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January 2016

Deep cuts no panacea for recession woes

Jan 21, 2016 9:35 AM
Carolyn Reid

Rick Spence, Financial Post
Published: Monday, September 14, 2009

The challenge of any successful business is to turn a weakness into strength. Figure out what's not working, and then find ways to overcome that flaw and outshine the competition.

No one does this better than entrepreneurs. Remember when lawn-spraying companies proudly sported names like ChemLawn? Once consumers started questioning the concept of dumping chemicals on their backyards, entrepreneurs responded by starting new lawn-care firms with idyllic names such as Barefoot and Trugreen.

I just read of another example at a bar in Berlin. Every retailer gambles when it purchases inventory, knowing some items will be more popular than others. In the heart of what used to be East Berlin, the Broker's Bier Borse devised a market-oriented solution. An electronic ticker over the bar readjusts prices every three minutes, upping the price tag on popular beers or lunch specials, and lowering the prices of the drinks and dinners currently less in demand. Result: better-balanced inventory, fewer product shortages, and daily discounts for bargain hunters.

What does it take to turn common obstacles into opportunities? It's just a matter of attitude. You have to be continually open to new ideas and see your business from the customer's point of view. What frustrates your clients? What prevents them from doing more business with you, or even with your competitors? Only once you identify these problems can you dream up solutions that will win their hearts and wallets.

Twenty years ago, Apple Computer faced a distribution colossus in the form of Microsoft-powered personal computers. But CEO Steve Jobs knew people hated having to learn MS-DOS just to type out a letter. So Apple made the user experience a selling feature, first by offering easy-to-use graphical operating systems and later supplying the coolest designs, from the one-piece iMac to the ultrathin MacBook Air laptop.

Every entrepreneur understands establishing a defensible niche, but you must push beyond that to grow. Toronto-based hamburger chain Lick's took on McDonald's with a chunky charcoal-grilled "homeburger" that made the Big Mac look small, and singing servers who make dining out a more personal experience than lining up at KFC. Now 30 years old, Lick's has 24 outlets and is expanding slowly but steadily across Canada.

The ultimate underdog, WestJet, became Canada's most valuable airline by stressing friendly service. With Air Canada staff known for their surly, civil-service demeanour (and heated strikes), WestJet promised crews that care, because they think like owners (and in fact are).

Examples such as these can help you spot opportunities to turn weaknesses into strengths. Is customer service a problem in your industry? Measure your service levels, then set the bar higher (remember FedEx's "absolutely positively" campaign?). Train your staff to go the extra mile -- and provide incentives to encourage them to do it every day.

Fill in gaps in your product line. If demand is growing for lower-cost products in your industry (or for higher-priced, higher-quality items), diversify your offerings by setting up new brands or distribution channels to meet these needs. If Indigo (Indigo, Chapters, Coles, and Chapters.,hotel chains, supermarkets and wireless companies can do it, you can too. Are customers bored with the same-old same-old in your industry? Mix it up. WestJet armed its flight crews with silly jokes ( "If you would all pay attention to the following safety demonstration -- we would be genuinely surprised") to put a laugh into every liftoff. In Halifax, Pete Luckett's Pete's Frootique introduced the colour, freshness and cheeky personality of an English country market into the tired grocery business -- and even a busker-in-residence. Luckett's motto: "Be first, best or different."

Find more ways to give your customers what they want. After Apple upended the personal device market by inventing the sleek iPod, Jobs became an even bigger hero by forcing the record labels to accept his 99-cent price tag for downloading songs on iTunes.

Loblaw's President's Choice built its reputation for quality by packing more chocolate-chips into its cookies than the national brands had ever done.

Many companies overcome customer mistrust (or unfamiliarity with new products and services) by offering no-quibble guarantees. If you don't like my product, take your money back; if you're not satisfied with my service, we'll keep trying till you are. The risk is low. As a business journalist, I get to ask indelicate questions, and one of my favourites is, "How often has someone taken you up on your guarantee?" The most common answer: "I'd have to check. No one has done it in a long time."

Transforming problems into strengths is a game-changing strategy. It may require updating your brand promise, or reinventing the whole business. Innovation has to spring from genuine customer need and must fit naturally with your company culture. But when you learn to redefine industry obstacles as custom-made opportunities, you find business gets easier. And a lot more fun.

© National Post (Evergreen) 2009