We’re preparing for Mastering the Rockefeller Habits Four Decisions Workshop, November 12th at the Kirkwood Hotel in Cedar Rapids, IA. As part of that preparation this month’s newsletter relates a story from one attendee that applied the resources to improve cash flow (Cash Conversion Cycle) and discover his X-Factor. For those of you unfamiliar with what an X-Factor is, no it’s not a TV Show, rather it’s identifying the chokepoint in your business model and industry that when you gain control of provides solutions that will give you an exponential competitive advantage (7-10x) for your industry. I’ll provide a couple of examples of this, however the point of this newsletter is to offer the value the Four Decisions Workshop provides as well as to remind you of the critical value that investing a day or more to work ON your business offers for the growth of your business.
It’s difficult to convince anyone who’s used to the weather in California to fly to Cedar Rapids, IA especially in March. Yet that’s exactly what Sat Singh did in March of 2009. He never let me forget it, nor the -17 degree wind chill he had to endure the next day when he left. The trip proved to be very rewarding for him none-the-less.
During our first exercise (Cash Conversion Cycle) of the workshop Sat suddenly realized that an aspect of his business which he detested, collecting membership monies from his customers through credit card payments, not only was a cash cow for his business, but that it represented a significant growth opportunity for his business. The frustration he had with continuous updating of his customers credit cards suddenly seemed worth it. Getting more of his customers to pay a year or month in advance would significantly increase his cash flow.
How much significance he would realize occurred later as we moved into the concept of the X-Factor.
Let’s first look for your X-Factor and give you an example.
You seek X-Factors by trying to overcome common industry bottlenecks. Look for bottlenecks by asking questions like:
- What is the largest cost component in my industry?
- What is the part of my industry that I hate the most?
- At your industry trade association tradeshows – look at the breakout session agenda/topics over the last several years and look for patterns.
These are “top of mind” problems for your industry, and all of your competitors are faced with the same challenges. Next begin looking for solutions that will give you an exponential competitive advantage (7-10x) for your industry. Once you figure it out, don’t tell anyone. Once you find an X-Factor, other competitors will eventually figure it out (once they know you are doing it, they’ll know it’s possible and they’ll keep working until they find the answer). People work differently when they know something can be done.
Therefore, start working on your next X-Factor as soon as you can after you launch your last X-Factor. X-Factors take some time to find. Solutions to complex problems that have stumped your industry for years won’t appear with just one brainstorming session.
Wayne Huizenga, owner of Waste Management, Blockbuster, Auto Nation, Miami Dolphins and at one time the Florida Marlins is a master at discovering the X-Factor for the businesses he owns and started. When I first started with Gazelles we would offer the story of Blockbuster as a leader because they developed a revolutionary approach to distributing video content to consumers by negotiating a new way to license and use studio content in a flat fee plus revenue share (upside) economic structure. It quickly gave them a 10X advantage over their competition. Within 12 months Blockbuster’s X Factor had put 2400 large and small video companies out of business.
Less than a decade later, Blockbuster is obsolete and bright, innovative companies like Netflix mastered a better, cheaper, more customer friendly way to distribute video content to consumers…then less than 3 years later, yet another innovative company, Redbox, challenged and expanded the market further by placing Redbox kiosks in high traffic areas (e.g. at McDonalds, Walgreens, Wal-Mart locations, etc.), using self-service $1 USD packaging to rapidly grow market share. Once again, when you find an X-Factor, other competitors will eventually figure it out. You need to begin to work immediately on your next X-Factor in order to keep your competitive edge. Companies that choose not to innovate, grow, change and adapt to changing market conditions run the risk of “missing the boat” and becoming weak and irrelevant.
In the subsequent years from Sat’s Cash Conversion Cycle discovery he began to see how this membership aspect of his business actually provided him with a ten times advantage over his competition. I’ve purposely not given you the type of business he’s in to protect his X-Factor. As we crunched the numbers to help him determine his profit per X it soon became clear that customers who became members of his annual & monthly subscription plan provided a 10X profit over one time customers.
Holding your X-Factor in secrecy you can maintain an aggressive advantage over your competition for some time. Once the cats out of the bag however your competitors will quickly copy you and your superiority quickly slips away.
At the Four Decisions Workshop the X-Factor, Profit per X, Brand Promise, Catalytic Mechanism and many more strategic ideas will be discussed, followed by exercises to apply these to your business to individually identify your advantages.
Have you looked for your company’s X-Factor? Have you dedicated time to work on your business to determine your 3-5 year plan, annual plan and quarterly plans for 2014? The Four Decisions Workshop is an excellent opportunity to set aside time to work on this. You will be free from distractions and receive an unconditional money back guarantee.
Set aside time now to plan for 2014 and join us by calling Positioning Systems. Plan to attend the Mastering the Rockefeller Habits Four Decision Workshop November 12th in Cedar Rapids, IA.