Can we learn from Bloomberg?

Over the last few years Bloomberg has been investing in content from a number of suppliers, Agence France Presse, Xinhua News Agency and it will soon announce a tie up with Associated Press. All designed to enhance the value sitting at a Bloomberg terminal. It will bring breaking news from around the globe, sophisticated filters to present it to users the way users want it, and a searchable archive to add historical content.

As Tom Secunda, who helped found the company 27 years ago, says, investment in news content is vital to persuade customers to keep paying $1590 a month for its service. "Our goal is to increase the value of Bloomberg dramatically more than the cost of Bloomberg".

So looking at your own business within your unique market - are you looking through the end of the user's lens? Do you really understand how your product is deployed at the sharp end?
Do you know how your users are thinking in the current climate? Are you aware of their changing needs? Don't think price reduction, think higher value.

If you look at every employee role currently being done. Do they all relate to tasks that are needed today? If you had to start the business from scratch tomorrow would you staff it differently? Could you redesign a number of roles within your staff to add more value to the customer and perhaps drop the number of bodies performing a lower priority function?

This is a time for reinventing how to serve the needs of your precious existing customers and as you excel, you will attract great new customers who want to be serviced the same way!

Dependency - The Paradox of Growth

Almost all businesses from time to time, somewhere on their growth curve, hit the dependency issue. Over dependent on a large customer, on a large supplier, on a market segment or on a government contract or on a technology platform.

In the UK many clothing related companies in the late 90s had become dependent on Marks & Spencer for survival, Daks Simpson, William Baird, Courtaulds Textiles. When Marks & Spencers axed these suppliers, the pain was high and in some instances terminal.

Anchor in Canada has sales of around $129m and is dependent on the automotive industry. Approximately 85% of its sales were tied to that sector and now its down to 70%. It has taken 5 years to drop 15%. It now supplies the wind turbine industry, medical, mining, and construction sectors. Evidence suggests that many didn't make the switch to non-automotive sectors in time, perhaps up to 60 suppliers have gone bust in recent times.

Britain's naval shipbuilders and designers are looking to diversify into other markets and target international opportunities in perhaps army and air force sectors around the globe. As the CEO of the JV between BAE Systems and VT Group said last June, we need to reduce our dependency on a single customer!

Equally dangerous is the reliance on one key supply chain. In regulated industries, approvals of new suppliers can take months further putting pressure on the one supplier model.
Insurers such as Zurich Financial Services are starting to offer insurance against disruption of the supply chain.

Even large successful companies can fall into a reliance trap. Thomson's acquisition in April 2008 of Reuters diluted down the dependence on Wall Street and the City by bringing in strong tax, legal and scientific databases. However Wall Street and the City still account for 60% of sales and around 50% of profits.

Owners of private companies need to understand the massive long term impact of these dependencies. That large order is great for cash flow but there is downside unless key strategies are deployed. Left unchecked, it is easy to let that one customer dominate your sales line for the next 5 years. Your culture, your identity and your margins are then shaped by the actions of that one large customer.

Use dependencies to grow your business quickly. Use large customers as testimonial, showcase sites to help you win further landmark clients. Let key supplier relationships create stability to allow you to put in place more strategic supplier partnerships.

Learn from your dependencies quickly and build a more diverse, sustainable business using these special relationships as a springboard for more success.

Do you know why you are successful?

In Malcolm Gladwell's latest book, Outliers, he poses the question, do we really understand why we are successful? Counter-intuitive propositions are often the hallmark of truly insightful observations. Take his example from Canadian hockey. Many of the most successful 18 year old Canadian ice hockey players were not only very skillful, they were really big nine and ten year olds. Because the age cut off for boys ice hockey is Jan 1st, then any kid with a birthday in January to March has a huge advantage to look good or at least dominate physically.
They are then selected for the rep squad, they get more games, better coaching etc etc. By the time they are 18 they have lived and breathed ice hockey their whole life! Same goes for baseball with a July 31st cut off. Other fascinating examples include the Beatles and Bill Gates.

The Beatles were an amazing band but it did them no harm that between 1960 and 1962 they played Hamburg gigs, off and on for 270 nights. By the time they had a burst of success in 1964 they had played an estimated 1200 times!

Bill Gates is a genius but Lakeside School where he attended as an eighth grader had a computer club with access to a mainframe computer in downtown Seattle. This was 1968 and for the next 5 years Gates racked up an extraordinary amount of time on the terminal!

We must be careful when analysing our successes. Do leadership teams really understand what makes their business tick? Are our accounts departments really generating all the real time key performance indicators we need.

Remember this, there are only two reasons that a financial number moves. Only two. Volume and yield. As you try to understand the stories behind your business, the reasons for failure and success - make sure you start with the obvious big volume and yield reasons or you might jump to the wrong conclusions!

Time To Be a Contrarian Thinker

So the recession is hurting, you've attacked costs, you've polished up your sales scripts and you still feel in trouble and in need of inspiration. The next five years will be an unusually attractive time to build a business! Enter a collection of contrarian views.

VF Corp, the world’s largest apparel maker by revenue, is continuing to add new retail stores and plans to snap up new brands.

Ticketmaster and Tickets.com are launching services to let customers buy tickets directly from their mobile phones.

Liquor giants are rolling out pre-mixed products to entice recession-weary Americans to serve more cocktails at home.

Valeant, a small Orange County, California drug maker is cutting its R&D budget by 50% to allow it to buy companies and execute licensing deals.

Paul Fireman, the man who founded Reebok, is in talks to invest $33m in a small LA based company, that makes $175 designer jeans.

In late January, as the US banking system was in turmoil, a tiny Hanover Community Bank on Long Island opened for business.

Wal-Mart is re-launching its Great Value Brand to establish an even stronger grip on the private label segment of the market.

As Borders struggles to cope with the recession, Barnes & Noble buys Top E-Book Retailer.

What unique market are you going to define and dominate over the next 5 years using contrarian thinking?