International bodies seem to be falling over themselves to upgrade their growth forecasts for the UK. The IMF recently hiked its predictions to 2.9% this year and the OECD to 3.2%. This is all good news. But what does it mean for business owners?
An interesting phenomenon occurs as economies race out of deep recessions; there is a rush of new and innovative products as buyers and consumers seek radical new solutions. This comes at exactly the time many companies are still in ‘recession mode’; blinkered, inwardly focussed and slow. In this climate, those who innovate win and those who don’t get left behind.
This is not a time for sticking to the knitting. This is a time for radical thought. Yet it is fraught with risk. History is littered with businesses that have innovated in the wrong direction. Yet, the most successful businesses and entrepreneurs seem to have an uncanny knack for this. They seem to have a GPS to guide the direction and timing of their innovation.
That GPS is called their ‘IP’.
Harry Warner is famous for his 1927 assertion ‘who the hell wants to hear actors talk!’. It’s a well-worn anecdote but it tells an essential truth; those who focus on the product of today and not what sits behind it miss the opportunities of tomorrow. And what sits behind it is your ‘IP’.
So what is ‘IP’? To me, it is the unique combination of knowledge, talent, experience, relationships, culture, reputation, technology, systems and belief that sits in your business. It is your unique rocket juice.
You may not have heard of Ilya Prigogine. His research into the energy in chemical reactions won him the Nobel Prize in 1997. To me, what is most interesting is that he also became a sought-after guru in the lucrative science of people flow. The point is that he realised that his unique ‘IP’ in understanding how order can be created from disorganised energy could be transferred to a completely unrelated ‘product’ field.
Identifying your true ‘IP’ can be tough. A good place to start is to ask yourself in one or two words what you are best in the world at. It’s a tough call when you are inside the business. But that knowledge can be genuinely transformational.
I was once asked to help an asbestos-removal business. The market was in decline, the owners wanted an exit and their Accountants had given them a gloomy valuation. So, what was the solution? Well the question is to ask ‘what are you best in the world at?’ The response was, inevitably, ‘asbestos removal’. Like Harry Warner we find it so hard to see beyond the product, particularly if we have built the business year on year on that product. However, after discussion, a set of ‘IP’ began to emerge; a fabulous culture, brilliant training, great recruitment, a deep understanding of complex UK and European Legislation etc. When I asked them to look at that ‘IP’ and tell me what a company like that would do they came up with quite a list from Recruitment to Training to Consulting. These are their potential extensions and, since they are based on their ‘IP’ and not on their products they were very likely to succeed.
I love the Saga story. Saga started with a hotel and built a successful travel brand. The marketplace they developed, by accident or design, was the over 50s. And here is the choice. If you look at it from a ‘product’ perspective the logic is to innovate travel products out of the over ‘50s market. However, if you look more creatively at the company and from an ‘IP’ perspective you realise that the core IP is actually the understanding of and relationship with that over ‘50s demographic. From that perspective, your extension strategy looks very different. This is, I think, quite a leap, but Saga, to their credit, ‘got’ that insight which allowed them to extend their product into insurance and then other financial services, magazines and thereafter other media etc. and build a multi-billion valuation business based on services for the over 50s. Had they logically extended into additional travel products (18-30s holidays?) I wonder where the business would be now.
What this teaches me is the value of asking yourself the ’what if’ question around how you define your business. And this is particularly important in this stage of the economy. A great question to ask is ‘what if we were a xx business? Then what would we do?’
Successful innovation and extension occurs where companies have truly understood their ‘IP’. And those companies that understand that will win in the world of growth and innovation that we are just emerging into.
The Secrets of Seven Alchemists by John Rosling is published by Harriman House in August 2014, priced £16.99. Find out more here.