Innovation & Positioning: It
Innovation,innovation,innovation is the mantra in businesses and management circles every day. Yet when ‘conventional wisdom’ enters the room it wins hands down in 80% of businesses! What a strange contradiction. Most businesses copy what their competitors do! They copy their product feature and how they promote and sell their product. Copycats!
Here is a man with an alternative goal, business approach, culture and strategy.
Ray Moylan, of Johnstown Living, has just met an old work friend that he hasn’t seen for six or more years.
After hello his first question to Ray was “What business are you in today?”
Ray replied as follows: “Well, three years ago when I bought the number one conservatory company in the country my answer to your question would have been ‘I’m in the conservatory business’.
Today, my answer to your question would be fundamentally different.
Today, we are in the business of creating additional space for homeowners and meeting their comfort, lifestyle, relaxation needs and aspirations .
For example, we help customers explore the possibilities of their garden as an extension of their house.
Today we educate and listen to customers far more and help them create their dream home from concept through design to build, rather than just supply them with a product. We have learned through an innovative strategy and change process that customer satisfaction and loyalty is not just about supplying a good product … it’s about much, much more than that”.
Two years ago Moylan felt Johnstown Living had reached a turning point.
He needed to move away from a single product focus (conservatories) in a market which was dominated by shady Bob-the-Builder types who were obsessed with getting-the-job at any cost.
These easy-come easy-go competitors had a hard-selling and promise-anything attitude to winning business. “We just collect the money and do the job, and to hell with using quality materials, excellent workmanship and doing the right thing (like customer service afterwards)”could be their mantra.
A reputable company has a credibility factor to live up to and needs to create a more genuine consultative type relationship with each customer. The sales emphasis here is on building trust and establishing the real needs of the customer and standing over quality workmanship.
Customers are not all equal, they are however all individuals.
“Customers were often not well placed to determine if our product was the best solution for them – even though many insisted it was – so we had to educate them from our experience and learn a new sales process to do that.”
Johnstown Living has almost 20 years of expertise and experience from 4,000 home extensions or installations under its belt. Over 90% of its customers come from referrals so they have a lot of credibility and marketplace advantages.
However, well meaning customers are often very naïve when making such a crucial buying decision as an extension to their home. Many know the price of everything and the value of nothing as the old proverb goes.
“Each year we pull down between 6-10 poorly constructed extensions or conservatories that have been bought on the cheap. The heartache and stress we encounter with poor competitor work strengthens our resolve to advise and follow due process with each individual customer we engage with. Buy in haste or buy on the cheap and repent at leisure is alive and well in the chance-your-arm building market” says Moylan ruefully.
“We did not want to be pigeon-holed with the poor reputation of the building industry even though we were already market leaders in our sector. We wanted to go from being a good company to being a great customer driven company. To do this we needed to change, innovate and learn how to fundamentally position our business without destroying our core offering”
Working with Century Management, a strategy consultancy, the company embarked on The Rubicon Strategy.
The Rubicon Strategy is a creative business methodology that sets out to identify and command a unique market space/position where a win-win equation emerges for both your customer and your company.
It is a strategic approach and business model that leverages your company to a higher level of performance, productivity and profit.
For example, “The average sale in Johnstown Living has increased by 265% over the last few years as a result of embracing the Rubicon Relationship Selling part of the strategy” explains Moylan. This is phenomenal growth and repositioning by any standard.
Moving from one level of accomplishment that had served the company well over two decades to a company that now offers exceptional value and a portfolio of solutions that customers appreciate and feel comfortable with has taken a lot of hard work, strategic insight and above all a systematic methodology.
So what is the Rubicon Strategy and how does it work?
Why would your company want to embark on it?
Who needs to be involved?
First let’s look at four levels of strategy positioning that businesses take in virtually every market in the world:
Level One Operational Efficiency:
This is not really a strategy at all. It’s more a battle for survival and often a race to the bottom. It’s a kind of non-position that most small and medium enterprises default to. The vast majority of companies in every industry operate with a commodity type mentally and believe business is about prices, customer transactions and getting sales to pay the bills.
Remember, the vast majority of start up or smaller enterprises go out of business within two years and many more survive on the border line for longer than that before throwing in the towel. This is a sad fact of business life.
Level Two Traditional Strategy:
Level two companies fundamentally believe that it’s a product battle between you and your competitor. They accept that their company will win some sales and loose some sales.
Their fundamental approach is to keep chasing customers and accept that customer attrition is normal and natural. The four Ps of marketing – Product, Price, Place, Promotion – and the economic law of supply and demand are the fundamental strategies for survival and growth.
Level Three The Rubicon Strategy:
Level three is a systems thinking approach that can take your company from being a good level two product performer to being a great ‘value solutions’ company. It’s a breakthrough strategy that puts your competitors firmly where you want them … totally sidelined.
This allows you to work with ‘the picture in your customers mind’ rather than being distracted by competitor pressure and other, real or imagined, market place nonsense.
At the very heart of a level three strategy is an appreciation of value.
“Value as you know” says Ray Moylan “is like beauty, it is in the eye of the beholder”. Value and price of course go hand in glove.
A higher price is easily justified when quality, expertise, experience, reputation and value are factored into a sale.
‘A good price’ is long forgotten when poor quality and product or service problems emerge after the delivery or installation.
The poet John Ruskin wrote these famous words many years ago:“It is unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money and that is all. When you pay to little you sometimes lose everything, because the thing you bought was incapable of doing the thing it was purchased to do. The common law of business balance prohibits paying a little and getting a lot. If you deal with the lowest bidder it is well to ask something for the risk you run, and if you do that you will have enough to pay for something better”.
The challenge for many business owners is that the vast majority of consumers are programmed to be price buyers today in a commoditised world of choice and accessibility.
Creating a strategy that deals with this challenge is the essence of the Rubicon approach.Consider whether you want to be the one in five companies who step away from their competitor?
Crossing the Rubicon is a metaphor for moving beyond the competitor pack and differentiating yourself and your business with a high calibre value portfolio you offer your customer.
Customer appreciation and customer relationship excellence is achieved by only 10-20% of all companies. The Rubicon Strategy is a whole company approach that requires a lot of leadership character and discipline around change and innovation.
Effectively, you move from being a product salesman to being a trusted advisor with your customer.
You move from hard selling/always chasing prospects to a professional partnership win-win type arrangement. You move from an emphasis on pushing and closing sales to allowing customers to make informed buying decisions based on their definition of value and their best interest.
This is the race to the top and in every industry everywhere there is lots of room.
There are classic examples of businesses all over the world that 80% of level two companies look at and read about and wonder how they have made the breakthrough to level three:
• Look what Amazon did in the book business.
• What about Starbucks in the coffee business.
• Ryanair and South West Airlines in the airline world.
• Lexus in the motor world. For example, Lexus unit sales only make up 3% of all Toyota cars sold but contributes 30% to their bottom line.
• IKEA is another great story.
• Curves have created a level three strategy in the gym business that is sweeping teh world .
• Jerry Kennelly created Stockbyte and sold it recently for a €135 million cash deal … what a level three story.
• What about Starbucks in the coffee business.
• Ryanair and South West Airlines in the airline world.
• Lexus in the motor world. For example, Lexus unit sales only make up 3% of all Toyota cars sold but contributes 30% to their bottom line.
• IKEA is another great story.
• Curves have created a level three strategy in the gym business that is sweeping teh world .
• Jerry Kennelly created Stockbyte and sold it recently for a €135 million cash deal … what a level three story.
Look around; these stories are closer to you than you might think.Following The Rubicon Strategy or similar is the secret. Competitors have great difficulty ‘getting at’ these kinds of companies.
Differentiation and a unique business model is the key.
Level Four The Odyssey Strategy:
This is a unique strategic approach based around partnerships, alliances, networks, collaborations which dramatically seek to leverage business to an extraordinary level and perhaps from the local or national to a global concept.
This is outside the box thinking and a completely new strategic model for reinventing your business strategy.
In a nutshell then, it’s not about the product which is a level one or two strategy that the vast majority of companies engage in. It’s about entering a market space ‘beyond the obvious’ that customers crave and your shareholders dream about. It’s a win-win strategy for customer and company.
Johnstown Living has crossed the Rubicon. It helps create a unique value proposition for its customers and effectively sidelined its competitors. Too many businesses eventually go out of business because they are in the race to the bottom. In terms of follow up and support the customer always gets a bad deal in this case.
Why don’t you enter this ‘race of one’ and leave your competitors stranded on the level two battlefield?