Year: 2019

2 Insights for Building a Stronger Business

Andrew Cooke Business Growth ,

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

Andrew Cooke Network

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

Andrew Cooke Competition, 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.

Question Storming, A Better Way to Innovate

Andrew Cooke Innovation ,

…a better way than brainstorming when innovating

The idea of brainstorming is to get a group of diverse people to generate a lot of ideas, without judgment, in order to discover a solution to a problem. It has its use at times, but the problem is that it doesn’t work!

Why do I say this?

There are two key problems with brainstorming.

Firstly, the problem starts at the beginning when we look to solve a problem rather than to find a problem. We have already defined what the problem is we believe that we “know” what the problem is when we do not. Next time you are in a brain-storming session, before you start, ask everyone to write down, without sharing what they have written), what the problem is that they are going to brainstorm.  You will get as many answers as there are people. Although there may be aspects of the problem that people share there is no commonly shared and consistent understanding of the problem.

Secondly, although there may be no judgment of ideas in the initial stage of brainstorming a lot of people will tend to self-censor as they know the ideas will be judged at some point. This limits the creative thinking and the ability for people to think freely.

The Right Question Institute has developed the question-storming method where the focus is on generating questions, not ideas, which tend to be judged more harshly than questions.  When people brainstorm there is a point when people can’t think of any more ideas. Part of this is because the group is asking the wrong questions – this is a good time to start question-storming.

The Right Question Institute has developed a process for this, the Question Formulation Technique, which includes the following steps:

1. Design a question focus.

Here you provide a focus for the group so that people can generate their own questions.

2. Produce questions.

There are four rules for producing questions:

  1. Ask as many questions as you can.
  2. Do not stop to judge, discuss, edit, or answer any question.
  3. Write down every question exactly as it was asked.
  4. Change any statements into questions.

As a group generates at least fifty questions about the problem being “stormed”.  Write down all the questions so that everyone can see them and try to think of a better question.

Questions tend to be easier than ideas to come up with. Note that just because you have thought of a question does not mean you have to have a solution for it.

As you go through this you will find that people have slightly different ways of framing or approaching the problem. If you have a large group then split the group into smaller sub-groups to encourage interaction between people.

Often groups stall at around 25 questions.  Don’t stop here as often the best questions come as you get to the fiftieth or seventy-fifth.

3. Work with closed-ended and open-ended questions.

Improve the questions generated by:

  1. Making open questions closed, and
  2. Making closed questions open

For example:

4. Prioritize questions.

Allow the group to prioritize the top three questions that need to be explored further. The reversing of the questions helps to winnow down the questions as the best questions become magnetic and draw people to them. So people converge around them. From this, the group can discern which questions are the top three questions that need to be addressed.

5. Plan next steps.

Use the three questions to help you develop ideas and solutions for the problem. 3.

6. Reflect.

Stop and reflect on what you have learned, found out and developed as a result of this process. What do you need to do next and what plans do you need to develop.

So next time you are looking to innovate, solve problems or come up with a new way of doing things don’t look for the right answer, look for the right question!

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 Use Emotions When Negotiating

Andrew Cooke Emotional Intelligence, Negotiation , ,

Emotions can make you a better negotiator… 

Normally when you think of making decisions, negotiating or dealing with others you do so on the assumption that you are a rational person, and that the other person is a rational person. In short, logic makes you think, and thinking makes you act.

Think of how you negotiate. In the book, Getting to Yes, Fisher and Ury, outline four key steps to take when negotiating:

  1. Separate the person – the emotion –  from the problem;
  2. Don’t get wrapped up in the other side’s position (what they’re asking for) but instead focus on their interests (why they’re asking for it) so that you can find what they really want;
  3. Work cooperatively to generate win-win options; and,
  4. Establish mutually agreed-upon standards for evaluating those possible solutions.

There is only one problem with this – the assumption that people are rational is flawed. People are actually irrational in how they think, decide and act. Let me share with you an example of how this happens.

Playing the Ultimatum Game

This game has been run many times with students. Students are split into pairs – a “proposer” and an “accepter”. The proposer is given $10 and then has to offer the accepter a round number of dollars. If the accepter agrees he or she receives what’s been offered and the proposer gets the rest. If the accepter refuses the offer, though, they both get nothing.  What would do you think they did? If you were the proposer, what would you do?

Whether they “win” and keep the money or “lose” and have to give it back is irrelevant. What’s important is the offer they make. Almost without exception, whatever selection anyone makes, they find themselves in a minority. No matter what split of the $10 is used ($6/$4, $5/$5, $7/$3, $8/$2, etc.), no split is chosen far more than any other.

When the pairs were asked to explain how they made a decision their reasoning, in every case, they described it as rational. However, they were wrong for two reasons:

  1. For proposers: If everyone was rational they would all make the same offer, yet they made different offers. The reasons they all made different offers is that they assumed the other person would reason like them.
  2. For accepters: Accepters who turned down $1, or more, made an emotional choice. If you are rational since when is getting $0 better than getting $1?

So do you honestly think you are a rational person? You’re not. Like everyone else, you and I are all irrational, all emotional.

So what is the assumption that should underpin how we decide and negotiate?

Logic makes people think, but emotions make people act.

So when making decisions or negotiating use both logic and emotion – remember, a feeling is a form of thinking.

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.

The Paradox of the Familiar and the New

Andrew Cooke Customers ,

Customers are a fickle lot. You produce what your research tells you will sell, and you end up with a lemon, or it fails to produce the results you seek. Why is this?

If customers are going to buy a new offering it has to appeal to them, not just in terms of the needs it satisfies, but in how it gets over the initial barrier of being attractive to them.

Customers are torn between a curiosity about new things and a fear of anything too new. So people tend to be attracted to offerings that are bold, but instantly comprehensible. Raymond Loewy, the industrial designer, who came up with this idea called it MAYA – ““Most Advanced Yet Acceptable”. He said to sell something surprising, make it familiar; and to sell something familiar, make it surprising.

Think of Apple and the iPad.  The technology was not new – it combined different technologies in a clever way, but what made it stand out was its design and the user experience that it created for the iPad’s users.

People like what is familiar, but if they are over-exposed to it then it becomes overfamiliar and they tire of it.  How many times could you listen to your favorite song before you get tired of it, or stop listening properly to it? It is probably fewer than you think. Similarly, although people may like surprises if the surprise is too much then it becomes counter-productive.

To get the best of both worlds – that which is familiar to people, and that which represents a surprise – requires a balance. The power of familiarity seems to be strongest when a person isn’t expecting it; and a surprise seems to work best when it contains some element of familiarity. This has been described as having a level of “optimal newness”.

Internet companies provide a good example of this where many new ideas are promoted as a fresh spin on familiar successes..  For example, Airbnb was once called “eBay for homes.”; Uber was described as “Airbnb for cars”; and with Uber’s success may start-ups have begun describing themselves as “Uber for [anything].” In the movies, the film “Alien” eventually found the financial backing it required when it described the plot as “Jaws in space” – the film and plot of “Jaws” being very familiar, and the locating the story in space providing the surprise.

So when you look to bring new offerings to market ask yourself these three questions:

  1. How will I make it familiar?
  2. How will I make it surprising:
  3. How will I make it familiar when a person least expects it, and make it surprising yet still somewhat familiar?

Answering these questions will help you generate ideas and approaches to try with your customers and make your new offerings more successful.

What is your key takeaway from 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

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.

What You Need to Do If You Want to Change

Andrew Cooke Change, Personal Development

Change starts with ourselves, but why is it so hard to do?

To change ourselves we need to change our behaviour. This is difficult to do and even harder to sustain. In fact it can be one of the hardest things that we do.

If you think I’m exaggerating this then answer these three questions for yourself:

  • What do you want to change in your life? – This might be something minor or major, just think of something that is important to you right now.
  • How long has this been going on?– How many weeks months or years have you been telling yourself some variation on the phrase, “this is the day I make the change!”
  • How is it working out? – Can you point to a specific moment or a specific time when you decided to change something in your life, you acted on it, and it worked out to your satisfaction?

I suspect, like many people, you have something you want to change that has been going on for a long time, and for which you have not yet taken any action or achieved the change to your satisfaction. There are three reasons why this is:

  • We can’t admit that we need to change – we are not aware of the need, or we are aware of the need but we have rationalized to ourselves why we do not need to change.
  • We do not appreciate inertia’s power over us – inertia is often the reason why we don’t begin the process of change. Given the choice we prefer to do nothing rather than take a sustained course of action. As such, it is hard to stop doing something that takes us out of our existing comfort zone, in order to start something difficult which will only benefit us in the longer term.
  • We don’t know how to execute a change – we need to understand the difference between motivation and understanding and ability. For example, we may be motivated to lose weight but we lack the nutritional understanding and cooking ability to design and stick with an effective diet. Alternatively, we may have the understanding and the ability but lack the motivation

Ask yourself these three questions:

  • Do I really want to change?
  • What am I prepared to stop in order that I can start something?
  • Do I have the necessary motivation, understanding and ability to successfully make the change in my behaviour?

If the answer to any of these questions is “no”, then consider why this is the case and look at what you need to do to bring around an answer of “yes”. You can’t change yourself unless you want to; you know what you need to stop doing and what you need to start doing; and that you have the necessary motivation, understanding and ability.

If you were to ask these questions of your team, then what would they answer? Understanding this will help you understand where you may encounter resistance to change, why, and what to do about.  Try it and see what insights you uncover.

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.

Lessons from Disneyland

Andrew Cooke Value ,

Build your map and build value

Have you ever been to Disneyland?  Millions of people, children and adults alike, have visited it and enjoyed its magic and experienced the wonder it has engendered. But did you know it nearly didn’t happen?

When Walt Disney first tried to get financial backing for his project – the future Disneyland – his own studio refused to fund it. So what did Walt Disney do?

He sent his brother, Ray, to meet with potential investors in New York. Imagine going to meet with potential investors to sell the concept of Disneyland – a concept that was new, unknown and untested. However, Walt Disney did not send his brother unarmed or empty-handed – he equipped him with a map of what Disneyland would look like.

Figure 1 – The Original Map for Disneyland

The map of Disneyland allowed Walt and Ray Disney to share the vision with their potential investors, it made the idea tangible for them, and provided them with a path that they could follow to see where this concept would lead it to.

Maps provide a point of reference for you and others, a guide to how you will achieve your vision, and a way by which people can align their interests and effort by creating buy-in and engagement. They reduce risk and provide a yardstick that you can measure your progress against.

What is the map that you have drawn, or have to draw, that you need to share with your stakeholders – your staff, your customers, your suppliers, your investors and shareholders, and your community. And when you have your map – how will you share it and communicate so it aligns their needs, interests and actions with those that you need?

The first map illustrating the Disneyland concept recently sold for over USD $1 million at auction. What will your map be worth to you in the future?

 

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

3 Reasons Why the Customer is NOT Always Right!

Andrew Cooke Customers

3 reasons why the customer is not always right

One of the oldest adages for customer experience and customer service is “The customer is always right!”.

Sorry, I don’t hold with that. Why? People assume that it is better to keep a customer rather than alienate a customer. But often this is not the best decision to make.

I want to distinguish between two types of customers – those who buy products and those who buy services.  There is a key difference between them – products are fixed and tangible; services are experiential.  In short, products are about hand-offs and hand-overs, and services are about handshakes. Be clear on what you are dealing with – the product or the service.

So when is the customer NOT right? Simply put, there are three times.

Firstly, when the customer is not a customer. Just because someone has bought from you does not mean that they are a suitable customer, or that they are someone you want to have and keep as a customer. Think of a time you had the “customer from hell” where the cost, stress and effort involved in servicing the client was not worthwhile. What did you do? Keep them and continue to suffer or let them go?

Secondly, when the customer is wrong. Yes, they are human and fallible and prone to making mistakes just as often as you and I. Just because they believe they are right does not mean that they are right. Think of a time when you believed you were right, but when you considered the situation further you found that you were wrong. Caving-in to a customer just because they think they are right does damage in two ways – the customer is kept uninformed and unaware of the risks/costs they are incurring; and you are doing the wrong thing by the customer, it may be a difficult conversation but you need to act in the customer’s best interests and educate them.

Finally, when you are right. You should be an expert and experienced in regards what you are selling to your customers – whether products or services – and you should be able to distinguish between when you are right or not. Just because a client is more vocal or aggressive in what they are saying or claiming does not diminish you or your expertise. Be assertive and calmly state the position whilst staying focused on the issue and not the individual.

So what are you going to do when the customer is not right, and how will you handle the situation? Share here the one action you will take, right now, to address this.

To find out more about how to attract the right prospects, convert them into great customers and deliver great results for you and your clients in building a sustainable business please click here.

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.

3 Insights to Being Successfully Self-Employed

Andrew Cooke Personal Development

What you need to know to be successful

So you are self-employed or you are looking to take the plunge and become self-employed.

Why?

Being employed is often seen as a safe and secure way by which to live your life. But is it what you want? Increasingly, job security and tenure is becoming less certain. Even so, people are loathe to make the move from what they know to that which they do not know.

Being self-employed can give you freedom, but with freedom comes with choice and with choice comes responsibility. Being self-employed does not necessarily bring you independence. Believe me, I have been there!

Being self-employed means taking responsibility for what you do and for what you don’t do, for what you achieve and what you do not achieve. At the end of the day it is what you do that matters. You may not be able to control everything around you or what happens to you, but you can always choose how you respond.

If you want to be self-employed and independent here are three things to be clear on:

  1. Your passion – what is your passion, that which underpins you and is you, which inspires you and can inspire others?
  2. Your goals – using your passion, what do you want to achieve for yourself, for others and what legacy do you want to create or leave?
  3. Your plan – how you will make it sustainable? What do you need to do to ensure you can continue to do this on an on-going basis? What do you need to earn? Who do you need to involve? What resources, capabilities or capacity do you need to be able to access?

To be self-employed and independent you need to take control, to drive from the front where you can see you are going and focus on where you need to go. To guide you use your passion, your goals, and your plan to help you build something that you love, that lasts and leaves a legacy.

So what are you going to do if you are self-employed, or you are looking to be self-employed? Share here the one action you will take, right now, to address this.

To find out more about how to build your own business and to attract the right prospects, convert them into great customers and deliver great results for you and your clients in building a sustainable business please click here.

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.