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Thomas Michael Hogg of TMH Consulting & Investment Group: “Lead your market”

Lead your market. Market segmentation is a wise old-school business concept. The secret is to concentrate all efforts on one profitable segment to be the number 1. Positive business results will follow you once you have reached the #1 position. Leading a niche depends on having a topnotch product or service, but also your marketing […]

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Lead your market. Market segmentation is a wise old-school business concept. The secret is to concentrate all efforts on one profitable segment to be the number 1. Positive business results will follow you once you have reached the #1 position.

Leading a niche depends on having a topnotch product or service, but also your marketing and communication strategy is crucial. If you are the number 1 you have to underline this positioning and communicate to your target market: “WE are the market leader because clients and sales say so!”


As part of my series about the “How To Take Your Company From Good To Great”, I had the pleasure of interviewing Thomas Michael Hogg.

Thomas is a Consultant and Mentor with more than 20 years of market and work experience in Germany, Switzerland, the US, and Mexico. He is author of “Profitable Growth Strategy — 7 proven best practices from German companies” and columnist at El Financiero.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

As former semi-professional tennis and soccer player in 2005 I was one of the happiest persons in the world when I got the opportunity to work for adidas, the global sporting goods giant and world market leader for football (soccer) products. Working day by day with my favourite sport brand one year before the FIFA World Cup 2006 in Germany seemed like a dream come true. I experienced working for and with highly competitive professionals that had the goal to exceed customer needs and quality standards. Furthermore, the company and top management achieved sustainable business results talking about profitable growth. At the time, I met Guenter Pfau, a long-time adidas executive, who was boosting sales through a well-defined market penetration strategy. It was then that I profoundly understood how certain companies grow profitably with a sound strategic plan and execution.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

The hard times were when there was only money to study and eat back at my time at Pforzheim University in Germany, one of the TOP3 business universities for applied sciences. My dad consciously supported me with a limited budget that literally just allowed me to eat, to pay rent and to study. Of course, I was angry because he had huge financial wealth and I did not understand why he didn’t give me more money to party with my peers. Later I understood the lesson, the best financial lesson in my life, and today I am very thankful that my dad took a hard line on me on this matter.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

At my beginnings I went to a really important client meeting with my former boss and founder of the company. He told me on the way back: “This was the last time you were this tie. Buy a new one tomorrow.” Lesson learned, get some business style advice in your first years.

What do you think makes your company stand out? Can you share a story?

At TMH Consulting & Investment Group we bring a strategic clarity and direction to our client’s growth plans. Most importantly, we share a passion for results with our clients. In our projects we have achieved 20–40% annual sales growth, 5–20% bottom-line growth, 30% target market penetration, and +50% key account lead generation. One specific success story was when the board of a client wanted to close an unprofitable business unit. The CEO told me he didn’t know what to do because there were many jobs at stake. During 4 months we implemented a new B2B sales and marketing strategy to get new target customers. The next months we worked on several cost drivers. After one year the company was back on track reporting profitable growth with top- and bottom-line results above industry average. On the one hand I was happy for the employees, on the other hand I was surprised to see that the board and shareholders were able to sell this specific company’s business unit two years later for multiple million dollars while keeping all jobs. This is our passion to achieve profitable growth and value for all involved parts: the customer, the employees and the company owner(s).

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

A sound work-life balance is crucial where family and spiritual quality time should on your 8020 agenda.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

I guess my first boss at adidas, Guenter Pfau, was very influential. He had a great and smart leadership approach, always in a good mood and joking, but in certain crucial moments he was super-demanding and competitive. My favorite story is when I did a really good job in something, he knew it was time to get my feet on the ground again, saying: “It is so good that we have you.” My pride went through the roof listening to this compliment. And then adding very quickly: “Well, and if it weren’t you we would have someone else.” Oftentimes he mentioned the same sentence and up to the present day I remember this lesson.

Ok thank you for all that. Now let’s shift to the main focus of this interview. The title of this series is “How to take your company from good to great”. Let’s start with defining our terms. How would you define a “good” company, what does that look like? How would you define a “great” company, what does that look like?

A good company lasts and overcomes many crises. A good company oftentimes is above the industry average when it comes to business practices and customer service.

A great company is the number 1 in a specific niche. A number 1 niche player delivers unique solutions and quality content. A niche champion is obsessed with having the best product and service. A great company serves a profitable market segment and is quick what means “high” speed to market. A highly successful niche player has qualified sales experts. A #1 niche player is an industry benchmark and stands out in the long run. A great company has high profitable growth and invests strongly in human capital and HR strategies. A great company combines both being financially the most successful firm and also being the best place to work in the industry.

Based on your experience and success, what are the five most important things one should know in order to lead a company from Good to Great? Please share a story or an example for each.

In my 20 years of market experience I have seen clear patterns, notably of German but also of other international companies, that succeeded on a global scale improving their financial indicators year by year.

In my opinion, CEOs, Directors and Entrepreneurs have to take into account the following “five” crucial concepts that will definitely enhance any business achieving customer value, employee value and a solid top- and bottom-line growth.

1. Quality is King

“If the industry quality standard is 100, we deliver 150.” This was one of the key lessons learned while working at the adidas headquarters in Herzogenaurach. Mercedes, BMW, Porsche, Audi, VW when it comes to automakers. SAP when it comes to technology. adidas and Puma in the sporting goods industry. Lufthansa, Siemens, Bosch, T-Mobile, DHL, Nivea, Hugo Boss, Bayer, Allianz and many more are global German quality brands. Quality is the German trademark. A German product or service often meets and exceeds the expectations of the customers regarding innovations, performance, and quality. Why?

There is this engineering and quality DNA we stand for. Furthermore, quality process management is an important task that affects all employees and which can only be executed successfully, if it is fully understood by involved and capable individuals. Sound quality assurance processes are going to guarantee quality standards and should be developed for three reasons:

• to ensure that the quality standards continue to delight the customer

• to create a benchmark operational standard

• to guarantee that all the everyday jobs concerning quality are fully understood throughout the company and the whole supply chain. Nowadays, a German product or service still stands for dependability, durability and quality. Furthermore, it stands for punctuality, discipline and success. This is why many German companies, large corporations and also SMEs, are more crisis-resistant than their competitors because the quality productos are needed to function the global value chains.

2. Innovation at its best

In November 2014, Dirk Nowitzki became the highest-scoring international NBA player in the history of the sport. Dirk represents certainly innovation and this in a certain niche: basketball. “You leave the game in a better place”, said Larry Bird after Dirk’s last home game after playing 21 years for the same team, the Dallas Mavericks. Dirk Nowitzki leaves a legacy and inspiration for all of us on and off the court.

Especially, when it comes to innovating new shooting or training methods were applied by his mentor Holger Geschwinder. Physics, rhythmic dribbling with music and other sports like fencing were just some ingredients used to revolutionize the game. The unconventional method concluded in an app “Dirkometrix” where you can calculate and see your own shot from the perspective of the ball to perfectionate your success rate even if the release angle and the deviation to the side are not always 100% accurate. Dirk Nowitzki became the 6th best scorer of the NBA history with a 31,560 points average per game and the 3rd player with most games played. The Nowitzki / Geschwinder story is somehow very German because I consider that in general we like analyzing, innovating and improving. This comes true for business. The secret behind the most successful German companies is the German “Erfindergeist”, the entrepreneur and engineering spirit based on a profound analysis and planning process. Germany is a Research & Development leader. Right from the top. I was truly surprised being at the opening ceremony of the 2018 Hannover Messe, the most important industrial and technology fair in the world, listening to Chancellor Angela Merkel.

“Germany has to and is going to raise its federal R&D budget to boost innovation, entrepreneurship and the industry 4.0 development. Most importantly, this innovation budget has to be spent on practical solutions and generating ROI.” Historically there are many useful German innovations / inventions:

– Aspirin from Bayer

– X-ray from Wilhelm Röntgen

– Contact lenses from Adolf Eugen Fick

– The bicycle from Karl Drais

– The car by Karl Benz

– Printing press by Johannes Gutenberg

– Modern refrigerator by Carl von Linde

– Konrad Zuse built the first fully automatic digital computer

– The gas-powered motorcycle by Gottlieb Daimler

– Portable electric chainsaw by Andreas Stihl

– Mercury thermometer by Daniel Fahrenheit

– Rudolf Diesel the diesel engine

– Clarinet by Johann Christoph Denner

– Modern football boots with screw-in studs by Adi Dassler

– Theory of Relativity from Albert Einstein

So, the importance of innovation for entrepreneurs and CEOs evaluating new ideas should have three aims:

• Practicality

• Customer value

• ROI

3. Lead your market

Market segmentation is a wise old-school business concept. The secret is to concentrate all efforts on one profitable segment to be the number 1. Positive business results will follow you once you have reached the #1 position.

Leading a niche depends on having a topnotch product or service, but also your marketing and communication strategy is crucial. If you are the number 1 you have to underline this positioning and communicate to your target market: “WE are the market leader because clients and sales say so!”

4. Leave the country

Your business growth strategy only works out when you export your products or at least when you expand your company to new cities. Another key secret of German companies is their international footprint having a clear plan of how to replicate and scale the business. Each strategy growth plan has to take into account improving your geographical footprint. Growing your company means that you should have a plan that your export revenue share increases above 50% as soon as possible.

5. Focus

The key challenge for a CEO is to manage that he/she and importantly his/her team are focusing and executing on the right things each day. And that doing the right things impact financially on profitable growth. CEOs have to define where the company will be in 2 years and not take part in each single decision which his or her managers are responsible for. CEOs have to define the long-term vision and the fundamental business model elements (for instance closing constant deals with their key account, developing and hiring an outstanding sales team, defining a required service level or establishing a best in class business practice or process) that provide the company a competitive advantage and generate financial value.

Extensive research suggests that “purpose driven businesses” are more successful in many areas. Can you help articulate for our readers a few reasons why a business should consider becoming a purpose driven business, or consider having a social impact angle?

I totally agree that purpose driven companies are more successful in the long run. I had a crucial lesson learned at adidas. The firm’s purpose is not only serving athletes, federations, and customers, but also taking care of your own talents, your employees. It was very surprising that adidas did not fire key employees during the economic crisis 2008 and 2009, while certain competitors did so. adidas trusted its talents, knowing that it is like sports: Even if there is a downturn you may come back even stronger sticking to your mission, people, and core values. The whole company is focused on the adidas group mission statement to be innovation and design leaders, consumer focused, dedicated and most importantly a global organization that is socially and environmentally responsible, and is financially rewarding for our employees and shareholders. At adidas, sustainability is at the core of all products. The choice of materials and how they are manufactured are the two main ways by which the innovation teams can influence the environmental footprint of products. To mention some examples: Avoiding oil-based plastic helps reduce carbon emissions. Thinner or lighter materials mean less waste and less embedded carbon. Dry-dyeing clothes saves water, chemicals and energy. Approaching the innovation challenge from an environmental perspective helps make products that are better for consumers and better for the planet, too.

What would you advise to a business leader who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?

REMAP YOUR OBJECTIVES. You have to set clear objectives and always increase your competitiveness and profitability. Decision makers have to go even further as defining the basic vision, objectives and core business. At TMH Consulting we re-define the business objectives in a simple 5-step REMAP process considering Reach, Empowerment, Metrics, Accountability, and Precision. Understanding and sharing this “REMAP” definition with all employees helps the C-level to execute.

The most important and first point is defining the future REACH of the company. Ask yourself again what is the purpose, the reason (the “Why”) to impact on customers. Impacting customers means to serve them with an outstanding product, service or offer. One of our clients defined among our advice the “REACH” (the goal) to impact and transform the Marketing practices of AAA companies. The Founder and CEO shared this vision with his team and invited his millennial employees and even some of them centennials to impact

and transform their industry. The firm had a highly successful profitable growth journey from 2014 to 2020. Not only do you need to establish a motivational reach. The REACH needs also clear financial goals (Sales and EBITDA). In order to achieve high profitable growth you have to set these reachable goals but at the same time define a high market reach. This is called the “business vision” in terms of IMPACT, EBITDA, PEOPLE and COMPANY SIZE.

Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?

At the beginning Covid-19 crisis we recommended Company Owners and CEOS the following:

– Push for (target) market share growth. The most important Top Management task is to maintain and grow the market share in their industry. During a crisis it is easy to gain or lose market share depending on the agility and financial stability of each market player.

– Defend your #CoreBusiness and key clients sales. Serving your key customers means “key”!

– Transform your business model, especially your financial model focusing on cash flow and profitability.

– Improve your #competitive position through improving substantially your service level.

– Organic and market-relevant #innovation impacting the business model.

– Inorganic #growth if financial and cash flow situation allows so.

– Divest. Or close certain business units. Especially companies without financial reserves and without access to debt.

Agile and sound decision making on these points will make the company survive and probably come back stronger.

In your experience, which aspect of running a company tends to be most underestimated? Can you explain or give an example?

The target market definition. Having a clearly defined target market (niche) was new for the CEO of a technology firm. The firm had more than 90% of revenue and EBITDA in a very specific industry during the previous 5 years. The CEO decided to take into account a strategic recommendation to focus on the niche they performed best (sales and profit-wise) and fully committed to defend and strengthen their market share in this niche.

While the overall country’s GDP growth this particular year was 1%, the financial results of the company were surprisingly good.

56% sales growth and

32% profit growth!

Lesson learned: The most common mistake I have seen as a consultant is the lack of target market definition. You have to define the niche you enter and conquer. Be the best in class.

And of course there is a tradeoff. You need to be very good in a niche that means in a specific industry, market, geography, demographic, or segment.

In a larger company where you may have several brands and business units the niche concept also applies. Each business unit / brand should have a specific business plan, market segment and EBITDA goal. Each business unit is accountable to become best in class when it comes to quality and profit.

As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies a business should use to increase conversion rates?

Address objections. I always say an occurring objection as the best thing that can happen during the sales process because you are one step away from closing the deal. Paying attention and responding smartly and quickly an objection should be a dominated business practice.

Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that a business can earn a reputation as a trusted and beloved brand?

“Quality is the crucial promise to the customer.”

A trusted brand needs quality. The leading companies associate brand value and quality. Brand Value = Quality of a product or service to a specific customer segment. Quality gives you customer retention and even the right to charge more. Quality is key for your brand.

Great customer service and great customer experience are essential to build a beloved brand and essential to be successful in general. In your experience what are a few of the most important things a business leader should know in order to create a Wow! Customer Experience?

Without making improvements and innovations on customer experience you may get obsolete. The velocity of customer demand and upcoming new habits in the digital age are so drastic that many companies won’t be able follow. Strategic innovation sessions and external support on customer experience matters are crucial. Having these sessions take into account the newest trends:

o The convenience generation

o The super consumer: highly engaged users being more demanding than ever before

o Automated and frictionless buying

o Growth of video and voice tools

o Useful Big data: Future value or Commodity

o Industry 4.0 or even 5.0

o Artificial intelligence, Machine learning and IoT breakthrough

o Salesforce transformation models

o Funnel Hacking

o Digital Marketing

What are your thoughts about how a company should be engaged on Social Media? For example, the advisory firm EisnerAmper conducted 6 yearly surveys of United States corporate boards, and directors reported that one of their most pressing concerns was reputational risk as a result of social media. Do you share this concern? We’d love to hear your thoughts about this.

Reputation is crucial. Indeed we have received many CEO concerns that the organic results on Google show sometimes really bad news. It is so important to implement a reputation and SEO strategy so that prospects, clients and other stakeholders are finding more good news than bad news. Social proof and response are essential for a successful brand strategy.

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

The lack of resources (time and money) allocated to a well-planned and realistic strategy have been one of my essential takeaways on why many enterprises fail.

CEOs and Business Owners struggle with both strategy decision-making and strategy execution. Mostly, there is no good strategy growth roadmap. Oftentimes they lack to understand and define the highest standards concerning quality, innovation and customer value.

Thank you for all of that. We are nearly done. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Giving more education and training on “Profitable Growth” inside the company. Profitable Growth gives the company a VISION of lasting and re-investing. Profitable Growth is made for shareholder and employee value. Pushing the business and transcending as a brand at the same time is possible, even being an employer brand. We need to erase the idea that profitable growth (financial focus) is contradictory to an employee focus. We live in a HR world and the importance of people-focused enterprises to not only generate company value but also employee value is highly important. In other words, being an employer brand while meeting all shareholder goals. Is this possible? Yes it is and with common profitable growth goals meeting the financial objectives there should be a sound budget allocation for all HR strategies. The future question should be rather if employee value creation can be fulfilled without profitable growth. The answer is a clear “No”. A company without profitable growth is not able to invest in people.

How can our readers further follow you online?

[email protected]

– Linkedin: Thomas Michael Hogg

– Twitter: ThomasMichael_H

– Instagram: thomasmichael_h

www.ProfitableGrowthStrategy.com

www.tmh.com.mx

This was very inspiring. Thank you so much for the time you spent with this!


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