Did you ever wonder what separates companies that are successful over a long period form those that aren't? The question has long confounded business observers. The answers aren't simple, but they are available to those willing to learn.
Attendees at the National Automatic Merchandising Association OneShow filled a room to capacity at McCormick Place North to learn about a business author's method for long-term success and to also hear from one of his clients on how the tenets were successfully used.
In a standing room only presentation titled "Building Your Business With Growth Opportunities," Mark Frigo, Ph.D., CPA, CMA, presented an overview of his "Return Driven Strategy" while E. Terry Groff, chairman and president of Reading Bakery Systems, Robesonia, Pa., described how Frigo's tenets worked for his company.
Attendees received a free copy of Frigo's book, "Driven – Business Strategy, Human Actions And The Creation of Wealth."
Frigo is director of the Center for Strategy, Execution and Valuation at the Strategic Risk Management Lab at Kellstadt Graduate School of Business at DePaul University in Chicago.
Frigo's method is based on five tenets: 1) target changing customer needs, 2) target the right customers, 3) change and innovate your offerings, 4) brand your offerings, and 5) use the right incentives and measure.
The book is designed as a guide to develop and evaluate strategy and strategic initiatives and develop strategic objectives and performance measures.
Frigo studied how 15,000 companies performed for a 20- to 30-year period.
He noted that high performing companies show an extraordinary ability to continually re-strategize and execute.
Groff of Reading Bakery Systems noted that Frigo's Return Driven Strategy helped his company create an effective strategic plan and the tools to examine every facet of its business. This resulted in higher sales and higher profits.
Groff said his company had set goals in various areas, such as service sales, pet treats, crackers and biscuits, and equipment sales. But performance in most areas fell short of goals. From 1994 to 2006, the company's revenues fluctuated rather than improved.
In 2006, the company implemented Frigo's Return Driven Strategy.
For Groff's company, a lot of time was spent identifying key customers. "Who really were our customers?" he noted.
The company decided to group customers based on how they think and act instead of grouping them according to size or geographic location. "That was an eye opener for us," Groff said. The company paid close attention to customers that valued its products and services.
It divided its customers into two key groups: corporate thinkers and entrepreneurs.
Corporate thinkers are customers who are motivated by the need to protect their own jobs. In presenting a business proposition to such a customer, Groff said he could predict what the outcome would be.
"But the entrepreneurs in the group didn't think that way," he said. Rather than protecting their jobs, they were interested in protecting their assets.
How did this help Reading Bakery Systems? By understanding the customer's needs, they knew how to sell to them better.
"This got me job after job after job," Groff said.
This exercise forced the company to recognize some customers should not be kept. This proved very helpful.
"Now the competitors are not making any money on them," Groff noted.
Frigo's system also forced Groff's company to examine its offerings. "I wanted to create offerings that were appreciated and valued," Groff said.
Reading Bakery Systems focused attention on deliveries, on partnerships, on branding, and its internal processes.
As a result of the focus on internal processes, the company is now producing double the amount of material with the same number of people. "The productivity gains have been enormous," Groff said. "I've imbedded this in my culture."