Posts Tagged ‘adaptation’

Many people assume that most any business can become a big business.  But if that’s true, why is it that 95% of all businesses in the United States never reach a million bucks in annual sales?

Surprising as it may be, most businesses simply don’t have what it takes to grow significantly.  In fact, only two or three businesses out of a hundred will ever grow past the Mom & Pop stage – past the owner’s immediate span of control.

If you’re a small business owner with visions of growth, these facts can be a little unnerving, and more than a little disheartening.  What these facts tell us is that if you want your business to grow into a substantial enterprise, you need to do something that roughly 25,000,000 other business owners have been unable to do!

So where do you start?  You start by confronting the brutal facts.  You start with perhaps the most important question a business owner can ask:

Is the market sufficient?

Two factors comprise the market, demand and attachment.

  • Demand is about quantity – how many people want what you’re trying to sell.
  • Attachment is about quality – how much do people want what you’re trying to sell.

For a business to grow significantly, there must be high demand or strong attachment, preferably both.  Although it’s a little unwieldy, here’s a question that gets to the core of market evaluation:

Do enough people care enough?

Sometimes, the answer is no.  Last year about this time our company released an online service called ReallyEasyHR.  The service provided a complete small company HR program for $30 a month.  It was a great service and a remarkable value.  But guess what?  Nobody cared.  It turns out that small business owners have virtually no interest in spending even a few dollars a month on HR.

I believed ReallyEasyHR was going to be successful.  And I suppose I could berate myself about how wrong I was.  But here’s the thing:  You don’t know how the market will respond until you start trying to make sales.  The hard truth is, until you ask a prospect to fork over some cash, it’s all just guesswork and speculation.

That’s true in small companies like ours and it’s also true in huge, wildly successful organizations.  Not so long ago the brain trust at McDonald’s looked at emerging demographic trends and saw what they thought was an opportunity.  People were living longer and the older adult population was burgeoning.  In response, McDonald’s spent $300 million to develop and launch the Arch Deluxe, a sandwich positioned as “a more sophisticated burger for the adult palate”.  The Arch Deluxe was a complete flop. As it turned out, people didn’t want a sophisticated burger from McDonald’s.  Which just goes to show you that some of the smartest people on the planet can be flat-out wrong when projecting demand.

Demand is one thing your company can’t grow without.  Unless enough people care about the product or service you’re trying to sell – and care enough to go out of their way to buy it – survival is unlikely and growth is impossible.  So here are two important reminders for owners who want to grow their businesses:

  1. You won’t know if there’s enough market for your product until you offer that product for sale.
  2. There’s a chance you’ve overestimated demand, so don’t go all in.  Make sure you live to fight another day.

In my next article, I’ll offer some thoughts on the other factor of market potential, attachment.

Chaos and Complexity #5: Chaos vs. Complexity

by Gary Monti on October 12, 2010

What is the difference between chaos and complexity? Many of the previous blogs have referred to both terms. While related, they are distinct. Here they will be differentiated.

Chaos vs Random

First, let’s look at what chaos is and isn’t. In everyday language chaos and randomness are considered synonyms. In chaos theory they are very different.

Random refers to a lack of structure at any level. No intelligence or pattern can be discerned.

Chaos does have observable patterns present. Chaos refers to the unpredictable behavior a deterministic (rules-driven) system displays. Chaotic systems are non-linear. This means small changes might produce a large change at certain times (tipping points). At other times a chaotic system can display remarkable robustness and remain intact when being hit with many, substantial impacts. There are other characteristics associated with chaotic systems, which we will explore in later blogs. For now, one more characteristic will be addressed which leads into the development of complex systems – emergence.

Emergence and Adaptation

Emergence is the appearance of patterns or intelligence arising from the interactions of components at a granular level. The most important distinction with emergence is the bottoms-up rather than top-down development of patterns. The resulting patterns can’t be predicted but they can be capitalized upon, amplified, and used to push adaption.

Adaptation is a transformative modification of the initial system, i.e., the system one ends up with can be different from the one started with. A good example of this is the map of Europe before and after World War II. The war began with England and France’s response to Germany’s invasion of Poland. The initial goal was the preservation of the sovereignty of Poland. In the end the German’s were defeated but Poland was lost behind the Iron Curtain. Notice how the adaption can have beneficial effects but may not necessarily result in the desired goals being met. This is a good example of the riskiness associated with working in the realm of chaotic systems. It still is better than trying to work in a deterministic fashion on a dancing terrain. Do you remember CompuServe? It had a chance to buy AOL, felt satisfied with being the big dog in business computing, stuck to a linear model, failed to adapt, got bought by MCI and now is a part of Verizon’s network.

Complexity

Complex systems are a special type of chaotic system. They display a very interesting type of emergent behavior called, logically enough, complex adaptive behavior. But we are getting ahead of ourselves. There’s a need to back up a bit and describe a fundamental behavior that occurs at the granular level and leads to complex adaptive behavior. It is self -organization.

Self Organization occurs when the individual components in a chaotic system come together to work as a team to achieve the desired goal. Remember the non-linear component of chaotic systems? This applies during self-organization and means teams may form, work for a while then fall apart and reconstitute in a different form when an obstacle is met to keep on moving forward.

Complex Adaptive Behavior is the name given to this forming-falling apart-reforming-falling apart-… behavior. Specifically it is defined as many agents working in parallel to accomplish a goal. It is conflict ridden, very fluid, and very positive. The hallmark of emergent, complex adaptive behavior is it brings about a change from the starting point that is not just different in degree but in kind. In biology a good example of this is the emergence of consciousness. Another example is the Manhattan Project and the development of the atomic bomb.

Back to Linearity

The development of a complex system within a chaotic situation has a big plus. Complex systems can cross over into predictability where the newly developed rules work, e.g., the actual development and delivery of the atomic bomb. Remember the equilibium-disequilibrium talked about in the previous blog?

We now have a good basis for moving forward. In future blogs we will draw upon both the vocabulary and frame-of-mind presented here to look at how one leads in chaotic situations.

social media relationshipsThe new year is coming on us and as we say good bye to 2009, which for most industries was a challenging year, we need to keep our eyes on the future. By far, 2010, will be the year when social media marketing is going to get really SERIOUS. You may ask, what does that mean?

For most part, like every maturing industry, here is what we can expect:

1. Consolidation: All the companies that support features and functions for Twitter and Facebook will see some consolidation.

2. Metrics Matter: For those managing marketing budgets, will start to put practices and metrics in place that will help them analyze social media spend and ROI.

3. More Adaptation
: The MarketingSherpa report also notes U.S. marketers plan to increase budgets, cites eMarketer. Retail and e-commerce marketers are more likely to increase social media marketing budgets next year, 79%, followed by publishing and media at 63% and computer hardware and software companies at 55%.

Here is a small twist: It is true that 2010 will make ‘social media’ more serious and that brings us back to SOCIAL in social media.

Whatever we might do in terms of setting policies, metrics and practices around quantifying and qualifying social media, we can be rest assured that PEOPLE and RELATIONSHIPS will rule the space of social media.

Here is what we can do to become more competent contributors and users of social media:

1. Are you listening? : If you really think that there is someone  (other than moms) interested in what you ate for dinner, you can forget about it. As a contributor ( company or an individual), you will have to bring “quality” to what you have to say… and even more important than what you have to say, is what you listen. If you have the competency to listen on social media, there is good news. A new career is shaping up, people who can listen on social media will be valued and compensated. This is where new ideas, fresh perspectives and solutions will be created.

2. Are you giving good help? : For a decade, the business world had a nice ride telling what consumers should buy. With social media came a new revolution, where a consumer was able to make informed decisions based on help from people he/she trusted. The real question is “Is your customer service responsive?”, “Are you keeping the promises you make to your consumers?”, ” Are you willing to break some traditional and outdated rules that hurt your consumers?”

3. Are you building long -term relationships?
: We have to give up our instant gratification mentality. Patience and perseverance – TWO KILLER APPS to WIN OVER MANY. Building long-term relationships means, you will have to first invest and nurture in those relationships – without getting anything out of them. And this means, to give a lot of help, a lot of value and a lot of time. Your content, your customer service and your response time – need to be impeccable to RULE the SOCIAL MEDIA Kingdom.

Welcome to 2010. I can’t wait to begin the ride….