This course focuses on the common growth challenges faced by existing private businesses when they attempt to grow substantially.
How to Scale Your Business with Enchanting Travels Case Study
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From the course by University of Virginia
Grow to Greatness: Smart Growth for Private Businesses, Part I
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From the lesson
Four Ways to Grow a Business
This module reviews the four ways to grow a business. The required reading is Edward D. Hess, Sanju Jacob and Monidipa Mukherjee,"Enchanting Travels," Case Study. Enchanting travels can be found at http://www.enchantingtravels.com.
Meet the Instructors
Edward D. HessProfessor of Business Administration
Darden School of Business
Welcome. Week four, grow to greatness.
Great to be with you again, looking forward to today.
Great session today, I believe, in this enchanting travels case.
But before getting there, I want to just take a moment Where have we been? Okay?
Week one. We focused on the truth about growth.
Week two. We focused on are you ready to grow and
how do you determine that in the growth risk assessment tool, that was the big
takeaway, ladies and gentlemen. That was the big takeaway.
Week three. The 4 p's.
Planning and we looked at structure, remember all the charts.
Infrastructure, whether outsource, prioritization, strategic prioritization.
The 3 w's and the key w, why is someone going to buy from you.
Talked about processes. The recipes, the check list and how
important building processes are, because you need processes in order to grow,
because Other people have got to do what you were doing as the entrepreneur.
And then my gas pedal. And you know the gas pedal.
You've seen it in all of the weeks before.
Alright? The gas pedal approach. And you know the little gas pedal.
With the little person beside with the big feet.
To let up on that gas pedal. Today, we're building on that.
We're going to take all that and go to a different question.
Now, 1 point I want to emphasize. People learn differently, but most people
learn through stories. Each case you've had is a story.
That story contains many, many teaching points and the purpose, okay of this
whole course is what do we know? We know that every entrepreneur, wherever you
live, whatever the business is, whatever your background.
Every entrepreneur, you, if you want to grow a business, you will face similar
challenges, and the same challenges that Julie face, okay.
That Susan faced, okay. That Dave will face, okay.
All of the entrepreneurs that we have read about And Parik who is our subject
today. So, those stories, those cases.
I have read them many many times. Every time I read them something jumps
out at me again. They are your real take away.
Read those stories as you go through the growth process.
They're not long. They're written intentionally to be
short, read em, go back, rehash em. They are lessons forever, because the
challenges they faced you will face. And there's no reason for you to start
from scratch and reinvent the wheel. Learn from these entrepreneurs and also
learn from entrepreneurs in the area in where, in which you live.
Get into a entrepreneur network. Entrepreneurs love to mentor other
entrepreneurs. It's a great, great way to save yourself
time, money and frustration. Okay.
I"m going to flip through these quickly because I want to get to the case, but
just let's focus on The difference here, okay.
What's that mean to you? What's this mean to you? Isn't this a great picture, I
love this, I love this. This is you.
That's you, ladies and gentlemen. And as you get better, it gets more
complex. [INAUDIBLE] consistent improvement.
Practice, practice, practice. Get better, better, better.
Growth shouldn't be assumed. You're balancing it, if you will.
The pros and cons. It's a strategic decision.
ha ha, here we go. Pacing growth, take small steps, don't
take big leaps, don't bet the ranch, don't bet all your money, strategic
focus, go for the bull's eye, 2" inches wide, 2 miles deep, and we're going to
come back to that in today's class. Here we go, bigger and better competition
as you grow. What does it mean to grow a business? And
that's what we're going to focus on today.
Today's class with enchanting travels is going to take us into a whole new area
that you haven't been. Where we're basically going to focus on,
okay? Really, the four ways to grow a business, okay? And we're going to focus
on C V P, Customer Value Proposition. We're going to focus on the big "W."
"Why" is someone going to buy from you? And we're going to focus on
differentiator. We talked about differentiator before.
Differentiators is what makes your offering, your product, your service,
different to all the rest of them. Now, a differentiator's got to be
differentiating in two ways. Two.
One, it's got to be different from what the competition is doing.
But as or even more importantly, the customer, has got to perceive it, see it
as different. Because you can differentiate yourself
all you want from the com, from the competition.
But if the customer, the buyer, your source of revenue, doesn't see it as
different, it's not value or worth anything, 'kay? And that's what we're
going to talk about today, because as we're going to talk about in this.
Class today, on the enchanting travels is this.
How do you scale a business? Scale a business is, how do I get bigger, okay.
How do I reach lots more, many more customers? Okay? There's really only, if
you think about it, you're starting a business.
There are 4 ways you can grow your business.
And the one I'm focusing on today is scaling.
We're going to talk about, at the end of the class, the other 3.
Scaling, what does that mean? What that means is, I got to sell, let's just say,
I'm in the mar, I'm, I'm in the business of makin' these pens.
Okay, how do I make more money? How do I grow? how do I scale? I've got to sell
more people my pen. I need more customers.
There's 1 other way, all the people who buy my pen.
Can I sell them something else that they need with the pen, maybe a case for the
pen, that's like Julie, right? Maybe a case for the pen, maybe they need refills
for the pen, okay? Maybe they need clips for the pen.
So, as you think about growing, the first thing is, how do I get more customers?
Why are customers, more customers important? Let's remember, this is a
business course. Okay, this is not a charitable
contribution course. It's a business course.
How do I bring in more money? Find more customers to sell my pen to.
Or, sell more stuff to the customers I got! Or a combination.
Now, in order to scale, that means I got to do more volume, more volume.
In order to be able to scale I got to be able To produce or manufacturer more,
create my product, I've got to be able to reach more customers, how do they know
I'm here? I've got to be able to actually sell.
I've got to be able to actually sell, I've got to be able to distribute,
deliver. I've got to be able to collect, pay,
everything has got to be able to get bigger, okay? It's hard to scale.
Especially when you're a small business trying to grow.
Why? How do customers find out about me? How do I get the word out? It costs a lot
of money to do marketing. Wow! How do they reach me? If they don't
live where I live. How do I manufacture or get enough
product ready? How do I hire enough right people who can basically sell, deliver,
take care of my customers? How do I make sure when I do that everything's getting
done? In the way I want it to be, that's what scaling is about.
In order to scale you need the 4 P's that we talked about.
So the 4 P's are the building block. If you have processes underneath, it
allows you to scale. And the Enchanting Travels case is a
scaling case, all right? It is a scaling case.
So, let's start with Enchanting Travels. First question.
What is Enchanting Travels' customer value proposition? Going to go back and
use the technique we used in week two. I'm asking questions and what I want you
to do is to answer them in your mind, or get your paper and pencil, and write down
some notes. What is, first of all, a customer value
prophecy? What do you think it is? Take a second.
Think about that. Well we know what customer is.
That's the person that's buying. What's the value proposition? The value
proposition is, starts with a need. What do I need or want as a customer? And
how will you Mr. or Ms.
enterpreneur meeting my need in a way that satisfies me, that I can afford.
And I perceive, that for paying you money, okay? Money. I'm going to pay you
money. Here's my money!.
What a I receiving in return for the money as the customer? Do I perceive that
that value what you're giving me meets my need? So I've got to offer a customer
value proposition that customers perceive as solving their problem or need that
they value. Now what was Enchanting Travels' customer
value proposition? Think about that. What was it? I know you're thinking.
That's why I'm giving you time. I know you're there, I know you're
thinking. And I betcha somebody said, they do
travel tours. Hm.
Is that right? Do they do travel tours? Let's think through that.
What was unique about them? Now, I know a little bit about Enchanting Travels,
because I found them. The following way.
I was asked to teach a couple of summers ago in a course that the Indian School of
Business in Hydrobod [FOREIGN]. I had never been to India.
Great country, fascinating. My wife said, why don't we go? Let's
spend 10 days before you keep touring. I says wow, it's a big place, alright? I
don't know how to get around. We don't speak the language.
And so she researched, a lot of research. My wife's a very smart woman, okay? She
did lots of research. She came back and said, here's a company
I think we ought to talk to. It was Enchanting Travels.
Now I didn't decide to do the case then, no, I said okay, I was very thankful my
wife was handling this, okay. Enchanting Travels had a distinct
customer value proposition that was aimed at me as a customer.
What was it? No, it wasn't tours. What was it? It was customized, for me,
okay. The first part of the, of the enchanting
travels customer value proposition is I'm going to customize, okay.
Ed, what would you like to do? What would you like to see? What do you enjoy
seeing? What parts of the country? Let's talk about it.
They made up a tour that met our needs. Enchanting Travels does customized tours.
Now, what's the other part of the, of the value proposition that they offer? Well,
they know, okay? That when people travel in countries where they don't speak the
language. Or in countries that are in.
Very diverse, very big, very large. The travel can be chaotic, OK? That it
can be that people feel anxious, and what do people want? Like most customers,
somebody to take care of me. Somebody to wrap their arms around me and
say You are in good hands, okay. The second part of their value
proposition was this. In many, many, many tour companies
operate the following way and I'm going to draw a picture.
Okay, Ed contracts with company number 1, Company number 1 may be based wherever,
New York City, Washington, London, India, company number 1 Basically contracts with
company number two to do the part in Delhi.
I'm making this up, OK, Delhi. The Delhi company then hires a tour guide
that will take me to The museum or to the seat of government.
So there are 3 people in what we call the value chain.
3 different groups coming together to deliver to me.
Now what did Enchanting Travels do? They had a different business model, they had
a different value chain. What did they do? Time for you to think.
Yeah, it was pretty cool, wasn't it? With Enchanting Travels, Ed only dealt with
one Cause Enchanting Travels did everything, and basically from the time
you arrive to the time you leave, they are in control of delivery.
They, all right, are in control of delivery.
There's two reasons for that. What do you think they are? Two reasons.
I'm going back, I want to use this a black board, white board.
Two reasons they want to be in control, OK? What did you write or what did you
think, yeah Their value proposition is to deliver a high quality wonderful
experience to their guests. So they wanted to control experience,
which means delivery. And what's the other reason? Ca-ching,
Ca-ching, Ca-ching, because they keep the profit.
In each stage. They keep the profit in each stage.
So there's two reasons. To control the experience and the
delivery and to make all the money in the value chain, very, very shrewd.
So, customize tours. Controlled, controlled delivery through
the value chain, to deliver a great travel experience.
And then, the other part is, they knew that their model would work best if they
focused on countries. Where it's complex to deliver that.
Where it's hard to deliver that, for many reasons.
And then, they focused on customers who wanted to come from North America and
Europe, to those countries. So they built their first business based
on bringing people from North America, the United States and Canada.
And people from Europe, primarily the United Kingdom, Germany to India.
And, you remember, in the first paragraph in the case.
The first paragraph, my friend Pareek. In the early days we were trying to build
a brand, it was imperative that every single guest, noticed.
[UNKNOWN] did not say customer, he said guest and that's a big difference for his
brand, for his culture, for his training, for the type of people he wanted to hire.
We serve guests, when [UNKNOWN] told me that, it reminded me of the Ritz Carlton
Corporation, which I told you about previously, the huddles.
And the motto, or the, or the, the, the value statement of the Rich Carlton
Corporation that [UNKNOWN] made. Ladies and gentlemen serving ladies and
gentlemen. The businesses services are profession.
[INAUDIBLE], Enchanting Travels and his partner.
Are in the business of providing guests the wonderful experiences and they do
that by customizing it, controlling the delivery from soup to nuts and we'll talk
about other parts to why they do that in just a second.
Now, what I want to do here is to take a few minute, two minute break.
Why? because I want you to think about what we've gone over and write down on
your piece of paper what are two keys things you want to think more about.
About customer value proposition and a business or your business.
Two minutes, don't go away, I'm coming right back at you.
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