Greggs: an agile approach to strategy & business model thinking

John Gregg founded his bakery business in 1939, selling eggs and yeast from his bicycle in Newcastle. The business grew, and his son Ian joined his father and mother, selling pies from his van to miners’ wives. They opened their first shop in Gosforth in 1951.

When John died in 1964, the bakery was taken over by Ian, and major expansion began, including the acquisitions of other bakeries such as the Bakers Oven chain from Allied Bakeries in 1994.

Greggs grew to be the largest bakery chain in the UK, home of the bacon sandwich and a coffee for two quid special offer which, disappointingly, is now £2.10 (a friend told me, honestly), famous for pies and pasties and everything you firmly resolved on December 31 would never touch your lips again.

A couple of years ago, Greggs fell victim to adverse PR about its product range and customer base. Oh how the Prêt crowd sniggered into their avocado and crayfish salads. Yet plucky old Greggs just got its head down and kept growing. ‘It’s a northern thing’ no longer serves as an explanation. The patronising notion that Greggs’s popularity is inversely proportional to the nation’s economic fortunes also fails to explain its steady expansion.

Today Greggs generate £1m a week from sales of coffee. It has repositioned the brand from an ordinary bakery-to-take-home to a high growth food-on-the-go entity, meeting changing customer demands and evolving food culture.

A new strategy was introduced in 2013 under CEO Roger Whitehouse, formerly Head of M&S Food, which focused on four pillars: Great tasting freshly prepared food; best customer experience; competitive supply chain; first class support teams.

Whitehouse introduced a ‘restless dissatisfaction’ approach to compliment the traditional business values, ensuring the business would never stand still after recovering from a period of stagnation. He implemented some radical changes, including closing the in-store bakeries, and introducing the ‘Balanced Choice’ range of products with less than four hundred calories, healthier options to the traditional product range.

And it’s worked. Having launched the first vegan sausage roll in January, last week the company announced a 50% rise in profits to £40.6m in the first half of 2019. The business is handing shareholders a £35m special dividend after total sales rose 14.7% to £546m.

In 2016, Greggs weren’t in the takeaway breakfast market but now only McDonalds sells more takeaway breakfasts. With a Fairtrade Expresso, it has overtaken Starbucks to become the third-largest takeaway coffee seller, behind Costa and McDonalds, while only Tesco sells more sandwiches.

So what are the lessons from the success of Greggs changing its business strategy and model that we take into our startup thinking?

1.     Be agile in how you connect with customers

Greggs expects to pass 2,000 outlets this year, 65% are on high streets, with the remaining 35% located in retail and office parks and in travel locations such as railway stations and petrol forecourts. The aim is to change the emphasis of the business so that it is 60% non-high street by the time it has 2,500 shops.

Part of this is having many of its stores open earlier and close later, in order to target those going to and coming back from work, expanding its breakfast menu to suit, and with ‘Greggs à la carte’ stores to open late to 9pm to lure evening takeaway diners.

As well as its new drive-through locations, the company is trialing a click-and-collect service, as well home and office delivery by Just Eat and Deliveroo. They aim to integrate click-and-collect and delivery services with the company’s Greggs Rewards app, which offers free drinks and birthday treats.

Greggs has previously failed with new ideas such as Greggs Moment, a coffee shop-style outlet with seating, and the Greggs Delivered service, which is only available in Newcastle and Manchester city centres, three years after it launched. However, the business is now at a scale where it can experiment without too much risk.

Takeaway: Greggs route to market strategy is to based on expanding their reach to enhance customer convenience, a ‘fish where they swim’ strategy, reducing the barriers between themselves and their customers, uplifting the customer experience and making the ability to connect and purchase convenient.

2.     Build your brand to face your market

Greggs has in recent years persistently bucked the wider trend on UK high streets, where most retailers are struggling to compete as sales shift online and the cost of running stores rises.

In 2013, Greggs began to transition out of the bakery market with the reasoning that it couldn’t compete with supermarkets, switching to focusing solely on the ‘food on the go’ market after discovering that 80% of its business was with that market. They stopped selling bread in 2015.

Greggs has worked hard at getting consumers to think about it as a food-on-the-go chain, developing ideas such as online ordering for collection and home delivery, developing strategic partnerships with their supply chain to focus on the four key pillars of their strategy.

They are more in touch with where the customers are today. It has managed to cater to new markets without being overly ambitious. The builder can still come off the building site and get a hot pasty, but there are also salads. The decor is still recognisable even if it has been upgraded and the older traditional customers still feel comfortable.

Takeaway: Many businesses want profit as their objective. But if you only focus on short-term wins and results, you get distracted from doing the work required to build the skills you need to grow and scale, and it’s the ability to scale that matters. The process is more important than the outcome at early stages of a change of strategy. Focus on getting good before you worry about getting big.

3.     Look forwards, not backwards with your product offering

Greggs sells 1.5 million sausage rolls a week but created the new vegan option due to public demand after an online petition signed by 20,000 people. In recent years Greggs has been innovating within its product range to appeal to a broader range of customers. Its ‘Balanced Choice’ healthy eating range, introduced in 2014, offers options including wraps and salads, all below 400 calories. It also sells gluten-free and several vegan lines.

The company also believes it can take advantage of rising demand for food ‘customisation’, driven by allergies and ‘food avoidance’ preferences, and its stores now make sandwiches to request.

One in eight new customers have bought a vegan sausage roll in 2019, which has overtaken doughnuts and other pastries to become a bestseller. The traditional sausage rolls remain at number one – with its 96 layers of light, crisp puff pastry – but there are more vegan products in development, including a vegan doughnut. It’s worked, such that Ginsters released their own vegan product for the first time in its 52-year history.

Takeaway: Greggs has been bold in its response to the adverse publicity on its offering and changing food culture. Aligning your product strategy with a focused brand image and route to market is core to any business model.

4.     Be clear about your marketing message & tone of voice

Before the Greggs vegan sausage rolls went on sale, TV presenter Piers Morgan sent out a tweet: Nobody was waiting for a vegan bloody sausage, you PC-ravaged clowns. The tone of the company’s response: Oh hello Piers, we’ve been expecting you – friendly but with a slight edge, was perfectly attuned to the ironic, self-confident marketing Greggs has adopted, a James Bond-inspired, droll putdown that was the perfect riposte.

Their hilariously portentous launch video – part of a build-up that parodied the release of a new iPhone model with journalists sent vegan rolls in mock iPhone packaging and stores sold sausage roll phone cases – meant that for days Twitter was engulfed with people talking about a £1 bakery product.

The vegan sausage roll campaign, officially launched to support the Veganuary campaign that encouraged people to give up animal products for a month, followed other memorable promotions include a Valentine’s Day campaign offering ‘romantic’ £15 candlelit dinners in Greggs shops, and a spoof ‘Gregory and Gregory’ event, and one faux pas: a 2017 advent calendar tableau of a sausage roll in a manger. After complaints Greggs apologised and reprinted with a different scene featuring Christmas muffins.

Takeaway: Greggs found its distinctive marketing style in 2012, when it saw off then-chancellor George Osborne’s proposed ‘pasty tax’ on hot takeaway food. Since then it has been consistent in its purposeful, structured and memorable content driven communication strategy, making the brand relevant to its target audience and differentiating its offering in an increasingly competitive market to reposition the brand.

5.     Don’t let your business model become stale

Innovation can be about efficiency. Look at Ikea, and The Billy bookcase. It’s a bare-bones, functional bookshelf if that is all you want from it. The Billy isn’t innovative in the way that the iPhone is innovative. The Billy innovations are about working within the limits of production and logistics, finding tiny ways to shave more off the cost, all while producing something that does the job. It demonstrates that innovation in the modern economy is not just about snazzy new technologies, but also boringly efficient systems.

The Greggs shop environment has been improved and significant investments made in logistics and delivery systems to make them more efficient and scalable. In-store ordering moved to a centralised forecast and replenishment system rather than relying on shop teams filling in manual order forms, which resulted in order accuracy and improved availability for customers.

All shops are on a refurbishment programme (every seven years) to ensure they stay looking bright and welcoming. In-store point of sale and window displays remain key to Greggs’ marketing strategy, however, a loyalty app was also introduced.

Takeaway: innovation in Greggs is about efficiency, economy and effectiveness, searching for ways to make their products even better and affordable for their target market. A ‘back to basics’ focus on the business model reflects the culture and humility of the brand. Combined with brave decision making to implement change and execution in a consistent, simple and continuous manner has delivered the results.

6.     Ensure your folks keep clear heads

Amidst the hullaballoo and the fury of the frantic activity in the coming and going of customers at busy times, staff have to keep a clear head. In the heat of the moment, they cannot get caught up in the intensity and frenzy. Resilience in times of peak demand is needed to keep the customer experience as fresh and stimulating as the steak bakes.

When you go to a Greggs, the staff are so engaged in what they do its untrue, they are like whirling octopus serving customers, and they do it with good humour, bantering with regulars, enjoying the success of seeing returning customers, before going again.

With 10% of profits going to the Greggs Foundation to help fund Breakfast Clubs for children and over £1m raised annually for Children in Need, the vegan pastry has helped change the perception of Greggs, but fundamentally it’s a people business, about delivering service, experience and the community it operates.

Takeaway: So, focused on a simple, core value proposition – reasonable quality food at reasonable prices, consistently produced and scaled – but the fundamental premise is to make customer experience the brand differentiator.

Many takeout food companies are head-on competition to Greggs, but due to its focused marketing strategies highlighting choice, quality, nutrition & easy access, the company is able to create sustainable advantage.

Changing lifestyles, changing eating habits and increasing health awareness factors are affecting the growth of the companies in this industry. Greggs has set its strategy from a customer’s point of view and with customer-based insights, to ensure the business model is as robust as it can be.

Adopt Greggs’ agile approach to strategy and business model thinking, to focus on the horizon and hold your vision. Do something everyday to move your business forward, and that makes you stand out from the crowd. A sheep has never stood out from another sheep, so don’t follow the herd blindly. People will take notice.

What’s your startup ideation strategy?

Nearly forty years after its invention, the world’s most confounding cube of colours is still going strong. It is estimated that there have been 400m Rubik cubes sold worldwide, a simple colour puzzle that offers 43,252,003,274,489,856,000 possible combinations (that’s 43 quintillion in shorthand).

In the mid-1970s, Professor Ernő Rubik worked at the Department of Interior Design at the Academy of Applied Arts and Crafts in Budapest. Teaching geometrical shape concepts, he designed the cube as a teaching aid to show the possibility of 3D modelling. He did not realise that he had created a puzzle until the first time he scrambled his new cube and then tried to restore it – it took him over a month to solve it.

On the original classic Rubik’s Cube, each of the six faces was covered by nine stickers, each of one of six solid colours: white, red, blue, orange, green, and yellow. White is opposite yellow, blue is opposite green, and orange is opposite red, and the red, white and blue are arranged in that order in a clockwise arrangement.

An internal pivot mechanism enables each face to turn independently, thus mixing up the colours. For the puzzle to be solved, each face must be returned to have only one colour.

He called the wooden prototype Bűvös Kocka: the Magic Cube. Rubik applied for a patent, but it took a few years to get the idea to market. In 1979, the Hungarian state-owned toy company Konsumex presented the cube to the International Toy Fair in Nuremberg, where it caught the attention of entrepreneur Tom Kremer.

By the end of that year, Kremer had convinced the Ideal Toy Company to take a chance on the puzzle. Ideal licensed the cube, and within two years it represented 25% of the company’s revenue.

At the end of 1980, Rubik’s Cube won awards for best toy across the world. By 1981, Rubik’s Cube had become a craze. As most people could only solve one or two sides, numerous guide books were published. At one stage in 1981 three of the top ten best selling books in the US were books on solving Rubik’s Cube, and the best-selling book of 1981 was James G. Nourse’s The Simple Solution to Rubik’s Cube which sold over 6 million copies.

Every legal permutation of the Cube can be solved in 20 moves or less. The current world record for the quickest solution is 4.59 seconds – but a robot solved it in just 0.637 seconds. There are also World Records for the fastest one-handed solving (6.88 seconds), feet solving (16.96 seconds).

Though sales fell from their peak in the 1980s, and were negligible in the early C21st, with the advent of the Internet, fans connected and shared strategies, and sales increased. Then earlier this year it featured in the SuperBowl, and in the new Taylor Swift/Ed Sheeran video, cementing the puzzle’s rise back to cultural prominence. It is estimated that one in seven people have played with this fascinating and frustrating puzzle.

Rubik’s Cube is an example of an innovation that took the world by storm, evolving into a populist toy from a device originally developed for teaching. Like many innovations, it came about almost by accident, a successful outcome arising from trying to solve a different problem.

For startups, the combination of original thought, timing, serendipity and chance encounters with future customers, often define the innovation journey. Innovation is not a very well understood process, by its very nature, it involves hits and misses because there is always an element of guessing and pre-empting the future, which by definition, is unpredictable.

Every sphere of human life today is undergoing rapid technological driven innovation, from cryptographic currencies changing the shape of money to the Internet of Things and Blockchain creating a new ‘Internet of Everything’. Newer, innovative technologies are developing faster than the speed with which we can rein in its unintended consequences.

New technologies track your every move, habit, communication or location, reducing privacy and opening pores to access your personal experiences. Startups are establishing Platform businesses, which in turn are disrupted by Blockchain, which promotes disintermediation and elimination of third parties. The biggest human experiment is a Hegelian pursuit of the one truth.

For a startup, innovation should always be customer centric. Never build something that you’ve not tested with users, and that ultimately customer won’t pay for. Startups with product innovation that doesn’t evolve with their customers’ lives don’t survive too long.

So many startups set out to innovate, but lose their way. All of the time, money, and energy invested loom over them like an ominous shadow. There was so much momentum, goodwill, collaboration, and then the painful, crash into the wall.

If you are striving for something new outside of the existing paradigm, think of the first trial or two as a learning investment. You may stumble upon revenue or insights that lead to giant leaps of both customer traction and inspiration, however, embrace this tension and good fortune at the right moment.

Startups often make the mistake of viewing innovation as a set of unconstrained activities with no discipline. In reality, for innovation to contribute to growth, it needs to be designed as a process from start to deployment.

When startups lack a formal innovation pipeline process, progress tends to be based on delivering the best demo or slide deck. Instead, there is a necessity to talk to customers, build minimal viable products, test hypotheses or understand the barriers to deployment.

Startups need a self-regulating, evidence-based innovation pipeline, a process that operates with speed and urgency, and that helps to curate and prioritise problems, ideas, user testing and feedback. Most importantly, minimal viable products and working prototypes will have been built and road tested.

A clear-cut innovation process inside a startup is one focused on ideation, a process that hustles game-shaping ideas by creating customer solutions that deliver remarkable impact at the intersection of purpose and profit – not just ‘disruption’.

Ideation is the act of moving ideas down the track from conception to implementation. It seeks to create clarity and a pathway from imagination to execution. Ideation embraces lean startup principles – hold your vision, but take small steps, and focus on learning as a true measure of progress, providing life-shaping insights that change our trajectory or sober us with reality that kills the ‘awesome’ idea we once thought we had.

While there is no perfect ideation to optimise innovation outcomes, the following is a helpful process that I’ve used and refined over the years while working with numerous startups:

Curation On a regular basis – say every three months – startups should get out of the building and talk to potential users and customers to help explore and identify new solutions that can be deployed rapidly. Gaining reflections to find where a given problem might exist helps to find opportunities for commercially available solutions to problems.

This process also helps identify who the customers for possible solutions would be, and even what minimum viable products might look like. Some ideas may drop out when you recognise that they may be technically or financially unfeasible, but that’s validated learning.

Prioritisation Once a list of innovation challenges has been curated, it needs to be prioritised. One of the quickest ways to sort innovation ideas is to use the McKinsey Three Horizons Model: Horizon 1 ideas provide continuous innovation to a company’s existing business model and core capabilities; Horizon 2 ideas extend a company’s existing business model and core capabilities to new customers, markets or targets; Horizon 3 is the creation of new capabilities to take advantage of or respond to disruptive opportunities or disruption.

There will be some projects in Horizon 0 – graveyard ideas that are not viable or feasible.

Frame the challenge From the prioritised list, articulate, document and frame what the challenge you’re seeking to solve for is a foundation for the next stage. Jumping to a solution before understanding the context of the problem is premature. Ask yourself questions like What is the real problem we’re trying to solve? or What is the real job to be done?  are essential to ensure we don’t leap with a populist, unstructured idea.

Exploration & hypothesis testing Ideas that have passed through the filters so far now enter an incubation process, which aims to deliver evidence for data-based decisions. For each idea, build out a business model canvas. Everything on that canvas is a hypothesis, designed to be tested.

The framework gets you talking to potential customers. This is another major milestone: to show compelling evidence that this project deserves to move into engineering or, alternatively, that it should be off the list and killed.

Diverge & Converge The main goal of this element in the process is to generate lots of diverging ideas from the results of the hypothesis testing, all of the crazy thoughts you have on potential options and alternatives. Make it a rule at this point to never say ‘no’ to any idea, but keep the time defined to give focus.

Once you have a ton of ideas, it’s time to converge through design thinking, to identify common threads, building upon each idea by connecting them, and then determine one or two ideas that are desirable, feasible, and viable. Now is the time to stand back and ask: Does it make business sensee?

Prototype One of the most practical ways to test out a solution is to build a prototype. This doesn’t have to be an elaborate or costly endeavour. Whether the prototype is digital or done through user testing with hands-on customer experience, the goal is to uncover new insights. A good prototype will force idea refinement and iteration.

Iterate Forward A startup should have a culture committed to constant experimentation, and iteration will continue to foster and accelerate this thinking. It will take a few cycles to get a process working with the required diligence and patience, but keep iterating forward. What’s next?

Refactoring: At this point, it’s time to integrate the innovation into the existing business model. Trying to integrate new, unbudgeted, and unscheduled innovation projects into a startup results in chaos and frustration. In addition, innovation projects carry both technical and organisation debt for startups.

Technical debt is often ignored in order to validate hypotheses and find early customers. This quick and dirty development can become unwieldy, difficult to maintain, and incapable of scaling.  Organisational debt is the culture compromises made to ‘just get things done’ in the early stages of an innovation project.

The solution is refactoring, fixing stuff to make it more stable, and avoid the myopia of innovation over business as usual. Whilst technological advantage degrades annually, standing still means falling behind, so it’s all about having the business case from the early stages in the process to act as a bookmark for reference.

Startup innovation is hip, complete with beards and fancy coffee machines, but to do it right can’t be left to chance and serendipitous moments, it requires a rigorous process. Innovation means you have to move the needle, not just vanity of being a ‘unique, disruptive startup’.

For startups, ingenuity and rebooting the offering is essential, but It’s important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea. Anyone can invent, not everyone can execute.

Think big, start small, keep moving. Like the Rubik’s Cube, if you are curious you’ll find the puzzles sat in the palm of your hand. If you are determined, you will solve them, with deft visualisation, ideation and execution.

How penguins on a melting iceberg can inform a startup’s change strategy

Charles Darwin, the English naturalist, biologist and geologist, is best known for his contributions to the science of evolution, a process that he called ‘natural selection’ in the struggle for existence. He is undoubtedly one of the most important and influential figures in human history.

As every schoolchild knows, Darwin spent five years living on the Galapagos Islands as part of his voyage on HMS Beagle, and studied the finches. He was intrigued that each island had its own distinct species, and worked out that they shared descent from a common ancestor and were a product of evolution.

Puzzled by the geographical distribution of wildlife and fossils he collected on the voyage, Darwin began detailed investigations and he conceived his theory of natural selection. Although he discussed his ideas with several naturalists, he needed time for extensive research, and his geological work had priority.

Two decades on from his HMS Beagle voyage, he was writing up his theory in 1858 when Alfred Wallace sent him an essay that described the same idea, prompting immediate joint publication of both of their theories. Darwin’s work established evolutionary descent with modification as the dominant scientific explanation of diversification in nature. Today, Darwin’s scientific discovery is the unifying theory of the life sciences explaining the diversity of life.

His hypothesis in The Origin of Species was that man had descended from chimpanzees. Nature, red in tooth and claw, had used the survival of the fittest to weed out the imperfect and weak. Homo Sapiens at the top of the evolutionary tree had achieved her desired end: they had evolved and responded to the changing environment, something that the dinosaurs patently had not.

Racked by guilt at replacing the doctrines of the Church with a vision of man as a shaven primate in an amoral universe, Darwin retired into obscurity. He repented his blasphemy on his deathbed. He is buried in Westminster Abbey, where he still lies, trampled by tourists.

There are, however, a number of inaccuracies in the montage of Darwin’s legacy. The word ‘evolution’ does not appear in The Origin of Species, and the phrase the survival of the fittest is not his, but was coined by the philosopher Herbert Spencer to summarise the notion of natural selection, the central tenet of Darwin’s evolutionary theory.

However, Darwin’s visionary thinking was truly ground breaking, as much as any disruptive tech startup today, and has application to thinking about startup strategy, where the dimensions of change – competition, economics and pace of tech innovation – exhibits similar characteristics and potential impact to those outlined in Darwin’s evolution theory based on finches and humans.

For example, startups can be grouped in to sets (species), revolving around solving one problem, where the basis of competition is providing a different value proposition to get ahead of others in the market. In doing this, it becomes survival of the fittest to win customers and market share in a changing environment, a fierce competition where sharp elbows and minds are needed.

There’s no grand theory of startups, nothing comparable to the theory of relativity for physics or the theory of evolution for biology. Neoclassical economic theory is the only real contender, where from a few simple assumptions about self-interested rational actors, you can derive equations for everything from employment, inflation and money supply. For Darwin read Malthus, Mill, Smith and Ricardo.

However, the science of economics has fallen upon hard times and lost credibility as a result of its lacklustre inconsistency in predicting economic trends or informing policy – in fairness the thinking was forged in C18th and C19th, and C21st tech has ripped up the rulebook of supply and demand, and market equilibrium. Today, it’s a laundry list of paradoxes and anomalies that are difficult to relate to C21st markets.

But you can apply Darwin’s fundamental postulates to startups quite rationally: the strong do crush the weak; startups exhibit incremental ascent with modification as new ideas evolve; semi-random innovation occurs via trial and error to find product-market fit; tech creates market disruption which drives selective survival, and other evolutionary Darwinian features.

It’s his statement that It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change where Darwin has the most resonance for startups, and brings me to a story about penguins to illustrate this.

On the face of it, Harvard’s John Kotter’s seminal book Our iceberg is melting is a simple tale of a group of penguins who are scared about losing their home and lifestyle because their current habitat – their iceberg – is melting, and yes, even more scared of the changes that could entail.

The book narrates how the penguins discovered the problem, which highlights a need for change, and how they then go through a process to secure survival, captured in Kotter’s eight principles of change. Through this simple allegory of their struggle for finding their new home, the story delivers a powerful message that is relevant for startups as they search for their isolated icebergs of opportunity that are sustainable.

In the story, Fred is an observant and curious penguin – maybe a data scientist in a penguin’s disguise? He observes that their iceberg home was melting. Not one to just wait for his daily quota of squid, he spoke to Alice.

Alice is one of the leaders of the colony, practical and mentally tough. Of course Alice initially wondered if Fred was suffering from a personal crisis or if he missed his morning fishmeal. But she gave him a patient hearing, which rapidly changed to alarm when she saw the cracks and fissures in their iceberg.

Alice brought Fred’s concern to the rest of the leadership team, and eventually the colony waddled their way to a miraculous solution in the book, enjoying quite a few squids on the way, showing that in order to achieve change, you need a vision, a process and a team that can drive that change.

Let’s cut back to the reality of our startup world, where the tech market is the iceberg and is never solid, melting in a maelstrom of new, emerging paradigms, contradictions, red herrings (Alice’s second favourite food) and more twists and turns than a King Emperor swimming at 30mph in the Antarctic sea.

Facing a startup CEO is a plethora of data looming across channels from transaction information to marketing automation and digital marketing platforms. Then there are blogs, meet-ups and accelerators offering insights and ambiguities on trends, opinions and comments. Against this backdrop of constant change, she has to balance branding and positioning, innovation and selling, people and finance, to respond and grow both in the near and long term.

Let’s look at the eight steps for change outlined in Kotter’s book and the penguin’s situation, and see how they apply for a startup trying to survive, grow and evolve in a shifting, mutating market.

1. Set the scene

Create a sense of urgency – don’t wait until the iceberg starts to melt Fred discovered the iceberg where the colony lives is melting. He tells Alice, who is initially sceptical, but she sees how urgent the situation is. Alice tells the leading council of penguins, most of whom don’t believe her. But Fred shows the penguins the urgency of the situation.

For startups, it’s a combination of instinct, hunches and data. But the message from the iceberg is that difficult problems won’t go away, and you need to help others see the need for change and the importance of acting immediately.

Pull together the guiding team A team of five penguins is put together to deal with the situation, they immediately start brainstorming ideas. This team has to focus on driving a balance between creativity and data driven decisions. Unexpectedly, their inspiration for a solution comes from a passing seagull, which happened to land on their iceberg.

For startups, the lesson is to ensure there are problem solving skills, not just creative thinking skills in the team, and to maintain a sense of balance around domain expertise and outward looking curiosity of your immediate environment for potential disruptive ideas. Never get complacent that you have all the questions – let alone the answers.

2. Decide what to do

Develop the change vision and strategy The inspiration from the seagull led to a solution, which would change the way the penguins lived. They would become a nomadic colony that moved to locations suitable for living, rather than being static. This would be a big change to the penguins, who had lived in one location for years, and were used to their current way of life.

The business learning here is to keep an open mind, and be prepared to pivot – in essence to start again. To find a sensible version of a better future, hold you vision – keep all the penguins together – but have a strategy that responds to the changing environment, and one that isn’t constrained by previous thinking.

Communicate for understanding and collaboration Though the team had now found a potential solution, they needed to get the buy-in of other penguins. There were penguins that were very sceptical and thought either the whole thing about the melting iceberg was nonsense, or it was too dangerous to move.

In a startup, avoid hierarchies and promote open communication at all times, change makes people nervous, and uncertain times combined with gaps in communication makes this worse. Ensure frequent and open communication with regular and personal attention.

3. Make it happen

Empower others to act The team found ways to include other penguins to become part of the solution, and because others felt part of the solution, the opposition decreased.

Opposition to change arises because of a lack of engagement and inclusion, and creates a feeling of not being valued. Remove as many these barriers as possible – a change of direction in a startup, as a result of the iceberg melting, needs everyone to be engaged, empowered and together.

Produce short-term wins When other penguins got involved they started achieving short-term goals, which were necessary on the way to the end result. This encouraged and motivated the penguins to keep working towards the solution.

Create some visible, unambiguous successes as soon as possible. Short-term wins create a positive atmosphere that everything will be ok, even if there are some tougher challenges ahead.

Don’t let up The colony finally moved to a new iceberg, but they didn’t stay there. They found a better one and moved again. They were not giving up but kept looking for better living situations for the colony.

The lesson for startups is to remain restless and ambitious, never resting on your laurels, adopting a culture of continuous learning, pressing harder and faster after the first successes. Be relentless with initiating change until the vision is a reality.

4. Make it stick

Create a new culture Actions were taken to cement the new culture in place, there was no going back to old ways of living. This ensured that the changes would not be eroded by stubborn, hard-to-die traditions or a lack of focus on the future.

It’s an oxymoron for startups, but innovation starts with their own business model and behaviours, constantly looking forward to new horizons and not getting stuck in a way of being that is successful in the market of today. Nothing is new forever, like Darwin’s statement, it’s those that respond to change who are the most successful in the face of uncertain conditions.

Ask yourself whether you are living on a potentially melting iceberg. Melting icebergs for startups come in many forms: aging products becoming irrelevant for new market needs; new, alternative offerings disrupting your market space; a growth strategy implementation that is slowing and getting stuck in pack ice.

The reality is that tech startups encounter constant changes as the pace of innovation quickens at a macro level, and scaling yields internal challenges. You maybe fit for purpose today but it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

Look to the RNLI for the reasons to have a purpose of your startup

The RNLI is the charity that saves lives at sea, providing on call, a 24-hour lifeboat search and rescue service around the UK and Ireland. With lifeboats, lifeguards, safety advice and flood rescue, they are committed to saving lives.

When their pager beeps to call them to the lifeboat station, breakfast, dinner or tea, the volunteer crew leave their families at a moment’s notice to commit to their purpose of saving lives at sea. I imagine that countless meals have gone cold or been left uneaten.

To me, it is an organisation of ordinary people doing extraordinary things. I like the way they have framed their purpose as an organisation, with simplicity and clarity: The RNLI saves lives at sea.

The RNLI has saved more than 139,000 lives since its foundation in 1824. The charity was founded, with royal patronage, as the National Institution for the Preservation of Life from Shipwreck after an appeal made by Sir William Hillary. Hillary lived in Douglas on the Isle of Man, and had witnessed the wrecking of dozens of ships from his home.

The name was changed to the Royal National Lifeboat Institution in 1854, and cork lifejackets were first issued to crew members that year. In 1891, the first RNLI street collection was held in Manchester. The C20th saw the RNLI continue to save lives through two world wars, and lifeboats moved from sail and oar power to petrol and diesel, and the first women joined their crews.

Without doubt, the bravery, performance and contribution of the teams of voluntary lifeboat men and women can give us clear learning points to take into our business about teamwork. However, at the heart of a great organisational success you will see a team transformed from a collection of individuals into a single entity with a shared identity – team members become a plurality with a single-minded focus and purpose.

It’s the concept of a clear, shared purpose of an organisation, and how the RNLI have captured this, which is the key learning for me to explore in this blog, and why it is essential a startup defines it’s north star around a clearly articulated purpose.

I define ‘purpose’ as Organisational purpose expresses the company’s fundamental value – the raison d’etre or over-riding reason for existing. It is the end to which the strategy is directed, why the organisation exists in the first place and what ultimately matters in its work.

Research shows that most people want their organisation to
have a purpose beyond making money. A purpose
of simply maximising profit leads to employee disenchantment and a lack of loyalty and commitment. In contrast, an invigorating purpose conveys something distinctive that is uplifting.

Leaders draw people into a shared sense of purpose by creating a distinctive, well-crafted and compelling vision of the organisation’s future. This is essential for a startup in terms of attracting and retaining early employees and early adopter customers, as advocates.

Harking back to the RNLI, although the organisation has significantly expanded its services and its geographical presence since 1824, its core purpose remains the same – the charity that saves lives at sea. This unifying purpose underpins the organisation’s vision, values and strategic and operational priorities.

How the purpose enables the RNLI business model offers insight for startups. For example, all its funding is from donations, the general public give to the RNLI because they respect the purpose and the work the organisation and lifeboat crews do. Maintaining the organisation’s reputation amongst the general public is thus key to sustaining the organisation’s business model.

Also aligned to the organisation’s core purpose is maintaining a strong volunteer ethos. This ethos enables the RNLI to prioritise spending on areas that allow it to achieve its core purpose, as opposed to staffing costs.

What also resonates with startups is that the purpose helps with high levels of organisational engagement too. While most staff find it relatively easy to identify with the organisation’s core purpose, not all staff find it so easy to appreciate the impact of their individual contribution on the wider purpose of saving lives at sea.

For a startup, the thinking that it should stand for something bigger than profit has become an important dialogue around creating customer engagement. When your customers can identify what you stand for and why you do what you do, this creates alignment with their own values.

The hard part is figuring out how to make it more than just words. For purpose to really count, it needs to go beyond an initiative or fine words of intent that sit around the organisation. It needs to be a central part of ‘why we do what we do’ and customers can see tangible existence in your every day work.

I find that entrepreneurs want to make a profitable living, but their purpose is to make a difference. Creating a culture of purpose is how you do both, create enduring customer value and leaving clear footprints. Simon Sinek’s work where he states people don’t buy what you do, they buy why you do it captures this.

This is why you must find the deeper purpose of your business. Here are some example of deeper business purposes:

  • An architect’s practice: Architecture design that inspires.
  • A furniture factory: The most beautiful tables in the world
  • An electrical contracting business: You’re in safe hands

If you were in the market for a table, wouldn’t you like to check out the furniture factory? Of course you would.

For other examples of purpose, look at ING, the financial services company Empowering people to stay a step ahead in life and in business, the Kellogg food company Nourishing families so they can flourish and thrive and IAG, the insurance company, To help people manage risk and recover from the hardship of unexpected loss

A good example comes from Volvo, which found its new purpose by looking to its customers’ needs, rather than simply their demands. Their purpose is epitomised in its company slogan: human made – making people’s lives easier, safer, better. To help in this came a new organisational approach to reinforce the new ways of working, with new independence, which in turn led to new ways of thinking. Volvo is focused on its customer-centric purpose.

For your startup, you need to have the same clarity on your north star as the RNLI and the corporates highlighted above for your purpose, and then you need to know how to do this in a manner that make a difference to your customers. Some companies are obsessed with growth, and have forgotten to see the real purpose they started up in the first place.

Having a purpose creates a sustainable and scalable competitive advantage. Competing on price is not a sustainable strategy for success of your startup. You can avoid having to compete on price if the purpose of your business relates to your customer’s needs.

Focusing on profit as the purpose of your startup has one major flaw: your customers have no interest in supporting you to just make money. They are quite happy for you to make a profit, but only after you have met their needs and delivered value first.

In other words, customers want you to explain to them why your business exists, what it is here for and why they should care. In working with my startup clients to find the deeper purpose of their business, I always ask them those questions first and invariably I get the following three answers:

We do great work. At a great price. And we give great customer service.

Undoubtedly true, but all your customers expect those three qualities as a bare minimum starting point and secondly, your competition makes exactly the same three claims.

So, as a startup, what is the purpose of your business? Have you clarity of this? Do you ever think about that throughout the course of the day? Ten years ago I would have gone with Peter Drucker’s answer – The purpose of a business is to create a customer. Today, after years of working with several hundred small business owners this very question, I have to say that your why matters more than just your what.

I had one client who’s reply to my question What is your purpose? was to provide the highest quality technical support within the terms of the service level agreement. An interesting answer, sincere intent, but is it a genuine purpose, or a KPI? It certainly could be a valid purpose, but surely it is description of what the business does. It’s the thing they do which, if they do it well, will achieve their purpose. It wasn’t their Why?

In the end, we reworked it and decided that the purpose of the business was to enable customers to continue to trade in the event of a technical failure. That was the problem their customers paid them to solve and where they made a difference and it created alignment. With this definition of their purpose, it was easy to see how they could grow the business.

Founders need to truly believe in the purpose of their company. Although many of us see Facebook as a social media platform, founder Mark Zuckerberg encompassed his personal vision in the purpose of his company.

Through Facebook, Zuckerberg aims to give everyone in the world the power to share and make the world more open and connected. By making the mission personal to the founder, it is authentic and sets the tone to attract a like-minded, vision-aligned team where everyone is working towards something in which they can believe.

A purpose-driven organisation believes it can advance society by harnessing the influence and power of its impact. The company’s purpose provides the fundamental reason for its existence and underpins its product or service offering. That’s exactly what the RNLI is all about, and is an authentic role model for startups.

If you do believe in purposeful organisations, then support the RNLI. This weekend, 14-16 October, there is a major fund raising event, Host a Fish Supper. The RNLI ask that seasoned chefs and amateurs alike dish up the fish for their friends and family in a fun themed evening.Every penny raised helps to protect the brave crew and the families who love them. Visit the Fish Supper website to sign up and receive your free fundraising kit full of recipes http://fishsupper.rnli.org/

Purpose really comes down to mindset that taps into your sense of being. At dna people, my purpose is to help build a more entrepreneurial society. I want to enable innovation with purpose from people with great ideas, intelligently investing in the future. My purpose drives me to ask better questions – to challenge, inspire and unlock new solutions. Why am I doing this? Because, quite simply, I couldn’t imagine doing anything else, it’s my purpose.

Lessons from le Tour: strategy is a team effort

The 2014 Tour de France returned to the UK for the fourth time in its history this weekend, with Yorkshire hosting the Grand Depart. There are two further stages in Britain, before moving over to France, finishing in Paris July 27 after 3,664km pedalling. With very few time trials, it looks like being a race for the climbers, and Chris Froome will be favourite once again.

Le Tour de France, the Giro d’Italia and Vuelta a España make up cycling’s prestigious, three-week-long Grand Tours. Traditionally held in July, while Le Tour route changes each year, it consists of 20 day-long stages over a 23-day period.The race alternates between clockwise and anticlockwise circuits of France.The number of teams usually varies between 20 and 22, with nine riders in each.

All of the stages are timed to the finish; after finishing the riders’ times are compounded with their previous stage times.The rider with the lowest aggregate time is the leader of the race and gets to don the coveted yellow jersey. While the yellow jersey and overall winner garners the most attention, there are other contests held within Le Tour for sprinters, for the climbers – ‘King of the Mountains’ – and for the fastest teams.

Riders in most stages start together. The first kilometres, the départ fictif, are a rolling start without racing, the real start, the départ réel is announced by Le Tour director waving a white flag. Riders are permitted to touch, but not push or nudge, each other.

The first to cross the stage finish line wins the stage. All riders in a group finish in the same time as the lead rider. This avoids dangerous mass sprints. It is not unusual for the entire field to finish in a group, a peloton, taking time to cross the line but being credited with the same time.

After 23 days’ competition, Stage 20 will be the usual ceremonial route through the outskirts of Paris, ending on the Champs Élysées after seven increasingly charged laps around the city centre. Whoever ends up wearing yellow on the top step of the podium come the 27 July will certainly have earned it after a relentless route.

Le Tour stems from the ‘Dreyfus Affair’, a cause celebre that divided France at the end of the C19th over the innocence of Dreyfus, a soldier convicted, though later exonerated, of selling military secrets to the Germans. Opinions were heated and there were demonstrations by both sides.  At an incident at Auteuil, Pierre Giffard, editor of Le Velo, the largest daily sports newspaper in France, thought Dreyfus innocent and reported the arrest in a way that displeased Edouard Michelin, who in response, opened a rival daily sports paper, L’Auto.

L’Auto was not a success. Stagnating sales led to a crisis meeting where the chief cycling journalist, Geo Lefèvre suggested a six-day race around France as a means to sell more newspapers. Henri Desgrange, editor of L’Auto, designed and announced the race on 19 January 1903.

The first Le Tour was a five-stage race from 31 May to 5 July 1903, starting in Paris and stopping in Lyon, Marseille, Bordeaux and Nantes before returning to Paris. Le Tour started outside the Café Reveil-Matin at the junction of the Melun and Corbeil roads in the village of Montgeron. It was waved away by the starter, Georges Abran, at 3.16pm, 1 July 1903. Maurice Garin was the first winner.

Garin was awarded a yellow armband, yellow was chosen as L’Auto printed its newspapers on yellow paper. The yellow jersey was added to the race in the 1919, the first rider to wear it was Eugene Christophe. Eddy Merckx has worn the yellow jersey for 96 stages, more than any other rider in history, whilst four riders have won the race five times in their career – Jacques Anquetil, Eddy Merckx, Bernard Hinault and Miguel Indurain (a record five consecutive wins).

I am a massive Le Tour fan, I watch it every year captivated by the relentless effort, the speed, the breakaways, the mountains, the rivalry. But I have been struck by something else – the way the cyclists work together.

For the majority, Le Tour is not about winning. The great myth is that the riders are all engaged in the main narrative, the battle for yellow, but Le Tour is unique for the way it blurs the distinction between individual and team competition. Some may see Bradley Wiggins’s triumph in 2012, the first by a Briton, as one of the supreme solo performances in the country’s sporting history, but it was only possible because of the dedication of his director, mechanics and, above all, teammates.

Only a select few of the 190-odd riders who start Le Tour harbour realistic ambitions of riding through Paris on the final stage, wearing the winner’s yellow jersey. Among the rest are specialist climbers chasing the ‘King of the Mountains’ title and sprinters, who come alive only at certain points in a stage. Then there are the domestiques (‘servants’), who do whatever is required to support their team leader.

The name of this last group was coined pejoratively by Henri Desgrange, the race founder. Desgrange believed that the perfect Tour was one that was so punishing that only a single rider would finish. The idea of a cyclist sacrificing himself to help another was abhorrent, yet in pursuing his vision, Desgrange made Le Tour so difficult that he ended up creating a culture of co-operation.

Today, the domestiques has evolved to perhaps the best example of collaborative team philosophy. Everyone who cycles Le Tour comes together to get their best people ahead. The top rider in each team has a whole group of riders around him who make the pace, ride in front of him to help him up the mountain, protect him from crashes – the works. There’s no way Wiggins or Froome could win without his team.

But unlike other team sports, Le Tour is won by an individual rider. The team put their talents at the service of one man who can achieve greatness. They are rewarded by the bigger goal of being part of the winning team that made it happen.

Le Tour is about teamwork and playing to your individual strengths, something quite unique. An individual, no matter how strong, cannot make it over a 3,000km long race alone. Technical, logistical, tactical and moral assistance from a well-organised and resourced team is key for success just as small details and a few seconds, here or there, can decide the race winner.

Collaboration of the people involved on the road and behind the scenes makes the difference. In Le Tour, like in business, talent and strength can win a stage, but clear strategy and dependable teamwork are what wins a high placing in the overall standings.

It might sound obvious, but consider how interlinked you are in your business. Who do you depend on to give you their best performance day in, day out? Whose success depends on you? Do you know the strengths, and weaknesses, of your team-mates? Do you have collaborative competence?

So what can we take from Le Tour by way of how to effect collaboration in our businesses?

Equipment matters but team matters more It is easy to get seduced into the kit and the gadgets. Carbon fibre bikes with lightweight components and apps that can tell you every detail of your ride. But the kit will never differentiate your performance for long, the way a team works is far harder to copy and is what sets winners apart from runners up.

Getting the people issues right in business often goes into the ‘too hard’ box and is ignored, while investment is poured into equipment or other areas that are easier to understand. If you want your team to flourish, you will need to invest in it.

Energy management is more important than time management In the race it is the relative time to other riders that matters, not the absolute time. The rider who wins over three weeks is the one who manages their energy best. They avoid wasting energy by riding in the wind or attacking when they don’t have to.

Time pressure is often an illusion. We all know that when we are working on something we are passionate about time is rarely a problem; it is when we are working on things that are hard that we run out of time. The ideal team will have specialists who are passionate about all areas that need to be covered, so that everyone can stay as energised as possible.

Train as a team A cyclist wanting to win Le Tour will have started their specific training the previous November, with a tailored programme over the spring, riding thousands of kilometres before they get to the start line. Riders will work with coaches, strategists, psychologists, doctors, nutritionists, physiologists and masseurs to ensure that they are in peak mental and physical condition for the race.

If we want the best from ourselves and our team, we need to take responsibility for our training, but also to ensure we’re connected in our development. There is so much that a leader needs to know – not just about their specialist subject, but also about psychology, marketing, communication, technology, etc., collaborative learning sparks performance.

Integrate collaboration into the flow of work Collaboration is an intrinsic element to the way a Tour team works, inbuilt to their psyche and way of being. It’s not seen as something to work on, rather collaboration fits naturally into the flow of work. Collaboration is a core organisation value.

It’s important to remember that collaboration is perpetual, a never-ending evolution. This means that it’s important for your organisation to be able to adapt and evolve as things change. Keep a pulse on what’s going on in the industry and inside of your organisation. This will allow you to innovate and anticipate.

Sometimes leaders follow – learn to get out of the way Cycling is brutally meritocratic. The team may nominate a ‘leader’ for Le Tour, but if that leader loses time, leadership moves to where it is most relevant. Cycling is both a team sport and an individual sport. Team members sacrifice their individual ambition for that of the team and the team leader. However, if the leader does not have the strength to win, or if they are so far ahead that they don’t need to, they gain more credibility with their team mates for next time by helping one of them to win. Leadership is emergent.

For a leader to remain the leader in business, they have to perform. In hierarchies, ‘leadership’ is appointed; in teams, it is emergent and dynamic. Every member is expected to take responsibility and contribute what they can: sometimes that means leading, sometimes that means following.

Measure what matters: the last 1% makes all the difference In the Tour, you might lead any of the stages by a crushing margin right up to the last kilometre of the last stage, but it is worth nothing if you don’t finish. Not everyone is cycling for their own yellow jersey, and whilst I am not advocating complete harmony and collaboration nor a complete subjugation of ourselves or our organisations, if combined effort wins the race, not everyone can be the front man.

There are a lot of things that an organisation can measure but that doesn’t mean that all of these things should be measured. Focus on the metrics that matter. Some organisations focus on ‘busy’ metrics such as web site visitors, others focus on metrics such as engagement, defined as how connected a potential customer lead is.

Protect your star cyclists In cycling, the star rider is usually a specialist who can climb or sprint better than the others. The team will ride to protect that rider and save their energy for the key moments of the race, when they can make the difference. The team will pace them back to the front if they stop for a pee or a mechanical problem and spend hours riding in front of them to protect them from the wind.

Most organisations also have a star, the best designer, sales person, or technologist. To make the most of that skill, the rest of the team needs to rally round and ensure they can focus time and energy on doing what they do best – although the team also needs to treat the stars carefully to avoid them becoming prima donnas.

For Le Tour, more collaboration means more progress, and ultimately more success. In business, the more people you collaborate with, the faster you go. The more people who share the work at the front, offering others their slipstream, the faster and further you will go. It is common for a group of riders to get ahead at the beginning of a stage. If this group is big enough and gets far enough ahead, they might be able to stay in front. But when the peloton, the chasing pack, gets organised they will probably go faster, and catch up.

In business, collaboration enables increased responsiveness, economies of scale and working smarter, increasing capacity and focusing expertise so that more can be achieved in less time and for less cost. Waste can be reduced by better decision-making and a broader understanding of the bigger picture of activity. Investments can be made once so that the wheel is not reinvented over and over again.

Business is not a solo act, unity is strength, gang up on a challenge, you don’t need to win personally, the best idea needs to win, every collaboration helps you grow. When there is collaboration, amazing things can be achieved, greater than the collective strength of each individual. Alone we can do so little, together we can do so much, and realise that behind every great person, is a bunch of other great people. As Isaac Newton said, I have seen it further by standing on the shoulders of giants.