Byron Kalies

Painless Strategic Management for Busy Managers

First appeared in ‘Better Business (U.K.)

I am making an assumption based on some experience and a good deal of
hearsay about busy managers. My assumption is that a large proportion
of you think strategic management is something that happens in books or
with IBM or some other large Organisation.
“Not for me, thank you very much.”

Now, don’t worry I’m not going to bore you senseless with a long
article on cost benefit analysis, TQM or force field analysis. I want
to try to give you some practical (fun, even) ideas to help you have
more control of the business and move your business forward.

Firstly a question; “What business are you in?”
Sounds a fairly innocuous question doesn’t it? But maybe it’s not so
simple.

Look at the example of Parker pens. Parker pens have had a great name
and reputation since their beginning in 1888. Yet somehow by the mid
1980s they were in crisis. Over the past nine decades Parker pens had
survived wars, cheap imports, ballpoint pens, roller ball pens, etc. .
Now, in a period of relative calm they were in disarray. They were
losing money despite a large range of initiatives. The approach that
had evolved was one of competing in foreign markets and neglecting
their traditional markets. So, a strategic meeting was arranged and
there was one item on the agenda; “What market are we in?”. Answering
this question transformed their business.

Someone asked the question; “When did you last receive a Parker pen?”.
Ask yourself that question. I guess, like most of us you’ll have a
similar response to the people at the meeting; birthday present,
Christmas present, presentation - a reward of some sort. Parker Pens
finally worked out that they were in the gift business. They were not
in the market of competing with cheap pens, etc. This insight
transformed their business. Instead of continually cutting cost and
quality they spent more on quality and marketing. They redesigned and
repackaged their products. They increased their advertising budget by
60%. They raised their prices and began to target the “style-conscious
and affluent sector.” Despite a world recession Parker pens increased
its turnover by almost 50% in the last half of the decade.

So now - which business are you in? The gift business? The everyday
business?
What are your markets? The luxury end of the business? The exclusive
market?

If you really think you know who your customers are and what they want
that’s really good. This next part of the exercise is the fun part.
You’re allowed to day-dream, be a little creative, let your imagination
run away with you. This works really well if there are a couple of you
to bounce ideas off each other. Now think about who your customers
could be? Who are your potential customers? List as many ‘types’ of
people you can think of that are interested in your products. Don’t
worry that they haven’t any money, or live in Australia or anything.
Just list your potential customers.

This list could include individuals - Mr Jones, groups - students,
farmers, “businessmen with no time”, or even Organisations - “Marks and
Spencer”, “Harrods”, The Clergy..

You should have quite a nice list. Now write alongside each entry why
they don’t buy from you at present - “no money” perhaps, “no time to
talk to them “, “never heard of me”

Now have a look at those reasons and for each reason see if there’s
something you can control or influence that would make them customers.
Influence could mean anything you could possibly do to influence them -
from sending them an email to arranging a thirty minute selling meeting
with them. If there is (and remember we’re still in non-practical
thinking mode here) then just put a tick alongside the customer.

Now look at the list. One of the reasons for doing this is to show how
much control you actually do have when trying to win more customers.
This shows that you have some control or influence over many, many
aspects of your business.

Now it’s finally time to get real and practical. Look at the list and
identify one or two potential customers or groups of potential
customers who would have a significant impact on your business if they
became customers. Highlight those. Think carefully about what you can
do to win those people over. Don’t worry too much about the timescale.
You’ve already identified that you can have some influence - just flesh
that out. If possible talk to people about ideas. Identify something
you can do that will kick start the process. Trust me even if nothing
happens you’ll feel better about it.

Go back to the list and identify some very simple, easy (hopefully
cheap, or even free) things you can do that will give you a ‘quick
win’. Something you can do tomorrow that will have an effect. It may be
that you just change your pricing strategy. Whatever you decide to do,
do it immediately. This action will give you more energy to move onto
the next target customers. Once you get some impetus it’s hard to stop -
just like a snowball.

A quick word on pricing. Sellers are often ‘afraid’ of price. They’re
afraid that if something’s too expensive no-one will buy. Well that may
be true but there’s a similar problem if the price is too low.
There is a great story about a business woman who was selling jewellery
and it wasn’t going to well. The story goes that she was with her bank
manager and realised she’d have to do something so she phones her
assistant to reduce the prices. The following day she goes to the shop
and sees her assistant beaming.
“Great strategy we’ve sold lots more jewellery”
“Yes but what’s it cost us?”
“What do you mean?”
“Well, I told you to half the amount”
“I thought you said “Add a nought. “so I did and we’ve sold lots more.”

It’s probably an apocryphal tale, but it does make a point. People
don’t always want the cheapest they can get. If something is well made,
unique, people want to pay for it. I’ve worked with people who have
said “Oh I couldn’t ask that for it - I know how much it cost to make.”
I would doubt if anyone really does - once you’ve taken in the cost of
everything, your time, the articles that don’t sell, the hours of
paperwork it’s impossible to know the price. One tip someone told me
was to look at the finished article and ask yourself how much you’d pay
for it if you knew little about the cost of producing it. That’s would
be a good starting point for your pricing.

So you’ve done a stakeholder analysis and looking at pricing strategy -
maybe this strategy business isn’t as frightening as it sounds.