For small businesses — bothfor-profit and nonprofit — andfor independentworkers, winning has never been more important.And for many,it’sa question of survival.
So, what is winning for your business?One of the simplest and most straightforward definitions is (to paraphrase Peter Drucker)“to create customers and keep customers by serving them better than any competitor can.”Now is definitely the time to take care of your customers and hold onto as many of them as possible.
Now isalsothe time to make sure you have enough cash or financing to sustain your business while you secure customers and adequate sales.
A winning business strategy is a set of choices that enables a company to deliver superior value to its customers and acceptable returns to its owners on a reliable, sustainable basis.Ideally, the choices a company makes create a sustainable advantage manifested in better performance, quality and value for customers and better value creation for the firm.
Narrowed focus
Because what gets measured gets done,clear indicators of customer response and clear measures of the drivers of value creation are required.
First and foremost, the most basic questionyoumust ask and clearly answer: Who is my customer? Or, moreprecisely,whoshouldbe my customer?
While not a hard-and-fastrule in business, I have been struck over the course ofmy50-plusyears in business by how often the 80/20 rule applies. That means 80% percent of sales in many businesses come from 20% of customers. And 80% of profits and cash come from20% of sales.
Who are your best customers? Do you have enough of these customers? Do you do enough business with these customers to generate an acceptable return on the investment you’re making in your business?
In challenging times like the ones we are in, narrowing your focus to your best current customers and your best customer prospects, and getting crystal clear about what it takes to deliver both superior customer value and sustainably sufficient returns, could very well be the difference between success and failure — and,ultimately,survival.
Second, and equally critical, maximizing profitable sales, avoiding unprofitable sales, eliminating all costs your customers should not have to pay for and paying close attention to every penny of cash matter now more than ever.
A.G. Lafley, the former CEO of Procter & Gamble, worked for decades in and with large public companies. Over the past 15 years, he has turned more of his attention and energy to small businesses and nonprofit organizations. He currently serves on the boards of Omeza, Snapchat, Tulco, Hamilton College and the Sarasota Bay Park Conservancy. A Sarasota resident, Lafley has written best-selling books on innovation and strategy as well as numerous Harvard Business Review articles on leadership and management. His new website, LeadingToWin.com, comprises practical, how-to insights for small businesses, nonprofits and freelancers rooted in his five-plus decades of business experience.
Certainly! The article touches upon various crucial aspects for businesses, emphasizing the significance of customer-centric approaches, financial stability, strategic choices, and the maximization of profitable sales. Here's an analysis of the concepts discussed:
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Defining Winning for Businesses: Winning is encapsulated as creating and retaining customers by serving them better than competitors. This notion aligns with Peter Drucker's perspective on business success.
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Customer Focus and Value: It stresses the importance of catering to the needs of customers and securing their loyalty. The 80/20 rule, highlighting that a significant portion of sales and profits often originates from a minority of customers, underscores the value of identifying and nurturing key customer segments.
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Business Strategy: A winning business strategy involves making choices that provide superior value to customers while ensuring acceptable returns for owners consistently. These choices should ideally create sustainable advantages, enhancing performance, quality, and value.
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Measurement and Focus: The adage "what gets measured gets done" emphasizes the necessity of clear indicators for customer response and value creation drivers. Businesses are encouraged to ask fundamental questions, such as identifying their ideal customers and focusing efforts on maximizing profitable sales while eliminating unprofitable ones.
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Financial Stability: Emphasizes the critical importance of financial stability during challenging times. It stresses the need to secure enough cash or financing to sustain operations while acquiring and retaining customers.
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Maximizing Profitable Sales: A.G. Lafley, with extensive experience in large companies, offers insights applicable to small businesses and nonprofits. His focus on maximizing profitable sales, cost optimization, and attention to cash flow highlights the immediate relevance of these practices in the current business landscape.
These concepts intertwine to form a holistic approach to business success, considering the importance of customer-centricity, strategic decision-making, financial stability, and operational efficiency. The emphasis on aligning choices with customer needs and sustaining profitability underscores the practicality and significance of these principles across various business scales and sectors.
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