Business Owners: Be Paranoid, There's Always Someone Ready to Outshine You

04/29/2015 07:38 pm ET | Updated Jun 29, 2015

Call it paranoia, hyper vigilance or just plain awareness -- whatever the term, I'm certain that all business owners need a healthy dose of it to stay competitive. After all, there is always a better technological innovation, business model shift or new competitive dynamic just around the corner, and a leader ready to employ it to outshine you and best your business.

In my 20+ years as a CEO and business leader, I've had my share of successes and seen others succeed, and I've also had my fair share of missteps and seen other leaders fail. I believe that those who succeed share common characteristics -- chief among them is a keen awareness of the need to avoid complacency and to keep driving an organization's evolution, relevance and value.

How do successful CEOs, presidents and business owners drive systemic change, keep their business model relevant and stay competitive? Here are four tips to success:

1. Don't Drink the Kool-Aid
CEOs and leaders need to make sure they, and their executive team, aren't "drinking the Kool-Aid." Successful leaders don't rely on feedback and recommendations solely from middlemen, because in doing so they avoid true critical examination of organizational performance. You need to learn the facts -- the good, the bad and the ugly -- directly from the front lines, not just from your own management team. Seek input from your customers, from the prospects that don't choose you and from those on the front lines in your organization -- it can be a sobering process, but one that's critical to effectively prioritize your business' needs.

A note of caution: I've seen many CEOs and leaders conduct these critical assessments when first joining an organization -- but the real challenge in this process is to ensure it's carried out regularly -- quarter after quarter, year after year. And the best way to ensure that happens is to prioritize it over all your many other tasks.

2. Create Structures that Drive Retention
Quantitative measures are essential to gauging and tracking organizational success. But what metrics are you emphasizing? If you put a compensation structure in place that primarily rewards customer acquisition; if you start beating the drum about how many units, how many calls, how many meetings, how many closes have occurred -- you will get just what you asked for: quantity. Sure, you may have more clients BUT you will also have unprofitable clients, dissatisfied clients and increased churn. If you have a high cost of client acquisition you'll also have declining profits.

Certainly, you can reward customer acquisition alone, and it may work, but if you want to use that model you better be sure your top line machine can keep accelerating, and you can bring more sales in the front door than you are losing out the back. Personally, I think such a model is unsustainable.

Admittedly, it's not an easy task to manage a salesforce and find the right balance between strong activity and quality business. In my experience, the most successful compensation models emphasize customer retention and attract customers that the organization can perform for and who see its value proposition. You should strive to bring on customers who are going to stay with your organization and communicate their needs so you can build the right solutions for them going forward. It's critical to build a relationship with your customers and to gain their trust. That will lead to them buying more from you, referring new clients to you and helping build your reputation and brand.

3. Find the Real 'Voice of the Customer'
There is so much written on voice of the customer -- so much consulting done on the topic -- we all talk about it. The real challenge is to build it into your DNA in a sustainable way. Too often, the CEO who starts out saying, "I will talk to a customer a week" soon gets distracted with other tasks. The new product manager who spends one week a month in the field soon is overloaded with internal meetings. The sales and service people who deal with the market stop providing feedback because nothing is being done with it.

You need to tackle this challenge by building customer time into your schedule in a way that can't be avoided. Do ruthless reviews of how your customer-facing staff spend their time -- and look very critically at how you spend your own time. Create formal channels to get feedback from senior leadership and be certain discussion of that feedback is baked into a regularly schedule agenda. Let your customers know what they can expect from you, and commit to meeting those expectations.

Metrics are also key in driving the voice of the customer. Clearly, if you are tracking the right metrics -- how many customers you are losing and why, how many you are not closing and why -- that goes a long way. But, you should go beyond that -- seek statistics around client engagement. If customers aren't using your product, opening your emails and aren't asking for help... that should be an alarm bell. This means they need you to engage with them. I am sure there are many industries where a pure SaaS model works -- but in my own view, many markets, particularly small businesses, need help. They need software with service, and if you aren't providing that service or the clients aren't using it -- it's time to worry, as a cancellation is likely coming down the track.

4. Make Great Products and Product Managers Essential
I encourage all companies to look at their product management organization with a critical eye. Are your managers customer people? Do they know their stuff intuitively? How do they spend their time? Are they product managers or are they project managers? There's a big difference. I would argue that product management is among the most important talent pool in your organization --these professionals need to be the pulse of the market and the pulse of your clients. They need to be incentivized on client success, client engagement and product success.

Great product managers build great products -- and great products are NOT those that get dreamed up inside companies, they are not tweaks to existing products to address the things clients complain about. What's the test of great products? It's easy: clients want to buy them and they keep them. If your products are hard to sell, if it's hard to define the value proposition against the competitive landscape -- you have a problem.

Of course, you still have to make improvements to existing products, and yes, occasionally, a great product is imagined before a customer knew they needed it. But, for the most part, great products are those that make a huge difference in customers' lives and make them more successful -- you can't discover those needs by sitting in your office.

Change isn't going away, it's a constant. No company is immune to the challenges of technology shifts, globalization, economic cycles and evolving customer expectations. But, if leaders are vigilant in watching for these changes, are honest with themselves, keep the customer front and center, drive retention and value great products, they can remain competitive and attain continued success for their organization.