Friday, April 14, 2017

8 Principles For Building A Competitive Core Business

Facebook-Mark-ZuckerbergMany new business owners I know have learned the hard way that you can never be everything for everyone. As a startup, you need to use your limited resources to excel at a few core things for your best customers, in order to stand out and get the momentum going. Focus on a few key principles is the key to success, and it takes discipline and determination to make this happen.

I found some good lessons in this regard in a new book, “Becoming Facebook,” by Mike Hoefflinger, the former Head of Global Business Marketing at Facebook. He talks in detail about ten of the key challenges that Facebook faced in their growth, to move from a tiny social media upstart to one of the most successful companies in the world.

Based on my experience advising new businesses, all of the principles that he outlines, including the following subset which I generalize here, should be taken to heart by every entrepreneur:

  1. Give customers fewer things that matter more. Your customers’ biggest need is not for more things. Your best strategy is to find more customers that fit the things you do best, rather than building more things. Too many choices confuse all customers, and make your job in marketing, distribution, and support much more difficult. Less is more.

  2. Pick a single metric that is the focus for all growth. Today’s world is full of metrics leading to business growth, including customer logins, revenue per customer, retention, and average solution price. Facebook’s winning strategy was a laser focus on increasing active user counts and time spent online. Revenue and competitive position followed.

  3. Speed is a key feature in every customer experience. Customers today have adapted to a fast-moving world, and they expect every business to keep up. They have no understanding or patience for extra steps and delays caused by bureaucratic processes, disengaged employees, complex networks, or software usability problems.

  4. Strive to cross the chasm from early adopters to mainstream. Many new companies become bogged down with the more vocal early adopters, who have an appetite for more function and new players. The mainstream majority want simplicity and base function, and we they get it they will come in droves, and be very reluctant to jump ship. Get there.

  5. Disrupt your own success before someone else does. In this age of technology, the advent of a better alternative is inevitable. To retain the initiative – especially when you’re winning – shape the disruption through your own moves instead of falling victim to those of others. Waiting for the crises of customers often means an impossible recovery effort.

  6. Maximize employee engagement by fitting roles to strengths. Employee engagement starts with looking beyond experience, to talent, determination, results, and a fit to your company values and culture. On an ongoing basis, engagement requires a focus on motivation, match to strengths and interests, and active career planning.

  7. Take care of business, but always play the long game. For many companies, the long game is choosing the right strategic partners and acquisitions. For others, including Facebook, it is penetrating China despite political constraints, and India, where only thirty percent of the population is on the Internet. But never take your eye off today’s customer.

  8. Getting acquired or going public should be a result, not an intent. A focus on looking good as an acquisition or IPO candidate has undermined many startups. Zuckerberg had so much confidence and determination to stay independent that he turned down an early $1 billion offer from Yahoo. Now Facebook’s market cap is nearly 500 times that number.

Facebook may seem like an overnight success, but in reality it faced the same challenges as any new business, including existing well-known social media competitors like MySpace and Friendster. Facebook competed against the model of free customer use paid by advertisers of Google, and the sophisticated data delivery infrastructures of YouTube and Netflix.

I’m convinced that the lessons outlined here can help you become the next Facebook in your business domain. How many do you already practice today?

Marty Zwilling

*** First published on Huffington Post on 04/12/2017 ***

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