Everyone hears about businesses that burn out early, but what about the ones that have stood the test of time?
Many businesses fail in their first years of operation, while others thrive and survive over generations. What can we learn from companies that remain relevant after years of trading?
Here are 10 pointers geared to help ordinary people build extraordinary organisations.
1. Consistently innovate
3M, perhaps best known as Post-It note producers, was a failed mining company in the early 1900s. The owners persisted and today this innovative company manufactures close to 60,000 products, recently earning its 100,000th patent.
For small business players, innovating incrementally can be a profitable path to increased turnover, productivity and efficiency. Staying on top of industry trends, improving existing processes and making use of technological advances are all clear examples of where a small business can innovate without having to take out a seven-figure loan to beef up research and development.
2. Embrace change
While the concept of “embracing change” is particularly significant in the technology sector, it carries weight in many industries. It may be a tough sell to staff (at all levels), but consistently measuring, reflecting, learning and adjusting allows a small business to grow.
Virgin and its suite of businesses have been powered by change since Richard Branson opened his first record store in 1971. When CD technology emerged 10 years later, Virgin was selling vinyl in more than 100 UK stores. Sensing a seismic shift, Branson got the jump on other record retailers, and was one of the first to ditch and switch. Bob Dylan sung it best: “You better start swimmin’ or you’ll sink like a stone, for the times they are a-changin’.”
3. Set a fearless goal
Jim Collins in the influential book Built to Last: Successful Habits of Visionary Companies, coined the phrase Big, Hairy Audacious Goal (BHAG).
A BHAG (pronounced be-hag) is not so much a plan but an almost fanciful future dream or a long-term bit of guesswork. In 1950, Boeing set a BHAG to become the dominant player in commercial aircraft and bring the world into the jet age. Arguably, the Boeing boffins nailed it.
“A BHAG will stimulate growth and make us better and stronger, even if it is cumulative failure along the way,” Collins said.
In his book, he identified four types of BHAGs: target-oriented, role model, internal transformation, and competitive. Honda’s mission statement in the early 1980s was “Yamaha wo tsubusu!”, roughly translated as “We will crush Yamaha!”. Yikes!
4. Build your company around a set of core ideologies
Designed to last for generations, a number of “set in stone” core ideologies will give a company a stronger sense of its own identity and an unbroken thread of continuity.
Singapore Airlines claims to be the world’s most awarded airline – and judging by the accolades, nobody’s arguing. Its six core values focus on customer service, pursuing excellence, safety, staff welfare, integrity and teamwork. These values could be effectively appropriated by any company, no matter the size or industry.
5. Develop a strong and cohesive culture
A workplace might gravitate towards a sit-down retro video game machine in the break room, but a winning culture is built around more than a high score on Galaga. Importantly, culture should not be confused with perks. A winning work culture is one where people are supported, rewarded and treated with respect while achieving great results.
In 2014, the Australian arm of Mars Inc broke into the top 20 of BRW’s Best Places to Work, the only manufacturer on the list. A privately held, family-owned company, Mars’ culture motivates its more than 2000 Australian staff to work hard and stay loyal. Successful work programs include health and wellbeing initiatives, reverse mentoring (graduates educate managers on developments in social media) and attractive pay and bonuses.
6. Serve the customer
In a 2014 survey commissioned by Australian small business cheerleaders Shop Small (an American Express initiative), 85 per cent of small businesses revealed that customer service is their main point of difference when competing with bigger rivals. Even such a simple gesture as a human voice on the end of the line or including a handwritten thank-you note with an order is appreciated in today’s digital world.
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Thanks to social media and online forums, the customer has found its collective voice. One complaint can spread quickly, placing a company’s reputation at risk.
Since going online in 1995, Amazon has led from the front on customer service, offering revolutionary work practices that are now almost e-commerce standard: automatic “no questions asked” refunds, free postage deals and price guarantees on pre-ordered items.
7. Think long-term
Remember Blockbuster Video? In 2000, the company turned down a chance to purchase ambitious new player Netflix for US$50 million. Netflix now has a market cap of over US$45 billion. In the US, Blockbuster filed for bankruptcy protection in 2010.
Being fixated on short-term decisions and solutions is a common trap for small businesses. Taking time to look ahead and reflect is just as important as capitalising on the cut and thrust of everyday trading.
8. Build a team
The people in your team are a reflection of your company’s culture and, ultimately, generate value. Take time when hiring, focus on building a powerful and empowered team, and don’t employ to simply fill holes. The best companies attract the best talent, creating even better companies.
In 1998, when Ian Campbell was appointed CEO of struggling ASX-listed GUD Holdings, he reviewed staffing, turning losses into profits.
“I needed professional managers who knew what was possible,” Campbell said.
“Plant and equipment is easy, you just go and buy it – but selecting the right people is a value judgement.”
9. Compete online
Even without the benefit of a fully budgeted marketing team driving content, small business can really shine online. There are conditions: a business needs to be in the same online space as its customers, give that audience value, cater to their needs, and communicate in an authentic voice at their level, not at industry level.
One company that executes its social media program effectively is Telstra. Recognising that social media has fragmented audiences, it uses Twitter mainly for customer service and Facebook for promotion. LinkedIn is focused on networking and careers, and its YouTube posts are service and product driven. The beauty of online communication is that you can refine and tailor your approach as required.
10. Develop customer loyalty programs
Historically, customer loyalty programs have been the exclusive domain of larger operators. Adopting a creative program for small businesses has two main benefits, however: customers choose to be a part of your program over competitors, and it can act as a form of marketing for your business, generating word-of-mouth.
Linking your rewards program with other complementary small businesses also gives your customers added value. One of the most popular frequent flyer programs, Asia Miles, offers thousands of product rewards besides the obligatory free flights. Its extensive online redemption store is stocked like eBay, with rewards including electronics, clothing, home wares, beauty products and concert tickets.
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