Have you been to a crowded restaurant and noticed the place next door completely empty? When I see this, I try to guess what is the difference between the two; why is one seemingly successful but not the other?
I have had my share of successful and not so successful ventures, and as a consultant, I have also consulted to both types. It seems like there is an empirical formula of some sort at play when it comes to which businesses make it and which ones do not. I call it the 1+2=Business Success formula. It goes like this:
There are three key elements to business success. “1” of the elements is not like the other 2 this is why it is called the “1+2” formula.
The element that is different and held separate is God’s guidance. Some call it God’s will. Just to make sure I am clear: Yes, I am calling on a mystical element in a world that insists on materialistic business science. I know this is so against everything we learn in business. But experience shows us that it is true. Look at all business majors out there. They are experts in their fields. With their prestigious MBA’s. You find as many of them as there are non experts on the successful side of business. Also, business experts are not immune to business failure either. So, the first element has to account for this uncertainty, and it has to be placed first and foremost.
If this is out of control then why talk about it? For two reasons: One it teaches us to stay humble; no matter how successful or knowledgeable we think we are, we have to submit to the fact that the first and foremost factor in our success might be out of our control. This is by no means a call for complacency, but more of a sobering reminder to stay humble and anticipating. After all it is more fun that way. The second reason this is a blessing: imagine if there were a couple of people who could not go wrong. Everybody else will have no chance, and everybody in the world will end up working for these business geniuses. I mean would you risk putting your money anywhere else in the stock market? When you can partner with the best? Even worse: imagine what would happen to their ego, and would they even want to partner with others? They will rule the world, indefinitely, and worse yet: no one else would have a chance. Some might say that this is already happening and they will mention a few entrepreneurs who seem to always be successful. However, history shows us these business geniuses are not perfect after all. All it takes is a change in market, politics, people attitudes, or even temperature, and failure can be imminent.
We covered element “1” so far. Let us move to the other “2” elements: “Perceived Value” and “Reach.”
Perceived value is key. Because it is what customers buy. Value from their perspective. You can have the best product in the world, but if they do not see its value to them then they are not interested. Perceived value is usually on the emotional side, not objective side. It has to touch a nerve. A pain area. The ego if you like. There is more that one can find on this subject of value. I really like the Six Sigma perspective on value and customer satisfaction. There is lots of literature on this subject and no place to go through it here.
The third element is “Reach,” which means you need to let your target audience know about your product. So you can have the best product in the world, but if they do not know about it, they cannot buy. I read about a real estate expert who gave his students this question: “ If I were to tell you that I have a buyer who is looking at a house very similar to the one you are selling, in the same neighborhood and budget, would you be interested in showing him or her your property?” any real estate agent in his right mind would say yes. To that he answers “ well, I can assure you that this buyer exists out there, now you need to go find him.”
The formula might seem simple but it is not. It is easy to say you need a product with a Perceived Value. But to design the product and show its Perceived Value is a very difficult matter. Same goes for the Reach element. To know how to Reach your audience is not necessarily straight forward.
the formula serves to remind us of these important elements. If at least to ask the right questions when designing new products, services, or start up companies. However, finding the right answers is up to you, after God’s blessings of course.