Bill Bishop defines a Strategic Enterprise as a company that uses the Relationship-First Formula, which means that it builds its business around customer type as opposed to product type. The author uses the formulae below to demonstrate what he is trying to say.
Product First Formula : Product x Large Number = Success
Relationship-First Formula : Quality Relationships x Unique Value = Success
Bishop builds the case for relationship selling by asserting that organizations need to shift focus from the products they sell to the people who buy them. The book is loaded with many pointers, and provides numerous examples of the problems that can prevent a business from reaching out to its customers. Bishop talks about how "most companies today use the incremental method and try to succeed by patching up their fundamentally flawed systems. Primarily, companies use this method because they spend most of their time living in the past. They can't envision an ideal model of the future, because they have so much invested in what they have already done. " The author also talks about eight limiting factors that can strand your company on the Performance Plateau.
- Focusing on short-term goals
- Working individually or in small groups
- Thinking only products and services
- Trying to beat the competition
- Focusing on sales, not marketing
- Creating tools for specific situations
- Being a slave to technology
- Focusing only on existing markets
To further explore focusing on short-term goals, Bishop delves into the characteristics of companies plagued by this limiting factor. For example, "short-term thinking is a key symptom of a company stuck on the Performance Plateau. Executives, salespeople, employees, and shareholders focus solely on achieving better monthly or quarterly results … Caught in the rush to achieve short-term goals, the company does not take the time to install a bigger, better, or more powerful engine. " Characteristics of a firm that focuses on short-term goals include: have no long-term vision of success for their companies, make major decisions and radical changes based on temporary setbacks, and strive to increase sales and profitability by doing the same things only faster , more often, and better.
Five Great Ideas
- It's important to take time off regularly to plan and build a better business. By making less money in the short-term, you can make more money in the long-term
- Success now takes more than a better product or service, no matter what your business or industry, your business must be built around specific types of customers, not around your products or services
- A well-designed information technology system will give you a greater chance of success and allow you to deliver unique value faster, better and in a more individualized way
- A strategic enterprise starts every project or initiative with a vision – a detailed blueprint of the ideal outcome to achieve success
- Your customer type must be a kind of person, not a kind of company or organization because you do business with, and have a relationship with a person not an organization. People buy your services and write the checks, not organizations
Though The Strategic Enterprise provides many mini case studies and examples of the problems that companies face when using the product first strategy, the author tells you rather than shows you, so you'd have to hire a consultant to implement the relationship-first strategy in your company. The book is loaded with information, but lacks the depth necessary for you to be able to make the changes necessary within your company. Despite the shortcoming, I recommend the book because you'll glean insights and it will make you think about your customers a little differently.[ff id=”2″]