Twitter

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What Business Are You Really In?

 

He started as a book salesman in the late 1880s. To entice people to buy his books, David H. McConnell gave away free perfume samples. Those proved so popular, he abandoned the books and founded the California Perfume Company in 1886. That company eventually changed its name to Avon in honor of Shakespeare’s hometown. Last year, Avon’s revenue was $1.6 billion.

That’s just one example of successful companies that were founded with one business model, then pivoted to a different business. They thought they were in one business, but the market led them to change their business, either by choice or because their potential for increasing market share vanished.

Nokia started as a paper mill in Finland.

Nokia started as a paper mill in Finland.

Twitter is an example of a forced pivot. It started as Odeo, a network for people to find podcasts. It was a bad day for Odeo when iTunes announced it would include a built-in platform for podcasts in every one of its iPods, pretty much obliterating their business overnight. So, the company got to work, hosting hackathons to come up with a new idea. The concept for a microblogging platform was hatched, and Twitter was created in 2006. It’s now worth over $10 billion.

One of my favorite pivot stories is about the American food company Wrigley. William Wrigley Jr’s father was a soap manufacturer, so as a teenager William became a soap salesman. To encourage shop owners to stock his soap on their shelves, William offered free gifts. Baking powder was the most popular, so he dropped selling the soap to focus on that. In 1892, as an incentive, he began offering two packages of free chewing gum with each can of baking powder. Once again, the giveaway was more popular than the actual product he was selling, and he moved to selling chewing gum. Wrigley sold to Mars in 2008 for $23 billion.

Did you know Nokia started as a paper mill in Finland in 1865? It moved to creating rubber goods and telecommunications devices, and a mobile phone in 1992. That year the company sold off all its other divisions to focus on mobile devices. Sadly, it failed to make a successful transition to the smartphone industry, and sold its devices and services division to Microsoft in 2013.

We associate the name Nintendo with Super Mario Bros, Game Boy and Wii. The company was founded in 1889 in Japan by Fusajiro Yamauchi to sell playing cards. Unsuccessful expansion attempts by his great-grandson in the 1960s included getting in the taxi business and “love hotels.” Then one of their engineers began developing electronic toys, which led to video game development, and its large market share of the mobile gaming space. While profits had been in decline, Nintendo seems to be on the upswing based on the potential of the value of its intellectual property.

In addition to knowing how to maximize profits for your company, knowing what business you are actually in allows you to expand and grow in the right direction.

When you aren’t clear what business you are in, efforts to innovate and expand can go astray. As Ty Montague writes in inc.com, “The lion’s share of innovation mistakes still come from companies funneling their efforts into extending the life of some existing platform, instead of spending time getting clear on what business they are really in and then constantly looking for opportunities to apply that definition to new technologies and new markets. Companies that do this will grow robust businesses that can be hard to describe in conventional terms.”

An example he gives is Tesla, which he says isn’t in the car business, but rather in the electric mobility business, so in addition to building cars, it builds infrastructure to support the mobility of electric vehicles.

Every business goes through a metamorphosis of product lines in response to marketplace pressure and technology, and a smart CEO needs to continue to monitor that so he can remain in business by moving forward.

Take a step back and think about your own business. What business are you really in?

 

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The Failures That Came Before

I like to write about failure, because it’s an integral part of success. Every one of my clients has succeeded, but only after a failure or multiple failures. We read about these mega-successful companies but sometimes don’t know about the failures these owners and founders dealt with along the way.

At the age of 39, Nick Woodman is a billionaire. He founded GoPro, a digital camcorder company recently valued at more than $3 billion. But before becoming one of the youngest self-made billionaires in the country, he had two companies that failed. His first was a site that sold electronics called EmpowerAll.com. It never got off the ground.

He did raise a lot of money for Funbug, a gaming site he started in 1999. But it went nowhere and shut down in April 2001. After coming up with the concept to attach cameras to athletes’ wrists, he launched his first device in 2009. Sales in 2013 were $985 million.

Jack Dorsey always loved computers and after working in dispatching services, came to value the ability to send short messages. He started a taxi dispatching service that worked through a website. But that company failed during the dot com crash.

He took that concept of short messages and used it to co-found Twitter, now one of the most popular social media sites in the world. One of his rules of success is “Fail Openly.” Oh, and also have an amazing haircut.

In an essay for the Wall Street Journal, “Dilbert” creator Scott Adams says his secret of success is failure. Before he achieved success with his comic strip he had several failures. These include his invention of a rosin bag that would attach to tennis shorts with Velcro. Turned out nobody wanted it and he couldn’t patent it.

He created “Dilbert” while working at a bank. He had drawn cartoons to liven up his presentations. After trying on and off unsuccessfully to get “Dilbert” into magazines and newspapers, he finally published the cartoon with United Media in 1989, becoming a full-time cartoonist of the popular cartoon in 1995.

In 2000, at the age of 22 Ben Huh started Raydium, a software analytics company. He managed to get investment money but a year later funds ran out and he couldn’t meet payroll.

But he didn’t lose his sense of humor and six years later, bought I Can Haz Cheeseburger. This odd sounding blog network, which is also the home of LOLcat, has been wildly successful, with half a billion page views a month. Investors were impressed enough to invest $30 million in this site of jokes about cats and other funny blogs in 2011.

The thing to remember is that these people learned something valuable from each failure that spurred them on and allowed them to ultimately become extremely successful.

Nick Woodman claims that it’s his fear of failing again that caused him to work 18-hour days to make GoPro a success, referring to it as “constructive fear.” In an article on Forbes.com, he said, “I was so afraid that GoPro was going to go away like Funbug that I would work my ass off. That’s what the first boom and bust did for me. I was so scared that I would fail again that I was totally committed to succeed.”

Failure is not a barrier to success. It’s merely a step. As Scott Adams said, “Success is entirely accessible, even if you happen to be a huge screw-up 95% of the time.”

That’s what life is really about — learning from our mistakes.

 

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Trust Your Gut

The freelance writer is a man who is paid per piece or per word or perhaps.
— Robert Benchley

In my job as a Turnaround Authority, I’m just like any other freelancer or contract worker. If I don’t work, I don’t get paid. I enjoy holidays and vacation time just as much as the next guy, but my bank account doesn’t grow during my time off.

I’ll go to great lengths to get new business. I once flew to Paris on a day’s notice at the request of a former client who said he needed me to meet face-to-face with someone at a manufacturing operation where he was experiencing a problem.

But there are other times when I’m offered work a lot closer to home. Work that would pay really well. And I turn it down.

Here are a few of the reasons I turn down work.

• I’m being asked to do something illegal or unethical. Not agreeing to do something illegal is an obvious one. But the ethical area is not always so clear cut to people. (I have a great story for that one that I’ll share later.)

• I don’t think the person trying to hire me is really committed to making the changes that will be necessary to meet the desired goals. Sometimes it’s someone who has a big ego and I can tell he or she won’t want to implement the changes I’ll be suggesting. I don’t want to set myself up for failure.

• I sense a personality conflict. I get along with just about everybody, but every now and then I’ll meet someone and I can tell right away that our relationship will not be smooth sailing. Many of my jobs involve working closely with key personnel at a company and it’s much easier to accomplish our goals (and more enjoyable) if we have good working relationships.

• I don’t trust the person who is trying to hire me. Sometimes this is based on just a sense I get about someone when I speak with him or her on the phone or meet with them in person.

Other than being asked to do something illegal or unethical, the rest of these reasons are pretty much based on my instinct. After almost 30 years in this business, I feel like I’ve learned to read people pretty well.

It really comes down to one thing: I trust my gut. If I make a decision against what my gut tells me to do, 99 percent of the time it turns out badly.

George Zachary, a partner with Charles River Ventures who has had more than $1 billion in returns on investments in companies that include Twitter, Trulia and Shutterfly, believes in trusting his gut too.

“Listening to my gut is the right thing to do for me. It doesn’t mean it’s going to work out.  But it does mean that’s what I should follow,” he said in an interview recently. “That’s my passion. When I’ve done that it has worked well. When I’ve followed my brain and not my heart it’s resulted in disaster and failure every time. I’ve had no success operating from making a rational decision or a decision based on fear. It’s all come from listening to my gut and intuition.”

The late Steve Jobs shared a similar philosophy during his Stanford Commencement speech. “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

It always works for me as well. My gut told me to go to Paris for a three-hour meeting. And that was the right decision. I didn’t make a lot of money on that trip — I only billed him for the time I spent in the meeting. But 18 months later when that client needed help again? He called me.

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The Power & Pain of Social Media

When our clients call us, they’re in trouble and need help immediately; they call for triage, not plastic surgery.

If you’re taking the time to read this, I assume you aren’t in dire straights right now (and hopefully you never will be), and that’s exactly why this proactive message about avoiding huge headaches may also help strengthen your relationships with customers and reinforce your brand. I’m talking, of course, about social media.

Many businesses scoff at the notion of employing a “Community Manager” to set up and maintain LinkedIn, Twitter, Facebook and other social media, but if there’s anything we’re learned and understand, it’s that – no matter what business you’re in – your customers and employees are using these media – and you need to understand them.

Don’t believe me?

Over 35 million tweets are sent every day (a tweet is a message sent using Twitter). There are over 500 million Facebook profiles. If you don’t think social media are important or that your employees and customers aren’t using them, think again.

Have a Social Media Policy

Even if you don’t want to utilize social media for the good they can do, you definitely need to have internal policies in place to mitigate the potential havoc they can wreak when left unattended and unchecked. Make sure your employees all know the Social Media Rules of your business.

Ask yourself, are employees permitted to use social media at work? Can they mention your company on Twitter, Facebook, LinkedIn or anywhere else? If so, are they allowed to do anything more than list your business as their place of employment?

If they say anything else, your employees may be perceived publicly as official representatives. If employees say anything negative you could have a nasty situation on your hands. After all, if someone robs a bank in a Wal-Mart uniform, that’s bad for business, and it’s on the news. If employees can mention your business, make sure they do so in a consistent and positive way.

The Consequences of Ignoring Social Media

If you opt to ignore social media, that’s your prerogative, but know that your business may have profiles and pages on either LinkedIn or Facebook just by virtue of employees listing your business as their place of employment. Others who don’t work for you might be claiming they do if these pages go unregulated.

Having someone within your company monitor these pages may prevent problems from arising in the future – if they haven’t already.

Granted, these issues may seem minor, but none of us wants the hassle. Monitoring social media and implementing policies is part of being proactive rather than reactive. As you start to see their power and value – especially when harnessed together – you may even want to use them to your advantage.

Have you had any unfortunate social media challenges? Which social media do you use and how do they affect your business?