According to popular legend, when Hernan Cortes landed in Veracruz on his campaign to conquer the Aztec Empire, he instructed his captains to burn all the ships. With no avenue for retreat, they would either be successful or perish.
And many consultants and business owners refer to this model of “burning your ships” as a powerful leadership tool.
In fact, when I interviewed Tony Hsieh, CEO of Zappos.com for my ebook “10-Minute Business Success”, he talked about how this approach motivated him when they “burned” $25 million in business in a single day, by terminating their relationships with all shoe companies that required drop shipping rather than providing Zappos with inventory directly.
At the time, Zappos revenue was about $100 million annually. So they were burning a full 25% of their revenue. At the same time, Tony was convinced that Zappos could never meet their customer service goals as long as shipping was in the hands of a third party.
Turned out he was right, as Zappos grew steadily to the point where there annual revenue now tops $1 billion.
My own experience with ship burning
About 12 years ago, I was lured away from my consulting and information products business to co-found a software company with two partners. The software was a unique testing and assessment suite for the online training industry.
Since one of my partners had recently sold his business to Bill Gates and my second partner was a senior professor in the Graduate School of Education at UCLA, we all thought this would be a slam dunk.
So I burned all my ships.
I sold off the rights to all my information products and my list, which included a non-compete clause prohibiting me from creating any similar information products for 5 years. And I handed off my consulting clients to other consultants who I trusted.
After all, I was just months away from becoming the next gazillionaire cover story, right?
Well, it didn’t quite work out that way.
Reality soon set in and although we had made great progress, had a couple of Fortune 500 clients and seemed to be well on our way, one of our key investors bailed on us due to family circumstances.
Cut off from our main source of funding, we were forced to either lay off most of our staff and attempt to stay operational with a skeleton crew, or sell the business.
We opted to sell the business. All in all, we came out alright, getting a decent price from a company we believed would handle the technology properly. And they did.
But now I was left empty handed, with 3-1/2 years to go on my non-compete deal.
In short, I had burned all my ships and had no transportation to take me home!
If only I had known the truth about Cortes
Back to our guy conquering the Aztecs.
As it turns out, Cortes did NOT actually burn all his ships. According to Harvard historian, John H. Coatsworth, what Cortes really did was have the captains of nine of his twelve ships run them aground, so they could not be used in a retreat.
But as a safety valve, Cortes kept three ships in working order along with a master shipbuilder among the crew. So he had a “Plan B” just in case.
And even in Zappos’ case, they still had their own Plan B, which was the other $75 million in annual revenue they could build upon.
But in my case, there was no Plan B. So I had to start all over again from scratch.
So the lesson is, whenever you’re contemplating making a bold move or a drastic change, ALWAYS have a well-established back-up in place. And limit your burning to just some of your ships.
My big announcement – a modified form of ship building
Each year, I lock myself away for a few days and review what’s worked well for my business in the past year… what hasn’t worked as well… and what new areas I could potentially help my subscribers and clients with.
And by “help” I mean both free content and paid products and services.
One of the ways I advise my clients to explore these new areas is to look at 3 components:
1. What you do well
2. What you have a passion for
3. Where you can help people by putting the previous two points together
This is not always an easy exercise to do. For it to be as productive as possible, you have to be rigorously honest with yourself. And that includes a clear assessment of both your strengths and your weaknesses.
So, in doing this for my own business (and my personal goals), I realized that my greatest strength is in identifying “leverage points” you can use to grow your business with less money, less time and less friction.
And much of what that boils down to is leveraging your own assets as well as other peoples’ assets to multiply your profits rather than grow them in a linear fashion.
Let me give you a couple examples of both that you can use in your own business right away.
Leveraging your own assets to produce more sales
with no added expense and just minimal effort
A great way to get more mileage, and more profit, out of your own assets is to go back and review your best performing marketing pieces for the previous year. Let’s say you have two or three emails that outperformed all other emails you sent to your list.
Take these same emails and do nothing but create new subject lines for them. One example I like to cite (and you may have seen) is how I tested three different subject lines with essentially the same body copy.
The first subject line focused on the benefit the prospect would receive. The second focused on a key problem the prospect would like to solve. And the third was very quirky and created a strong sense of curiosity.
After testing all three, the problem solving subject line and the quirky subject line both performed strongly, with the benefit subject line coming in a distant third.
So I continued to run the emails with the two winning subject lines, while testing new subject lines against them. Each time, I would keep the winners and eliminate the losers.
By doing this, I gained tremendous leverage of my assets by being able to sell the same product over and over again with essentially the same body copy. This saved a tremendous amount of time and added a substantial amount of additional profit to my business that I wouldn’t have seen if I had abandoned those old emails and started from scratch as so many businesses do.
The big takeaway: There is almost always a large reserve of untapped profits in what you’re already doing well. Mining those profits is a faster, more certain way to make more money than to constantly be starting over with each marketing campaign.
Leveraging other peoples’ assets to ramp up your profits
with no risk and no additional cost
One of the most frequent questions I’m asked when working with clients goes something like this, “What do you think about me creating a new blue gizmo to sell to the buyers of our red thigamajig? We could have it designed, manufactured and take it to market in just 10 months.”
My answer, although obvious once you’ve heard it, always takes my clients by surprise.
“Instead of going to all the time, trouble and expense to develop something that may or may not sell, why not sell another company’s yellow thigamajig first as a test? Sure, the color is a bit different, but in most other respects, it’s very similar. This way, you may not make as much profit starting out, but you could quickly test the market and move forward with your own version if the results are good, but save yourself an enormous headache if the results are not so good.”
Regardless of what industry you may be in, nearly every business can use this fast-to-market approach to product development. Why waste significant resources developing a product BEFORE you know for certain that your customers will actually buy it?
The big takeaway: There’s tremendous leverage in sacrificing a bit of profit now to quickly and safely test another company’s product before making a major commitment of time, effort and money to your own version. It takes what was a gamble and converts it to a sure thing.
And now for that announcement I was telling you about
I hope you’ve enjoyed my quick tour of two ways to leverage assets – your own and other peoples’ – to multiply your profits. More importantly, I strongly recommend that you put them to use.
And, I also recommend that you take some time each year away from your office and do the “business soul searching” I mentioned above.
After doing that this year, I’ve come to the conclusion that the way I can best serve you and everyone else on my list is to focus my products and services on these “leverage points” that I mentioned. So for the foreseeable future, everything I do is going to show you how to get greater returns for less time, effort and money by leveraging your own assets and other peoples’ assets in all areas of your marketing.
This will include copywriting, prospecting and lead generation, traffic generation, converting more prospects to paying customers, joint ventures, licensing, ways to increase the lifetime value of each customer – and much more.
With the daily challenge of so many different things competing for your interests – and not knowing which ones are truly valuable or just an empty promise – I think we can all benefit from making life easier and more productive, not harder and more frustrating.
If you agree with me, stay tuned for more to come.
Am I nuts? Am I right on target?
Feel free to let me know – or share your own experience with this topic – by leaving your comment below.
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