Aaron Hoos

I recently wrote an article, published at EvanCarmichael.com, called: “Lifting the Hood of Your Small Business Engine: An Introduction to the Business Diamond Framework“.

During the first 4 days of our vacation, my wife and I blasted around London on foot, on double-decker bus, in taxis, and in the tube. London has a great public transportation system (which is good because driving there is ridiculous).

So, one day we found ourselves in some little corner of London. We’d just finished browsing at a used bookshop and were planning to go to the Royal Albert Hall just a short walk away. And it was lunchtime so we surveyed our options and selected one lively-looking restaurant to try.

The restaurant was called Nando’s. The atmosphere was fun, the food was incredibly good, and I observed that they effectively filled a niche that seems to be gaping wide open. After eating there once, we actively sought out the restaurant 3 or 4 more times throughout our vacation.

Nando’s is an interesting mix between fast food and a conventional restaurant. You go into the restaurant and sit down. The waiter/waitress hands you your menu. You decide what you want to eat and you go to the counter to order and pay. Then you return and waitstaff bring your food to you.

Similarly, the food itself is a crossover between fast and conventional: It’s higher quality and fresher than what you’d get at a fast food restaurant but it’s delivered just as quickly yet right to your table. It’s primarily chicken-based food (although it’s very vegetarian friendly) and you can get a variety of salads. You choose what level of spiciness you want and there’s a set of shelves from which you choose various sauces (hot, extra hot, garlic, etc.) to add to your food.

Between the food and the atmosphere, it has become my favorite restaurant. (Unfortunately, there are only a few in North America. Hopefully franchisers will jump into the opportunity!)

I like the business model, too. The mix between fast and conventional fills a gap. No longer do people who desire a quick lunch have to resort to less-healthy choices or an all-plastic eating environment. The restaurant is fun and classy. While staff costs are higher (since there is a kitchen and waitstaff), food costs can be controlled (especially with a limited menu and flavors added through sauce rather than menu variety). Additionally the speed helps increase table turnover.

If you ever get a chance to try Nando’s, do so! You won’t be disappointed!

To apply the Business Diamond Framework to this model: There is a very clear application of all four Function Diamonds: The Leadership Diamond has kept the restaurant’s brand consistent and their message and atmosphere a fun, hip environment to eat at. The Value-Add Diamond delivers good value (quantity and quality) for the price. The To-Market Diamond uses the atmosphere and “attitude” to make it an attractive place to eat. The Support Diamond was clearly at work in the background keeping the place running smoothly with well-trained waitstaff and kitchen staff who could produce quickly and consistently.

If you can overlook the retina-burning red of their website, and if you can get past their awkward stock symbol (STD), you’ll be surprised to discover Global Santander as an impressive organization and the banking industry’s best kept secret.

Santander is the largest bank in the world in terms of bank branches (they have 14,000) and they are the third largest bank in the world in terms of assets (they have $1.5 trillion). They’ve been around since 1857. They seem to be well defined in terms of what they do and how they communicate it. Their mix of geographic markets and demographic markets minimizes their risk. (Read an article at MoneyShow by Forbes International Investment Report Editor John H. Christy III).

So, why haven’t most people heard of them? Well, for one, their focus has not been on US and Canada: They have branches in Europe and Latin America. Latin America has money but doesn’t make economic headlines. (Well, that’s not entirely true: Brazil is the “B” in the BRIC acronym). I’d also suggest that companies that do make headlines lately are ones that are having a rough time in this economy, while a company like Santander has been around for 150 years and just continues to plug away at what it does well.

There’s some interesting potential here for them to grow. In a time when banks are imploding and financial confidence is weakened, a strong company like Santander can come in and make strategic acquisitions. It’s a cheap way to gain fast marketshare. And they already have a North American presence: They’re in Mexico and they have some regional presence in the US with an American bank (Sovereign Bank) and a financial company (formerly Drive Finance now Santander Consumer).

Consumer concerns over “foreign ownership” are a potential threat but they can be addressed with regional, co-branded marketing (on a similar but larger scale to what they are doing at Sovereign Bank and Santander Consumer). Or, they can accomplish it in the same way that the Toyotas and Hondas and Nissans have done it (quite successfully) with heavy investment in communicating that they do business locally.

If I were to recommend how they might gain further entry into the North American market, this would be my recommendation:

1. Start marketing right now. Before you do anything else, flood the market with a bunch of marketing on the size and stability and competitive advantage of Santander.
2. Then, in the US, buy banks. They’re cheap. Pick up some regional banks. Put together a co-branded package to *slowly* switch XYZ bank to XYZ bank by Santander. Make “by Santander” or “backed by Santander” a key part of your co-branding. In Canada, use the bankless PC Financial model (which places kiosks in Loblaws grocery stores). There are other places people shop. (Does Walmart have a bank? I can’t remember. The one near my house doesn’t).
3. Start making in-roads into other countries. (They are in Russia, the “R” in BRIC). I think they could make some ground in India, the Philippines, and they might even have the chops to fill the financial services vacuum in Africa.

ING Direct is another good example of a foreign company doing a good job entering the US & Canadian market. If Santander is looking to make headway into the US/Canadian market, now is the time to do it. They have money, they have sound policies, they have a strong brand, and have little exposure to the mortgage poison that has put many banks on shaky ground.

In terms of the Business Diamond Framework™, all four Function Diamonds are really strong: Their Leadership Diamond has a clear focus and game plan; their Value-Add Diamond has won the trust (and the $1.5 trillion in assets) of Europeans and Latin Americans; their To-Market Diamond articulates clear benefits to their current market; their Support Diamond has made helped them to grow consistently over 150 years. Now, in my opinion, it’s time for them to take it to the next level and become a truly global organization.

Most entrepreneurs are I know are fueled by their ideas and dreams. How many among us have lay awake at night with a great idea that seems to be the best thing since sliced bread? The later into the night it gets, the better the idea becomes! We get up, we map out the idea on our whiteboards, we pace our homeoffice doing thumbnail calculations – usually trying to figure out how we can keep up with the demands of the hordes of people who will be clamoring to buy our product or service.

I’ve done it. Several times. C’mon, admit it! You have, too. Fortunately, in the light of day, 80% of those ideas are revised and/or dropped. We wake up in the morning and wonder “what was I thinking? No one would buy that!” or we might rejig the idea to make it more viable (with the realistic notion that there may not be hordes clamoring for it).

But some ideas from those crazy nights do make it. And CueCat is one of them.

I’d heard of CueCat before but never gave it much thought. But recently, my wife and I (who are avid book collectors) got a membership on LibraryThing and have been documenting our collection of books. LibraryThing recommends CueCat for fast inputting and, although I didn’t get one, I looked into it a bit more.

What is CueCat? CueCat is basically a barcode scanner that plugs into the computer. Consumers can scan various barcodes (UPC, ISBN, and some others) and the code will access the product page on the company’s website. That’s the “Cue” part of CueCat. The “Cat” part seems little more random: the CueCat is in the shape of a stylized cat.

Business strategy
CueCat’s to-market business strategy was interesting. They sent out a bazillion of these things for free to targeted users in the hopes that these users would plug them in, use them, and rave about them to their friends. Fair enough. Now here are the problems, as I see them:

First, CueCat’s value is largely unknown. Most consumers I know don’t want to scan their household junk to see the product page on the company’s website. There didn’t seem to be a point to it. This unclear purpose of CueCat is referenced by Jeff Salkowski of the Chicago Tribune who said, “You have to wonder about a business plan based on the notion that people want to interact with a soda can.”

Second, the cat-shape seems random. It could have been Cue-anything and as long as it was in that shape, they could call it that: CueDog, CueTiger, CueCumber. Now, making it a cat at least gives them a little differentiation but there is no tie-in to the product’s purpose.

Third, the targeted distribution was costly (+ $1,000,000 estimated). It seems like they are taking Gillette’s cheap blades/high profit handles model… but leaving out the high profit handles. And, it turned out to hurt them in the end: They tried to legally enforce proprietary code but people in the tech community quickly figured out how to “declaw” the cat (as it was called) for personal use.

Applying the Business Diamond Framework
When applying the Business Diamond Framework to CueCat, the problems become clear: They seem to have a decent Leadership Function Diamond. With 200 employees, their Support Function Diamond seems a little bloated (but what do I know?). Their Value-Add Function Diamond wasn’t clearly creating or providing value. Their To-Market Function Diamond was basically putting CueCat into envelopes and adding a stamp, but there was no clear, viable monetization strategy.

If I were to work on this, here’s what I would have done:

1. Forget the cat shape. It’s weird and it’s not really something that you’d proudly display. In most cases, I suspect you’d say something like: Hey, I got this cool scanner even though it’s in a cat shape. Just make it look cool.
2. If you want to stick to barcodes, that’s fine, but make the interactivity far more useful: Don’t send users to a website’s product page. Instead, create a CueCat page where users can buy more products (i.e., through Amazon, eBay or whatever; and it should list available products and make the list sortable by various aspects), rate products, give testimonials, show health information, show hacks, list recipes, and add products to their own page (in a way that’s similar to what I’m doing with LibraryThing).
3. Open source, open source, open source.
4. Consider sending bar code stickers for free and sending the CueCat for a mailing fee, and making money on various types of retailer-sponsored marketing or affiliate fees from purchases.
5. Assure users about security. This wasn’t done very well in the original CueCat and users were conscious of the threat to privacy.
6. Consider niching the product: Have a tie-in with grocery stores so people can use CueCat at home to create a grocery list that syncs with available coupons and estimates how much groceries will cost before they even go to the store. (And some stores might even have the groceries packaged by the time you get there). Or, tie it in with a weightloss company and set up CueCat for dieters who want to scan barcodes of the stuff they eat to have it automatically journal their diet and keep track of calories, carbs, etc.

Will the cat come bacK?
It could. But we live in a very different world today. It would need to be way smaller, sleeker, more portable, open source, and able to read way more than UPCs. And it would need to be supported by an iPhone App.

This is a great article about competitive advantages in business. It’s a long article but well worth the time. Although the article tends to focus on communicating your competitive advantage through a USP, there are real applications throughout all 4 Function Diamonds of the Business Diamond Framework.

The biggest lie in business – Profit Magazine.