I saw a short interview with Jay Piccola, the president of athletic-wear giant Puma. He's a very interesting guy. He comes from a family of doctors - a 400-year tradition. When he joined Puma, the company was technically bankrupt. He said the problem was that it was run like a bureaucracy, with all the ideas and directives coming from the top. "Besides that, there was this idea that Puma was a German company and that the rest of the world should be happy to buy whatever German products it decided to create."
Piccola changed the business dramatically. First, he changed its nature from a German, inwardly focused company to an international, market-focused business. Next, he gave Puma a vision. They would reinvent their brand, combining sports (which had until then been primarily a functional idea) with fashion and lifestyle.
It worked very well - but that's not what Piccola attributes his company's success to. He gives credit to three factors - three very good business practices:
1. Giving his employees a great deal of liberty in design and marketing
Giving your employees the authority to make lots of decisions is essential if you want your business to grow big. Most managers are comfortable letting their subordinates make the ordinary, quotidian decisions but reluctant to allow them equal freedom in the creative and marketing spheres. That's a mistake, because product creation and marketing are the keys to growth.
Unless your employees can practice making good decisions in these key areas, your business will always be dependent on you for growth. That may feed your ego in the short term, but after a while you'll get tired of having to come up with all the answers, and sales will suffer because of it.
2. Listening to the market rather than dictating to it
Deciding what the market needs may be the most common and most deadly mistake entrepreneurs make. It's interesting that, according to Piccola, this was also a problem with Puma.
When you are new to a market, you are seeing it from the outside. Coming at it with fresh eyes, you may see a product gap that you want to fill. Usually, you will get very excited about your idea, because "nobody else is doing it right now." So you do everything you can to protect the idea. Later, when you launch your advertising campaign, it flops. So you try again. And again. A million dollars later, you are broke ... and you still haven't figured out what went wrong. It was because you never asked, "Why isn't someone already doing this?"
In Puma's case, the company was sturdily positioned in its market. But the executives who were running it insisted on sticking to the old marketing and design formulas because "they had always worked before." Yet market conditions change over time. The essential human personality doesn't change ... but the market does. To keep an existing business at a competitive advantage, you must be aware of what your competitors are doing and pay extra attention to the new businesses that are growing fast. Once a year, you should sit down with your creative team and ask, "What has changed? What is the same?"
3. Pushing the company forward on a Ready-Fire-Aim basis
Piccola doesn't believe in getting everything perfect before he launches a product. He understands something that all experienced businesspeople eventually learn: You can never get it completely right when you are starting out. There will always be after-market modifications. Trying to "do it right the first time" can slow your business down.
Be happy when you have 75 to 80 percent right ... and then test the idea in the marketplace. When it comes to staying ahead of the competition, speed is critical.