When Should You Procrastinate?

When procrastinating can be a good thing to do….. 

What do you think of when I say the word “procrastination” to you?  Often we look at procrastination we see it as something that we do but should not – it is about creating delay, avoiding work, or putting off those things that we don’t want to do so we can do that which we like or want to do. Often when doing so we feel guilty.

But procrastination is not black or white, but shades of gray. Let me explain.

I see three types of procrastination which are dependent on what you are doing instead of what you could be working, these are:

  1. nothing,
  2. something less important, or
  3. something more important.

Out of the above three types, I would suggest that the last – doing something more important – is good procrastination.  Why is this? Procrastination is not just about what you do or not do, it is not even just about the priorities (or lack of) that you have, rather it is about the opportunity cost of how you spend your time. Opportunity cost is about the benefits you could have received but have foregone by choosing one alternative over another. In terms of procrastination, when you choose to spend your time doing on one alternative then you forego the benefits that you could have realized from choosing another.  This is important, as time is a scarce resource – once you have used it you can never get it back. No matter how rich, how powerful, or how smart you are we only have 24 hours in a day, 60 minutes in an hour and 6o seconds in a minute. Time spent can never be regained!

If you are a good procrastinator you focus on the important stuff and put off the “small stuff” – those things which do not really matter and which do not progress you in what you are looking to achieve. By doing this the benefits you have not realized from doing the small stuff are outweighed by the benefits you have realized from doing the important stuff – this is why it is good procrastination, it is the best use of your time. If you focus on the small stuff then you are doing better than if you are doing nothing, but not as well as if you were working on the important stuff; and if you do nothing, then you incur higher opportunity costs as you have failed to use that time to realize any possible benefits. So good procrastination is about avoiding the smaller stuff to focus on the important work.

So how do you know if you are spending your time most effectively and that you are exercising good procrastination and not a form of bad procrastination? Ask yourself this one question:

“What’s the best thing you could be working on, and why aren’t you?

The kicker here is the second part of the question! You need, to be honest with yourself and to identify the barriers that are making it hard for you to do so. I always use the Five Whys tool where you take the initial statement and then ask “Why?” up to five times – this helps you to identify what the root of the problem is that needs to be dealt with, rather than dealing with just the symptom.  For example:

“I don’t know where to start on this project”

Why?

“Because I am not sure of what the outcomes are I am looking for”

Why?

“Because I have not determined what is in the scope of the project”

Why?

There are several ways I could approach this project.

Why?

“Because my boss wants a variety of things but I don’t know what is important to her”

Ah-hah! – the underlying problem, or the root of the problem, is that you don’t know what the boss wants to achieve from the project – not that you don’t know where to start. So the action for you is to go and talk to your boss – this will help you get started and stop procrastinating!

The process of good procrastination is simple, but it is not easy – this is why so many people slip into habits of bad procrastination instead. Use this approach to help you and see the benefits come to you over time.  So when are you going to start doing this?

To view or download a PDF version of this blog click here.

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

Price & Value

Why price and value must co-exist…

The most important thing in pricing is value. This is not the value as you determine it, or but rather the value as perceived by the customer.  The price a customer is willing to pay, and therefore the price you can achieve, is always a reflection of the perceived value of the product or service in the customer’s eyes.

There is a relationship between price and value which the Romans understood; in Latin the word “pretium” means both price and value. Literally speaking, price and value are one and the same. This is a good guideline for businesses to follow when they make their price decisions in that you need to:

  • Create value: how your product or service is designed, made and performs all drive the value that customers perceive. Innovation also plays an important role as it focuses on creating, unlocking or delivering customer value that was not previously available to them before.
  • Communicate value: This is how you influence your customers’ perception. It includes how you describe the product, your value proposition, and your brand. Value communication also covers packaging, product performance, and shelf or online placement.
  • Retain value: Your customers’ expectations as to how the value will last post-purchase will have a significant influence on a customer’s willingness to pay, for example, luxury goods, consumer durables and cars.

There are a couple of illustrative quotes regarding price and value. Firstly, the French have a saying, “le prix s’oublie, la qualité reste.” Loosely translated, that means that the quality you bought endures long after you have forgotten the price.

“That is the worst and yet easiest error. Better be cheated in the price than in the quality of goods.” (Baltasar Gracian, 1601-1658)

The point here is that price is quickly forgotten, while quality, good or bad, stays with us. So when you create a product or service is when you begin your planning on how and what to price it as. Make sure you create, communicate and retain value which is perceived by customer as valuable to encourage their willingness to pay.

To view or download a PDF version of this blog click here.

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

Better Customers – How to Find Gold Mines & Avoid Land Mines

How to ask customers for feedback to build better relationships and drive sales

Too often businesses adopt pessimistic mindsets when using customer surveys, with the surveys being focused on problems and what has gone wrong – your “land mines”. This is so the business can identify what has gone wrong, focus on what can be improved (or avoided), and allow customers to vent. However, this does not help businesses to build a long-term, positive relationship with customers as it focuses on the negative.

Rather, think about using your customer surveys as opportunities to not only listen to your customers, but to subtly influence your customers’ perceptions.  So how can you do this?

Instead of asking people what has gone wrong, ask them what has gone right – your “gold mines”. For example, asking a compliment question such as “What went well during your visit?” or “What did you enjoy about the purchase experience?” creates tangible benefits for the business. Research has shown that when businesses do this several things happen:

  1. Customers who are surveyed using a compliment question are more likely to spend more in the following year than customers who are surveyed without a compliment question.
  2. Satisfaction measures are increased.
  3. Being asked to give positive feedback boosted spending even among customers who reported having had poor experiences.

Why is this?

There are two key reasons. Firstly, memory is malleable, so asking customers to recount positive experiences may make the memories of those experiences more salient and accessible in the future, enhancing customers’ overall perceptions.  Secondly, people tend to compliment what they like and to like what they compliment – so if a customer answers positively they will also be likely to act in a way that reflects this so that they are self-consistent in how they think and act.

This is not to say that you should use this to try to manipulate people. You can only affect how they perceive things in the short-run, but you cannot change the reality. However, this approach helps you to just focus on your “land mines” (your weaknesses), but to focus on your “gold mines” (your strengths). What customer questions will you use and how will you use them with your customers?

To view or download a PDF version of this blog click here.

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

2 Insights for Building a Stronger Business

Building a stronger business through network effects & collaboration 

Network effects are becoming increasingly important for businesses; especially those involved in technology, as by understanding them you can not only build better products but also a better business.

A network effect occurs when a product or service becomes more valuable to its users as more people use it. For example, when people first started using telephones they had little value as there were very few other people who you could call. As the number of people who had telephones increased, then so did the number of people with whom you could communicate – this making telephones more valuable to those who had them.  More recent examples of this include communication and social media applications such as Skype, Facebook, Linked-In etcetera.

Telephones, of course, don’t perform better as you add more of them to a network. But people and institutions do. And that’s where the concept of network effects gets more interesting – when you apply it to how people might perform better.

Example: World of Warcraft

The online role-playing game World of Warcraft (WoW) provides an intriguing example. Performance in the game is measured by experience points, which are awarded to players as they successfully address progressively more difficult challenges. It takes roughly 150 hours of accumulated game play to earn the first 2 million experience points but players on average are able to earn another 8 million experience points in the next 150 hours of accumulated game play. Even though within the game, experience points become more difficult to acquire as you advance, World of Warcraft players are improving their performance four times faster as they continue to play the game.

How? Most improve their performance by leveraging a broad set of discussion forums, wikis, databases, and instructional videos that exist outside the game. Here the players share experiences, tell stories, celebrate (and analyze) prodigious in-game achievements, and explore innovative approaches to addressing the challenges at hand. This “knowledge economy” is impressively wide and deep.

The more players participate and interact with WoW’s knowledge economy, the more valuable its resources become, and the faster players increase their rate of performance improvement. Said more generally, the more participants – and interactions between those participants – you add to a carefully designed and nurtured environment, the more the rate of performance improvement goes up. This is the “collaboration curve.”

Collaboration Curve

Collaboration curves hold the potential to mobilize larger and more diverse groups of participants to innovate and create new value – they could be users of your offerings, or people from different groups who can contribute (for example employees, suppliers, customers, competitors, regulators etcetera). In so doing this can help you improve your level of performance. This is already seen in the development of open source software, product development through crowd-sourcing, new product launches through crowd-funding etcetera.

So look at how you can create and leverage network effects for your product offerings, and in doing so create collaborative effects by connecting and leveraging different people, groups and stakeholders around your offerings. In doing this you generate greater levels of experience, better networks, greater engagement, and develop more knowledge – all of which can be used to create value and realize the profit.

To view or download a PDF version of this blog click here

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

When Networks Work Against You

When networks become counter-productive 

A network effect occurs when a product or service becomes more valuable to its users as more people use it. For example, when people first started using telephones they had little value as there were very few other people who you could call. As the number of people who had telephones increased, then so did the number of people with whom you could communicate – this making telephones more valuable to those who had them.

This is an example of a positive network effect – but sometimes the networks effect can be negative.

A negative network effect occurs when more users make your offering less valuable.  This may be due to a number of factors including:

  • Lack of resources –where you may lack the resources required to enable and provide on-going support to realize the network effects. For example, if a mobile phone operator rapidly grows the customer base without having sufficient bandwidth to service the customer base properly
  • Lack of skills – for example, if you lack the ability to share information and communicate clearly, consistently and concisely then this will reduce your ability to create the networks required.
  • Wrong culture – where the values, approach, and behaviors are not sufficient or properly aligned to support the realization of the network effects. For example, collaborative behavior within the business and externally is required to create and leverage the network effects, but the people in the business act in a self-interested basis, and put their particular area ahead of the business, its customers and other stakeholders.

Network effects can have a powerful effect – whether they are adverse or advantageous depends on you. Are you able to anticipate potential network effects? Are you prepared and willing to take advantage of existing or potential network effects? And do you have the necessary skills, resources and organizational culture necessary to create and leverage the network effects?

To view or download a PDF version of this blog click here.

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

How to Make It Easier to Retain & Attract Customers

How to make it easier to retain and attract customers

In the world of accelerating change and increasing competition, how can you keep existing customers, and attract new ones?

Clearly, your value proposition needs to be relevant and superior compared to those of your competitors or potential substitute offerings. However, just because your value proposition has attracted customers, it does not mean it will continue to do so in a changing world.

You need to help your customers to continue to choose you over anyone or anything else. To do this you want to make it easy for them to have to choose between your offering and that of someone else. And this is where the cumulative advantage comes into play.

Competitive Advantage

When businesses create and use competitive advantage they pick a position, target a set of consumers, and configure activities to serve them better. The goal is to make customers repeat their purchases by matching the value proposition to their needs. By doing this the business is uniquely different and suitable for its target customers, allowing it to see off competitors and achieve sustainable competitive advantage.

But in a changing world, this is difficult to maintain as customer needs, competition and potential substitutes change quickly. With people having to make so many decisions and to distinguish between so many competing choices, it is important to make it easy for your customers to choose you.  This is where the cumulative advantage comes to effect.

Cumulative Advantage 

Cumulative advantage is the layer that a company builds on its initial competitive advantage by making its product or service an ever more instinctively comfortable choice for the customer.

Cumulative advantage is about creating process fluency – this term used by psychologists refers to how we make decisions, often filling in the gaps on the basis of our past experience – think of the thoughts, opinions, and preferences that come to mind quickly and without reflection but are strong enough to act on.

Our brains like to work automatically and find it easier to work with that which is familiar (just think of the times you have driven to work but have no or little recall of the drive itself). So once you have bought something you have experience on which to draw and which, automatically, your brain can draw on and fill in the gaps. The more you repeat this, the greater the experience, the easier the purchase decision and the greater the willingness to act on it. It is a bit like walking from your home across a field to get to a stile on the other side.  As you do this again and again, so the path becomes more well-established and broader making it easier to take each time.  This reflects what happens in our brains and in the neural pathways, we create and strengthen every time we make the same decision.

So what we need to do is to convert our offering and value proposition from a decision into a habit. In doing this here are four rules you can use:

  1. Become popular early – gain market share early. This requires more people to buy your offering and to do on a repetitive basis.  This creates a relevant experience which people can draw on which makes it easier to make future decisions to buy again. Also, with many people buying you’re offering your create social legitimacy – people perceive your offering as less risky and more acceptable if others are also using it.
  2. Design for habit – design your offering so that it is easy for others to choose it.  Facebook is a good example of this where people continually check for updates on their Facebook account, this is also compounded by the huge network effects that Facebook enjoys. At the same time, this also creates a strong barrier to stop people switching from Facebook.
  3. Innovate inside the brand – this allows you to continue to leverage the brand equity you have built up; at the same time you need to introduce changes in technology or other features that allow the new version of a product or service to retain the cumulative advantage of the old.
  4. Keep communication simple – the mind is lazy. It doesn’t want to ramp up attention to absorb a complex message. This helps to make decisions and choices easier.

To view or download a PDF version of this blog click here

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.