{"id":1274,"date":"2015-02-02T16:35:48","date_gmt":"2015-02-02T21:35:48","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=1274"},"modified":"2015-02-03T13:08:11","modified_gmt":"2015-02-03T18:08:11","slug":"business-is-a-contact-sport","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/business-is-a-contact-sport\/","title":{"rendered":"Business Is a Contact Sport"},"content":{"rendered":"<p><img decoding=\"async\" class=\"alignright size-medium wp-image-1275\" src=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2015\/02\/business_boxing-300x222.jpg\" alt=\"business_boxing\" width=\"300\" height=\"222\" srcset=\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2015\/02\/business_boxing-300x222.jpg 300w, https:\/\/flevy.com\/blog\/wp-content\/uploads\/2015\/02\/business_boxing.jpg 800w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>Too many businesses, young or old, struggle or fail because they never understand that you have to practice, practice, practice, then get in the ring and fight as if your life depended on it!<\/p>\n<p>Business is a brutal contact sport for five main reasons, and it\u2019s getting worse.\u00a0 You will not survive, grow and prosper:<\/p>\n<ol>\n<li>if you don\u2019t listen to and learn from your customers and others who know more about them than you do<\/li>\n<li>if you can\u2019t sell to customers empathically and build their sustained trust and loyalty<\/li>\n<li>if you don\u2019t understand and outmanoeuvre the competition in whatever form it comes<\/li>\n<li>if you don\u2019t learn fast and adapt by experimenting, finding out what works, and perhaps even more importantly, drop like a stone your cherished preconceptions, prejudices and sacred cows that don\u2019t or won\u2019t work<\/li>\n<li>if you can\u2019t retain, motivate and enthuse great staff.<\/li>\n<\/ol>\n<p>If you want to win, and go on winning, be prepared.\u00a0 It will bruise you like going 15 rounds with Muhammad Ali!<\/p>\n<p>The bewildering choice available to customers and their ability to gather and test information rapidly via the Internet are ruthlessly exposing weak business models, knowledge, thinking, attitudes, character, messages and behaviour like never before.<\/p>\n<p>On 1<sup>st<\/sup> January, my 4 business partners and I officially re-launched my company <a href=\"http:\/\/www.resolvegetsresults.com\">Resolve Gets Results<\/a>\u00a0to address the same three problems we constantly encounter in businesses we work with, which drive us crazy!<\/p>\n<ul>\n<li><strong><em>They are obsessed with their product or service, which they assume everyone will love like they do, not with customers.<\/em><\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong><em>They are dangerously preoccupied and distracted by internal perspectives (what I call \u2018inside-out thinking\u2019), including unrealistic financial objectives, restructuring, unsubstantiated opinions, personalities, personal crusades\/ego trips, power struggles and politics.<\/em><\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong><em>Under no circumstances do they want to know what their customers really think \u2013 it\u2019s too inconvenient or threatening!<\/em><\/strong><strong><em> \u00a0So they guess what customers are thinking and then convince themselves that it\u2019s reality!<\/em><\/strong><\/li>\n<\/ul>\n<p>The vast majority of us are guilty of at least one of these mortal sins some or much of the time.<\/p>\n<p>If you don\u2019t believe me stop and think for a moment.\u00a0 Ask yourself the following questions and be brutally honest:<\/p>\n<ol>\n<li>Who runs your organisation and influences or dictates its culture, attitudes and behaviours?\u00a0 To what extent do they seek, understand or accept customer perspectives on your business and your marketplace, especially if these contradict their own prejudices and personal objectives?<\/li>\n<li>Is your organisation focused on minimising cost and maximising profit, irrespective of its effect on customers?\u00a0 Does it believe it can tell customers what to think and how to behave?<\/li>\n<li>How often do you commission meaningful, emotionally intelligent, independent research to understand what your customers (and others in your marketplace) really think of you, your business, and your products and services &#8211; warts and all?!\u00a0 And if you\u2019re scared to know, like most business leaders, or it doesn\u2019t even occur to you that it might be important, ask yourself how you would feel if you survived a car crash in which someone you love dearly was killed because you were driving recklessly, without due care and attention.\u00a0 Then imagine that all of the people who work with and for you were killed in a crash caused by you, and think of the impact on their loved ones.\u00a0 This may sound extreme, but I once worked for a 400 employee company which failed due to reckless leadership and I have observed similar situations repeatedly for 18 years since then as a consultant, turnaround specialist and interim manager.<\/li>\n<li>Is the basic stance of your organisation that it knows most, if not all, of the key information it needs to succeed, or is it engaged in a never-ending quest to learn and adapt better to the marketplace?<\/li>\n<li>Does your organisation have a clear and compelling purpose beyond profit, and does it treat cash and profit as blood and oxygen \u2013 essential for healthy life, but <strong><em>not<\/em><\/strong> its core purpose?<\/li>\n<li>Do the majority of your staff believe in your organisation and feel they truly <strong><em>own<\/em><\/strong> its core purpose?\u00a0 Does it excite them?\u00a0 If not, why not?<\/li>\n<li>Hand on heart, are most of your business decisions made intuitively, using gut feel, often impatiently due to the pressure of expectations or the need for quick results, instead of by gathering objective data, analysing it carefully, and refusing to be stampeded without good reason?<\/li>\n<li>Do you post-rationalise your mistakes, secretly dispose of the bodies, pretend you knew what you were doing and it wasn\u2019t your fault, blame others and forces beyond your control, fail to learn any lessons and\/or find yourself repeating the same, or similar, mistakes?\u00a0 <strong><em>Top Tip &#8211; accepting your mistakes and apologising for them is one of the most cathartic, liberating and enabling steps any leader can take \u2013 welcome to humanity<\/em><\/strong>. It <strong>WILL<\/strong> make you a stronger, better and more respected leader \u2013 <strong><em>guaranteed<\/em><\/strong>.\u00a0 In the eyes of the majority who matter most it will <strong>NOT<\/strong> be seen as weakness.<\/li>\n<\/ol>\n<p>Here are some situations I\u2019ve dealt with personally:<\/p>\n<ul>\n<li>Last year I spent time helping a recent start-up company.\u00a0 It uses a pure online business model to market and sell decorative products to consumers and businesses.\u00a0 Its investors wanted faster sales growth and requested that it build a business-to-business (B2B) sales pipeline by contacting prospective business customers and actively selling to them.<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\">Unfortunately the company found it difficult to think outside the collective experience of its founders, <strong><em>beyond<\/em><\/strong> the online sales model.\u00a0 It did not understand B2B selling and was unwilling to listen to professional sales advice and expertise.\u00a0 It tried to impose its own opinions of how to sell to B2B customers.\u00a0 It could not understand why it was important to actively manage existing major corporate accounts with whom it had negotiated <strong><em>potentially<\/em><\/strong> lucrative, exclusive content licences on 2 year contracts, or why it was important to tackle large target customers who could place regular repeat and\/or large orders.\u00a0 The company made untested assumptions that these large prospects would demand minimum annual sales guarantees and\/or upfront royalty payments, so it refused to take them seriously.\u00a0 In one case it ignored a huge potential business opportunity with a major global music rights company who loved the product but wanted a high volume retail, not online, sales strategy, and was prepared in principle to consider <strong><em>waiving<\/em><\/strong> minimum annual sales guarantees and upfront royalty payments.\u00a0 Similar opportunities existed with numerous globally recognised sporting brands and there was a limited window of opportunity (say 2-3 years) to harvest these opportunities, which required rapid action and dedicated effort.<\/p>\n<ul>\n<li>A home furnishings company employing 450 staff persuaded a large venture capital firm to back a management buy-out (MBO) based on a business plan that predicted dramatic sales growth.\u00a0 18 months later the company was in turmoil and in danger of going under.<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\">Careful investigation quickly exposed fatal flaws in the MBO strategy.\u00a0 The company had switched focus away from its traditional, high end, highly profitable customer base and begun chasing high volume, lower margin sales with out-of-town, warehouse-type home furnishing and accessories stores.\u00a0 To meet their aggressive price points the company had outsourced <strong><em>all<\/em><\/strong> production from the UK to Pakistan \u2013 as a result lead times on orders were now <strong><em>3 months<\/em><\/strong> whereas previously they had been <strong><em>1 week<\/em><\/strong> or in some cases less!<\/p>\n<p style=\"padding-left: 30px;\">This strategy proved catastrophic.\u00a0 Established, loyal customers who paid healthy margins and <strong><em>were willing to pay even higher prices<\/em><\/strong> received terrible service and began to move elsewhere.\u00a0 Meantime the large warehouse-type retail chains kept cancelling or changing orders, leaving the company with a growing mountain of unsold stock.\u00a0 The company had built its very own <strong><em>perfect storm<\/em><\/strong> out of nothing, due to <strong><em>reckless greed and arrogance<\/em><\/strong>!<\/p>\n<p style=\"padding-left: 30px;\">Sadly, the results were inevitable.\u00a0 The company refused to accept the brutal realities (though it was almost certainly already too late) and the venture capital firm was powerless to do anything as it had only 49% of the shareholding.\u00a0 8 weeks after I presented my findings the company went into administration.<\/p>\n<ul>\n<li>I\u2019ve recently been working for the UK marketing and distribution arm of a large, traditional American corporation which has acquired multiple manufacturing businesses around the world over many years.\u00a0 Like many large organisations it is struggling to respond to rapid changes in technology, systems, management thinking, customer needs and competitive pressures.\u00a0 Its current business processes are truly labyrinthine and require drastic simplification and modernisation.<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\">The visionary, inspirational UK Managing Director has been in post 16 months and is determined to \u2018turn the oil tanker round\u2019 as he has done previously in several other, unrelated businesses.\u00a0 This will require several key initiatives including a radical new commercial strategy, the development of a continuous improvement culture, more responsive and user-friendly IT systems, redesigned business processes, and <strong><em>above all<\/em><\/strong> far greater commercial agility reacting to accurate customer and market intelligence.\u00a0 All of this will depend on a realisation and commitment from the company\u2019s European and US corporate bureaucracies of the need to adapt to brutal market realities and throw out its many sacred cows to avoid long-term extinction.<\/p>\n<p style=\"padding-left: 30px;\">The ability to face up to painful decisions about what is actually core and what often <strong><em>appears<\/em><\/strong> core but in truth is no more than a <strong><em>self-deluding comfort blanket<\/em><\/strong> is arguably the single most important determinant of a business\u2019s survival and long-term prosperity.\u00a0 It is one of the crucial differences between Top 1% performers and everyone else.\u00a0 Top 1% companies ground their decisions in <strong><em>customer and market facts and data<\/em><\/strong>; everyone else is far too prone to opinion, hearsay and wishful thinking, and too often will accept false premises simply because they are driven by strong personalities or seemingly unstoppable juggernaut bureaucracies \u2013 \u201c<strong><em>we do it this way because we\u2019ve always done it this way\u201d<\/em><\/strong>, or \u201c<strong><em>because we\u2019re ABC Corporation\u201d, <\/em><\/strong>so by implication we know better and have a right to tell customers what they can and cannot have!\u00a0 This is folly \u2013 pride <strong><em>always<\/em><\/strong> comes before a fall and companies <strong><em>never<\/em><\/strong> know more or better than the market.<\/p>\n<p>Do you recognise any aspects of your own company\u2019s behaviour in any of these stories?<\/p>\n<p>Fortunately I\u2019m also dealing with entrepreneurs and businesses who are alert to the dangers, willing to listen, experiment, learn, and be guided.<\/p>\n<p>No matter how strong you believe your business model, products and services are never be afraid to subject them to the rigours of constant \u2018sparring practice\u2019 in the gymnasium before each \u2018big fight\u2019.\u00a0 Otherwise you may end up losing on points or even getting knocked out.\u00a0 Always remember that business is a contact sport and the more contact you get the more resilient you will be when someone or something throws you a vicious right hook. \u00a0\u00a0Complacency is a killer!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Too many businesses, young or old, struggle or fail because they never understand that you have to practice, practice, practice, then get in the ring and fight as if your life depended on it! Business is a brutal contact sport for five main reasons, and it\u2019s getting worse.\u00a0 You will not survive, grow and prosper:&hellip;&nbsp;<a href=\"https:\/\/flevy.com\/blog\/business-is-a-contact-sport\/\" rel=\"bookmark\"><span class=\"screen-reader-text\">Business Is a Contact Sport<\/span><\/a><\/p>\n","protected":false},"author":27,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[408],"tags":[],"class_list":["post-1274","post","type-post","status-publish","format-standard","hentry","category-management-leadership"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1274","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=1274"}],"version-history":[{"count":3,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1274\/revisions"}],"predecessor-version":[{"id":1278,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/1274\/revisions\/1278"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=1274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=1274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=1274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}