At E R Grove we are committed to providing our clients with wide ranging, business focused and innovative support. Times are not easy and we strongly believe that those businesses that embrace innovation will weather the storm better, and emerge better equipped for the future.
The following short article by one of our associates will, we hope, provide you with food for thought – if you do want to know more, please don’t hesitate to call us.
Innovation – in threes
There's an old joke that describes two men walking across the savannah in Africa when they spy a hungry looking lion. The lion starts to approach them and they fear for their lives. One of the men takes off his rucksack, produces a pair of track shoes and starts to put them on. His companion is dumfounded – "What are you putting those on for," he asks, "you’re never going to outrun a lion". "No", the first man replies, "but with these I can outrun you!"
As jokes go it’s about a six, but in just a few words it captures the situation in which many businesses suddenly find themselves. The message: to survive in today’s jungle, don’t focus on the downturn, focus on doing better than your competitors - whoever and wherever they are.
Few businesses, it appears, are immune to the downturn, so what can ‘innovation’ teach us, and where can it help?
In terms of addressing the downturn, characterised for many by falling sales and a squeeze on credit, I suggest that innovation can help in tackling three separate issues:
- Addressing the day-to-day issues: slow payment, problems with the bank, cancelled orders, the need to focus on CASH.
- Increasing Sales: taking a growing share of a shrinking market - running faster than the guy without the track shoes.
- Preparing for the future upturn: making sure that when it happens you’re ready, and that your products or services are the best.
The first of these is difficult, not least because time isn’t generally on your side. The message is to try and get in control. Don’t panic – think and think innovatively about your response to each issue.
Cash. In difficult times, cash really is king. The old homily …
Turnover is Vanity
Profit is Sanity, but
Cash is Reality
... is particularly true in these times.
So can you reduce your fixed costs? Brainstorm what you could do, and don’t rule out wild suggestions – they often lead to workable and effective ideas.
Can you get better deals (perhaps just by asking!) from your suppliers? Lower costs and better payment terms? But a word of warning – if you have key suppliers, suppliers who, were they to go to the wall, would seriously embarrass you, then you need to do all you reasonably can to keep them in business.
Really focus on your best customers – you do know who they are, don’t you?
Get the money that you are owed, in, quicker. Get in control – it’s your money!
In terms of the second task, increasing sales, take a close look at customer service. Do you really do what it says on your tin? In my experience, an awful lot of businesses with an okay product are let down by poor service. This is a real opportunity area for a quick win!
Ask your clients: "Where could we do better?" If service in your sector is poor, then differentiate yourselves as a company by delivering peerless customer care.
The trick is look at what you do…from your customers’ point of view!
Small increases to the volume of your trade can have a big impact on your bottom line, so think about what the marketing people preach. The only options are … sell more things, to more people, more often!
Can you increase your price? Sounds like a crazy idea at the moment, BUT are you just selling on price? If not, then it is worth a careful thought?
Businesses ‘trapped’ within a supply chain, totally dependent on a few big customers, have particular problems. Perhaps now is the time to explore the idea of a product of your own? Key questions are about the skills you have and the industry knowledge you possess. Options include working in partnership with another business or licensing an existing product.
Finally, preparing for the future. Will you have your track shoes on when things improve? In normal times, businesses that decide innovation can work for them find themselves taking action on three levels:
- What can we do now to increase our sales or reduce our costs?
- What can we do in the medium term?
- What can we do in the longer term?
The immediate, the ‘now’ is discussed above, and in terms of the medium and longer-term actions, I think the car industry has a model worthy of consideration.
Every year models are updated – often just minor changes to the look of the front of the vehicle or the inclusion as standard of a feature previously only available as an extra cost option. But changes that allow the word "new" to be used!
The longer-term changes are new models – the Mark 6 replacing the Mark 5, or an extension to the range – a mini MPV or sports model. In truth though, the ‘new’ models are very similar under the skin!
So where do the ideas come from? Is it all about ideas?
Space prohibits a full answer, but ideas are the starting point. Equally important is selecting the right idea – the one that makes commercial sense and is judged to have a high likelihood of delivering to the bottom line. The commercial element is absolutely critical – the idea MUST be worthy of investment, with clear exploitation options and proven / accessible markets.
Monitoring progress and spend in a relatively formal way is also part of this important commercial mix.
Ideas can come from all sorts of routes – your workforce, customers and suppliers, even from your competitors. But start small, first look for the ideas that can save you money or make your existing products or services more attractive.
Then move on to look perhaps further afield, in other industry sectors or countries, for ideas that pass the commercial test and offer a real step forward. Finding the pain or the gain can be a very good first step, since an alternative solution to a long-standing problem can really pay dividends. In the past, a lot of innovation focussed on saving people time; in the future, saving people money may come to the fore? In terms of step changes, it’s not a perfect example, but the blade drier from Dyson™ is one example.
So three characters (don’t forget the lion), three approaches to the credit crunch, three aspects of business (turnover, profit and cash), three options to increasing sales (more things, more people, more often) and three steps to the future.
But one number to call if this article has raised questions and you’d like more help - E R Grove on 0121 559 1071.
Roger Browne
MD
Futurology Limited
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