How to Develop A Highly Effective Playbook for Your Business Success
Hope you have managed to catch some spectacular 2019 World Cup Rugby matches from Japan last month, albeit that for All Blacks fans like myself it wasn’t the outcome we were looking for.
Having witnessed some great upsets in the tournament, including our own All Blacks loss to England in the semi-finals, we get a sense of how strategy and set pieces can be utilised to bring down formidable foes.
These days, in high stakes sports, a huge amount of resource and effort goes into analysing the game and the opponents, to devise a Playbook of strategies and set pieces that are rigorously practised and selectively applied to opposing teams. The exceptional players specialise in set pieces, memorising these moves from the Playbook in advance, which they apply to different situations on the field.
So how can this concept of a Playbook be applied in business to help us win by growing profitable businesses?
What is a Playbook?
A Playbook is simply a tried and tested Plan with an orchestrated Set of Activities designed to deliver a Result. In business, it is generally a Way of Working that is unique to an organisation.
Successful companies, in our experience, have a unique way of doing business which includes how to attract and serve a profitable segment of customers. Through the combination of market knowledge and experience, and trial and error, they develop a Recipe or a Playbook on how to undertake key market activities in distinctive way that enables them to rapidly grow in the face of competition.
As an example, a Kiwi business we deal with, through years of trialling and experience, has become highly effective in opening new export markets. Their Playbook here includes a period of market testing, a consistent approach to distributor search, a format for entering distributor and sub-distributor arrangements, which includes their close involvement, to ensure a wide market coverage and pull through of their products and services. To date they are successfully in over 15 export markets with access to over 20,000 outlets.
Whilst the word Playbook is used in a singular context, a business can have a collection of Playbooks on how to undertake the various key functions and activities within the organisation that make them successful.
As market dynamics and customer requirements change, the Plans and Activities contained in a Playbook tends to be refined based on the results achieved, market learnings and competitor activity.
Why Do you Need a Business Playbook?
A Playbook is Your Repeatable Processes for Getting Results.
At the heart of a Playbook is a tried and tested process for getting results. Say you are a typical Kiwi business with limited sales resources and any given day, your sales team are getting pulled between meeting existing customer needs (account management) and getting new customers and sales (business development). Now, in order to grow sales you feel that you need to hire a new salesperson but because you are operating under a tight budget you don’t know how long will it take for the new hire to be able to generate enough new sales to cover their costs, so you procrastinate whether or not to get one.
Compare this to a scenario where through experience and customer feedback, you have figured out the requirements and the pain points of your most profitable customer segment. You have assembled the right mix of products and services that you know will exceed their expectations, and you figured out that the best way to showcase this is through a product demonstration. Based on history you also know that 50% of product demonstrations translate into new business.
Ramping up sales now becomes dependant on the number of successful product demonstrations. Also, the activity, being the number of demonstrations, becomes a measurable metric, that can be used as an indicator for future sales growth and hence to calculate the approximate payback period of new sales hires.
A Playbook Focuses Your Limited Resources on a Few Key Priorities
A key outcome of an effective Playbook is Focus – meaning that that through experience, testing and research you figure out a selection of activities that have the greatest propensity for the outcome you are seeking. It then focuses the organisation to perform only those tasks and at the same time requires the business to stop undertaking tasks that don’t deliver the right results.
A Well-Honed Playbook is your Catalyst to Scale
Founders or Leaders of businesses generally are well acquainted with what will drive business results. Their challenges are two-fold, one that these recipes for success are in their head which they may not always be able to articulate to people around them and secondly because they are being pulled in many directions at once and tend to work with limited resources, they aren’t able to adequately test and consistently apply the Playbook in their heads to deliver the results that they are looking for.
A tried and tested playbook, which is repeatable and well-articulated can be applied by multiple people to create Leverage in your key business activities such as business development. Creating leverage is one of the single most important aspects of scaling a business. The more leverage you can create the faster a business is able to grow.
A Playbook will significantly increase the Valuation of your Business
As part of the investor readiness work we do with clients, we attempt to separate the founders from the processes that they instinctively carry out. Investors are looking to invest in businesses that have a high chance of success long after the founder has exited the business.
Therefore, an investor or a buyer is inclined to buy into a business that has strong systems and processes which are independent of its founders or key people. Businesses that are self-sufficient and run by managers are in high demand hence such businesses can command higher earnings multiples as sale price.
Puts a Business in a Proactive Mode
Businesses that are working to a Playbook are effectively working to a plan, which puts them in a proactive mode. The presence of a Playbook provides clarity to the people in the business hence they are able to prioritise the activities of the playbook above anything else.
A business in proactive mode is more likely to be more focused on achieving its goals.
How to Develop Your Business Playbook?
Developing a Playbook on any activity requires us to reflect on what has worked in the past. So, as an example, it may require you to take a handful of your top customers and identify how you acquired them. Did they come through your normal sales channel or did they come via an inquiry after reading an article about you in an industry publication – in which case as part of your playbook building you will test out whether doing more press releases in industry publications gets you more customers that are similar to your top customers.
Hence the second part of playbook building is about taking something that has worked before and testing and refining how that can be turned into a repeatable process. In the above example, you might find through testing, that leads are generated not by doing any type of press releases, but rather by doing press releases on new innovation you are introducing – which may mean that you might have to speed up the rate at which you are introducing innovation and let the industry know about this through press releases or advertisements.
The third element of playbook building is measurement. It is also being clear on what your key priorities are right this moment, in order to grow – is your top priority now to grow in the local market or is it to build overseas distribution or is it to build your capacity to deliver top products, services and innovation to your existing customers. Your Playbook building has to firstly be around what is priority for the business. Measurement ensures that the Playbook you are building delivers to your highest priority first.
If you would like to talk to us about how you can build an effective Playbook for your business, feel free to email me on Shakti.Harduar@paradigm5partners.co.nz or call me on mobile +64 21 679 849.
Shakti Harduar is the founder of Paradigm5 Partners, a boutique advisory and investment firm that helps NZ businesses to grow and build scale. Our services include strategic advisory, capital raising and getting businesses investor ready as well as helping businesses with geographical expansion. Paradigm5 Partners also helps owners build value in their business’ pre-exit or succession. Shakti is a Chartered Accountant and a member of NZ Private Capital Association.