Business Opportunity

Does Your Company Have An Evolutionary Advantage?

Does Your Company Have An Evolutionary Advantage?

Like just about everything else these days, Google seems to have the answer to long-term consistent business growth. Interesting commentary in the Wall Street Journalby a Gary Hamel. Mr. Hamel is a visiting professor at London School of Business. He makes the point that it is very difficult for any company to avoid declining even with a great business model and tremendous success. Dell Computer being a case in point, but there are countless other examples of decline. Why? In Mr. Hamel's words:

What the laggards have failed to grasp is that what matters most today is not a company's competitive advantage at a point in time, but its evolutionary advantage over time.

He goes on to say that he believes Google gets this and will avoid decline for some time into the future because it's management approach guards against the following evolutionary risk factors that most other companies succumb to:

  • Evolutionary risk factor #1: A narrow or orthodox business definition that limits the scope of innovation. Google's response: An expansive sense of purpose.
     

  • Evolutionary risk factor #2: A hierarchical organization that over-weights the views of those who have a stake in perpetuating the status quo. Google's response: An organization that is flat, transparent, and non-hierarchical.
     

  • Evolutionary risk factor #3: A tendency to overinvest in "what is" at the expense of "what could be." Google's response: A company-wide rule that allows developers to devote 20% of their time to any project they choose.
     

  • Evolutionary risk factor #4: Creeping mediocrity. Google's response: Keep the bozos out and reward people who make a difference.

Our companies may never become the size of Dell or Google (if you are like me, you don't want them to) but this seems like a good organizational analysis tool to keep handy in case things seem to be going stale. Oh, and don't forget to check the mirror when you start looking for bozos...

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Making Gold from Scrap

Making Gold from Scrap

Nucor's business is not new and sexy. In fact it is as rust belt as it comes: melt down scrap steel to make new steel. What's amazing about Nucor is not the business they are in but their results.

How does 387% return to shareholders over the past five years sound? That's better than Amazon, Starbucks and eBay. Since the 1980's it has grown into the largest steel company in the U.S. In 2005 it did $12.7 billion in sales, up from $4.6 billion in 2000. Income was $1.3 billion up from $311 million in 2000.

Their secret? This radical insight from their legendary leader F. Kenneth Iverson: employees, even hourly clock-punchers, will make an extraordinary effort if you reward them richly, treat them with respect, and give them real power. Sounds like something we in the service industry might be able to learn from.

From a recent article by BusinessWeek:

At Nucor the art of motivation is about an unblinking focus on the people on the front line of the business. It's about talking to them, listening to them, taking a risk on their ideas, and accepting the occasional failure.

Lot's of people talk about empowering employees and paying for performance, at Nucor it's not just talk. Base hourly pay at Nucor is around $10 an hour compared to other companies that average $16 to $21. But a bonus tied to the production of defect-free steel made by the worker's shift can triple the average to $30 at Nucor. Bad work is also penalized. If a bad batch is caught before it leaves the plant the shift loses the bonus on that batch. If the defect doesn't get caught till it gets to the customer, they lose three times that amount.

Thinking that will only work with certain employees? Nucor has applied it at several acquired sites with tremendous success. They don't force new employees to switch immediately to their new pay system, they just start posting what the employee would have made. It doesn't take long for employees to demand the switch even as production at the facilities goes up.

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This Growing Business is Sweet

This Growing Business is Sweet
Remarkable is the key here. These native american kids are remarkable in and of themselves. Their product follows suit. They have figured out government issues, food serving issues, product, marketing, web sales. Wow!

Their web site is pretty weak but they make up for that with a remarkable product and a 14 year old CEO. They are Lickity Split Chocolate Studio, LLC located in the southeast corner of Utah. Through attending an economic development conference and getting to know the right person (U.S. Senator Bob Bennett) they were set on track to land a major contract with a billion dollar company. Can they pull it off? "Of course we can we are only limited by our imagination" states their CEO (yeah, he's really only 14).

The company is managed by native american kids who discussed, brain-stormed, developed technology and a marketing plan that has brought them success. Now they can afford to buy the movie tickets that they wanted which was the motivation to start the business.

If you are not regularly staying in touch with your customers someone else will. How do you stay in touch? Learn more

Business Success... How Sweet the Sound

Business Success... How Sweet the Sound

It's always nice to hear success stories. Here are three from the Small Bussiness Association, winners and runners-up for the 2006 National Small Business Person of the Year Award.

Eric A. Hoover of Conneaut Lake, Pennsylvania, who overcame childhood rheumatoid arthritis and built a thriving machine tool company from scratch in the scenic northwestern Pennsylvania resort town where he was born and raised, was recognized as National Small Business Person of the Year.

Hoover's company, Excalibur Machine Company was founded in 1988. Excalibur provides original equipment manufacturing, machining and fabricating services for major manufacturing companies. In the past five years Excalibur has experienced continual growth in a difficult industry, and has posted sales growth of more than 350 percent, giving Hoover the time to launch three other companies: Camelot Consolidated, a sales organization; Blade Transport, a trucking firm and Lancelot Construction, a construction firm.

Andrew Field, the first runner-up, is what one might call a “serial entrepreneur,” having launched three successful businesses since 1976. His current venture, PrintingForLess.com, started in 1999 with 6 employees and $600,000 annual sales when a customer at his conventional print shop asked him to print a brochure that had been created on a computer.

Today, that company has grown to 125 employees, posting more than $20 million in sales, and is working on the construction of a 46,500 sq. foot, state-of-the-art facility set for completion in May 2006. PrintingForLess.com has been named to Inc. Magazine's 500 fastest growing companies in the United States for a third year in a row, and is a leader in the field of Internet- based color printing.

Big dreams, new ideas, perseverance and SBA financial backing gave the second runner-up, Robert 'Leroy' Shatto, the drive and wherewithal to save his family's dairy farm and restore its profitability. Marrying into a family that had been milking Holsteins in Missouri since the 1800s, Shatto embraced new ideas and equipment that turned him from a producer who sold his milk to other processors into a bottler who sells a variety of finished dairy products directly to stores.

After consulting with SCORE, Shatto developed the idea of reaching out to families with great-tasting raw milk with no hormones or chemicals added. Through dogged determination to succeed, several SBA-backed loans and timely business counseling and assistance, Shatto Farms, Inc., today employs 20 full-time and part-time employees, delivers its products to 56 stores, and has become a home-grown small business success story.

The growth of your business will be determined by what your customers say about it. Do you know what they are saying? Learn more

Hot franchise business growth area

Hot franchise business growth area

It seems that Americans are putting their money where their home is. The Joint Center for Housing Studies at Harvard recently reported in their 2005 report “The Changing Structure of the Home Remodeling Industry” that homeowners and rental property owners spent $233 billion in 2003 on home remodeling. Wow! Due to the long work hours many homeowners are keeping they’re looking for help, not only with renovations, but also with home maintenance chores. Following the money trail many small businesses have started up to meet these needs and some are franchised.

CNNMoney.com highlighted seven such franchises. They are:

Garage Tek
Designs of the Interior
Kitchen Solvers
Mosquito Squad
Floor Coverings International
Spring Green Lawn Care
Home Team Inspection Service

Get customer feedback, generate referrals, and increase repeat sales for as little as $150 a month. Learn more
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Seeds from the blogworld
We search the business blog world looking for posts that illustrate principles, or "Seeds", that if followed, or "planted", will help small businesses grow. We list them here for your convenience. Enjoy.

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