A Gordon Bizar student contacted me to know more about the implementation of Gordon´s Aggregation Business Model in my industry of corporate gifts. This is the transcript summary.
RYB: I am exploring optimal ways to create a hugely profitable entity in the financial services space.
I have heard bit’s and pieces about Octavio’s strategy: that he is in the “gift marketing” space (ie., engraved pens, etc) and has been very successful in forming “loose” partnerships to co-market and take advantage of customer lists, etc. But frankly, I know little else. I will be interested to learn:
What were you doing before GAWM (i.e., what was the status of your undertaking) and what drove you to GAWM (i.e., what were you hoping to achieve)?
OU: I met Jay and Gordon when I only had 6 month in businesss, so I was just starting alone. Jay gave me the marketing mindset, and Gordon provided me with a blueprint to develop an aggregation for my industry.
Since then, we´ve been growing well over 100% every year for 5 years in a row.
RYB: What plan did you then create; what obstacles did you run into; how did you change the plan; and given what you learned from the experience, how would you tackle it differently (and ideally more efficiently)?
OU: The plan was executed by creating a bond with potential clients, competitors and suppliers. The group of suppliers responded better to accept this aggregation strategy than the others. In less than six month I had informally agregated 5 other companies, that still keep today. Later, I included clients and competitors into the aggregation as well. There have been several in and outs for every member of the aggregation. The largest was a $50 million company, that liked the idea, however, it was difficult to train the sales team to promote each other group. We still work together but with an strategic alliance rather than belonging to the main aggregation.
RYB: How well do you experience transfer to other industry applications? Will it work as well in financial services? Are there industries or businesses that you believe are too different for his approach to be applicable? Are there modifications to the approach that need to be considered based on varying circumstances? If you could start over, would you choose to be in the same business or something different? Why?
OU: The concept can indeed be applied to other industries. Gordon identified 10 main aggregation industry themes to develop. Financial is certainly one group where cross marketing can be applied as a way to start developing relationships with other companies to later develop potential aggregation.
Personally, I would like to develop an aggregation around the concept of luxury real estate, or commercial real estate, or industrial real estate. However, at the moment I am focus in organizing how to develop the aggregation beyond Chile, going to other 5 countries in latinoamerica.
RYB: Are there any of Gordon’s approaches that you are using? What is most useful from Bizar Financing? What (if anything) would you disagree with the Bizar approach about?
OU: Gordon developed the aggregation blueprint, I just applied it to my industry of corporate gifts in Chile. So, everything he taught us is for real and not textbook theory. There are several adaptations to each industry or country, however, those are minor changes when you understand the general concept that he described in the aggregation blueprint.
RYB: Are there country-specific and/or cultural differences from his South American experience that may be different in the US? Would you recommend focusing on just doing business in the US (i.e., for me)?
OU: Gordon developed the blueprint with his American mentality for the American companies. It happens, that I was the first to implement it, and abroad. One difference between USA and Chile is in relationships. Since we are a small country, we still have meetings face to face, instead of you in the US where you have deal with clients and vendors thru the phone for several years without knowing each other. The are advantages and disadvantages to this kind of relationships. Face to face is certainly easier to create the cosmic bond, however it is much slower due to every decision takes longer to get through.
RYB: What are some of the “must do’s” to be successful? in general; and specific to your strategy?
OU: I was succesful just by creating the bond with suppliers first. Providing value to them at sharing information of products we can cross promote, then we share our client lists, and develop a plan to share profits in a simple and clear way. Quite quickly we got results, we got several orders that force us to continue growing. But instead of growing internally, we reach other complementary suppliers who could add more to the aggregation.
It is important to the success of the aggregation to have a clear head who organize all the administration to all parties. I was that head, who they could trust. We´ve never had a discussion of money or else. We just focus on how to continue grow our aggregation and reputation in the marketplace.
Today we dont focus too much in growth and marketshare, but in creating value with high margins.
RYB: Besides Gordon and Jay’s materials, what information/teachers/etc. have been most helpful to you?
OU: Yes, indeed. There are several specialists in different areas that can contribute with specifc skills, about production, marketing, finance, etc. I have studied several other experts, however, Jay and Gordon have provided me with such rgeat concepts, that still there is a lot to implement form them. Later, I´ve learned a lot from Dan Kennedy as well. You will certainly need some experts in your specific field. And Gordon is a source that can recommend as well.
RYB: Now that it’s 2011, has anything changed from how it was when he began (for better or worse?
OU: The market is much more competitive today. However, there is no other in the industry doing any kind of aggregation the way Gordon taught me. So, even today, I´d be able to make it in this industry. There are people though doing acquisitions the old way, ie, with a lot of capital. However, they´ve had little success. I strongly believe that Gordon´s blueprint is still the best I´ve seen.
Your questions are good. Just go a create bonds with complementary companies, you will clarify the vision while you grow. Let me know if I can be of any specific help. Thanks.
If this interview has been useful to you, contact Gordon Bizar for the latest business model strategies that he is developing in the next 2 links. He has been the best mentor I could dream of.
All the best, Octavio Urzua
Further questions I´ve been asked in other presentations regarding Aggregation business model:
What is the limit of market share to grow in your industry using this model?
What kind of reactions have competitors when they realize your growth strategy that could trigger them going out of business?
How did you replicate the strategy in other countries?
Which other challenges do you face at the beginning, 3 years after aggregation, and beyond?
What is the evolution of the aggregation model?