The Top 100 Business Schools avoid this piece of critical thinking in their MBA programs, dismissing it as too soft and somewhat less than tangible. Try telling that to Nordstrom. 10 Minute MBA creator John Quinn explains why entrepreneurs and business leaders need to develop their own version of his Theory of Everything
A touchy subject this, but unfortunately there are many key things about being successful in business that you won't learn in Business School. One of the worst omissions in my view is that of the power of small changes and how these compound to make big improvements to business over remarkably short timescales. One such idea is the one I call my magic profit spell, which shows you how to take specific components of any business and make them unrecognisably better by changing things almost imperceptibly.
photo by: Robert Fornal
Insight is great stuff to have, but it’s sometimes difficult to find when you are up close to an issue.
A few years ago an ex colleague of mine who had been loosely involved with the travel and tourism industry told me he was buying into a new business venture: a high street travel agency. My heart started beating very fast; my first reaction was to ask: are you sure?
It seemed to me like the craziest idea possible in 2008 to be getting into a 1968 business; and so it proved; the business burned through a heap of cash and was gone inside a year.
But, it seemed like such a fantastic idea to my colleague; so much so that no-one could convince him otherwise, even his wife.
He was in the woods (his industry) and he was so familiar, felt so at home in those woods that he couldn’t possibly conceive of this venture going wrong; he knew the industry so well; so well in fact that he couldn’t see the exodus of clients from traditional travel agencies to the internet at the lower end of the market, where everybody buys on price. It must have been very painful watching people walk past that shopfront everyday.
But what can you do in that situation; you know a business so well and you can’t begin to imagine having to learn new skills and a new industry; he could have thought: “rich people”.
You see the obvious alternative might have been to cut costs and go straight onto the web; but that is also a very expensive game if you want to play in the mass market. As we have seen before at the price sensitive end of the market all sorts of things go wrong:
- The big guys can always do things cheaper than you
- The big guys can always get more exposure than you
- Sometimes there actually isn’t enough money in the transaction for everybody to make a profit; just look at the number of holiday companies going out of business now.
- The customers at that end of the market are the first to disappear when times get tough
Imagine instead that my colleague had started a bespoke travel agency which helps affluent people to arrange holidays and business travel, he could have effectively become a sort of concierge service for affluent people; benefits would have included:
- No high street store front and associated overheads
- Clients who are willing to pay for high quality and a hassle free life
- Major up sell opportunities for add on features such as trips, activities, meals etc.
- The opportunity to partner with many high end businesses to deliver the high quality his clients expect.
- No drop off in business during hard economic times
- No scrabbling for pennies at the bottom end of the market
- Client loyalty and an ever increasing customer base.
- Repeat business, not just year to year but multiple transactions per client per year
- A valuable business that he could sell on in the future
Please don’t be blinded by the familiar; if in doubt find a mentor, someone who can take an objective view of your industry.
How can you use this idea in your business?
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