Building a successful business should not be overly complex. Hard work? Yes. Complex? Not if founders are focused on what matters.
Suppose founders remain focused on the reputation they want to have with their customers (i.e. trustworthy, ultra high-end, caring, efficient, intelligent, funny, etc.) and execute exclusively based on that vision. In that case, the odds of success are high… extremely high. However, many startups fail because they don’t have a defined lane and lack the necessary execution capabilities.
To ensure a company stays true to its desired identity (learn more on this subject by reading “Your Company is a Person“), consider that three business strategies/identities work, no matter the industry. Which one have you implemented, and why?
This approach requires your business to be entrenched in your customers’ challenges/routines/pleasures — so much so that the thought of being without it creates a deficit or even anxiety for them.
Bottom line: Their lives are better off because of your business, and they know it.
To successfully achieve a customer intimacy model (think world-class resorts, tax/wealth planning, health facilities, etc.) is to KNOW your customers like you know your friends. You must understand their demographic, desires, habits, routines, and tastes and use that knowledge to provide a superb experience that will be incredibly difficult for a competitor to match.
Amazon is famous for its customer intimacy model. Outside of their clever algorithms, Bezos and crew engrained the customer intimacy model into their corporate culture. At meetings, Amazon is famous for having an empty chair present, representing the customer always having a seat at the table and being the motivation behind important decisions.
A remarkable aspect of the customer intimacy model is it leads to the discovery of new ideas and, thus, quicker and better innovation than the competition.
This is the most manageable strategy to implement in the early days, yet the hardest to maintain as your business grows.
This strategy succeeds based on finely tuned numbers/math to provide customers with the most cost-effective product/service. Math and connections make this model work well.
When quality is not the number one thing for the customer, this is the only model that will work… think Walmart.
The entire goal of Walmart is to lower the cost of every transaction it has with its customers — affordability above all for the consumer while creating consistent and predictable margins for the business.
This is a challenging and time-consuming strategy to implement early on, but once established is the ‘easiest’ to maintain.
Creating the next ‘must have’. Obviously, this requires a deep knowledge of customer tastes (customer intimacy model) and having the skillset and expertise to create based on that.
The innovation model is the more exciting of the three business strategies but has the highest failure rate. It is typically capital-intensive initially and takes the longest of the three to see results.
However, when you nail the innovation model, your margins will be among the best in the industry, and your brand can become a household name. More billionaires are created from this model than any other.
I’ve worked with over 100 early-stage ventures or startups over the past 15 years. The successful ones are dialled in and obsessed with implementing at least one of these models.
Perhaps you’re approaching entrepreneurship with a hybrid model that blends two of these three together (the customer intimacy model paves the way for the innovation model). Either way, you need to master at least one to succeed.
Something for founders to consider…