling for hours, and his impression was that people would be trying to beat the weather. I was indeed leaving a bit early to make sure to catch my flight back to the West Coast. The email I received that morning from my in-laws in French Polynesia didn’t help.

When he asked what the conference was about, I replied “analytics”. He looked at me with a blank stare. I explained that the conference was about people making sense of data, with the help of technology. It helped a little bit, but not much. I began to touch on the use of analytics in sports, making better strategic decisions based on a number of variables: Was it better to repeatedly pound it in to the block, or fire away from 3 point range, or a mix of both? I referenced the TV show “Person of Interest”. I told a story of how Wal-mart had discovered a multi-million dollar opportunity by finding an anomaly in the data.

It began to make sense. While most of the world goes on about their day, clinging to their nightly news, happy that their iPhone takes great pictures, and complaining about Obamacare, the physical world is being digitally connected. These connections are producing incomprehensible amounts of data, which is creating both opportunity and challenges for organizations to earn the attention, trust, transactions, and loyalty of their customers.

Analytics growing in strategic importance

I heard several folks at this year’s SAS Global Forum making the case that analytics is the trump card that is helping to pave the CIO’s path to the more strategic conversations at executive table. The case is underscored by IBM’s latest C-Suite study, which shows several data points that there is increasing demand for strategic CIOs.

There is also plenty of posturing and championing of new roles like Chief Data Officer, and Chief Analytics Officer. Regardless of whether these new roles come to fruition at scale (my bet is no), there are three primary themes to note, all which were underscored at the SAS conference:

  • The analytics conversation is being elevated to the C-Suite and board levels
  • Increased demand for speed and more accurate decisions driving investment
  • There is significant need for, and current shortage of, data scientists over the coming years

While there were around 4,500 people at the event at the Gaylord National just outside of Washington DC, about 1/3 of them were attending the executive conference, a subset of the conference away from the technologists, engineers, data scientists, and statisticians, which highlights the strategic elevation that data analytics is playing in corporate leadership.

The Executive portion of the conference has grown significantly in attendance over the past few years as the impetus to make better decisions by knowing more about customer preferences, behaviors, supply chain details, and market factors, has placed increased pressure on senior executives.

Retired General and former Secretary of State and Chairman of the Joint Chief of Staffs, Colin Powell, highlighted the role that timely and accurate information plays in leadership. Building organizations to sense and respond to information, to differentiate the known, from the speculative, and then apply the very best judgement is the key requirement of leadership. There are probably few leaders in the world that know more about building an information gathering architecture in order to make critical, timely decisions.

Along the gauntlet of challenges then, is vastly improving core capabilities in collecting, analyzing, and understanding key pieces of information and then being able to decisively take action on them. This is the challenge that all organizations are facing today, and the significant opportunity that SAS and other vendors have before them.

SAS is addressing this market need by making investments in coordinating activities for marketers to allow more sense and respond abilities from one centralized dashboard. SAS announced they’ve made improvements to last year’s release of Customer Intelligence 6, a step ahead towards coordinating all marketing operations that SAS provides under one umbrella; planning, segmentation, modeling, creative, campaign execution, analysis, and relaunch. Forthcoming releases will aim to make further improvements to the user experience, integration across marketing functions, and add greater deployment ease and flexibility.

Smarter, Stronger, Faster.

Speed. Speed is arguably at the core of every innovation that’s happening. The basic and fundamental tenets of what we’re doing as a society haven’t really changed in millennia.

Making progress (regardless of the institution) by identifying challenges, imagining new solutions, assembling resources, making, and then distributing ideas, products, and resources is how the world has worked for a long time.

But across every domain, we can, and in many cases we are being forced to, do things much faster, in a more complex environment.

Data driven decision making also isn’t new. The two main differences now are that (1) we now have access to unfathomable amounts of data, ever increasing in its granularity, and (2) we can make sense of it much faster than before. This is evidenced by how automated the public stock markets have become with the vast majority of all trades being made by institutions, based on real time data and algorithms, and constantly evolving models. The migration from gut feel to data driven is happening everywhere.

Not very long ago, decision cycles were typically annual, quarterly, or often on a monthly basis. Historical data informed future projections and decisions. Often times, decisions were made without visibility to key information. It was either not available, or took too long to gather. Data is increasing in its general availability and it’s moving ever closer to real time.

One of the most valuable data sets for corporations is related to their customers and prospects. A flurry of tech startups are emerging at the fringes of this movement to aggregate and make better sense of customer data to help marketers, sales people, and contact center agents be able to respond to their customers better. I’ll highlight many of these in a future post. Have suggestions that might be off my radar? Please send me a note.

The same trajectory as what’s happened in the public stock markets is happening on the fringes of the traditional CRM spectrum, primarily in marketing and service, as customer interactions are disseminated and distributed across a sea of pixels.

The pace of acceleration and innovation is frantic. It’s important to note that concurrently to the SAS event, Adobe was hosting it’s own summit in Salt Lake City, with several announcements of their own, aimed at addressing these very issues, while rumors surfaced that IBM is in talks to potentially acquire Silverpop, a leader in marketing automation.

While SAS, one of the world’s leaders in analytics technology, specializes across many domains, my interest lies primarily with how analytics are being leveraged for better customer understanding and more valuable customer interactions across a widening sphere of channels and data sources.

I heard great stories from Hyatt Hotels, Disney, Wal-mart, and T-Mobile about how they are both embracing the opportunity, but wrestling through the challenges of large data sets and more transient customers, and how SAS has become a trusted partner in their efforts.

The onslaught of big data is forcing the use of new platform technology. Hadoop is becoming (if not already is) the standard for big data processing, and SAS announced its in-memory analytics for Hadoop to allow for rapid analytics to be applied to giant data sets.

One of the challenges with these gargantuan data sets is making sense of them. Ten or twenty years ago, organizations spent massive amounts of money creating reports that provided answers to specific questions. Senior leaders used between 5 and 50 “reports” to gather intelligence about what was happening.

Now, there is increasing pressure and expectation that information be instantly available, visible, and dynamic. These are couple of areas when SAS excels. With their previously released visual analytics and the recently announced visual statistics, users have the ability to navigate and understand enormous data sets in real time, while building predictive models based on the data.

Another interesting highlight of the event is that this current onslaught of data is creating a significant talent gap. In order to help with building the market capabilities required to address the coming talent gap (and obviously to help incubate a new generation of SAS users), SAS unveiled its eduction program that all college students can use SAS analytics for free. Since they’ve seen success with this model at NC State, they are extending not only to all universities, but to all students at these universities.

SAS: A quick assessment

SAS is widely regarded as one of the global leaders in analytics and boasts a who’s who of global clients. They’ve achieved an unfathomable record of 38 straight years of revenue increases. They are also generally regarded as one of the best places in the world to work.

However, their ability to innovate at or beyond the pace of the market is a critical challenge for them at this time. With the scale of the cloud, smaller, more agile technology vendors have the opportunity to compete on many of SAS Institute’s core competitive fronts: analytics, marketing automation, MRM, data visualization, predictive analytics, and in-memory processing. Not only this, but traditionally large enterprise players like IBM, Oracle, and SAP continue to bolster their respective suites to provide solutions to the marketplace. SAS is making moves to address these factors by moving to more pure cloud offerings and positioning themselves to be able to deploy for more Small to Midsized businesses. But, just as this post illustrates, the name of the game is speed, not just for their clients, but also for SAS itself.

DISCLAIMER: SAS Institute, Inc. paid for all of my travel, accommodations, and much of my food and beverage at SAS Global Forum in Washington DC. They are also a thought leadership client.

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Competing and winning as the game speeds up

Posted by on Jan 23, 2014 in Brian Vellmure | 0 comments

Segway Speedway Howard Ignatius via Compfight

Yes. You are in a race to compete and win. It’s exhilarating. The “landscape” is changing quickly. Your map may not even be big enough to understand what landscape you’re even on.

Organizations are certainly at different levels of maturity as it relates to re-assessing, re-visioning, and re-calibrating investments to adapt and win in their respective markets. But, the pace of change is undeniable. We feel it, and the data supports it.

“If you look at big companies, only 1/3 of them will exist in 2 decades.”

-John Chambers, CEO of Cisco at the 2014 World Economic Forum.

However, a common theme I am continuing to see and hear is that most organizations realize that they need to be re-thinking their business models, their marketing, information management systems, their supply chains. But most are not doing this to accommodate the pace of emerging realities. Change is not easy. Changing at the speed of today’s markets is even harder.

Process and technology, two traditional pillars of organizational transformation have arguably become easier to change recently. Cloud computing continues to reduce friction associated with adopting and integrating new organizational capabilities. Improving process(es) as a benefit of this more accessible technology is often a surprisingly positive benefit to older workers, and is expected by the younger workforce. So then, what’s the hurdle?

Re-tooling organizations with people who work according to new realities is a more challenging problem. Most of today’s workforce were educated and trained to do jobs that either don’t exist any more, or will shortly be irrelevant. These jobs were to be performed in industrial age top down models that placed emphasis on hierarchies and efficient production. Entire industries are being re-imagined and retooled as they shift towards acting and behaving as integrated networks of nodes.

Replacing vacancies or extending capabilities in an incrementally improving model is a well trodden path. It’s a model that senior leaders of most organizations understand. They’ve become experts in this model over the past 20 or 30 years. But shifting and staffing an organization that needs to be critically focused on continual learning, adapting, responding, measuring, and then adjusting in a perpetual loop is different. And, most organizations have few incumbent employees that contain these increasingly critical skills today.

While unemployment levels remain historically high, there are significant skill gaps for certain roles. It’s a strange and widening disparity.

So, how do we get from here to there? How will we change the wheels on the bus while it’s moving?

Questions leaders should know the answers to or be developing the answers for:

  • How do we acquire new talent, retrain and re-empower existing employees, and how do we slough off the talent that no longer aligns with our vision?
  • How do we shift our culture to embrace constant learning and adaptation to create value for our customers in feedback loops that are 1/2, 1/4, or 1/10 the length of our previous iterations?
  • How do we extend our capabilities and encourage agility by partnering with external talent and organizations?
  • How can we leverage technology to amplify, accelerate, and displace analog systems and methods?
  • How important is “experience” in our employees, consultants, and external service providers and partners when most experience may be obsolete or not directly related to organizational needs in 3 years?

In a future post, I’ll share some thoughts about some of the key characteristics of the ideal next generation employees.

What are your most perplexing challenges you’re seeing or wrestling with in building the road to tomorrow’s organization?

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Critical Lessons: NFL focuses on a better customer experience – Next Gen marketing on display

Posted by on Jan 17, 2014 in Brian Vellmure, Business, Marketing, Sales | 0 comments

I love the game of football. I’ve referenced parallels and correlations between football and business here and here and here, to name a few.

Two of my primary areas of expertise are the “Digitization of Everything” and “Customer Experience”, so it’s little wonder that yesterday’s announcement that Extreme Networks was going to be providing wi-fi and analytics to all NFL stadiums caught my attention – a perfect synergy between three of my passions.

The NFL’s Dilemma

The NFL faces an interesting dilemma. Popularity is at an all time high, but attendance has been steadily falling for the past several years. How could this be?

The summary answer is that the “experience” of watching from home has begun to rival and in some cases even surpass that of attending a live game.

When I can pay next to nothing incrementally, be in the comfort of my own home, grab a cold beer whenever I want, watch several games simultaneously on my 1,000 inch TV in HD, , why would I pay $150 to go deal with the travel, parking, lines, $15 beers, and $8 hot dogs? During commercial breaks and in between games, I can even knock a couple of tasks off the honey-do list to keep the wife happy.

However, as NFL CIO, Michelle McKenna-Doy, mentioned during yesterday’s announcement, there is nothing that can quite duplicate the experience of being at an NFL game. If you’re a die hard Steeler fan, the camaraderie of cheering along side 65,000 of your best friends at Heinz Field for the day is unmatched. The NFL is betting on creating a new and enhanced experience by connecting attendees to all sorts of in-game entertainment and capability that you can only get while inside the stadium. The New England Patriots GameDay Live app includes access to “game replays, live field cameras, statistics, league scores, restroom wait times, weather, traffic and more.”

Other teams are considering or in the process of rolling out similar applications.

Wrapping an experience around the product

The emergence and growth of Starbucks is a legendary tale. The product (coffee) had been commoditized. But Starbucks created a differentiated and unique experience, and cultivated communities within (traditional) communities. The NFL and other professional sports are being forced to do the same thing. The product (the game) has been commoditized. It’s easily available for next to free from anywhere. But the “experience” is where the teams are trying to differentiate themselves… are NEEDING to differentiate themselves.

I see this when I go to watch a baseball game at Angel Stadium. The Disney influence is apparent. Fireworks, kids games, activities, are all part of the stadium experience. The San Diego Padres have a HUGE giant sandbox in their outfield so that kids can play while their parents watch the game.
g20-20petco20park20beach20panorama.JPG

The possibilities that an integrated digital platform presents are endless. Imagine having access to:

  • Private On field conversations in real time
  • Close up camera angles of the O-Line, D-Line, individual players, coaches
  • Predictions of the next play call based on previous tendencies & analytics
  • Real time polling within the stadium
  • All sorts of interesting gaming derivatives – think fantasy football at a micro scale
  • Prioritized seating, perks, and contests based on “fan value”, not just static ticket prices
  • Augmented reality features of on/off field data in real time
  • And, and, and…

Attention is finite. The NFL, the NBA, the NHL, and Major League Baseball are not only competing against other sports teams. They’re competing against all other forms of entertainment. Not only that, they’re actually competing against all other things that may vie for a few hour block of time.

And they’re not alone. While the dynamics and context are a bit different, this is also your organization’s reality as well. It’s my reality. The government can print more money. But they can’t manufacture more time. Time saving technology doesn’t save time. It just allows us to do more, enabling vendors to race for an increasingly valuable slice of your strictly finite attention.

Extreme Networks CMO evolves marketing for maximum impact in a connected world

A significant subplot to the announcement yesterday was the way that it was done. CMOs and all marketers can learn something from how Vala Afshar of Extreme Networks orchestrated things. The default action from the traditional marketing playbook for this type of an announcement would have been to write up and distribute an excellent press release. Those seeking extra credit may have actually held a press conference, and reached out to media and influencers in the space to try and get some additional covereage. Well, Extreme Networks did that, but they took it a step further and actually created and produced a digital media event.

They invited the CIO of the NFL and an all star cast of NFL executives, while holding the event at NFL headquarters in New York.

ExtremeNFL_Agenda

They invited well respected analyst and Chairman of Constellation Research R “Ray” Wang, and Crawford Del Prete, Executive Vice President of Worldwide Research, IDC to provide insights about the changes happening in the world around us.

They embedded the announcement within the context of a thought leadership webinar and had visitors register to attend online.

In short, they made it worth people’s attention. It garnered significant signups. It then created a cascade of attention. Nearly 1900 tweets and nearly 7 million impressions through the twitter hashtag #EXTRNFL. It actually was the 2nd most popular hashtag on Twitter in the United States during the event. There are plenty of other metrics that I am not privy to, but it likely did the following:

  • Established Extreme Networks as the top of mind provider of In-Stadium wifi and analytics
  • Created shared value with the NFL and their team’s executives
  • Generated a slew of leads via web registrations and social shares
  • Generated a decent amount of mainstream and new media follow up coverage
  • Created a digital asset to be re-used and leveraged in future content marketing initiatives

So, then, here are your takeaways and challenges:

1. How are you re-inventing and enhancing your customer’s experience?
2. How are you leveraging emerging capabilities to evolve and re-invent your marketing?
3. How are you creatively leveraging emerging technology to do each of the above?

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Access to anyone and anything from anywhere: Implications for Professional Service Organizations

Posted by on Jan 16, 2014 in Brian Vellmure, Business, Sales | 0 comments

Ciber Cafe Lars Kristian Flem via Compfight

Access and Speed. are the two primary things that are rapidly changing the word around us. Individuals all over the world have unprecedented access to virtually anything, or anyone, from anywhere. Tribesman in Africa now have access to more information than the US president did just a couple of decades ago.

Organizations have unprecedented access to: customers, competitors, and resources; human and otherwise.

How is this changing things for professional services organizations? Let’s take a look at a few examples.

Traditional software VAR (Value Added Resellers) have felt a significant pinch in the recent years. Business models built on software maintenance revenue and professional services have been disintermediated by Cloud software providers making better, cheaper, and more accessible capabilities available with limited need for long sales cycles, significant installation, and configuration expenses, and expensive customizations.

We see the continuing trend of technology absorbing lower value added tasks across the economy. In professional services, we see this trend accelerating as well. Lower value legal activities like entity filings and other forms have given way to do it yourself service firms like Legalzoom and Nolo.

However, the power of access has had a positive effect on another attorney I know. Most of his clients think “Jim” lives in Orange County, CA. However, he actually lives in Costa Rica. soaking up “La vida pura”, and doing most of his work near jungles, warm waters, and great waves. When he needs to be in court, he hops on the 6 hour flight back home, wows the judge and jury, and then flies back home to surf, sand, and toucans.

While it’s no surprise that technology has displaced generations of lower end workers, it’s now apparent that many white collar jobs may soon feel disruption.

Andrew McAfee, well respected research scientist at MIT, and co-author of Race Against the Machine, observes the following:

“There will be some very powerful technologies entering the economy over the next ten years. When I look back at the kind of things computers have been doing, my strongest impression is, “We ain’t seen nothing yet.” Many people in jobs ranging from customer service to various types of diagnosis to driving vehicles are going to be confronted by those technologies, and some will be displaced. And the rate of displacement will increase because technology improves at an exponential rate. It feels like we have recently crossed a tipping point.

Classic theory has it that technology is bad news for those further down the skills or education ladder. That will begin to change, at least slightly. Diagnostics is a good example. This is a large part of what doctors do, and one of the most advanced types of diagnosis is pattern-matching. What astonishes me is that computers have recently demonstrated pattern-matching abilities that make a mockery of everything that has come before. We have not seen such displacement of higher-wage, higher-skilled professions yet, but we are going to see more.”

In addition to doctors being vulnerable to having much of their diagnostic capabilities (and perhaps their prescriptive capabilities as well) being replaced by technology, one of the world’s most elite and respected management consulting firms, McKinsey, began to disrupt themselves a few years ago by building a new practice not centered around human capital for the first time in it’s nearly 100 year history. McKinsey solutions, instead, is built around data, and tools to help enable their clients to make better decisions.

I recently advised a professional services client to change their model from hourly billing to fixed priced packages, which could be easily consumed by their customers. It required a slight shift in delivery methods, and human capital, but the results have been dramatically positive.

Critical Core Competencies Evolving

We’ve seen a dramatic shift in the last 20 years. Talent and capabilities are largely distributed and accessible. Access to a broader set of capabilities, packaged up in easily consumable technology, or more cost effective human resources are seemingly as close as a few minutes on the internet. So if that’s not the challenge, what is?

The impetus today is harnessing these capabilities, collaborating across broader boundaries, and packaging, and distributing value in a manner that resonates with a more intelligent customer.

An evolving set of professional services models that seek to be more agile are showing us new examples of value creation. Along with the examples laid forth, technology analyst firms, Constellation Research and Altimeter Group, have recently brought new models that change the way that clients gain access to research and insights related to the world of disruptive technology.

More than $360 million worth of freelance work gets funneled through oDesk, where 9 out of 10 of their clients say using their freelance marketplace makes their business more competitive.

In Summary

Creating new ways to find, collect, package, and distribute service capabilities will continue to evolve as we become more connected, and technology provides increase challenges and opportunities.

Which new challenges are you faced with and what innovative professional service models are most interesting to you?

This post was sponsored by Work Etc. The opinions expressed in this post are entirely my own and don’t necessarily represent, nor have they been influenced by Work Etc.’s positions, strategies or opinions.

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The Anatomy of Growth: Five pillars to fuel dynamic growth in your organization

Posted by on Jan 10, 2014 in Brian Vellmure | 0 comments

IMG CREDIT: http://businesscoachbayarea.com

Running a successful business is hard. According to a recent survey, 59% of small business owners believe that it’s actually harder to do business today than it was 5 years ago. That number seems small to me.

It’s no wonder. According the the 2011 SHIFT index, competitive intensity has doubled during the last 40 years and the rate at which (big) companies lost their leadership positions has more than doubled. Despite these harsh realities, most SMEs are still optimistic about the future. 72% of these same business owners expected to bring in more revenue in 2013 than 2012. They are checking to see if they were right, right about now.

A quick glance at the Inc 500 / 5000 reminds us that thousands of companies have experienced hypergrowth over the last three years. So what is their secret? Ah, if there was a perfect formula, we’d all be rich.

Like most things worth pursuing in life, running a successful business is a marathon pursuit. Entrepreneurs are driven by making things better, creating new value, and doing what other people can’t, or won’t. Product and service development, marketing and sales, operations, and finding and keeping the right people all bring varied complexities in a constantly evolving context.

While there are no magic bullets, we can absolutely learn from studying history. Data and research from the past gives us meaningful historical perspective. But as you’ve undoubtedly heard and experienced, past performance is not necessarily indicative of future results. Grounding our forward looking projections through an intelligent lens helps us to make better decisions based on the landscape ahead, and not simply the roads that have already been navigated.

In this post, we’re going to focus on examining what growth looks like, identifying pillars that we should be strengthening to support the growth of our organizations.

DISRUPTION AS A PROPELLER OF RAPID GROWTH

Clayton Christensen, selected recently as the top management thinker in the world by Thinkers50, highlights how disruptive innovation vastly changes markets and fuels significant growth for those who choose to disrupt. Disruptive innovators basically “transform a product that was previously so complicated and expensive that a small population had access to that which a much larger group of people can have access.

We’ve seen this type of transformation take place repeatedly. A prime example is how the multi-million dollar mainframe, has progressed from an era where only a few large governments, mega corporations, and huge universities had access to them. Mainframes were disrupted by the PC manufacturers, which were disrupted by the laptop, then the tablet, then the smart phone, which has essentially made computing power accessible to almost everyone.

We see this in the current era of cloud computing. We see this amongst automakers. Look around at many of the high growth organizations around you, and chances are they are providing access of something useful to larger sets of people for a much lower cost.

SUSTAINABLE GROWTH

While rapid growth seems sexy and magical, it’s sustainable growth that leads to long term success and perhaps is the better of the two. Your preference as a business owner is akin to whether you’re more interested in being the tortoise or the hare.

The best companies are able to sustain their growth over the long run. In 1981, a company called SAS Institute showed up at number 15 on the very first Inc. 500. The company was 5 years old and growing at about 100% per year. In early 2013, they announced record revenue for the 37th consecutive year. Dr. James Goodnight, CEO and Founder, has some incredibly sage advice for how to duplicate his success. “We have a very simple philosophy: Try to make sure the percentage revenue growth is higher than the percentage expense growth. It’s a magic formula.”

Dr. Goodnight does offer another clue that may indeed be a bit more helpful: “Really, you just have to give people a great place to work.” SAS regularly shows up as one of the best places to work in the world, which drives increased productivity, and a significantly lower employee turnover rate than most organizations.

The fact that Dr. Goodnight is still involved also highlights another factor that has led to increased returns and favor from investors over the years. Founder led companies typically do better.

A fascinating study by Gary Kunkle titled “Building Scale and sustaining growth: The Surprising Drivers of Job Creation” found 2 primary key insights:

(1) “The more frequently a firm grew in the past, the more likely it is to survive and grow in the future”

(2) “The faster a company grew in a period, the less likely it is to grow again in the future. In fact, it’s also more likely to die”

These findings highlight the importance of consistent and measurable growth. SAS Institute provides the best manifestation of these principles that I’m aware of.

(Disclosure: SAS Institute is a client, but their inclusion in this article had nothing to do with that. I am not aware of another company with quite a remarkable track record over that period of time)

WHY COMPANIES DON’T GROW

While investigating how and why organizations grow, it’s also important to look at the primary reasons why companies stop growing. While there are dozens of contributors to both growth and “stalls”, respectively, research from the Executive Board (published in a book called “Stall Points”) highlight four main reasons why organizations suddenly reverse trend and begin to slow down, often to the surprise of executives:

1. Premium Position Captivity – Interestingly enough, this is the inverse of what we found in the first section, highlighting the opportunity around disruption. While high growth organizations are often disrupting, those that are being disrupted are often tied to their premium position, selling high profit products to high value customers while someone else is democratizing access to the utility of those products.

2. Innovation Management Breakdown – This is when there is a breakdown in the processes of developing new products and services, and getting them out to market. Systemic innovation matters.

3. Premature Core Abandonment – This is a tricky one. While there is danger in sticking with the same customers in the same market for too long, there’s also risk in abandoning them too early by assuming that the market is saturated.

4. Talent Bench Shortfall – People. Acquiring and keeping talent is paramount. This becomes most hurtful when core strategic capabilities are missing from the organization, especially at the organizational level.

FIVE PILLARS OF GROWTH

Blending these findings together, we can begin to create a mental image of core pillars of an organization that is capable of dynamic growth.

PILLAR #1: FIND AND HIRE GREAT PEOPLE

This comes as no surprise. The greatest assets of any organization are its people. As the pace of change increases, finding people who are talented and can adapt to change with a strong work ethic, high integrity, and the ability to learn and solve new problems creatively is the key.
Not only to great people provide a positive force multiplier, but not having the right people on the bus is a key contributor to impeded growth.

PILLAR #2: CREATE A GREAT CULTURE

There’s oodles written about the impact of culture on success. Creating a place where employees are engaged with their work and people around them is a rare skill. Creating an environment where high caliber people (see Pillar #1) are highly engaged, suitably challenged, and working in the zone of their peak performance, recognized for their contribution, and offered an environment that works well for them has proven to be a core pillar towards growth.

PILLAR #3: FOCUS ON INNOVATION

Firms that have, and continually cultivate an entrepreneurial environment perform better over the long run. The opportunity to disrupt markets provide significant growth opportunities until the firm is so successful that they themselves are vulnerable to market disruptions. This reminds us to look for opportunities to constantly disrupt the market, even if it means disrupting yourself along the way. We also see in the research that a breakdown in innovation systems and clinging too tightly for too long to high value customers and/or high value products lead to perilous stalls in corporate growth. Finally, while many firms believe that innovation is random, placing a core focus on systemic innovation is critical to long term success.

PILLAR #4: SERVE YOUR EXISTING CUSTOMERS WELL, BUT SEEK TO SERVE THEM IN NEW WAYS AND ACQUIRE NEW ONES

Much has been written about the benefits of customer loyalty. And we see from the “Stall Points” research that abandoning your core customers and product/service offerings too soon can be detrimental to sustained growth. Conversely, sticking with the same customers and product and service offerings for too long can equally cause stalls. Creating great customer experiences that deepen engagement and word of mouth are critical to sustained growth. Parallel to these efforts and investments, new products and markets must also continually be developed and entered.

PILLAR #5: MAKE GROWTH A HABIT

It seems obvious, but I believe it’s worth highlighting again. “The more frequently a firm grew in the past, the more likely it is to survive and grow in the future”. The more often a firm grows, the more likely they are to continue growing. In other words, make growth a habit. Slow and steady wins the race. I’ll admit, there is plenty of space for a correlation vs. causation argument here. However, at the very least, there’s an argument to grow every year. Build it into the DNA of the culture and the research shows, you’re more likely to grow again.

This post is an adapted post from one sponsored and originally written for Work Etc.

The post The Anatomy of Growth: Five pillars to fuel dynamic growth in your organization appeared first on Value Creator.

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