What is the purpose of innovation? Is it..

• To create new products…
• To create new customer demand…
• To build strong teams capable of constant innovation…

… or all three?

Well, you guessed it, it’s all three…. but to find out why is this an important question we need to go back a bit…

Until recently, the job title – New Product Development (NPD) Manager or Director was very common. However, now we see these roles increasingly re-titled as ‘Innovation Director’.

In the past, this role was about Research and Development (or R&D) – very product focused and very focused on the area of science or technology that was chosen as a strategic priority (chosen, that is, by executives rather than customers).

Equally, roles previously described as ‘brand development’ are now often called ‘Innovation Directors’ too. So what’s this about?

Well, the brand director is responsible for the customers or market places experiences and views and opinions (good will, if you like) towards the companies products and services.

The fact that this role is also being re-titled with ‘Innovation’ is why we are now a little confused.

Add into this mix the point that the third core purpose of innovation is to create teams of people (who are able to invent, match to market etc…) and that explains why we are confused about innovation.

Okay, so what is going on?

Quite simply, there is a recognition that developing new products is a cost centre – developing new brands or customers is (often) a cost centre too – and that businesses – no matter how large or small – need more profit centres.

The profit, of course, comes when you have the right product, right market demand and the right team. And the shift in job title tells you that, starting from different positions, there is an increasing recognition that these roles need to become about building self-sustaining sources of profit.

The only problem is that, put like this, it quickly begins to sound like the CEO’s job. Which of course it is – and this explains why some people believe the CEO should also be the Innovation Director.

Nevertheless, the take away point here is that successful business is based on successful innovation – that is, building self-sustaining sources of profit. And, the key to profit is the ability to balance product, market and team.

Leave out any one of these key elements and the business (and product) will almost certainly fail.

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Want help building an innovation engine to create sustainable profit? Contact me…

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Every three years we seem to undergo a fundamental shift in thinking.

So, 6 years ago (2005) we had the concept of extreme programming – or rapid development.

Then, 3 years ago (2008) we were given the concept of rapid customer development – by Steve Blank.

So, its 2011, what will we get this year?

A few sign posts are around – such as Mike Marples (Twitter investor) view that

“[the internet has] fundamentally democratized the process of innovation. So what it costs to prove or disprove an idea has been fundamentally altered.”

So, perhaps we now have rapid innovation?

Well, if defined as innovation of products and services then I don’t think so. However, defined as rapid innovation of business, and then yes, I think this may be true.

You see, rapid innovation has been around since rapid programming was first expressed in 2005. What we have been lacking since then, is rapid development of a business.

Now, a business consists of three critical parts
- customers,
- products and
- a team.

We’ve solve rapid development for the first two – so this year, the next step is the rapid team development.

A key sign of this is the growth and success of startup business accelerators (those replacing incubators). The difference between the two is that incubators provide infrastructure such as office space, computers, connectivity etc (a bit like building roads) but accelerators teach drivers how to drive.

All we need now are something to drive (or businesses).

Okay, the startup business accelerators teach people how to build a vehicle – but, really, do we need to build each vehicle from the ground up each and every time?

Well, clearly, this is the area where greatest time is lost and hence, there is the greatest opportunity for rapid development.

Think for a moment –  what is a business if it isn’t the product and customers?

Well, it is ‘the team’ – hence building better business teams – faster – has to be the next logical step in rapid innovation. And, based on precedence, 2011 is the year when we’ll get it.

The worst mistake I’ve made – and now see others make – is to think that if I build it (a great product, web service etc…) that the customers will come.

They will not.

Sadly!

Okay, Google is an exception – but do you really want to play 1/1000 kind of odds?

The most common reason why a business doesn’t take off or move forward is because of a lack of sales.

Yes, some will say it is the lack of funding and it is true that the funding will run out – but only because the money spent so far has failed to generate sufficient revenue to either make the business break even, nor, to persuade investors to keep funding the business in the hope of future revenues.

To often a business has a great idea or piece of research, but is not making enough sales or is not engaging with its market early enough..

If, having built your splendid product or service, you expect buyers to flock towards it then you are make the classic error of engagement with the market at the END of the product / service development cycle – instead of DURING the product development phase.

Above and beyond the ability to recruit great people to support your business, this failure to engage with your potential customers DURING the product development or research phase is the principal reason that businesses fail.

Note, the harsh truth here – businesses do not fail because they lack funding – there is plenty of money available to back great ideas and strong entrepreneurial teams. No, instead, entrepreneurial businesses close because they lack either the right team to commercialise their business or fail to engage with the market soon enough.

Or, to put it another way, the money runs out before the ‘great’ idea is adopted and bought by the market.

Hence, the issue with standard business plans

Too many biz plans make the assumption that you begin by hiring senior marketing or sales director. Of course, this is a 3 month search and then you need to allow them to give notice too. That makes it a minimum of 6 months before any real work gets done.

And, following the same pattern, you can not hire a marketing manager, web manager, account managers, SEO managers etc…. until you have your sales or marketing director in place. So, recruiting a team might take a year.

Can early stage businesses afford to wait a year before it starts to market? No!

This corporate recruitment approach has shocking outcomes for early stage businesses…

1. One year of time required to build a sales and marketing team

2. Significant costs are incurred both in the recruitment costs AND also the cost of running the rest of the business whilst you wait for your sales and marketing to *finally* get going.

But it can get worse – you might hire the wrong person and you might only discover this when you review the quality of middle management that he or she hires.

Or, that you don’t need a super salesman – what you may need is a super digital and new media team.

In this case, you’ve wasted 6 to 12 months, tens of thousands of pounds and now have to unravel your mistake before you can begin a second 6 month process of recruiting the right team. In the meantime, your competitors are on your trail and you’ve burnt through your funding with precious little to show your investors to support an additional round of funding.

Okay, okay, you can see – this isn’t going to work. We can not simply build great products and services and then hope we can find a place in the market.

You see, smart VCs and Business Angels will not fund businesses with this kind of plan.

Instead, VCs – especially in this current environment – want to invest in business that have ALREADY delivered sales. And, have built product and service innovation into the DNA of the business. That is, that they are responding to market needs and developing products – or accurately forecasting where those needs are moving.

The circular argument to avoid is this: You can’t get funding without sales, you can’t hire without funding, exactly what is he to do?

The answer?

Well, the answer is to forget the idea of hiring a senior marketing or sales director.

Instead, hire a freelance or contract team to deliver a short term project – quickly – and use the results and insights to improve your products and services and/ or change and adjust your marketing strategy.

So, put together a small team of key individuals – all working freelancers or from small key agencies – and give them a fixed budget and objective to deliver.

This approach will allow you to test your market early-on DURING your product development and to use the customer insights / preferences and behaviour to create better products that meet customer needs more directly.

What is the benefit of this freelance approach?

The benefits are simple

1. Your products and services can get to market in a matter of weeks instead of months and years

2. You will know almost instantly if your products and services will succeed, and if not, you can quickly stop your marketing spending and avoid very costly product / service development mistakes

This will then allow you to go back to the drawing board and improve your products / services or adjust your marketing strategy until you can sell profitably.

3. This approach will massively appeal to investors and hence, by demonstrating that you are able to find a far cheaper and lower risk way of taking your products and services to market, you massively increase your appeal to investors.

To sum this up, the freelance / project approach is faster, cheaper and you are more likely to succeed and get funding.

Okay, convinced? Then how to do you do it?

How do you implement a freelance approach to sales and marketing?

You now have two choices.

1.) You can either build a contact list of freelance marketing, sales, IT, PR, writing, design and sales people – such that you can quickly build teams to deliver your marketing projects

or…

2.) You can hire someone else to run the project and recruit the freelance team for you.

If you want to go down the DIY route – then sign up to the next Enterprise Freelance Fair in Liverpool on the 16th March or Cheshire/ Daresbury on 31st March – where you can meet a wide range of freelancers from many different walks of life who can help deliver your marketing and sales projects

or… if you don’t want to engage with freelancers directly, and have the money to do so, then hire Project2Sell to put the team together for you and project manage the piece of work.

Regardless of which path you choose to take (and you may choose to do both – ie. directly recruit key freelance talent whilst outsourcing certain projects) you no longer have the excuse for your business not getting into its market place.

Now, no one can guarantee that when you take your products to market that the customers will want them, but, even if this is the case, you can find this out early (before investing your entire life savings) and either adapt your products/ services or start with an entirely new idea.

Either way, your chances of success in your current or future business will be massively increased.

That’s why ‘HOW’ you engage with your marketing and sales effort is such a key determinant of whether you will succeed or not. It is also why lack of funding is not a good enough excuse anymore.

So, don’t believe in the myth of ‘build it and they will come’ – instead make your engagement with the market an interative process that feeds and supports both the development of your product / strategic AND your marketing strategy at the same time.
If you can achieve this – and this is no mean feat – then you are far more likely to succeed and to be able to raise any additional funds that you might need.

A dreamer? An inventor? Someone who never makes it?

So then, how do you become a successful entrepreneur?

You need to open your shop or market stall or website.

In simplest form, success as an entrepreneur is when you take a great idea AND turn that into revenue (and then into profit too!).

And, interestingly enough, this is the point where many good ideas and inventions fall by the wayside – they just don’t get from the creators den into the market place, or if they do, they arrive too late or don’t fit what the market is willing to pay for.

And that’s why I am offering to help a select few entrepreneurs.

If you’d like the opportunity to learn how to commercialise your products, services and proto-types, and to do this from someone who has been there, done that, got the T-shirt, then drop me a line.

I have a small number of places for an initial free programme including advice, access to key people and events. After the initial free programme, we can discuss terms and decide to whether to proceed further or not.

If you’d like to know more, please drop me a brief line telling me why I should pick you.

Here are the key criteria

1. - you don’t need to live in the NW of England, but you must be able to reach the region for events and meetings
2. - you should have a clearly articulated idea and be talking (or getting ready to talk) to customers
3. - preferable your product or service will be built or at least in the form a prototype
4. - you need to own the product / service / idea
5. - you need to be willing to learn
6. - you need to be able to work with others
7. - you need to be able to turn up on time and keep to deadlines

If your business is just an idea, then this programme would not be for you.

So, if you are ready to move from the invention phase to the real business building and entrepreneurial phase, then please contact me for more information via the Media Modo website.

The IMF has provided entrepreneurs with a wonderful example of how to get it wrong.

The number of times IMF economic forecasts have been trashed is very surprising. In fact, for a bit of fun – have a look at this google search – IMF Forecast Wrong .

You will see that the IMF failed to forecast the economic meltdown in 2008 and then equally, failed to estimate the cost of bailing out the banks getting it wrong by Trillions of £ or $ on each occasion.

Famously, their forecast for central and Eastern Europe in 2008 were so bad (and damaging) that the head of the IMF personnally apologised to the Austrian government (as Austria was criticised for heavy investment in central and eastern europe).

Okay – that’s enough fun – what does this tell us, the entrepreneurs?

Firstly, macro economic thinking is deeply flawed. This doesn’t stop it being a major business, of course and lots of big salaries and some profits somewhere?

Secondly, most forecasts – including entrepreneurs’ business forecasts – are wrong. Yes, just plain and simple, wrong!

All data driven forecasts (in the IMFs case – economic modelling and the Entrepreneur’s case – the spreadsheet) are wrong because they can only use the past to predict the future.

So, what should the entrepreneur do?

If you speak to a VC fund and ask them how they choose their investments, they will tell you that they back smart ideas, great people and a powerful emerging trends.

The notion of a smart idea and great people is well documented, but the idea of backing a powerful trend is interesting.

What the VCs are saying is that a business that will receive funding is going to be riding on the back of a long term demographic or consumer behvaviour trend.

Why?

Well, the VCs already know that the business forecasts they are presented with are rubbish. They already accept that many of their investments will fail (and their forecasts will turn out to be as valid as the IMFs).

Therefore, the VCs need to ensure that when one of their investments takes off – that it takes off big time. It needs to have the potential to become huge. And for that, the business needs to tap into a new trend in consumer or business behaviour.

So, the message that the IMF teaches us is this – don’t make your forecasts too complicated – they will almost certainly turn out to be wrong.

Instead, focus on establishing and proving an emerging trend – a growing desire to buy convenience food – the emergence of freelancing and entrepreneurial activity – the shift to mobile communication and impact on social media – the success of TV talent shows – the green energy shift – Government outsouring – consumer trends to value etc…

So, make the trend spotting your key focus and how your business taps that trend – and use the spreadsheet to manage your cash.

That is because the spreadsheet will keep you in business (stop you running out of money) but the trend forecasting is what will help you raise money – and potentially – have a huge success on your hands.

The competition from emerging market businesses mean that entrepreneurs in the UK and other developed economies need to grow agile and flexible businesses.

The future offers entrepreneurs more rapid shifts in demand – both up and demand – and a better connected world which will deliver price and service competition faster than before.

To survive in this environment, entrepreneurs need to avoid the rigid structures and bureaucracy of employment and adopt either entire or heavily freelance / contract based workforces.

It explains the concept behind the book and how it can help new and old entrepreneurs learn from my mistakes.

Giving up equity to partners is dangerous. It will cause you major problems in the future – if your busines is successful – if you don’t get the splits right from the outset.

Find out how I split the equity on my first business – and why it became a problem.

Then, don’t do as I did!

Instead of just being a way to save costs, freelancers are discovering that they bring original ideas and solutions to their clients. But does it work? Can freelancers help avoid failure and stimulate innovation?

To find out, we are conducting a survey with an analysis of the results and some thoughts on how businesses, agencies and departments might go about resolving those challenges and find new ways to innovate and grow. Please complete our survey and in return we will email you the full results once analysed.

Does it's singular purpose make it successful?

Why do you have a website?

Is it because everyone else has one, so you thought you ought to have one too?

Anecdotal research tells us that 80% of websites don’t have a clearly defined purpose. So, if you’ve made the classic mistake of building a website and are now wondering what to do with it, or even, whether it works, then read on…

What is the purpose of your website?

In our last article, we talked about the cost of a visitor to your website, and how this can vary from a couple of pence or cents to anything up to 10 GBP or over 15 US Dollars (such as the UK Government’s www.UKTradeInvest.gov.uk website).

Whilst this information on costs shows a massive variation, could it be that the 10 GBP per visitor cost to the UKTradeInvest website is money well spent? Well, perhaps it is, but firstly, this will depend on what the website is for, or put it another way, what the website is attempting to achieve.

In a similar way, if you were asked ‘what is the purpose of your website’ would you be able to give a clear and confident answer?

To help solve this problem, we’ve taken a look at the web and can come up with this list of reasons or purposes for any website. Which of these purposes fit your website(s)?

• Digital business card (make the phone ring – could be a one page site with you phone number on it)
• Digital brochure(static content and generate enquries – might be anything from a 6 or 8 page site )
• e-commerce (to sell products online – which will a database driven website)
• Magazine (to promote corporate messages, update on relevant news, demonstrate brand values, generate brand loyalty or to sell advertising and membership services – such as this one or www.EnterpriseFreelanceFair.co.uk - and requires a CMS or Content Management System)
• Community(to allow community to connect to each other – independent of the media and either promote your corporate messages or sell advertising such as LinkedIn or Facebook etc… but could also include smaller communities – such as teachers)
• Deliver internal or service data (so a corporate intranet, an added value customer service site – such as DHL giving real time tracking of a parcel or a Government website – with the purpose of improving your product/ service)
• A redirect site (if you buy a .com and a .co.uk domain, you’ll want to redirect one to the other, or you may set up a corporate home and redirect traffic to your sub-domains, a bit like www.MediaModo.co.uk)

Okay, let’s take some examples. www.DHL.com – this site combines a number of the above purposes - so it is a corporate brochure, an e-commerce site and also it delivers data about the movements of your parcel or shipping.

Equally, our favourite high cost site www.uktradeinvest.gov.uk (which costs 10 GBP or 15 US Dollars to run) is very complex and appears to attempting to deliver the purposes listed above – it is a brochure for the UK, it is attempting deliver information both in magazine format as well as a data driven service. It also appears to have a community aspect to it too with login and restricted parts of the website.

Now, we don’t know the cost metrics of the DHL website, but given the size of its business and customer base, the costs are probably a lot lower per visitor than the UKTradeInvest website.

Other sites, such as www.number10.gov.uk (which only costs 2p or 3c per visitor to run) have a very simple purpose and that is a Magazine to promote corporate or Government messages.

So what can we entrepreneurs learn from this?

Again, we don’t have access to the ROI (Return on Investment) measures for the different websites, but it is absolutely clear that the web lives up to its promise of being cheap and simple if – and only if – you build websites with a single purpose – such as the www.number10.gov.uk website.

Once you go beyond the singular purpose,  and if your website begins to manage multiple roles and has a number of different purposes it will become very complex (and anything complex has a higher risk of failure) and much more expensive per visitor.

If you are a large company with a large number of customers, then the complexity may pay for itself on a cost per visitor basis. But if you are not a DHL, but just an inward investment agency or national based business, then the costs will be too high in most cases.

The advice then, if you want to build economically viable websites with multiple purposes and don’t want to pay 10 GBP per visitor, is to create separate website for each purpose and then a single / central brand brochure website which directs traffic to the correct website.

There is still some work to be done on multiple domains and subdomains – but this will cost far less than then integrating complex ‘heavy lifting’ computer systems into a single domain / home page.

The alternative, again, if you don’t like this complexity (and its associated cost) is to make a radical decision and choose just one purpose – then build a website that meets that purpose.

That - single purpose websites - after many years of getting it wrong and thinking the web is a complex place, is what successful entrepreneurs are now doing. So, do you now have a clear purpose in mind for your website?

How much does this visitor cost?

Do you know how much your digital visitors cost?

Well, if you are working for the UK Government, you will now know how much a single visitor to your website costs – and it can vary by a factor of 48,900%.

Yes, that’s right, the cost of visiting www.number10.gov.uk cost just 2p per visitor – compared to the cost of visiting www.UKTradeInvest.gov.uk which cost £9.78 per visitor.

You can read more about the analysis provided by the Guardian’s data blog.

How can you use this data?

Well, the first question to ask is whether the £9.78 spent on a  visitor to the UK Trade Invest site was good value or not, compared to a visitor to the Number10 website – costing 2p.

We could at this point fall into a lengthy discussion about time spent on the website and therefore, the quality of the visit – but I think that we should approach this a different way.

Firstly, a Number10 is essentially a PR/ News selling site. That is, its function is to push a set of news stories in a way that is beneficial to the UK Government. If it can successfully influence the media agenda, then it is doing a good job.

Equally, the purpose of UKTradeInvest is to bring investment to the UK or support exports. A single investment could be multi-million pound – and therefore, the site is selling a key product – trade to or from the UK - to potentially very high end users.

Okay, let’s look at the costs. Number 10 spent 400,000 GBP on its website last year – that’s around 30,000 GBP per month – or the costs of a medium sized magazine.

On the other hand, UKTradeInvest spent 5,000,000 GBP on its website last year. Now that would pay for the print, distribution, editorial and production of 25 copies of the London Evening Standard. On Editorial costs alone, it would probably get you a 64 page daily newspaper for most of the year.

So, let’s get back to the value argument – take a look at www.­uktradeinvest.­gov.­uk - which will immediately redirect you to a different domain name. The site’s home page – looks cluttered and static. Clearly there are logins and databases behind it – but it looks really hard to use.

It is quite possible that UKTradeInvest has spent a lot of money developing tools – but the figures suggest that no-one is either finding or using those tools. Perhaps because no one really want them?

Take a look now at http://www.number10.gov.uk - and you can really clearly see what this website is about – and why you might want to browse or come back.

The point then is this – very high visitor costs are probably a sign that readers/ browsers simply aren’t engaged with your website. Perhaps this is because it is dull and static (like the UK Trade Invest) or more probably, people/ visitors don’t really know what to do when they get there.

And this brings it all back to the strength of the brand!

To make your digital business work – or any business which relies on digital communication – you need to clearly define and understand the message you want to communicate – then deliver that message and as a result build a strong brand presence.

If you fail, you’ll end up with exceptionally expensive websites that aren’t being used.

So, let’s go back to our brands – and let’s review what we are trying to do – and let’s see if we can achieve a cost of 2p per visitor?

By the way, average time on the site – per visitor – for Number10 is over 5 minutes. UK Trade Invest achieves 6 minutes. Both of which are high scores, but I’d rather be paying 2p per visitor – wouldn’t you?

So what do we do?

Let’s use this information then to set some goals. Websites that cost 2p per visitor and where the visitor stays longer than 5 minutes are a success and will be a clear sign that your have a strong and clear brand and are delivering your website to a high quality relative to the cost.

New start-up digital businesses are going to take some time (or get very lucky, quickly) to reach these kind of figures – but this does set a goal for what we should be aiming at.

Now, would we be willing to share data about the cost per visitor to our websites? Hmm… there’s a tricky question. Answers below please…