How important are hunches to your business? And listening to your customers? And testing your hunches with experiments? Taking financial risks? Then tinkering?
My transformation from seat-of-my-pants café owner to creative revenue and profit growth advisor began with a hunch. For more that 25 years I’ve steadfastly supported countless business owners and executives as they trusted their hunches. Hunches bubble up from our experiences. They should be explored and tested. Continuous improvements come from tinkering to reflect internal and external changes. Billions of dollars have flowed into the coffers of these companies as a result.
You can imagine how excited I was to read, in Jeff Bezos’ 2019 letter to shareowners, that much of Amazon’s huge success has grown up from hunches. He explains that they listened to their customers, used their imagination and figured out a plan to provide it thoughtfully—and quickly. He emphasizes that speed matters!
Be like Bezos
How does Amazon’s philosophy apply to your small or mid-market company? To your professional services firm, or your tiny medical device manufacturing company? Maybe you own a remodeling or design business, printing, plumbing, HVAC or other consumer services business. Maybe you’re a technology company, serving business clients. Can you really rely on hunches to grow your revenue and your bottom line? After all, hunches may not work out.
Here’s the secret–if you understand that hunches and experiments are investments in the future, and are the only way to create significant growth and company value—then no matter the outcome, you’ll generate a significant return on your investment.
On the other hand, if you think taking hunches is risky and you’re afraid to spend money to test them, you will indeed be disappointed. And left behind.
If the hunch and experiments succeed, you have new revenue and profit. Way to go! If the hunch and experiment show you that there’s no market for whatever you put out there, or the costs are too high, you have also succeeded. You’ve learned what doesn’t work so you never have to try that again. You’ll get insight into your thinking process, your planning and your ability to execute. All of these valuable lessons will inform the next hunch and experiment.
Create Hunch-Friendly Culture
Create a hunch-friendly culture where everyone is encouraged to share their hunches. Your leadership priority should be to make time, money and attention available for designing and implementing experiments. Make it a company mantra—”We Love Hunches!” Encourage everyone to ask questions and listen to buyers. Open the floor to sharing the answers, especially the ones most unlike what you currently do or offer.
Model the responses you want to hear. Instead of saying “We always do it this way” or “We don’t do that here” ask “How could we do that?” Or “What would success look like?”
What’s your equivalent of AWS, the service that no one knew to ask for?
Here are some examples from my client work with owners and executives who are committed to building companies of lasting value:
- Fixed fees/prices/rates commensurate with the value the buyer receives. When you ask “What would this look like?” or “How can we do this?” you will have hunches and be able to design experiments to test them. Not one company I’ve worked with that switched from hourly billing or cost-plus pricing has lost money or customers.
- Extreme levels of convenience, access to limited supplies, becoming part of an inner circle that confers status and prestige. These are tangible intangibles that most companies can offer if they just ask “How do we provide exceptional value to our best buyers?”
- Deep and extensive investment in your company’s current buyers, offerings, and employees. I call this “Think Inside the Box” because that’s where the riches are. Direct 70% of your current business development resources to the riches inside the box. Buyers will buy more, and they’ll become staunch advocates of your company to their colleagues and friends. Improve and innovate your current offerings to increase value (and revenue) based on the desires of your current buyers (forget the competition). Show your employees how each and every one of them contributes to revenue and profit. Develop their owner mindset and they’ll help the company increase profitable revenue.
- Spend money–invest–to get the best the quickest. You don’t have to spend at the Amazon level (billions) but you probably have to spend more than feels entirely comfortable. Spend the money on imaginative and creative thinkers who will break your patterns. Be like Bezos, at your level of spending.
- If you’d like to read more, grab a copy of my book Tinker: How Smart Business Owners Develop Creative Ideas for True Growth.
Your Company’s Next Annual Letter
Imagine writing your company’s next annual letter and opening with something like this: “The Company began the year with a hunch: that we could increase company value by extreme focus on our customer’s desires. We made listening to our customers’ requests our highest priority and when they told us what they wanted, we experimented to see how we could fulfill their requests. Most of the time we did. And this year has been the best year ever.”
If you would like to write this annual letter for your company, I would love to help you create a hunch-friendly culture with the most positive energy devoted to experiments and tinkering. Give me a call at 703-801-0345 or send an email.