Somewhere somebody described to me the process in which Michelangelo imagined his David from inside a flawed block of granite marble that had a crack in it. The crack became the hitch in David’s arm as he holds the sling.

I think that’s something like real business strategy. The general type of business, what other people would assume it to be, is like the uncarved block of marble. The strategy is locked inside it. And the end result is created by what you take away.

So, for example, a restaurant’s strategy is about what it doesn’t do. One of my favorite restaurants serves very healthy fast foods. That’s what it’s doing. What it isn’t doing is sit-down table service, breakfasts, cheap meals, drive-through, date dinners, and on an on.

Then there’s the attorney I’ve dealt with for years who sent me to somebody else for IP law, and to a different person for litigation, and yet another for employer law. What he does is small business law. And what he doesn’t do is much bigger.

First you define your market in general terms by describing your target market segments. Then you define it better by defining who, within that segment, isn’t your customer, and why.

First you define your general strategy by what it is that you do. Then you refine it by defining what it is, within that general description, that you don’t do.

(Photo credit: K Patel 1980/Flickr)

A nice person almost apologized to me for not having her business on Facebook. I said: “but why?”

Blogs, Twitter, Facebook, and all the rest of that “social media stuff” may or may not be good business. But not just for its own sake. It has to be part of a strategy.

Otherwise, it may or may not be fun, depending on who you are and what you like to do; but it’s not good business without a related plan for how it’s supposed to help. Does it generate leads? Page views? Validation? Or is it just a rationalization for spending time doing something you like, like keeping up with friends, being clever.

My blogging has a business strategy. I don’t sell anything, but I do talk about business planning and business management. It relates to my books, my software authorship, and the company I founded. It generates page views in the Bplans.com domain. It validates.

So it’s fun, but it’s good business too. In this case, at least. It relates directly to validation of product, to page views, and to marketing objectives.

What is it for you? What’s the business objective? How to you measure achievement of that objective? Do you have metrics to review? Do you remember to review them?

Funny coincidence: "mission" the way we use it in business, and "mission" the way the Spanish priests used it to build colonial California. In both cases, it's foundations. As the Spanish settled California, the conquistadores who explored were followed by clerics who built missions and invited the neighboring Indians to join them in creating farms, towns, and schools around the missions.

Last year I heard Eli Halliwell, CEO of Jurlique, talk about how much extra momentum he got as he worked with that company by building a team based on a shared mission. Jurlique is about natural, healthy cosmetics.

What reminded me of that was Seth Godin's post In search of dolphin leather:

"Having a community-based quest means that there's less room for whining, for infighting and for dissolution. Having a mission not only points everyone in the same direction, it also creates motion. And motion in any direction is often better than no motion at all."

And although Jurlique comes to mind because Eli made his point very eloquently, you and I know companies like that, driven by missions. People can believe in a mission. It gives the team power and momentum. People are happier when they work on something they believe does some good to somebody.

Photo source: Mission San Diego de Alcala, flickr, by Allan Ferguson

I just read Netflix demolishes own business model on John Caddell's blog and I think it's very much worth passing on. John is posting about Netflix now working with various (he just installed a Roku digital video player at his house) on-demand options that potentially cannibalize it's main business of DVDs by mail.

It's got to be a tough world in video media these days. Things change fast. That gap we used to fill by renting videotapes turned to DVDs and then DVR and now at our house we've also got video on demand from iTunes and Amazon Unbox and Comcast, as well as Netflix instant.

For a while there, Netflix was the only really competitive game in town. As far as I'm concerned, they blew Blockbuster out of the water. But then the whole world of DVD rental starts to go away, and what do you do?

John says:

What’s so impressive to me about this is that Netflix is investing in technology and partnerships expressly designed to make their old business model obsolete. When I think about how much they have spent, in dollars and time and thought, on the sending-videos-through the mail model, I wonder how they were able to make the leap to say, “We have this process optimized, but it’s not the future. Time to build a new model”–meaning internet streaming.

Netflix founder Reed Hastings recently said "We named the company Netflix, not DVDs by Mail, because we knew that eventually we would deliver movies directly over the Internet." That's in a post listing his 4 secrets of success: Target a niche, stay flexible, never underestimate the competition, and take no shortcuts. It speaks to flexibility, of course.

John has a more troublesome word for it: "cannibalization."

One of the most repugnant terms in the English language – referring to one of the greatest human taboos – is used when a company’s new products take sales away from its older products.

So I propose the revisionist phrase "eating your own tail." Because you're eating yourself, in a way. But isn't that also the best way to go in a fast-changing market? John concludes:

The problem is, the marketplace is a bit like the jungle. If you don’t eat your own, someone will eat them for you. And this has happened again and again. One example: GM’s abandonment of the EV1 electric car just a few years before Toyota introduced the Prius. To survive, companies will have to get rid of that taboo against cannibalization and act more like Netflix.

I have a suggestion for marketers. If you want to get approval to introduce a better product, instead of referring to “cannibalization,” call it “upselling.”

And I have a conclusion too. I'm in awe. Can you imagine what it takes to not spend all their time defending DVDs by mail? Can you imagine how hard it was, there in the Netflix headquarters, to really move into video on demand?

That's so hard to do. There's a lesson there for every business.

I find this fascinating:

"Yes, I think it’s a really good idea, and everybody around here really likes it, but what I’m worried about is that when I talk about it everybody I’m talking to sees what they think I’m saying, what they want to be the idea, rather than the real idea."

I’m not going to cite the author of that quote, because it could embarrass him with the others on his team, but it was in a phone call last week.

It reminded me that what he’s talking about is a common phenomenon. Until I find a better description, I’m referring to the misunderstood images of the original idea as Idea Ghost Images, a reference to the shadow images you get on television when you have problems with the antenna. They are a reflection of the original images, but they’re off. And the more of them you have, the greater the problem.

Have you seen this happen in your business world? Where there’s an idea being discussed but each person imagines something slightly (or maybe more than slightly) different? And sometimes companies will move forward and commit to budgets and tasks and strategy without realizing that each person is agreeing to something different. That can cause a whole lot of problems.

It’s closely related to what we  call getting everybody on the same page. Maybe we should call it asynchronous idea management, but that’s probably getting too techie with the language.

The solution, I think, is completely obvious. It’s part of the normal planning process. Define the idea in a concrete way — document, email, presentation, something that can be recorded and referred to later — and manage it through that idea definition.

It’s amazing, though, easy solution or not, how far we get sometimes without really dealing with those ghost images.  I think it’s a common problem.

I knew a man who made a living with complicated mathematical models that he would provide for large companies. He was a professor at the Stanford Business School, but kept his consulting business on the side.

"One thing you want to look for, always, is the simple easy-to-understand model to use at the start," he said.

"Never propose a big job as a whole package. Instead, always propose a small piece of it as a first step. Assure the clients they can abandon the whole thing if they want after that first step. Make it like a tenth of the whole job.

"Make it something they can see, touch, feel. Make it simple to understand. Make it as visual as possible."

If that first piece doesn’t work, then you’re better off without the rest of the job."

I’ve used this tip a lot over the years. With my business plan consulting, with my market research, with some of the product development I’ve done or supervised. It’s very important.

This applies as well to a lot of business situations. Start with something you can show fairly easily.  Look for something that will make your clients understand the benefit of going on.   

I was with Oregon Small Business Development Center counselors and directors yesterday doing a workshop on "The Plan-As-You-Go Business Plan", talking about metrics, when an interesting question arose.

Joe Austin, an SBDC counselor who (I’m told) has been very successful as an entrepreneur in cable businesses, asked about making employee satisfaction one of the key metrics for a company’s business plan. I was taken aback, frankly, because I think of that as a measure of a company’s health, something that should always be a major factor, but not, to be honest, something that comes up as a major priority in the heart of a plan.

Still, Joe has a very interesting point. Isn’t the general mood of the employees one of, if not the, most important measure of a company’s health. I’ve posted previously on this issue several times, but I was nonetheless taken by surprise with his emphasis.

Later, during a break, I discovered the rest of the story. I’m trying to contact Joe to fill it in even more, but in the meantime, for today’s post, what I’m told is that Joe had purchased several companies and made them work very well, after acquiring them. And — here’s where it gets interesting — his main measure of the value of the company was the employee satisfaction.

This is one of those things that make me say, yes, of course, it should be obvious. But sometimes they take pointing out.

Alright I admit it. I don’t like grammatical errors and misspellings, I don’t like them, Sam I Am, not one little bit. I’ve done some peeveblogging on this site along those lines. But when I’m wrong, I’m wrong.

I was happily heading for my blog at entrepreneur.com (Up and Running) tonight when I came across a strange and bewildering complete redo of not only my blog, but the whole entrepreneur.com site. Wow, how could that have happened, I asked myself. See if you catch it on the banner here.

Not easy to catch? No, I missed it too. There’s an entire site, offering entrepreneur.com information — or so it seems, I didn’t explore much — at "entrepeneur.com." That’s simply a misspelling of entrepreneur. And a business opportunity.

Or is that buisness opportunity? Bussiness opportunity? Do Google searches on either one of these, see what happens, I dare you.  I fear that Palo Alto Software owns some domain names that catch misspellings of business plan.

So, in deference to blog discussions of the right domain names, let’s hear it for entrepeneurs [SIC] who build businesses on the wrong domain names.

–Tim

Very nice post last week by Brian McCann at Management R&D: Business for Boneheads.  He makes a very good point.  You can’t really interview a bunch of successful companies and reach useful conclusions that a reader can take to his or her own situation.

My take on this, slightly different angle from Brian’s but in complete agreement, is that as soon as you adopt something that worked for somebody else, you are already changing it and so it is no longer original, and neither are you.  I don’t think he means that studying other businesses is bad, but simply that you can’t just extrapolate to a different situation.

This makes good sense.

– Tim

One of the little-known side paths of great customer service is figuring out who’s a customer, and who isn’t. I just picked up a fascinating report about Sprint dropping customers who call customer service too often. Here’s the link:

Sprint breaks up with high-maintenance customers | Tech news blog – CNET News.com

Is this crazy? I’m not sure. Would it be better to explore further, proactively talk to those customers, one by one? That sounds good, as I write it, makes me feel like I’m saying the right thing.

Still, I have two nagging doubts. One was a lecture I attended from a customer service expert who’d been very successful with auto mechanic businesses. He was extreme about giving the customers everything they wanted, but added, at one point:

"But remember, not everybody is a customer. Some people take advantage so much that you can’t afford them. Bending over backwards once or twice is great business, but with some extreme cases, you have to ask them not to come back."

This is a set of interesting questions for me, questions that I’m not prepared to answer.

– Tim