I have worked with thousands of entrepreneurs through Birthing of Giants, my school for entrepreneurs. As a teacher and advisor to the owners of businesses with millions of dollars in revenues, there’s a scenario I come across every few years that breaks my heart. It’s when the rules of the game change and some business owners—those who are so consumed with the day-to-day running of their business—can’t see the huge disruptions that lay ahead.
This is what’s happening right now in the “knowledge” businesses.
I started my career in New York City so businesses where smart people got together to provide wisdom and insight to their clients were common. After all, no one builds a factory in downtown Manhattan. Advertising agencies, management consulting firms, public relation and communications firms—these are the kinds of businesses that I came across early in my career. They are staffed by deeply creative individuals who love to bring people together and ideas to life.
But there’s a tornado headed their way. More accurately, the tornado has already arrived and most of my friends in these knowledge businesses are in the middle of it. Actual tornadoes are a mixture of pressure systems, moisture and geography. The tornadoes these knowledge businesses face are a mixture of attention deficits, A.I./automation and near-shoring.
WHAT’S CHANGED
The world is moving faster, including product cycles. Any product or value proposition you deliver needs to be revisited annually, not every few years. In other words, how you provide value to your clients and how you create value in your business has to be under the microscope constantly.
HOW YOU PROVIDE VALUE TO YOUR CLIENTS
What we know about your clients is that they are being told to do more with less. America is in the middle of a productivity boom. Productivity is simply the revenues we generate divided by the number of hours we work to create those revenues. The financial markets, which are always future looking, are telling your clients that they have to become more productive or else their stock prices will be punished.
Historically, this is a good thing for knowledge businesses because we take the work off the shoulders of our large company clients so they can reduce headcount and measurable hours. However, the attention deficit economy has changed where we fit in their value chain.
Your best ad campaign? Your savviest communications campaign? In an attention deficit world, its value has been reduced considerably. You have to produce 10x the amount of creative content in an omni-channel world where customer journeys, employee needs and vendor strategies are as unique as snowflakes in a snowstorm and as prevalent, too.
Large amounts of data have replaced creativity. Remember “Nike, Just Do It”? That gripping tag line worked once. Now the successful ad campaign is one that assembles and optimizes 100 pieces of creative seconds before a user sees it. Not exactly the scenario depicted in the tv show “Mad Men.” In fact, there are no agencies left on “Mad” (Madison) Avenue anymore.
What about our own clients? An insightful consulting conclusion delivered by the best educated management consultants telling your client where to focus over the next twelve months is out of date before your PPT arrives in their email inbox. Oh, and they likely don’t have time to read it anyway. In fact, even though this article could help you save your business, it’s probably 500 words too long. Nobody reads anymore.
Big data sets are more valuable than wisdom-based insight. That’s a profound change for knowledge businesses.
HOW YOU CREATE VALUE INSIDE YOUR COMPANY
Your peers and friends you came up with– those experienced and knowledgeable folks who need six figures to live? You don’t need that many anymore. One smart, tech savvy “grey hair” that’s willing to leverage A.I. and talent in less expensive parts of the world can do the work of ten experienced, well paid individuals. That means nine of them are now superfluous or need to find work elsewhere. Not much else to say about that other than if I were one of the nine superfluous people, I’d go start my own business and find a better way to do what I do. (For more on that, keep reading).
WHAT TO DO ABOUT THE TORNADO
If you’re reading this message, you might file it into the “too little, too late” box because you already know that your clients appreciation and recognition of your value has been diminishing ever since we recovered from COVID.
On the other hand, whatever I write about this is also what I’ve been sharing with entrepreneurs for the past few years and to them it has the smug ring of “I told you so.” If I’m being honest here, I’m writing this today because so many amazing entrepreneurs have heard me talking about this but haven’t done anything about it.
Nevertheless, here’s what I’ve been telling them for years. If you want to know more about it, let me know in the comments below. Otherwise, I’ll just end up in your “too little, too late” or “I told you so” boxes and I hate it there.
- Choose clients that mitigate risk for you. Our corporate clients are brutal. They don’t pay us very quickly and they don’t want to make long term commitments to us. And our points of contact with these clients may not be there much longer. Factor that in.
- Kill the legacy. Be honest with yourself about your value proposition. If you don’t deliver enough value or the right value to your clients, change that. How? Go ask them what they want you to be. If you don’t like their answer, either find new clients or change your value proposition. You can’t keep doing it the same way and expect a different outcome.
- If you have solid positive cash flow, you have two choices: Either invest in technology to make your business more relevant or invest in something entirely outside of your business, like a strip mall down the street or Bitcoin. Investing in your legacy model probably isn’t wise (see #2)
If these don’t sound like easy “nuggets” that seem to be the currency of most Internet articles, you’re right. The reason why some of you are in the eye of the tornado is that valuable time has already been lost and the pathways to success are narrowing. I’ve run countless programs that have been enormously successful showing entrepreneurs how to change but the hardest thing is watching those who don’t want to.
I’m sure some of you might think of this as a confrontational message but to me it’s a love letter to the indomitable spirit of the entrepreneur. It’s also the same advice I have to take as an operator of businesses myself. You are agents of change and the world is changing. It’s a perfect match if you’re up for it.
Read the full article here
