I was asked to present at the FBD / KCLRFM Conference on ‘Change Your Thinking - Be Creative’ in the Newpark Hotel Kilkenny during the week.

I was pleasantly surprised in the first instance that an insurance company and a local radio station would be hosting such a conference, and even more so by the 200 or so small business people that actually turned up to the event! So the subject matter of the conference obviously caught the attention!

The other speakers at the conference included:
Dermot McConkey of ‘McConkey Performance Management Ltd.’ (www.mcconkey.ie);
Thomas Marry, MD, Surfbox (www.surfbox.ie); and
Robert Kerr, MD, Insomnia Cafes (www.insomnia.ie).

Dermot gave a very wide ranging motivational talk that certainly provoked, stimulated and entertained the large audience. The main thing I picked up form his presentation was the importance of delivering a quality service.
His main message: “People don’t buy similarity or mediocrity - they buy difference!” And in order to differentiate - we have to be creative!

Thomas and Robert highlighted the various forms of change they have had to deal with - from start-up to success - in their respective businesses.

In my presentation, I attempted to focus upon the challenges that face the owners of small business and the importance of being open to change.
I copy below my presentation -

What’s going on in Your Business Right Now?

I want to first of all start by making a statement:

“Owner-managers of small business are not getting the return they should for the work they are putting in to their business.”

Have a think about this. Do you agree or disagree?

Honestly ask yourself are you satisfied with the return that you are currently getting from the hard work and effort that you are putting into your business? If you forget for a moment about the satisfaction that self-employment might give you or the freedom you might enjoy from being your own boss and look purely at the monetary return you take for the hours you put into the buisness - are you satisfied with the rate at which you are being renumerated?

I would guess that the vast majority of you are not satisfied. And I would argue that one of the main reasons that you are not getting the return you should is that as owner-managers you are not allocating your time properly . You are too preoccupied with ‘fire-fighting’ the day-to-day issues in your business that you are not devoting any or enough time to stand back to organise and plan for the overall development of your business.

You are spending too much time doing the wrong work! The worst case scenario is that you are busy fools!

The American guru Michael Gerber perhaps articulates this best when he says that every small business owner must be three distinct entities in one.
They must be at the same time an entrepreneur, a manager, and a technician.

The entrepreneur in you comes up with new ideas for the business.
The really good entrepreneurs constantly try to innovate their business and they have an ability to change in response to changes in the external environment.
If you correctly interpret what is happening now, you will win a huge advantage over your competition and be in a better position to adapt to change.

The technician in you strives to develop the methods necessary to put your idea(s) into practice.
Most businesses are started by technicians - individuals who have tradeable skills or an expertise in a certain area, and they often make the assumption that if one understands the technical work involved in a business, then it automatically follows that one understands a business that does that technical work.
This of course is not the case and is unfortunately one of the root causes of most small business failures - Poor business planning and management skills. The really good technicians continually look for best practice to aid continuous improvement.

Finally, the manager in you takes care of the business functions necessary for the operation of the business.

The really good managers will create action plans to support your business; use Key Performance Indicators (KPI’s) to constantly try to quantify the impact of the new ideas – how does it improve upon the bottom line; take the time (monthly and/or quarterly) to evaluate critical business indicators to check the health of your business; etc.

Identifying and developing essential small business and management skills are vital components of entrepreneurial success. Business and management skills such as sales & marketing; financial planning; costing & pricing; etc.

You need to get the right balance and devote sufficient time to all three roles. 

One way of looking at your business objectively is to imagine that you have been approached to franchise it in some other part of the country in the morning.

Ask yourself - would you be able to show a franchisee how to run your business? Explain to them your vision and what business you are in? Outline your target market and customer base? Would your business processes, marketing approaches, etc. be easily and readily followed?

We can all innovate!

The Enterprise Strategy Group (ESG) were set-up by the Government to develop an economic strategy for the country as a whole going forward in 2003.

In their report published in 2005, the ESG stated that in order to maximise the greatest number of sustainable enterprises in this country in the future, we will have to ensure that a combination of the right ‘essential conditions’ and ‘competitive advantages’ are put in place.

These will involve a wide range of stakeholders where everyone has a role to play in ensuring that we have the greatest possible number of sustainable, profitable enterprises in the country going forward – from society in general, and our attitudes towards enterprise; to our the education system and government policy (e.g. taxation regime, infrastructure, etc.) to state agencies with supports they make available - but most importantly of all you the small business owners have the biggest role to play.

You must recognize that you face challenges too. The ESG outlined a number of essential conditions, and given the subject matter of the conference here today, I will focus on one of these, namely - innovation & entrepreneurship.

In fact I have adapted this slightly to ‘innovation and creativity’ as I believe they are so closely linked.

What is meant by innovation and creativity?

Innovation: is the process of developing new products, services, or ways of operating the business for commercial gain.

Creativity: enables innovation. It is the discovery of new ideas or new ways of doing things.

Most times clients I work with switch off when they hear the word Innovation, as unfortunately it is too often viewed as the preserve of large industry and that small business have little or no role. 

To be fair, this view is to often bourne out by the way that innovation is spoken about and by the way it is measured. We hear about investment spend in R&D, university research, technology transfer, by the no. of PHd’s; by the no. of science graduates; by the no. of patents registered; etc.

Sure all of this is important, but is only part of the picture of innovation and I would argue – only a very small part!

Many of the hundreds of small businesses supported by the CEB in Kilkenny in the last 13 years have displayed various forms of innovation (technological and non-technological).

They have been creative in order to adapt the way they do business to become more efficient and effective. I want to just give a few examples here:

Example 1: Oldtown Hill Bakehouse trades under the brand “Where food still tastes the way it should.” All their products are free from artificial additives. They operate in a very difficult sector where the vast majority of bakeries in this country have closed down in the past 20 years, they have worked very hard to develop an extremely successful business from start-up.

They use traditional methods and recipes throughout their range of products from Brown Bread and Apple Tarts to luxurious Chocolate Fudge Cake. However, they were finding it difficult selling their new range of rhubarb and apple crumble cakes, which they tried initially selling in packs of 6.

They knew the product was a quality one and that it should sell but couldn’t undertsand why it wasn’t. Following consultation with the shop owners through which they sell and their own market analysis they introduced simple innovation - adapted the product to packs of 4.

Sales dramatically increased as a result and the product line is now one of their best earners.

This was mainly due to the fact that the no. of 1 person households in this country has increased by almost one third in the last 10 years with more single people living in 1 bedroom apartments and more old people living alone. So these people were less inclined to purchase a premium fresh product of 6, but more inclined to purchase pack of 4.

Oldtown didn’t compromise on the product itself – it is still a premium product – it is not cheaper. This to me is an excellent example of simple non-technological innovation. The CEB assisted Oldtown with a small capital grant to set-up their state-of-the art premises in Tullaroan.

Example 2: Up to 80 per cent of all Leaving Cert students currently take grinds, paying between €25 and €50 per hour, depending on the subject, which means that this market is worth at least €50 million per annum.

We have supported a teacher who was one of those that gave grinds to set-up ‘ReviseOn-Line’ (www.reviseonline.ie), which is an on-line service opening access to a greater number of students for course materials for a fraction of the costs, taking the same materials that he gave in one-to-one situations and small group workshops here in Kilkenny, and using the latest internet based technology to make them available to a much larger market nationwide via the internet. Again - this is real innovation.

The CEB has supported this project through small levels of grant-aid, technical assistance and mentoring to establish the project.

Example 3: Another client of the CEB has developed a board game based around field sports such as gaelic football, hurling, rugby and soccer. It is similar to monopoly but based on the rules of field sports.

However, he realises that the concept of his ‘roll-the-dice’ board game is really difficult to market in today’s world, especially when competing against the likes of sony playstations, Nintendo wiis and other computer games. He is aware that his product will not be appearing on many Santa lists.

So he has creatively adapted the game on 2 fronts:

first as a tool for aiding the teaching of Irish with the support of the Dept Community Rural and Gaeltacht Affairs, where primary schools will be given 6 copies of the board game; and

second he has developed the board game as a merchandising product available in the merchandising stores of English soccer clubs. The game is adapted with the branding and logo of the club concerned. The price point is right in that adults attending the games are more inclined to purchase the product as a merchandising product to bring home as a present for kids. This again is innovation. The CEB assisted the project through a Feasibility Study Grant to develop a prototype for the merchandising product.

The above examples prove that every business can be creative and innovate.

Challenges that lie Ahead:

We are increasingly being subjected to international competition from many foreign markets attracted by Ireland’s growing population and wealth. We can access them and they can access us. You only have to look at shopping centres to see that more and more foreign owned companies are occupying space there selling goods here that are made elsewhere!

This emphasizes the need for Irish companies to identify precisely what it is they are good at so that they can secure business and build good customer loyalty. Local businesses now have to compete with some of the world’s largest global brands in every sector. Many of these companies operate with huge economies of scale and can therefore produce products and services at much lower costs, so it is becoming almost impossible to compete with them on price. But you can compete by offering superior levels of service and quality - by innovating.

You will have to find new ways of competing – based mainly on building customer loyalty - knowing your customers better; developing stronger relationships with them; knowing their needs; providing unique products and services; etc. – in short in every aspect of your business, striving to be the best.  This will require greater levels of innovation. 

Predicting the future is easier said than done.

Lets look for a moment at some of those who got it wrong in the past.

“I think there is a world market for maybe five computers.” Thomas Watson, founder of IBM, 1943. 

“There is no reason why anyone would want a computer in their home.” Ken Olson, founder of Digital, 1977.

The moral here is not that major business leader say foolish things but rather that you must be prepared to accept that everything is subject to change sooner or later.

What holds true today may not hold true tomorrow. We have to be prepared to:            - change, come outside our comfort zone, be open, be creative and innovate!

The key for the future will be to know what business you are in.

What business are You in?

All businesses operate between 2 extreme ends of a spectrum:

At one end you have those that operate on a ‘Cost leadership strategy,’ which is a bit like saying ‘buy mine, its just as good but it’s cheaper.’ This is the no frills product or service produced at relatively low cost. 

This strategy depends largely on economies of scale; efficiencies, upon cutting costs. We can all think of examples of companies that have a leaning towards this model of doing business - RyanAir; Lidl; etc. There is typically very little brand loyalty here, as the customer tends to shop around for the cheaper option all the time!

At the other end of the spectrum you have companies that operate on a ‘Differentiation strategy,’ which is a bit like saying ‘I’m better than all the rest but you will have to pay more!’

Products or services produced within this strategy are perceived as being unique and premium (e.g. rolex; Gucci; Jaguar; etc.). This strategy depends upon creativity – innovation, adaptability, etc.

The ‘Cost Leadership’ strategy is also referred to as ‘so what’ whereas the ’Differentiation’ Strategy is referred to as ‘oh yes’. There is nothing wrong with operating strategies at either end of the spectrum. There is a place for them all, but it is becoming increasingly difficult for small businesses to compete on cost alone.

Small businesses in particular will have to differentiate themselves more and more in other ways. And this is where the role of creativity comes in. I would contend that small businesses in particular have a better chance of succeeding by differentiating and to succeed here you will have to be creative to come up with ways of being different from the competition.

Structured Creative Thinking Techniques

You can introduce structured creative thinking techniques into your everyday business practices to help you adapt to change.  The CEB through a new initiative with which we are involved – the nc4c – ran a pilot programme earlier this year with 16 small companies from Kilkenny, South Tipperary and Carlow.

The programme was aimed at helping owner-managers introduce creative techniques to help with their:

Marketing & Sales:

to develop stronger relationships with customers and to help them identify their differentiation.

Improving Work Practices:           

to become more efficient & effective;

overcome challenges more easily; and

achieve a better work balance (between the entrepreneur, manager and technician)

Product & Service Innovation:           

to solve problems;

do things better;

identify future opportunities.

The feedback from this pilot programme has been excellent and has inspired us to run a number of further ’structured creative thinking’ programmes. Indeed, we have an information session planned on 11th December next to explore this subject further.

Be Open:

Sometimes we are blinded by our culture, by our education, by our background, by our prejudices, etc and that can prevent us from opening up our minds.

We can find that we look at things in the same way that we always did and as the old addage states if we always do what we’ve always done then we’ll always get what we’ve always got, and we will be unable to adapt to change.

Look at this photo – what does this group of people conjure up in your mind?

If they approached you in the morning would you consider investing in them?

If I said the era is 1978 and this is the original team at Microsoft would you have a different view?

They eventually secured loan finance to start their company and in 1981 they had their IPO. The company is now one of the largest in the world and employs 80,000 people worldwide.  4 of the people in this photo are now billionaires and this little boy in the bottom left hand corner is Bill Gates, multi-billionaire and reputed to be the richest man in the world!

I want to finish up now.

I would contend that there has never been a more supportive environment for those either in business or thinking of starting one.

The CEB ladder of supports – we are the first point of contact for small business in County Kilkenny.

I urge you to be open - seize the opportunity – come talk to us today.

Thank You for your attention.

Sean McKeown.

www.kceb.ie