The risks and rewards of being a unique business

Apple, Netflix, Nike. Leaders in very different industries. They didn’t get there by doing what everyone else was doing.

Apple adds crafted design to desirable functionality and makes it fashionable. Netflix goes beyond being a digital LoveFilm and creates high quality, polished, original programming that goes toe-to-toe with Game of Thrones and Mad Men at the Emmys. Nike’s sponsorship deals are with athletes even your gran has heard of.

However doing something unique in an industry comes with risks: Apple’s focus on design and fashion didn’t sit well with many hardcore techie types, those early adopters who, at one time, were the biggest group of computer consumers; Netflix and Nike both are taking huge financial punts compared to their competition.

Being averse to taking risks can lead to failure

But without risks the likely outcome is stagnation. Perhaps even decline. Without taking risks, there’s little chance of being number one. Playing it safe only gets you second place, at best. You might fail — that’s why they call it taking risks — but the alternative is to hope that your competitors don’t figure out a way to things more efficiently. Hoping that the Market Leader will take a risk too far and fail isn’t a strategy, it’s just a hope.

Look at the heroes in any field, the mastermind types like Picasso, Steve Jobs, Richard Branson, Elon Musk, and Andy Warhol. None of them became the heroes of their field only by being really good at what they do. They became heroes of their field by doing something that nobody else was doing.

What are the costs and risks involved in trailblazing?

Doing what nobody else is doing, whether that means offering remarkable customer service, improving the product or just re-branding with a new marketing strategy that your prospects will find more appealing is not free. Here are some of the potential downsides you should consider:

Reduced profit margins

Going the extra mile can be expensive. For example: If you sell advertising space, you may decide to combine that with free data analysis that will allow clients to create more effective advertising. That may seem like a good way to get an edge over your competitors, but you’ll have additional costs such as hiring analytics experts.

There are some more subtle risks: providing clients with extra reporting that you think is valuable puts more time and effort on their shoulders too, after all they have to use the analysis or there is little point in providing it. That increases their costs too.

What matters is deeply understanding how value is created and how it is perceived and optimising the provision of your service to do the best for you and your client. Do that and the end result will be happy clients who unlock sustainable profits.

There’s no map to follow

Trying a different route means you’re on your own; making it up as you go along. It’s inevitable that you’ll take a few wrong turns, and you need to have the resources to allow you to back up and take a different tack.

Mistaking novelty for innovation

Sometimes customers really don’t want change; just ask Coca-Cola how their new recipe almost wrecked their business 30 years ago. How else could fizzy drinks manufacturers change their product? Swap cans for flexible plastic pouches? Who wants that? Seems like a great way to end up with warm, flat drinks. Different isn’t always better.

So, if the route to innovation is mined with possible mistakes, how can we navigate a safe (or safer) path?

Just ask

We spend so much on analytics and consultation every year when the easiest way to improve what we’re doing is simply to listen to our clients and customers. It doesn’t take much to get customers to share information about how they feel their needs aren’t being met.

Look for trends when reading feedback. Trying to make every customer happy individually is a great idea if you have fewer than a dozen customers, but it isn’t feasible if you sell to a market of one hundred businesses or more.

If your customers aren’t giving you the information you need, ask. Send out surveys to your customers, and let them know that you want to see what you can do to make their experience better.

Also, look out for similarities (and differences) in other industries and brain storm how you could apply crossover thinking to your market.

Balance costs and rewards

The basic principal of risk and rewards is to measure risks based on whether you’re likely to gain more than you put in. For example: It costs more to hire a professional web designer than it does to pay your mate/cousin/kid a few pounds an hour to make your website for you. But are you really saving money if two out of three customers can’t find the link to your eShop, or the subscription button for your mailing list doesn’t work?

So when considering which extra mile you’re going to offer your customers, ask yourself if you can comfortably absorb the costs if your new approach flops. And as important, if your customers love your new service, can you afford to keep delivering it?

A third question might be: Do you have the right skills and/or numbers within your existing workforce to actually implement your audacious initiative? Or will you have to outsource, and can you afford to hire top-notch freelancers to handle it?

Before you boldly march towards a future so bright you need sunglasses, make sure you’ve costed the enterprise.

Finally, there’s one more question to consider. It’s the most important question. And it’s a little tougher to answer than the others … What do your customers not realise they’re missing? Answer that and you’ll need to update your Social Media profiles: you’ll no longer be just an entrepreneur; you’ll be an innovator.

About the author

This guide has been written for ByteStart by William Buist, a Business Strategist, Speaker, and founder of the exclusive xTEN Club – an annual programme of strategic activities for small, exclusive groups of business owners. William is also author of two books: ‘At your fingertips’ and ‘The little book of mentoring’.

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