Want to really focus your team and get amazing results?

Set a really big goal and then form a Catalyzing Statement around this goal.

Catalyzing statements hook people emotionally and are the driver that propels individuals towards a challenging goal.

About a month ago I heard  Rick Sapio give several examples.   I would like to share his and then give a fun one that I ran across in Japan this week.

Fed Ex – When It Absolutely Positively Has To Be There Overnight —  If you want a GREAT laugh, watch this FedEx Commercial
Microsoft Bill Gates – I picture a world with a PC  on every desktop and in every home – 1975
President Kennedy – We will put a man on the moon and return him safely to earth before the end of the century.

These catalyzing statements go FAR beyond placing a goal. They emotionally charge us and align us. They emotionally allow us to seek and believe and go forward.

A good example of this is Bill Gates. Prior to making the  unifying statement the goal was clearly set to have Microsoft be the largest software company in the world. Great goal, but where is the emotion and the emotional buy in.  It came when he stated  ” I picture a world with a PC on every desk and in every home.” That inspired us, we visualized this and indeed it enabled the goal.

This past week I have been in Asia. I was able to spend a bit of time in Japan and visited a company in Tokyo called Fujita. From the instant I entered this business I knew it was different. The tone, the conduct of the staff, and the presentation of the board room was simply different. They were focused and clearly were on a mission.  There was not the usual motion that I frequently experience in Japan.   Indeed the meeting I had was successful and at the end of the communication I could not help but poke a bit. I asked the individual I was meeting with to explain more about the company, the founder, and the history. His answer gave it all away. With out a second of hesitation here was his response:

“Fujita’s vision is to bring American culture to Japan”.

Wow, now that is powerful.  That is a hairy, big, audacious, and crazy goal.   “Bring American culture to Japan!”

You see they are not in the hamburger or movie business.  They are not selling clothing. They are not in the import / export business. Those things are simply vehicles.

They are going to change Japan from eating sushi to Big Macs, and guess what…they did.

What I did not tell you earlier is Fujita’s founder  Den Fujita is responsible for bringing McDonalds to Japan. He was also responsible for bringing Toys R Us and BlockBuster to Japan.

As I have considered this, I realized that this type of statement not only motivates us and inspires us, but also allows the company to change and extract us from the weeds when necessary.

Next time you set a big goal, create a catalyzing statement!   Hang on because it will rock your world with what happens if done properly.

In 1989 I helped make my first $2MM business mistake.  I keep this box on my life-trophy shelf to remind me never to make this mistake again.

So what was it we did?

Rich Christiansen $2MM Channel Lesson

We did what so many eager engineering types do–we built a way cool, exciting,  leading-edge technology (digital power line transmission) and then tried to sell it.

We just knew the customers would buy these by the bucket loads.  We would go to the trade shows and got mobbed, so certainly this was going to be a barn burner. Everyone told us we were so smart and this was the coooooolest technology ever.

NOT! Cool technology does not necessarily mean purchasing customers. In 1990 the company went belly up!

I would rather have purchasing customers and profit than some cool little box sitting on my shelf reminding me not to be stupid again.

Better to sell it first and build it second, than to build it first and then try to sell it.

Today I did a BootStrap Business lecture at an Entrepreneurial Launch Pad event.

I love meeting with eager individuals who are on those tender first steps of venturing out into the brave cold and exciting world of creating a business.   However, there is one thing that makes me want to scream every time I see it and indeed I saw it today.

Make sure someone is going to buy it before you build it.

Its All about the channel!

Build It and they will come…NOT!

Save yourself a couple of million $ and let my box be the reminder. Don’t build your own.

In a competitive environment, it’s important to know how to out-value your competition. I’ve discovered that one of the best ways is to reduce your transactional costs. While producing motherboards at Mitsubishi Electric, we went through a phase when customers wanted, more than ever, the latest technology possible. Mitsubishi knew that in order to be competitive, it had to either keep up with the latest technology or find another niche. We also found that if we did it right, we could reduce our costs and undermine the competition.

At the time, specialty equipment such as medical devices, gaming machines and ATMs faced a problem with the motherboards used in their machines. Federal regulations mandated that an entire machine be approved through an often 12- or 18-month process before it could be used. In the sector that Mitsubishi and its competitors dealt with, keeping up with the latest technology meant a constant swapping in and out of motherboard components. (Obviously, that made us money.)

But these sectors—medicine, gaming, and banking— could not simply swap out a motherboard. For example, any changes at all in an X-ray machine required that the whole product be re-approved. Twelve-month delays for every innovation obviously would not work. As a result, these industries had taken to hiring their own teams of engineers to build motherboards that were more stable. They did not meet the performance of outside motherboards, but there seemed to be no other way to meet the need for stability.

This is where we came in with Mitsubishi. Seeing an opportunity, we began producing a line of motherboards that would outperform the ones these industries had created while still providing the needed stability that kept the approval process from having to be repeated.

Suddenly, these industries were able to cut their transactional costs by laying off engineers and opting for better-performing motherboards in their equipment. At the same time, Mitsubishi could optimize its profit by entering an arena where we could undercut the cost of a 10-person engineer team but make a massive profit relative to the other motherboard sectors we were engaged in. By reducing transactional costs and improving the product and product environment, this one sector opened up a profitable new market.

An even clearer example comes from my 2001 trek through the Himalayas. While hiking in Nepal, I met a young man from the village of Namche Bazaar. Some time before, he had decided to try breaking into the Internet market in his village. Nestled high in the beautiful, snow-capped Himalayas, Namche Bazaar is a frequent traveling stop for trekkers. As hikers pass through this village, it is their last chance to check email, make a quick call home, or get in touch with business contacts.

For a long time, the only telephone option was through expensive satellite communications. So, while trekkers could touch base with home, it was at a cost of several dollars a minute. Doing so took a small fortune, but given that this was the only option, nobody questioned the price—until this young man set up his Internet café.

His desire to break into the Internet market had led him to the United States, where he quickly landed a job at McDonald’s. Saving as much money as he could, he eventually bought four used desktop computers that he brought back to Nepal. Once there, he had to hike up the Himalayas to Namche Bazaar with his computers strapped to his back.

I met him after he had set up shop. His resolve and tenacity had given him a toehold in the Internet café business, but it had also whetted his appetite for something more. You see, while in the U.S., he had learned about Voice-Over IP technology. This piqued his interest as a cheaper option than satellite phone calls (and he knew would expand the potential of his business plan), but he did not know how to set it up. He asked if I did—and I did.

I helped this young man set up his VOIP phone call business and, suddenly, he had not just a toe, but his whole foot, leg, arm, and body thrown right into the middle of the market. The high cost of satellite communication meant that his competitors could not drop their prices without losing their profit margin; for him, though, VOIP cost mere cents each minute. By charging little more than a dollar a minute to the trekkers, his profit margin was insanely higher than his competitors’, and the price tag to the trekkers was insanely lower. Considering the low average daily wage in Nepal, this was almost like me renting out my restroom for five hundred dollars an hour!

I am certain it was harder for him to reduce costs and thereby increase margins than it will be for you. Still, if you do your prep work to cut your transactional costs, you will be able to reduce, improve, and profit.

There are thousands of ways to reduce. Whether through applying technology, finding your niche, or just behaving small (see chapter 14), you can find a way to reduce your transactional costs without traveling the world and hiking the Himalayas. If you can do it cheaper than the competition and protect that price-enabling innovation, you will have flexibility with pricing, marketing strategies, and customer relationships. You simply need to be aware of the competition, the customer’s wants and needs, and the best use of your imagination.

When you do all of this, you will be far more profitable, acquire more customers, and outpace your competition. Dance with the devil for the judges and the audience, yes; but, most important, dance with the devil for yourself and your business.

Porter’s Points – Reduce and Improve

• In order to respond to your competition, examine product innovation, longevity, and quality, as well as associated services, legal and technical requirements, and market trends for places where you can start cutting. Reduce your transactional costs by cutting out the middleman.
• Don’t just cut costs. When you scale something back, take the opportunity to improve the product, the marketing, and all other aspects of your reduction. When you can hit a market niche with lower costs to you, be sure to hit it with the highest profit margin that you can.

Now is a good time to pull out the model we talked about in “Power Tools.” You remember: the Competitive Matrix Model. Draw a matrix comparing your and the competition’s price, products, and cost. Where do your competitors map to? How about you? Are you right on top of them, or are you in one of the gaps in the market? This exercise will show you how likely you are to be in their crosshairs, how aggressive you need to be with pricing, whether or not you can ride in their wake, and how much you need to compete or cooperate.

I don’t know if Ray Noorda at Novell coined this one or not, but the first time I ever heard the word “co-opetition” was from his mouth. The idea is exactly how it sounds: compete, but cooperate. Competitive relationships can and should be fun, lively, and challenging. Hate relationships (like those unfortunately existing between many competitors) are not a place you want to go. Haters are annoying. They just waste energy.

The amount of energy you can expend in a fit of anger or jealousy can be significant, and even if it was motivated by an idea that popped into your head, that idea is usually gone once the tirade is over. New developments inspired by competitive camaraderie are often longer lasting and more respected. Some try to argue the value of a good dose of angry, negative competition, but it is just a short-lived dead end.

As much as you would like to engage in “coopetition,” you still need to know when your customers or affiliates don’t feel the same way. Some years ago, Ron experienced the tip of this negatively competitive iceberg when caught between two companies that seemed to love hating each other. Here is how he learned about hateful competition:

While employed at a large software company in the early ’90s, I had the direct responsibility to sponsor a customer feedback forum. The forum was held at a location that was neutral to all our customers, as we wanted uninfluenced and uninhibited feedback on how we were doing as a service organization. These customers made up our Customer Advisory Council, and their input was critical to our success. In many cases, they had spent millions of dollars on our software and services. They were highly respected in their particular markets and industries.

About midway through the first day of meetings, break time came around. One of our customers, a representative from a worldwide manufacturer and distributor of soft drinks, made his way to the refreshment table. I was standing nearby, visiting with another customer, when I heard a loud expletive. Turning my head to see what was up, he locked on my eyes and exclaimed something to the effect of, “I see our competitor’s products all over this table, but not a single one of ours. Would someone like to explain to me why the %&*@ that is and what the %*#& I’m supposed to drink?!”

Not knowing the intensity of the competition had led us to commit a cardinal sin. As soon as our customers returned to the meetings, we cleaned out every bit of his competitor’s products and replaced them with his company’s brands.

This kind of competition is abundant. You need to do your homework to be sure that you know what kind of competition to expect. Don’t believe it? Well, of a hundred more that I could pen, here comes another example of a rivalry so intense that the companies did stupid, self-defeating things. Once again, it comes from Ron’s bank of stories. Read it, believe that competition can get brutal, and resolve to do better.

When Ron was building the professional services team for a startup software company, his field sales engineer (FSE) was invited to present at a large hardware and software business based in Texas. He was equipped with the latest laptop technology—albeit from a competing hardware manufacturer—and was prepared to give a sterling presentation. This was a presentation that was important not just for the startup company, but for the long-term IT strategy of the Texas company as well.

The FSE was invited into the conference room and settled in for the presentation. One of the potential client’s high-ranking employees watched the FSE set up for the meeting—laptop out, wires hooked to the projector, everything ready for the dog-and-pony show. The employee waited until the presentation was ready to begin and then stood up, walked around the table, stopped in front of the engineer, and told him to unwire
his laptop, pick it up, and follow him.

He led the FSE out of the room and into the hallway. There he “invited” him to stow his laptop in his bag and hand it to him. He then walked the laptop over to an administrative assistant and instructed her to return the laptop to the FSE after the meeting. Returning to the engineer, he said, “Don’t ever come into our complex again with our competitor’s laptops or any of their products. You will do the presentation without our competitor’s gear or not at all. What’s it going to be?”

Never underestimate or misunderstand how your competitor feels about you. You need to know the appropriate amount of sharing and communicating to do. If you can stay away from this kind of brutality, it will be better for all of you. In some cases, however, it’s best to leave the relationship alone completely. If you run up against negative competition, don’t touch it. This is for the good of both companies and anyone
else foolish enough to wander into the crossfire.

Porter’s Points – Know Your Competition

• After you draw up your Competitive Matrix Model, determine when and how best to approach each of your competitors and then do it. “Co-opetition” does not always mean that you cuddle up with everyone in your market. Be especially careful with the timing of your market entry.
• For those competitors who react harshly to your friendly overtures, figure out how best to observe their work from a distance and then stay away. As a startup, the last thing you need is for an established business to come gunning for you.
• Whenever you interact with competitors or customers, think through every detail— technology, refreshments, location, and especially culture. If there is anything that could offend, eliminate it. In such situations, it’s much easier to be a friend up front than to ask forgiveness later.

Think for a moment about your business idea— product, services, market, scope. Now create a list of all the competitors that occupy the same space. Did you write any names down? If so, you are further along than many first-time entrepreneurs. Lots of novice entrepreneurs don’t recognize the value of this type of list. They don’t understand the power that comes from knowing about who’s out there for them to go head-to-head with.

Make a concerted effort to create your list. Search online. Go to the mall. Attend conferences or seminars dealing with your market space. Pay attention to advertising you see throughout the day—commercials, newspaper and magazine ads, billboards, anything.

List in hand, it’s time to get to know the guys across the street. What are they doing right? What are they doing wrong? Who are they selling to? Who is their biggest customer? What is their best-selling product? This may require a little espionage. Go stand in line at one of their stores. Eat their food! Call the companies and engage their administrative assistant in an informational conversation. Tell them that you’re doing research and ask about the company’s goals, mottos, and customers. You will be amazed at what you can find out by asking the right questions to the right people.

Open up a line of communication with the owners of the company. Take them out to lunch and have an honest conversation. Make sure you approach this from the right angle, though. For instance, you could say, “I admire you company’s history. I’m interested in a similar industry, and as someone just starting, I wanted to know if I could ask you a few questions.” This comes across much better than, “Tell me what you guys do, because I plan to leave you in the dust in six months’ time.” Be polite and ask honest questions. You’ll get answers.

Just because you know this information about your competitors, you do not necessarily need to model their businesses’ look, feel, and function. If you see weaknesses, for example, you certainly don’t want to let them slide into your company. Don’t just look for holes, though; there may be a thing or two you find valuable and decide to borrow. We’ll go back to Schoolhouse Rock! and affirm that, indeed, “knowledge is power!” Specifically, it is the power to emulate the good, improve the bad, and sail past your competitor on the dance floor.

Porter’s Points – Do Your Homework

• In the planning stage, list all aspects of your business that might run up against competition. Starting with Internet searches and moving into actual legwork (malls, phone books, industry directories, etc.), make a list of all your competitors.
• Draft a series of questions and talking points to use when approaching your competitors’ administrative assistant, managers, and owners. Don’t put them in the awkward position of disclosing proprietary information, but focus instead on their product ideas, customer relationships, advertising techniques, and other useful information.
• Always be courteous when courting your competitors. Don’t push if they refuse some answers. If it really is important, you can find out some other way.

Whatever the competitive landscape in your market, you must accept it as the only landscape worth traversing. Competition can become the lifeblood of your business, inspiring change, freshness, and innovation. Ignoring your competitors, by contrast, will drain the life out of you—often without you even knowing it.

Where do you and your competition stand? If, upon concluding your market analysis, you find that you have no competitors, think twice about your business idea. Why isn’t anyone else doing it? Are you really so smart that no one else could have possibly come up with the same idea? Dig deeper. Perhaps someone has already tried your idea and it didn’t fly. Be cautious and intelligent about when you enter what landscape. If you dive in anyway and then get asked to tango on a trampoline, it’s hard to back down.

One drawback to entering a sparse environment of competition is the need for a longer, more expensive ramp-up phase. You have to break your own trail. You will have no competitor to help you advertise your product. There will not be an established channel of marketing and consumption specific to your brand-spanking-new idea. Building new channels and pioneering marketing campaigns can be done, but you need to recognize the associated costs.

On the other hand, having a competitor or two gives you access to banks of information. You will not likely get direct access to your competitors’ databases of customers, cost structures, or product development secrets, but for every company you compete with, you will find administrative assistants, other customer facing employees, and both happy and dissatisfied customers—all who will be willing to talk.

Most people are excited to chat about what they do. They like to brag about their company’s innovative products and who their big-name customers are. Use this knowledge to build a better mousetrap. What about your competitors’ product or service is broken? How can you take advantage of what has already been done? Being willing to follow the lead is often more profitable than leading out.

This concept fits with the section on “abundance mentality” found in chapter 12, “The Heart and Head of the Entrepreneur.” Recognize—and, if necessary, make yourself understand—that there is plenty to go around. At times, it’s even a good move to let your competitors get to market first to make the mistakes for you. Learn from those mistakes and clean up! This is the idea of drafting—like how geese draft off the ones in front, or how the second- and third-place race cars draft off the leader.

Our latest venture places us in the highly competitive and rapidly changing online search engine world. This market is complex enough that no one individual or company can keep up with the ever-changing landscape. Success requires a level of openness and sharing within the industry brain trust. There are several individuals in our industry that thrive on discovering amazing new strategies. We directly benefit from drafting off the learning and creativity of our competitors.

You too can take the more profitable tack of learning from other companies’ mistakes and taking a more profitable slice of the pie. Some argue that beating everybody else to market is absolutely critical. If you are going to get to the market first, simply prepare yourself to adjust, improve, and change as your competitors begin to poke into your market share.

Porter’s Points – Competition Is Good

• If nobody is in your market, ask yourself if there really is a demand for your product. Is the demand sufficient to give life to your business? How will you create a market that doesn’t exist? What other products and services can you offer? Do some careful investigation before diving headfirst into an empty pool.
• The way to your competitors’ customers is through the employees who interact with the customers and through the customers themselves. Contact these people and ask them about what they do. Take careful notes on how you can improve.
• Reread the section on having an “abundance mentality” from chapter 12. Really commit yourself to believe that the market is big enough for you and the competition. Let others test the waters a little, and always, always learn from your and their mistakes. Use those mistakes to look for openings and then take them!

Chapter 18 of Bootstrap Business begins today with not-so-common advice:  Dance with the devil!

As a teenager, I played on a football team in Flagstaff, Arizona. Once, we played an away game against a team that didn’t seem at all motivated. The game turned out to be an easy win, and one of my teammates quipped, “I bet if we hadn’t shown up, they still would have lost!” He didn’t know how true his statement was. In order to truly test yourself and your new business idea, you need competition; you can’t win without it.

Several years ago, Rich and I both worked for Novell, a networking company that at one point controlled 80-plus percent of the market. In other words, it had no competition. Then Novell became complacent. And when the serious competition did show up, the company was far from prepared to take it on.

Most people are timid about interacting with competitors; even worse, many business owners think that they don’t have or even want any competition. If you use it to your advantage, competition keeps you hungry, honest, and forward-moving.

As the saying goes, “High tides float all boats.” When your competitors advertise their products, your business benefits from getting the byproduct of unexpected marketing. If you’ve positioned yourself correctly, when people look for your competitor’s product, they will likely also find yours. More than just benefiting from happy accidents, though, you must know your competitors’ strategies, their position in your market, and their weaknesses. Competition is a healthy part of the entrepreneur’s diet.

Rich thrives on embracing and enjoying competition. It shows up in all aspects of his life—from golf to work to siblings. He has mastered how to let it keep him sharp and focused. He also knows that when you dance with the devil of competition, even one misstep will allow it to dance all over you. You may think that you are dancing the tango only to suddenly watch your competitors cha-cha on by. You want to win, but you cannot win unless you compete and do it well.