Blank stares – that’s what I get when I ask the dreaded question “Is your company relevant? Ouch. The follow up question gets an even stronger reaction – “Why”? Jaws drop. Lips quiver. Stuttering commences. Some get angry.
Why the angst? It’s about accountability. Many entrepreneurs know they are not optimizing opportunities or their company performance is down with no real strategy to reverse the trend. They hide behind past success or massage sales numbers to fit projections There’s tunnel vision and an unwillingness to adjust because they stick with ‘what got them there’.
Little by little there is a loss of relevance as factors transition the market to the next level. The business owner has to make decisions but doesn’t have the framework in place. They end up in a catch 22 because they have to make the investment of time and resources to strategize, or they make decisions based on hunches and best guess. Irrelevance becomes a self-fulfilling prophecy as don’t understand the process to stay relevant. I hear a lot of ‘I don’t have time to think longer term’.
The process is important because the process is what drives an action oriented culture. To remain relevant a business requires strategy and strategy requires tactics to implement. But, before any of that happens the process demands that you DVAA (define, validate and align assumptions). Let’s take a look at a few companies in diverse industries that have practiced DVAA and introduced or reversed negative trends by understanding their market, focusing on their identity and partnering with their customer;
1) Square – as the owner of a athletic lifestyle company I was introduced to Square by a T-Shirt company at a trade show. They were able to take credit cards with their smartphone while my people could only make cash transactions. Apply this concept to any individual cash businesses (street vendors, dog walkers, maid services) and you have a product that is relevant to their targeted marketplace with plenty of room to grow into other line extensions.
2) LuluLemon – my favorite. A brand that consumers not only support but drive. They remain relevant because of their business model and the fact that they focus on product innovation. The brand touches the consumer who is partnered to help drive new product development. Their ambassadors live the lifestyle transformation and further support and extend the brand. Even when they make a mistake (sheer leggings) their research and consumer relationships helps the brand persevere. LuluLemon’s focus is relevancy and it shows in the process of new product development, merchandising, staffing and stores. You can feel it.
3) Arbys – In 2010 Arbys was considered worst in category. By 2013 the chain managed a 25% revenue increase and 14 quarters growth in same store sales. When Arbys discounted their products rather than market and innovate, they lost their consumer relevance. Now Arbys is known for “We have the meat” – quality meats and unique sandwiches. They have revamped their new product development process to define metrics and identify opportunity costs.
If you’re asking ‘whats’ the point’ then you may not understand your problem. These companies all work closely with the consumer/customer as well as technology. They use data, to understand their customer, how products are used and enlist the customer as brand ambassadors. In Arbys turnaround, they began to use in house data, already available to them, to determine new product direction and then create metrics to align with their product mix.
These companies thrive on their ability to remain relevant. They use a combination of marketing and product management to drive brand and consumer experience while measuring their ROI. Assumptions always go through their own cultural DVAA process. Once you dive into Value Based Outcomes you’ll recognize how relevance is dependent upon assumptions and the DVAA (defined, validated and aligned assumptions) process. It’s time to validate and align your assumptions and perform a check and balance leading back to company culture and brand. You’ll be surprised about how much data you actually have and how your customers can help you in defining your place or future position in the market.
Every company, no matter the size, can manage the steps of the VBO process. Yes, you’ll make assumptions – every business does. But, you’ll validate those assumptions and move forward when the numbers ‘clear the bar’ and work together with the other key elements of your business.
We love to hear your feedback, let us know what you think. Email us at Mark@valuebasedoutcomes.com if you’re interested in learning more.