Mar 29, 2011

Follow Your Dreams, But Chase The Money

The best way to grow profits is to cut your own path. You never hear about companies who achieved immense success by doing what everyone else did. No. Successful companies challenge the status quo, and create new categories and sub-categories.

Companies that break the mold and create new categories create immense competitive advantage. You can see these breakout businesses in almost every industry. Wal-Mart rewrote the business model for discount retailers, and set the standard for big box retailers. The Chrysler minivan went 16 years without a viable competitor. And Apple epitomizes the creation of new categories with the iPod, iPhone and iPad – each product causing structural shifts in consumer electronics.

Every business owner has an opportunity to break the mold and find their own path. It takes vision, commitment and quick reflexes.

New categories aren’t made in a vacuum

Innovative new categories are not created in isolation. Thousands of brilliant business ideas have died on the vine, because there just wasn’t enough demand for them. The entrepreneur saw a need that no one else cared about.

Successful companies challenge the status quo. Steve Jobs said in a Fortune Magazine interview, “When we created the iTunes Music Store, we did that because we thought it would be great to be able to buy music electronically, not because we had plans to redefine the music industry. I mean, it just seemed like writing on the wall.”

When forming a new category it’s always in comparison to the current alternatives. Your customers already have solutions for their business challenges; they just might not be the most optimal. Challenge those solutions head-on, and provide them a better option.

Constantly Tinker

Businesses rarely get it right the first time. Wal-Mart’s dominance didn’t happen overnight. It was Sam Walton’s life’s work, and came out of his constant tinkering and risk taking.

Walton was always on the hunt for fresh ideas he could implement in his own stores. He said, “I probably have traveled and walked into more variety stores than anybody in America. I am just trying to get ideas, any kind of ideas that will help our company. Most of us don’t invent ideas. We take the best ideas from someone else.”

Creating a new category is a work in progress. It takes a significant commitment of time, resources and energy to give your customers a new alternative.

Nothing relieves pressure like sales

It always boils down to money. If your customers don’t get it, they won’t pay for it. Customer feedback is the best feedback. It will tell you if you’re on the right track or not.

Chances are your first time to market may not be a whopping success. So persist, tinker, reinvest and continue to push the ball forward. It’s your vision and dreams that will help you find a new category, but it’s your customers that will form it and make it a reality. When it does come together you will be on the path to immense profit growth.

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