"Give me a place to stand, and I shall move the earth with a lever" Archimedes
International business and trade is challenging and adds complexity to a business venture. Add to that  today's turbulent business environment, it would seem that reaching beyond domestic borders can be too difficult. In business, there is rarely, if ever, a time when everything is "perfect." So, I have learned to take advantage of the opportunities presented. And, by leveraging the opportunities I have had greater success.Â
The principle is simple – use small, significant strengths to create the greatest impact. However, this often requires organizations and entrepreneurs to develop a new mindset and strategic process, so we have developed the Leverage Point Strategy methodology. This piece is the introduction to a book on the Leverage Point Strategy under development. This is your opportunity to engage me on the topic, so read, comment, and share.
Leverage is a simple concept. It is the ratio of change in input to the change in output. You get greater leverage when a small force multiplies output. The goal is to see a small force produce as much change in output as possible.
Leverage points are those forces, or points, that create the rate of change in output. The power of leverage points is on a continuum from low to high. The best scenario is to locate high leverage points, which means the smallest amounts of force effect the greatest change or results.
A very clear example of a leverage point is the rudder of a ship. It is a small part of the ship in comparison to the size of the ship, but it creates a force that is able to turn the ship in a new direction. In practical terms, you can describe the process of maximizing leverage points as making use of small, but significant forces.Â
Leverage points are related to tipping points. A tipping point is a point at which an object is displaced from one place to a new and different state. Leverage points are used to create the tipping point.
Malcolm Gladwell wrote, "The Tipping Point: How Little Things Make a Big Difference." He identified three key factors - Law of the Few, Stickiness Factor, and Power of Context - for creating tipping points.
The Law of the Few is when a few key types of people champion and catalyze an idea or concept to critical mass. The types of people are Connectors, Mavens, and Salesman. When all three types of actors advocate an idea, the idea is more likely to reach a tipping point. Connectors, Mavens, and Salesman are examples of leverage points. Each is a small force, which can wield significant results.Â
The Stickness Factor is something that sticks in the mind of your customers and influences their behavior in the future. And, the Power of Context is when the right environment or time aligns with your business opportunity.
Each of the leverage points highlighted by Gladwell can induce a tipping point, but it is more likely the combination of these leverage points that actually forces a tipping point. As a business, the key is to identify key leverage points and combinations of leverage points, which will catalyze a venture into emerging markets.
In actuality, almost anything is a leverage point. However, the leverage point might be in your favor or in someone else's favor, and the leverage point may have low or high impact. For example, one person's trash becomes material for someone else's art. Or, requirements for proper disposal of batteries and computers may be a headache for some businesses , but for others it has presented a business opportunity. Your goal is to find a series of leverage points in your favor with high impact potential.
Using leverage points to maximize a business opportunity or venture, is a process strategy. It works in conjunction with completing an environmental analysis, as well as a SWOT analysis, on your business opportunity. The Leverage Point Strategy should be embedded, and pervade, the strategic function or dimension of a business. The results, of which, are operationalized as integrated parts of the overall business strategy. To activate the Leverage Point Strategy in the strategic function, address these questions:
- What are the key leverage points that will make this business opportunity work?
- Which of the key leverage points have high, medium, or low impact?
- Which combinations of key leverage points will have best to least impact?
- How will the key leverage points help us to override the weaknesses and threats in the business opportunity?
- In general, how will we incorporate the high leverage points and high leverage point combinations into the business model?
The first place to discover leverage points is by looking at individual strengths of team, partners, and yourself. Dr. Bruce Cook identifies 13 types of capital:
- Economic includes currency, liquid assets, and finance.
- Social includes community-focused or social good activities, such as relief work ,charity, and scientific.
- Spiritual refers to strength drawn from faith.
- Knowledge is what you and your team know.
- Political refers to formal political affiliations and influence.
- Environmental refers to assets in the global "green" movement like carbon credits.
- Creative includes your unique creativity, artistic expression, and intellectual property.
- Positional refers to the roles, titles, and authority you hold both formally and informally.
- Institutional includes ormal reputation, influence, status, alliances and partners.
- Physical refers to your body's capacity, including energy and fitness.
- Generational refers to legacy, heritage, family lineage and wealth that is passed down in families.
- Closeness refers to an ability to draw close and be vulnerable in relationships, which can be a catalyst for trust.
- Relational refers to the span and depth of your relationships both vertically and horizontally.
After looking at individual strengths to discover leverage points, you apply the same process to the organization and ecosystems in which you belong. Not all the types of capital identified by Cook will apply in every situation.
This first exercise also represents the identification of strengths in the SWOT analysis process. As the SWOT analysis process continues, look at each opportunity, threat, and weakness to see if any key leverage points in your favor can be uncovered.
Once you have applied the Leverage Point Strategy to your analysis of the business opportunity, you can then carry the details forward into your business model. The business model gives you a complete picture of how you will implement the business successfully. It answers the question, "how do you logically create value?" Johann Wallin, in Business Orchestration: Strategic Leadership in the Era of Digital Convergence, says a business model:
...Defines the value-creation priorities of an actor in respect to the utilization of both internal and external resources. It defines how the actor relates with stakeholders, such as actual and potential customers, employees, unions, suppliers, competitors, and other internal groups. It takes account of situations where the actor’s activities may (a) affect the business environment and its own business in ways that create conflicting interests, or impose risks on the actor; or (b) develop new, previously unpredicted ways of creating value.
In the book, Business Model Generation , by Alexander Osterwalder and Yves Pigneur, Â there are key questions to develop a solid business model. The following is an adaptation focused on leverage points, "What key leverage points will you use to:"
- Activate your customer segments?
- Maximize your revenue streams?
- Improve offerings for your customer segments?
- Better relate to your customers over time?
- Maximize resource allocation to run the business?
- Improve efficiency and effectiveness of key activities in running the business?
- Better utilize and leverage the "people" assets?
- Increase and improve outputs of key activities?
- Maximize partnerships, alliances, and collaboration?
- Maximize network and distribution channels to reach customers?
- Manage and reduce costs of running the business?
In summary, leverage points are simply tangible and non-tangible assets, resources, situations, etc. that can be used to gain and sustain momentum in the business environment. As you analyze a business opportunity or problem, identify leverage points. And, use leverage points to help you assess opportunity, as well as incorporate best leverage points and combinations into the business model and operations.
"Leverage Point Strategy for Emerging Markets" is a set of fact sheets on leverage points in general and by region, country, and industry, as well as tools, resources, and publications for implementing. The current offering is a subscription to the sharing of a different leverage point each week. Look for the following book releases in the coming months, "15 Leverage Points for Exporting to Asia, Africa, and the Americas," "50 Leverage Points for Doing Business in Emerging Markets," and "30 Leverage Points for Doing Business in Kenya."
Note: Information on this website has been prepared as general information on matters of interest only, and does not constitute professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information on the website.
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