Strategy Ideas #1

Strategy

Tuck Business School is usually ranked in the top 5 in the country. Its professors are well known in the area of business strategy and have come up with some important ideas and concepts.

Vijay

One of them is Vijay Govindarajan. He grew up in India in a lower middle class neighborhood in a one bedroom house with his parents and five brothers and sisters. Electricity couldn’t be counted on. He figured that India had few resources and lots of problems. If he wanted to get ahead he was going to have to be innovative. He feels that the only way to move up, either as a person or a corporation is to be creative and innovate.

Vijay went to Harvard Business School on a Ford Foundation scholarship. The scholarship required that he spend two full years in India after graduation. But then he got a job offer from Harvard Business School and they required him to start work one week before the full two years were up. Neither Harvard or the Ford Foundation would budge and Vijay had to pay the Ford Foundation back for his business school education.

He was struggling to get by when a more senior professor suggested that he try doing some consulting on the side. He did and loved it and found that it provided a great synergy to his teaching and research. He was able to get in and see what companies were doing and not just do things from an ivory tower more theoretical approach.

Reverse Innovation

One key idea this has led to is Reverse Innovation. Reverse innovation is the process of inventing or designing products for use in underdeveloped or emerging markets. Then you bring those products back to the wealthier countries.

Example / Inspiration

He came up with this idea of course while consulting. In this case, he was consulting with GE. He saw that they had developed an ultrasound for the Chinese market that only cost $5,000 and was portable. In the US an ultrasound machine with similar function costs $300,000. GE brought this machine to the wealthier countries and sold a ton of them. But they didn’t understand what they had done because it was such a small event in such a large company.  Vijay picked up on this and used it as a focus for his research. He also told GE’s CEO Jeffrey Imelt about his discovery and Imelt jumped on the idea. He made it a major focus for the following year.

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Sales & Leads

Marketing

My mentors, Dan & Brad spoke last night and stressed that the key to a successful business is leads and sales. You might add a third, which is conversion. Just because you have a lead doesn’t guarantee a sale, so conversion is important as well. Although if you have enough leads you can overcome poor conversion.

Play to Your Strengths

They pointed out that some people are able to excel at both, but many people have a knack for one or the other. So team up and let each person do what they are strongest at. One generating leads and the other closing business. Sometimes the whole is more than the sum of the parts. Each of you should make more money teaming up.

We were also reminded that business owners don’t care how many ads you run, whether they are in position 1 on a Google search or anything else like that. They care that they are getting leads, making sales and growing their business. If you can deliver leads, they aren’t going to care what position they are in.

Listen and Question vs. Pitch

Find out from them how many leads they are getting currently. How much is an average sale and what is the average margin or profit per sale. Then you can figure out where they are now. Then ask given their current resources, how much extra capacity do they have to do more work. If they are maxed out, that is a different discussion.

Most companies have more capacity to do work that they an utilize. Then take that number and multiply out and figure out if they could get the leads and the sales, how much extra in sales and profit that would be. Then ask them what they are doing to get there. If they are just going to do more of the same, they might not make it to that goal.  They need a new channel and strategy to bring in more sales. That would be you!

Listen, Diagnose, Prescribe

By finding where there pain is and where their dreams and vision are you are gaining information and leverage so you can better sell them but more importantly so you can better help them. If it doesn’t work for both parties you probably won’t make a sale. So don’t just pitch them and sound like everyone else touting why they are great. Listen, diagnose, and then prescribe.

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