PRODUCT AND ENTERPRISE

INSTITUTIONALIZATION
- STRIVING TO LAST INDEFINITELY

NIGEL A.L. BROOKS

THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION

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 PRODUCT AND ENTERPRISE INSTITUTIONALIZATION
- STRIVING TO LAST INDEFINITELY

For an enterprise to be sustainable, it must offer products or services that

become institutionalized, regardless of whether the founding entrepreneur
or lifestyle enterprise owner stays or not. Institutionalized products or
services are those that have become permanent features in society or in a
community as determined by the marketplace. As a consequence, the
enterprise becomes institutionalized also. However, achieving the state of
product and enterprise institutionalization requires an effective
management team that can deliver the right products or services into the
best markets.

Thomas Edison once said that he had not failed, but just found 10,000
ways that didn't work. He also said that he didn't want to invent anything
that wouldn't sell, because sales are proof of utility, and utility is success.

Upwardly mobile entrepreneurs start enterprises to transform innovative

ideas into products and/or services that are attractive in large markets. One
reason for doing so is to create wealth. Another reason is to make a
statement by creating a product and/or service that delivers value and
makes a difference in the marketplace. Yet another reason is to make a
contribution to society and leave a legacy regardless of whether they
create wealth for themselves or not.

High-tech enterprises usually have to be upwardly mobile. This is because

the capital requirements for product, market, and infrastructure
development require large markets that have enough critical mass to
generate a return on investment. It is hard to generate a basic income from
an upwardly mobile enterprise in the emerging and growth stages unless
the idea is so compelling that it can attract capital to fuel growth early on.

Over the long haul, upwardly mobile enterprises can generate significant
wealth as demonstrated by the energy providers, such as Exxon Mobil and
Royal Dutch Shell. However, they can have downturns too as
demonstrated in the automotive industry by Chrysler, Ford, and General
Motors. Coca-Cola is an upwardly mobile enterprise with hugh brand
equity.

Some upwardly mobile enterprises are unable to reach large markets but
default to becoming lifestyle enterprises in a scaled down form.

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Many lifestyle entrepreneurs and owners either start or acquire enterprises
to provide a basic income to sustain themselves. This is a risky approach
unless the owner puts the customers' wants and needs ahead of their own,
and has sufficient working capital to survive until the enterprise makes a
profit, if at all. These enterprises are found on Main Street as automotive
body and repair shops, gas stations, restaurants, retail stores, and service
providers. Many famous names such as Albertsons, Kroger, Macy's,
Marriott, Walgreens, and Wal-Mart began as lifestyle enterprises.

Without attractive products and/or services, building empires of

enterprises is a waste of capital, as is building enterprises on hope - it
takes a compelling value proposition to achieve product and enterprise
institutionalization, although convenience and quality of service can be
differentiators also.

A lifestyle enterprise can migrate to an upwardly mobile enterprise if there

is demand for its products and/or services in multiple markets. Franchising
provides a way of transforming a lifestyle enterprise into an upwardly
mobile by applying the duplicable principle to enable expansion in
multiple markets. Kentucky Fried Chicken, Holiday Inn, and McDonald's
reached multiple markets in this way.

Whatever the approach, founding entrepreneurs and owners strive to see

their products and/or services and enterprises become permanent features
of society, and to earn a return on their investment of time and money.
Ideally the enterprise will become sustainable over time. Permanence is a
condition of lasting indefinitely, but not necessarily forever.

Products and/or services become institutionalized within society or in a

community over time if customers in the marketplace adopt, use, and rely
upon them on an ongoing basis, regardless of the effort to promote them.
If the products and/or services become institutionalized, then the
enterprise that produces and sells them becomes institutionalized too. If
not, the products and/or services and the enterprise will eventually blend
into the background. For example, products from Campbell's, Colgate-
Palmolive, Heinz, Johnson & Johnson, Procter & Gamble, and Unilever
are institutionalized, as are the enterprises themselves.

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If the product and/or service causes a paradigm shift through changes in
assumptions, concepts, practices, and values, a major promotional
campaign over a prolonged period of time may be necessary to achieve
widespread adoption. Many high-tech products and/or services, such as
automated teller machines, cell phones, portable digital assistants, radio,
and television, have caused paradigm shifts, but over long periods of time.

Successful products and/or services institutionalize out of the wants and

needs of the marketplace. Product and enterprise institutionalization is not
an accident. It takes an effective management team to develop the right
people, process, and product and/or service capabilities in large markets
that are ready, willing, aware, and able to buy.

Founding entrepreneurs and owners may be able to translate an innovative

idea into a product and/or service that earns and adds value. They may not
necessarily have the leadership and managerial competencies to attract the
right employee, customer, supplier, and investor constituencies through
whom institutionalization can occur, or deliver results consistently through
engineered processes.

Institutionalization starts with plans and policies. Attracting the right

constituencies requires aspirational, inspirational, and motivational
communications that entertain, inform, convince, and persuade. Delivering
results requires organizing, executing, evaluating, and adjusting resources
and activities based upon performance measures that can capture feedback
from constituencies. Both new products and/or services and enterprises
require adaption based upon how the marketplace responds. Adaption
involves tuning and standardizing functions and features. As the product
and/or service migrates through its life cycle, enhancement and
maintenance will be required to optimize the value opportunities.
Adaption is the intersection between what the entrepreneur had envisioned
and how the marketplace responds. As the enterprise migrates through its
life cycle, intrapreneurial, leadership, and management competencies are
required to balance new innovation with improvement.

Through this approach, institutionalization can occur regardless of

whether the founding entrepreneur or owner stays or leaves. Sometimes an
entrepreneur takes on a new role, such as a chief technology officer, if a
new management team comes on board. Sometimes the founding lifestyle
enterprise owner sells to an experienced operator who can adapt a
fledgling enterprise into one with traction. In such cases, the founder may
become an employee of the new owner.

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Entrepreneurs and owners must be willing to surround themselves with
others that collectively have the enterpriship (entrepreneurship, leadership,
and management) competencies to institutionalize products and/or
services, and consequently the enterprise itself, by leveraging people,
process, and product and/or service capabilities.

Achieving product and enterprise institutionalization is an enterpriship

competency.

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For more information...

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About Nigel A.L Brooks...

Nigel A.L Brooks is a management consultant to entrepreneurs, business

enterprise owners, executives, and managers, and the enterprises they
serve. He specializes in developing the entrepreneurial, leadership, and
managerial competencies that build sustainable advantage from vision to
value. He is an author and a frequent speaker.

He obtained his professional experience as a partner at Andersen

Consulting (now Accenture, Ltd.), as a vice president at Booz Allen
Hamilton, Inc. (now Booz and Company), as a senior vice president at the
American Express Company, as president of Javazona Cafes, Inc., and as
president of The Business Leadership Development Corporation. He has
been a contributing editor for the Bank Administration Institute magazine,
and has served on boards of entrepreneurial networks. He was educated at
the University of Exeter, Devon, United Kingdom.

His clients are in the financial services, food services, high-tech,

manufacturing and distribution, pharmaceuticals, oil and gas, professional
services, retail and wholesale, transportation, and government industries.

He has experience in North and Latin America, Europe and Asia-Pacific.

www.nigelalbrooks.com

About The Business Leadership Development Corporation (BLD)...

The Business Leadership Development Corporation is a professional

services firm that works with entrepreneurs, lifestyle business enterprise
owners, executives, and managers, and the enterprises they serve.

BLD develops entrepreneurial, leadership, and managerial competencies

that achieve performance excellence by building sustainable advantage
from vision to value through:

 Strategic Management Consulting

 Executive Coaching and Mentoring
 Professional Training via The Center For Business Leadership
Development (CBLD)
 Motivational Speaking

www.bldsolutions.com

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