Jeff Standridge:
Hey guys, welcome to another episode of the Innovation Junkies Podcast. I’m Jeff Standridge.
Jeff Amerine:
Jeff Amerine here. It’s good to be back.
Jeff Standridge:
Yes, sir. Good stuff. Good stuff. How’s everything?
Jeff Amerine:
You know, it’s Friday, I think we got some Arkansas baseball, it’s all good.
Jeff Standridge:
Awesome, awesome. Well, we’re going to take another opportunity today, which we do on occasion to answer some listener, viewer, and client questions. In the past, we’ve done it on the topics of leadership and teamwork. We’ve done it on the topics of organizational change and innovation. Today, we’re going to focus on strategy and business growth. So questions that we get around strategy and business growth. And before we do that, I think it’s important to talk about what strategy is. And so how would you define strategy?
Jeff Amerine:
Yeah, I mean, it’s a good question. I think strategy provides a definition of those important things that you’re going to undertake. It’s going to define why you’re going to undertake them. And I think it’s also going to identify things like what kind of competitive advantage those things are going to afford and who’s actually going to be involved in implementing those activities that you take. And I think it’s also intertwined with those sort of cultural North star items like vision and mission and core values. I think those things are integral to how we think about strategy.
Jeff Standridge:
Yeah, I agree with you. And I like to think about strategy in answering a few questions like, what fields are we going to play on and what games are we going to play on those fields? In other words, strategy says, these are the fields that we are choosing to play on. And those fields can be markets. They can be geographies. They can be, segments of, of industry. But these are the fields that we’re going to play on because we know that we can win on those fields. And these are the games that we’re choosing to play on those fields because we know we can win at those. And the games can be our products, our services, our offerings, and what have you. And so what fields are we going to play on? What games are we going to play on those fields? And as you said, what capabilities do we need to have in-house on our team within our domain in order to dominate those games on those fields. And it’s driven by mission and vision, certainly, but so many organizations stop after mission and vision and don’t really do a good job of articulating strategy. And as a result, they maybe don’t achieve the degree that they would like going forward.
Jeff Amerine:
Right. No, it’s very true. And strategy can be manifest in a lot of, just as you said, in a lot of different ways that are important to understand positioning and the gaps in the marketplace. And I think you have to do a fair amount of reflection on what are the assets we have, what are our aspirations and what are our constraints. And what do we do with that? How do we move those sorts of things forward in a way that is going to be effective in implementing the strategy?
Jeff Standridge:
And by design, strategy actually articulates things we’re not going to do. Even if we don’t say them overtly, we might say them overtly. We’re going to stop doing business in these ways. or we’re going to maintain what we’ve got here, but we’re not going to put investment behind going and getting more. or, or we’re just going to stop cold turkey. You know, we’re going to.
Jeff Amerine:
Right.
Jeff Standridge:
I’ve seen organizations adapt or adopt rather an adaptation to their strategy that actually resulted in them spinning off some segments of business and some clients, firing some clients, so to speak.
Jeff Amerine:
stuff you decide to get out of because you don’t have, you can’t either create or maintain a competitive advantage.
Jeff Standridge:
There’s this counterintuitive situation going on for lack of a better description where, when we focus and when we understand the playing fields or the niches where we can actually perform at our best and highest, there’s significantly greater value that comes back to us. And it’s fearful many times for a lot of leaders, to think about that because saying no to some business is scary. And so there’s this counterintuitive conundrum sometimes that calls leaders to go after all aspects of business, not realizing that in doing so, they’re robbing themselves of really, really great strategic opportunities.
Jeff Amerine:
It leads to dilution of effort around things that could be better and more important and more impactful. That’s for sure.
Jeff Standridge:
How should companies adapt their strategies in response to rapid technological advancements?
Jeff Amerine:
Yeah, good question. Let’s take a very specific case, the rise of AI and machine learning, the democratization within the last year and a half or two of the accessibility of ChatGPT and Jasper and Gemini and all these other tools. And on the one hand, you could say, it’s scary. We don’t know what to do with it. We’re not sure how we’re going to incorporate it. On the other hand, part of your strategy could be to figure out…How can every aspect of the business implement AI tools in some creative way to affect greater efficiency, greater customer impact, et cetera. So a process of experimentation in the early days of formulating a strategy to get some ideas about what might or might not work, where key advantages can be made and not. I think that’s a good way to start. And particularly now with things accelerating, organizations that figure out how to use, whether they’re strategic or tactical tools around artificial intelligence to increase productivity are going to have an advantage. And it’s fundamentally because population growth is such that even in a relatively stagnant economy, we still have very low unemployment because the participation rate is low and we can’t get all the talent that we need. So this is when things like AI can be a strategic force multiplier if you figure out how to incorporate that into what you’re doing. That’s a very specific example, but that’d be one case.
Jeff Standridge:
No, I think you’re right. And so all of those things having to do with generative AI, a few weeks ago, we were speaking with author Ash Maurya, author of Running Lean and Scaling Lean. And he talked about the transformative nature of predictive AI and how organizations, you know, who figure out how to also certainly use generative AI, but also use predictive AI to transform their business results will be ahead of the pack as well.
Jeff Amerine:
Yeah, I couldn’t agree more. I think, I think that’s a, and there’ll be other things like this, but this feels like one of those transformative capabilities that is going to provide institutional displacement for companies that aren’t quick to figure out the best way to bring it into their strategic thinking and their plans.
Jeff Standridge:
Sure, for sure. So spanning, transitioning rather from strategy to business growth, what are some effective strategies for sustainable business growth in competitive industries?
Jeff Amerine:
Yeah. You know, the one thing I would rule out generally speaking is a race to the bottom around pricing. That tends to be a way to go out of business the quickest. And so to avoid that, I think part of it is constant differentiation. How can you win on other planes other than price? This is particularly true for small and emerging businesses that don’t have the scale to compete on a basis of price. And so business growth, I think, can be driven around much better sales processes better customer journey and customer experience, providing the sort of level of service that is going to differentiate between other competition, constantly looking for ways of inserting technology to improve efficiencies and improve margins. I think all of those things are critically important. And it’s never a bad idea to assess how you’re doing sales and delivery and what can be done better to improve your customer acquisition capabilities and costs and your client retention lifetime value.
Jeff Standridge:
Yeah. You know, one of the businesses that I’m involved in, we made a specific decision about two years ago to become an employer of choice for particular professionals in that industry, because that industry has a very, very wide gap in the level of professionalism to, you know, highly professional persons in the industry to folks who just really aren’t very professional at all yet are in the same industry and have the same credentials and what have you. And so we said, we wanted to be the employer of choice where professionals in this industry could come to thrive. And it was a, it was a market decision we made two or three years ago. We built a brand new building. We created a very nice class of office space. We adopted some pretty interesting company benefits and just two weeks ago, we posted a position for a new hire in that regard. And we vetted through over 40 applicants and narrowed it down to probably half a dozen, all of whom would be acceptable, and to two people that we couldn’t just decide on. And so we hired them both. And that I think was an example of us making a strategic decision to differentiate ourselves in the environment that we create and becoming an employer of choice for professionals in that industry to come and thrive. And the word’s starting to get out and it is a market differentiation from the way it was five years ago in trying to hire people.
Jeff Amerine:
You know, we add complications sometimes in the way we talk and think about a lot of things, but most businesses are talent-driven. You find the best people, you empower them, you build a winning culture, you reward them for their efforts. That is the most fundamental thing you can do to drive growth. The best people on the best teams with the best cultures end up being market leaders. Apptegy, whose company we know well dominated the EdTech, MaraCom space with a platform that was pretty good, but the team was outstanding. It had a great culture and they hired the best people and became an employer of choice within that space.
Jeff Standridge:
What are the essential elements of a business plan that attracts investors?
Jeff Amerine:
you know, I would say not much in a business plan really attracts investors, right? It’s, it’s a management team that provides confidence that they’re going to execute well. And so I think part of it is you look for an encyclopedic understanding of a business segment of a problem that they’re solving. You look for grit and tenacity associated with how they’re executing, and you look for a market that’s large enough that a sizable business can be built so that if you’re investing in that particular team and that plan and that vision, you know that they can build a business big enough that when an exit comes through a larger player’s acquisition or recapitalization, there’s a chance to make a sizable return. Having some kind of competitive moat or special sauce that can be created around it so that you’re not competing just on the basis of price is also pretty critical.
Jeff Standridge:
Yeah. Just the overall concept of credibility is, is a big factor. And, and, you know, I always tell founders, that every interaction you have with a potential investor or potential client for that matter is an opportunity to either build or erode credibility because you don’t walk away with your credibility being status quo after any interaction. You either, you either add it a little bit to the credibility or you erode it a little bit to it. And you may not be able to recognize the degree to which you’ve added or eroded, but something in that conversation did. And so, you know, when I think about many of the pitches that we see or the investor decks that we see or the executive summaries that we see, you know, we don’t make any investment decisions on a 30-page business plan, never have and don’t know that we ever will. But their command of the market, their command of their product and solution and the fit of that, have they done the homework to suggest that command or to validate that command, are the assumptions underlying their proforma credible, reasonable? But then even after the pitch is done and we’ve said, yeah, we’re ready to go to due diligence, the credibility growing or the credibility eroding process doesn’t stop, it continues on. And so, you know, when we say, yeah, we’re ready to go to due diligence, can you send us your data room? And four weeks later we get a link to their data room or 24 hours later we get a link to the data room and there’s nothing in it and four weeks later we’re still asking for documents. You know those things are all part and parcel to us making decisions about credibility.
Jeff Amerine:
Right. Yeah, I couldn’t agree more. And it’s an old adage. Someone told me about 30 years ago, this particular mentor said, if you can’t get the small things right, why should I believe you’re going to get the big things right? And so that sort of commitment to attention to detail, being prompt, being coachable, being receptive to input, communicating well, all those things. And again, it gets back to the great teams, high integrity, no progressive disclosure. Whoever said so many years ago, you gotta fake it till you make it, nothing could be further from the truth. It’s not true at all.
Jeff Standridge:
Yeah. And, and, you know, realistic valuations, you know, but, you know, that, my, my dad’s variation of that, of that adage that you just shared was that if, if, if you don’t have right, if you don’t have time to do it right, when do you think you’re going to have time to do it over?
Jeff Amerine:
Yeah, exactly. Exactly. Very true.
Jeff Standridge:
Good. Anything else on business growth and business planning or strategy?
Jeff Amerine:
And the one thing I would say about that is that that world of business planning has changed. There’s not a high premium on a 50-page business plan that no one wants to read. There is a high premium on having a well-vetted business model with empirical evidence to back up your assertions and your assumptions. And I think, I mean, this is one of the things that we provide to our clients and understanding of how to do that well.
Jeff Standridge:
Yeah. Yeah. I, you know, we talk about, having a systematic approach to executing a plan, you know, and, and strategic planning is done so badly in so many organizations, business planning is done so badly in so many organizations. I don’t even like to associate myself with, as someone who helps people build strategic plans for that reason. And so we like to talk in terms of a strategic growth system that not only has all of the elements of what one needs to do in order to make the achievements that they’ve set out to make, but also has a cadence of accountability wrapped around it as well. And that’s a critical aspect of what we’re focused on trying to help our clients create.
Jeff Amerine:
And it makes a big difference.
Jeff Standridge:
It really does. All right, very good. So we’ve done now three episodes over the course of the last few weeks on answering questions from our viewers, our listeners, our clients. If you have questions that you would like for Jeff and me to address, reach out to us via the Innovation Junkies Podcast. This has been another episode. Great talking with you and we’ll look forward to seeing you soon.
Jeff Amerine:
That sounds great. See you next time.