Setting the Course for Your Next Strategic Breakthrough

In tackling new strategic opportunities, two common business tactics are: “develop new products” designed to appeal to your market base or “develop new markets” for an existing product.  According to Harvard Business Review’s recent piece: “Locating Your Next Strategic Opportunity” and a new company, Quid; the shortest distance to your next opportunity may not follow a classic or clear-cut path.  

Having followed Quid co-founder Sean Gourley’s work – from YouNoodle [as their CTO], his popular TED talk, and several in-person conversations – it makes sense that a company he’s co-founded would stake their claim on just that premise.  A new way of analyzing and applying compelling business data – takes an obtuse notion and pinpoints an attainable strategic goal.

Here’s how it works:

Leveraging information about the thousands of privately held companies, Quid uses semantic clustering  to  accurately predict where what your company/product does today may offer possibilities to  address new and different business challenges.  A scatter plot shows where empty zones exist within industries – market opportunities with little competitive pressure and yet offer possible  rewards.

“Most companies cluster around established sectors, but a few will sit in the white spaces between the clusters and can represent the seeds of new technology sectors.” says Kurzweilai.net

Examples of where Quid has applied the technique include seemingly unconnected sectors such as biopharma and gaming, yet a smattering of companies exist to address opportunities in that market.

I found this HBR piece fascinating because private company data that Quid is privy to – both structured and unstructured – analyzed in new ways could lead to your company’s next niche thing!  Continuing with the innovation and strategic opportunity theme, be sure to catch innovation in action for customers, partners, and influencers from the SapphireNOW Conference, here on the virtual platform.

giffgaff – The UK Telco Gets SocialCRM Better than Most: Globetrotting SocialCRM

Globetrotting to Europe, now, where mobile phones became prolific far before they made it to the US – let’s look to the UK, the birthplace of SMS / texting!  With that level of innovation, it shouldn’t be such a surprise, then, that innovation drives the UK company: giffgaff.

giffgaff

“The quintessential SocialCRM story and poster child in Europe is giffgaff.com, a UK mobile service provider that keeps prices low by supplying only a SIM chip to its customers, and then crowdsourcing the support,” according to Mark Tamis, a SocialCRM guru based in Paris.

Giffgaff is an MVNO (mobile virtual network operator) operating across the O2 network. What that means, essentially, is that the operation of the mobile network is not a differentiator for the company, so they look to the customer experience playing a larger role in what makes their service and the brand: giffgaff and the tagline “The mobile network run by You.”

Further to Mark’s comments, he shared that giffgaff has won a 2010 B2C International Groundswell Award (awards in honor of Josh Bernoff and Charlene LI’s book on social growth “Groundswell”) for embracing the customer.

According to giffgaff founder Vincent Boon: “what really sets giffgaff apart is the fact that it really has no call center and all customer service (except for billing queries) is done by the online community. Active community members get rewarded for running parts of the business including answering questions in the community (majority within 5 minutes), attracting new members or helping to promote the company.”

Mr. Tamis also shared further innovative marketing by giffgaff: “They have social commerce by allowing customers to accumulate phone minutes and “goodies” when they onboard others from their social network.”  A novel concept, indeed! This proves that an innovation in SocialCRM may lie not only in the service one provides, but also in the way the community is rewarded for its participation.

Vincent Boon built an online forum to find out what people really wanted before he started giffgaff.  That input led directly to the creation of giffgaff, its community-led innovation, packages, offerings, pricing and more. It doesn’t get much more customer centric than that!

A Fast Growth Inc. 5000 company: Tea Collection Manufactures Style

Since earlier this year I’ve been blogging on women business leadership stories. The central character is either running, managing, operating, founding or evangelizing a business with a growth component. Typically there is a great takeaway, and to that end this post will be no different.

Elias plays in this printed shirt designed by Tea Collection

Recently, a friend, Bastien Beauchamp, founder of the BeesAwards, asked me if I’d seen or had heard of a good example of an email – social media campaign which struck me as truly outstanding. I told him about an offer I recently received from a company called Tea Collection: designers of globally-inspired clothing for kids and moms. The offer came to me in an email, though it also was offered directly through Facebook to the fans of Tea Collection.

Not only was the offer a terrific one (vote for your favorite item and we’ll offer the highest rated items in our catalog per category at 75% off list price for 1 day), but it worked incredibly well – according to Lauren Uppington, VP of Ecommerce and Stores for Tea Collection. Almost too well!

“We are in a constant learning process, you learn every day. This promotion provided some good learning.” And she went on to say that the promotion was far more successful than they had imagined. The force multiplier, from email to Facebook, took hold and Tea’s customers – who are mostly working moms and non-working moms – consumed the offer like kids snatching up warm chocolate chip cookies.

Tea Collection is a story of a gazelle – a high growth fast successful company – that has been recognized by Inc. Magazine three years and counting (this year’s Inc. rankings will be out in Inc.’s September, 2010 issue). And for all the right reasons, expect to see Tea Collection again this year, 2010, as a high achiever on the Inc. 5000 list. According to a recent Press Release:

Tea Collection ranks 1054 on the 2009 Inc. 5000 with three‐year sales growth of 293%. Tea
ranks #71 in the Top 100 Consumer Products & Services and #41 in the Top 100 Business in the
San Francisco Bay Area. This is the third year in the row Tea Collection has been honored by
Inc.

Further to the story, Tea Collection’s co-founders are two women: Emily Meyer and Leigh Rawdon, who are today the company’s Chief Creative Officer and CEO, respectively. Lauren Uppington (quoted above), and Laura Boes, VP of Design and Product Development comprise the all-women management cast at Tea Collection and each one has a terrific story about their journey to this next big thing, Tea.

In speaking with Lauren Uppington, it is clear that the company sees customer engagement through social media channels rapidly transforming their business trajectory and positioning the company for another renaissance and undoubtedly more fast growth. “Being authentic” is what the company holds steadfast in its social behavior and according to Uppington, “Every customer relations colleague who answers the phone has great brand moment and professional opportunity [to lead by example].”

And, for the rest of today, you can receive free shipping for any purchase you may make at teacollection.com!

Modwenna, Jim Estill, Stephen Pegge on: Hot Sectors Getting Funded, The End Game, Women Entrepreneurs, ‘Finding the Money for Growth’

There’s a substantial amount of life in some early stage funding markets:  ‘Modwenna’ (AngelNews) interviewed Jim Estill (Canrock Ventures) and Stephen Pegge (Lloyds’ and Chairman, Small Firms Advisory Panel at British Bankers’ Association) during a MyVenturepad webinar Thursday, July 8^th, 2010 providing a guide to the current financing market in the US and in Europe. 

Entrepreneurs have more challenges than just the "selling of an idea"

 

Both panelists, Stephen and Jim indicated that they are seeing things starting to turn around. Margins are a bit higher than they had been (due to higher risk) and there seems to be more pressure to get out and look for new business opportunities.  According to the recent NFIB survey, some small business managers are optimistic towards second half of 2010 in terms of revenues, but still a tinge of uncertainty in markets is holding back the aggregate.

Who’s going looking to lend and for what?

“With interest rates where they are, Angels are coming out of the woodwork”, according to Jim Estill.  Few investors want to continue to get 2% return from a CD, so they are looking at trying some new things out, and for entrepreneurs that means there is a greater amount of less expensive money out there.

“Investors are looking for real profits and real companies.” says Stephen Pegge. 

Alternative financing approaches / tactics

“Businesses today are being funded on discounted cash flows, not on valuations”, according to moderator Modwenna Rees-Mogg. 

Looking back to two years ago, the perception had been that valuations had gotten so high business angels couldn’t invest.  Now things are more reasonable.  What that means from a business perspective is that you, as a growth company principal, are held accountable; you want to deliver what you say you’re going to deliver back to your investors.

The demand side impact is that established businesses with good business models who never thought about sharing their equity – have begun considering doing so – whereas in the past they had been cautious about overleveraging.

Drop inventory, increase payables, drop receivables to improve your cash conversion ratio.  Under a  certain amount take on credit card. 

Is there Leverage in smaller company deals?

The panelists believe that there is room for debt as well as equity in financing growth.   The multiples which had been possible are not likely – at least not to the same degree – as in the past.   Financial engineering is not as fashionable; there aren’t as many management buy-outs in the market.  So the consensus is that debt has its place as does a bit of traditional bank lending, supplier finance, equity.

On Women Entrepreneurs

The speakers advise women entrepreneurs looking for capital to “ask for what you need!” Men typically ask investors for double what women do – Jim Estill mentioned working with “Golden Seeds” angel investors in New York and finds that woman are more open to coaching, more transparent, have numerous  advantages, but also harbor disadvantages: such as not having the rolodex some other entrepreneurs may have.

Stephen added that he sees more structured plans, more caution in women, at least as a general perception. Both Stephen and Jim believe that as they begin to see women role models join angel and VC networks, rolodexes will grow and women will be able to demonstrate business plans with ‘BIG Thinking’.

What’s Hot?

Jim sees the technology sector is “always hot”, and to that also “always changing”.   He referred to companies / products we’d not heard of 10 years ago: Twitter facebook iPHONE.  Anytime there is a change, there is an opportunity – if you’re an optimist. Jim took brands that you’ve never heard of to market – as he grew, he took bigger and bigger lines on and so on and so on, and much of that was being the right-sized company at the right time. 

Stephen indicated that research shows growth business sectors always depend on the business cycle:  “If you are a long term investor or with a bank, you need to work through that cycle.  At present, good old-fashioned manufacturing is hot: sterling’s competitive, Asia and Africa have multiple growth opportunities.  Companies supplying the public sector will find it start to get difficult as fiscal policy comes in to play.

Jim added “I hope manufacturing Improvement isn’t just for eastern countries.  Innovation, design, especially in manufacturing is unprecedented in US and Europe.”

What’s the end game?

• Start to build relationships with VCs and boutique-lenders. This will start to be useful for both startup and follow-on financing, too.
• The speakers are proponents of debt and ‘vendor financing’… you can fund a business if you do it well.  If you have a proof of concept – and can demonstrate a scalable model to drive 50 MIO in sales, funding will allow you to hire a sales person, hone your quality control, and follow your  proven process. 
• If you get away without taking cash, don’t take cash, grow with profitability.
• Growing slow often leads to a better company, provided no one is riding you closely enough to take over your market.
• Franchising shows good numbers. This provides the advantage that someone else may finance your growth.
• The best stage for an Angel to invest in is the idea phase due to the best returns
• IPOs are coming back on Nasdaq in a viable way.  If you have a good viable company and need cash – you can grow a $50 -100 million company to several hundred million
• Being a socially responsible company can be the end game –

In conclusion, the panelists agree that there is a tighter overall market for capital – but discipline will make stronger companies.  Investors will ask entrepreneurs:  Can they do it with less? 

If you’ve got a strong, good, quality, business, it’s a good model no matter what the business cycle.  The market will come back, markets do come full circle and funding liquidity wisely will get you to where you want to be faster and smarter.  Thanks to Jim, Stephen and Modwenna: it’s great advice for the days and markets ahead.