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Strength or Weakness?

By Dr. Burt Smith August 23rd, 2009

cable.jpgGuy Kawasaki told an enlightening story about the old Woolworth’s Department Stores in How to Drive Your Competition Crazy: Creating Disruption for Fun and Profit.

When Woolworth’s moved into a market, the entrenched department store across the street launched a campaign to remind the market that they were there first, that the customers should entrust only an established retailer, and implied that Woolworth’s was an unproven start-up not worth gambling on. The older, established store put up a sign in their window that simply read, DOING BUSINESS IN THIS SAME SPOT FOR OVER 50 YEARS.

Woolworth’s countered with a sign of its own. It read, ESTABLISHED A WEEK AGO. NO OLD STOCK.

In The Art of War, Sun Tzu said, “In weakness, find strength, and in strength find weakness.” What may, at first, look like a serious strength of a competitor may actually be the exact thing we can exploit to our advantage. The thing THEY think is a weakness may be EXACTLY why we’re the better choice for the customer.

dice.jpgHow can you eliminate risk altogether? Here’s a better question: Why even try?

In an article in Stocks, Futures, and Options Magazine, author Michael Covel recalled a quote he’d found beneficial since first hearing it at the 1989 University of Georgia’s commencement address. The speaker, Charles S. Sanford, Jr., said,

“In the conventional wisdom, risk is asymmetrical: It has only one side, the bad side. This conventional view of risk is shortsighted and often simply mistaken. Successful people understand that risk, properly conceived, is often highly productive rather than something to avoid. They appreciate that risk is an advantage to be used rather than a pitfall to be skirted. Such people understand that taking calculated risks is quite different from being rash. This view of risk is not only paradoxical – the first of several paradoxes I’m going to present to you today. This one might be encapsulated as follows: Playing it safe is dangerous. Far more often than you would realize. the real risk in life turns out to be the refusal to take a risk.”

 

Consider what happens when the economy slows. Everyone quits spending in a downturn because of the enhanced “risk” that accompanies challenging economic times. “Now is no time to be spending…” and “We sure don’t want to gamble in this environment…” seem to be the widespread reactions. In fact, this may be the exact time to spend.

It’s simple supply and demand. When the market pulls back, supply builds up. With more supply than demand, a buyer’s market develops. As the buyer, you should at least be able to pick up some bargains and, at best, you may be able to name your own terms! It’s almost like the marketplace is helping finance your future growth.

Not starting a business, not expanding a business, not making a sales call, not changing jobs, not getting additional education, not starting a new career, not trying a new hobby, or not asking that person you’re interested in for a date may indeed help you avoid “risk,” but it also guarantees that you won’t get to experience an exciting new set of circumstances. Is that really the “guarantee” you’re looking for?

Take a look at what “risks” you’ve been avoiding, then take another look at the potential payoffs. You may find that what you stand to gain from a calculated risk or two will be well worth it!

“Buying good companies on sale isn’t risky” – Warren Buffett

Win-Win…Win?

By Dr. Burt Smith August 10th, 2009

hands_clasped.jpgI ran across a good book about Drucker a while back and ended up ordering it through the good folks at Books Beyond Borders. I got it at a steal of a price (including shipping it was about 1/4 the cost of a new book, and far less than I usually pay in library fines!), which made me happy. Getting this e-mail from them made me even happier:  

>     Thank you for placing an order with Books Beyond Borders. You have

>     helped us to further our mission of turning old books into new

>     schools.  We donate all net proceeds to Project Schoolhouse and

>     its school building projects.  More info is available at

>     
www.projectschoolhouse.org.  Please let us know if you’d like to

>     be included in our mailing list.

I was even happier with my purchase after learning I hadn’t just purchased  a book, I’ve helped a cause! I’m helping make sure some young person gets the resources he or she needs to obtain an education. That’s a triple win! The transaction between me and Books Beyond Borders is win-win, and the cause we are BOTH helping to support wins, too! Win-Win-Win! That’s cause marketing and the free market at its best!

When the customer can get value for themselves and do some good for a cause they believe in, all the better. So much better, in fact, that it could be something that helps you differentiate your brand from your competition. Consider what cause(s) you could support or are already supporting and let the world know about it! Your bottom line won’t be the only beneficiary!

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Silver_Medal.jpgTypically it’s better to be first into the market because the organization or product who is first in the market winds up being first in the mind when consumers are making their purchase decisions. A degree of ownership accompanies being “first” into the market because the opportunity to obtain ownership of the whole category or “high ground” is possible. But is being first absolutely essential to success?

Actually, there may be some genuine advantages to being deliberate rather than first. One is that by letting somebody else be first, they have to shoulder all the R&D expense. They have to work all the bugs out of the system, educate the marketplace, and earn the trust of the customers. And that takes a ton of money and a whole bunch of trial and error.

Consider what happened in the Internet service provider category, and how few of the “first movers” are even around any more. Originally companies like Prodigy and Flashnet were the service providers who made the miraculous Internet available to the masses. They took a considerable amount of share of mind and market share, and should have been able to keep the high ground. What ended up happening, though, was that companies like AT&T watched to see if this “Internet thing” was really going to take off or not, then they said, “Hey, all you need is a bunch of phone lines and a big server to get into this business, and we’ve already got that” so they jumped in and an all out war was on, but AT&T and its peers had a slight advantage because they could forgo many of the “start-up costs” and allocate that savings right to their bottom lines.

Perhaps Larry The Cable Guy said it best: “The early bird may get the worm, but the second mouse gets the cheese in the trap!”

The answer is less about who’s “first” than it is about who better serves the customer. So remember that the customer IS the answer and whether you show up first or second or fifth to the game, you know there will be someone in the stands cheering for you as long as you’re giving them something of value. Simply watch for opportunities to be better, then build a relationship with your customers based on that.

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