August 12, 2015
Ask a strategic consultant about the value of a strong organizational culture and she'll likely remark: "Culture eats strategy for lunch!" Her reasoning is usually based on the consistency of behavior that strong culture creates - enabling every associate to make "the right decision" even when the leader is not around. The name of the game in business growth is scalability, growing steadily without sacrificing consistency in quality (whatever that means to you.)
Org-culture is a conversation, led by leaders, about "how we do things here successfully." It's built up through hiring, on boarding and successions practices. It's reinforced through rituals and stories, often shared at the group level. The more leaders punctuate the conversation with action, the more the followers march in lock step with them.
But here's the problem: Every idea is based on an assumption, and similarly, every culture is based on a set of values. When transparency is a key value, the culture requires sharing information and avoiding secrecy. When someone violates it, they are shunned, punished or coached. The word 'transparency' is often embedded into internal communications and in some cases, the market facing branding. While few would argue against transparency, I would take issue with whether that value is a leader's personal value or a business driver.
The purpose of an organization is to produce customer/member value, which in turn is captured in order to sustain and grow it. If culture drives consistency, then it should be based on values that drive the business by producing a unique value proposition. In other words, your culture-driving values should differentiate a company in a way your customers care about. That's the real reason that culture has become a focal point of leadership development and corporate performance.
When Zappos put a supreme value on "Delivering Customer Happiness," it separated them from other apparel e-commerce providers. They redesigned call center rules, adopting unconventional KPI's to ensure that reps spend ample time with customers and display empathy and a sense of humor. They enforced the culture heavily throughout hiring an on boarding, famously offering briefcases of money to those who were willing to quit (and leave the Happiness Culture). In this case, the value drove the business.
But in too many cases, values are often created in a cramped conference room by over-worked founders or later in the life of the enterprise, by corporate communications during a turnaround. There is little or no formal training on how to vet a value for business output, it's usually just a random process where words or phrases are thrown around until the group forms a consensus.
That's why companies have chosen "Fun" or "Fair" or "Agile" as their values - making them the foundation of the culture they are building. And it's hard to debate the value of fun, fairness or agility from a personal or even professional standpoint. Why not? That's why they are often adopted. But what if the company is in the financial services market, where "Meticulous" is valued by the customer more than "Fun"? What if the company is in a risk-averse business, where customers value "Best-To-Market" instead of "First-To-Market"? In those cases, Fun and Agility are not business drivers, they are pet values, which are likely to build more of a cult than a strong corporate culture.
So here's the prescription: Test the values that you base your culture on for business value. If you choose "Honesty" for example, ask yourself, "is this a market space where deceit is a customer concern? Is this a lead story in our industry?" If it is, then this value will drive the business through differentiation. If not, then you are basing your culture on a foundation that could lead to a me-too market position. If your competitors are honest, then why is this a business driver value and not just "good business practice"?
You might be thinking, "What's the harm in including obviously good values in our culture mix? Why exclude "Fun" or "Honesty"? I thought that way too for a long time, but when I went to work in human resources, where values are a part of the talent lifecycle, I realized that you have to pick your battles, and limit yourself to a manageable group of norms you want to create.
Limit yourself to 3-5 values, the less the better. Much like phone numbers or login passwords, the longer the list, the harder it is to call up when you need them. Culture is all about living a set of values everyday, and if you throw in the kitchen sink, your associates will have to pick and choose, and that's where a culture starts to get weak (read: inconsistent).
It's never too late to go through the business driver value process with your team. If it leads to a new conversation about "how we do things around here moving forward," it just may help your company jump out of the pile, and rise to the top of the customer's mind. Just like a company can outgrow its founders, an organization can also outgrow its founding values.
Note: The recent holocracy movement at Zappos is based on the founder's value of self-management. It's yet to be seen as to whether that's a pet value or a business driver (their relative customer experience levels will be lifted). In the long run, the fate of the company's market position will be an acid test of my theory about picking personal or business centric values to base a culture on.
Watch: Culture Is A Conversation by Tim SandersTweet
August 05, 2015
Napoleon Bonaparte believed that the leader's role is "to define reality, then give hope." Within this prescription lies a formidable challenge to leaders. How can you focus on the challenges and opportunities of today and, at the same time, maintain the spirit and effectiveness to lead your team forward?
In today's business environment, there are high hurdles that stand between you and leadership success. The ability to leap over them through lifestyle design and talent development separates the truly effective from the ambitious or charismatic. The three hurdles are:
Distraction: Today's technology makes it nearly impossible to work without distraction. Think about right now. Some of you are reading this post, and will stop to check your email that just dinged. Before you can get back to reading this, a text comes through on your smart phone, requiring a quick call. After it, you return to grazing on a budget spreadsheet, which you were working on before you booted your internet browser, clicked around and found this article. Sound familiar? You may call this multi-tasking, but really, it's LWD (Leading While Distracted).
SOLUTION: Work on one task at a time. Turn off email notifications and instead, schedule times during the day to read-respond (and only do that during that time!). Put your smart phone in Airplane Mode. Push back on anyone that invades your scheduled focus time. For more on this, read Focus: The Hidden Driver of Excellence by Daniel Goleman
Abstraction: Too often, leaders rely on verbal communication to convey complex ideas. They often do this via email or written memos. Words often don't work, and in turn, there is confusion, requiring you to repeat the attempt and grow frustrated. You cannot define reality or give hope if you cannot reduce abstractions into concrete ideas. Your bullet point slides don't solve the problem, they just summarize your wordy attempts to get through.
SOLUTION: Show them, don't tell them. Find visual ways to express your ideas. You can find images on Google or iStockPhoto. Better yet, create prototypes of a proposed process or product. They could be simple diagrams or rough sketches. At innovation consultancy IDEO there's a saying: A prototype is worth 1000 meetings. For more, read Blah Blah Blah: What To Do When Words Don't Work by Dan Roam.
Dissatisfaction: This is the highest hurdle, especially if you've been leading for a while. Skillsoft's Taavo Godtfredsen has spent time with hundreds of leaders and leadership experts during his career and has discovered that career dissatisfaction (burnout, resentment) is a supreme challenge to effectiveness. Long after the luster of the title and power has faded, the pressures of leading and chasing made up goals crushes the best of leaders. Never assume you'll stay motivated!
SOLUTION: Find work-life balance, even if it means more delegation. Design you lifestyle to recharge your spirit as well as physical health. Revisit the purpose of your organization, and periodically read your 'fan mail' to understand the significance of your work. For more, read Fully Charged: The 3 Keys To Energizing Your Work and Life by Tom Rath.
September 09, 2014
Quick, name a Hall Of Fame player that was also a head coach. It's quite rare, actually. but if you take this test on a company's sales or product group, the answer would be different. We often graduate the rock stars of business to middle management and beyond. That's the bench strength program of the average organization.
Too often, though, the Peter Principle applies as the new manager struggles to make the leap from Rock Star to Director. Why? Because most stars are deeply scripted to focus on their personal improvement above all, so they can outwit and outlast. Many stars are also good team players, but that's more about the give-and-take of strategy than it is coaching.
Occasionally a star player exhibit's otherish tendencies, and that's when and only when they should be promoted to coach the team (manage a group). Michael Jordan, who should know, once said: "It's one thing to get better and better, it's another to make everyone around you better."
To offer a football analogy (It's Fall, after all), that's why so many of the top coaches in history were not rock star players: Bill Belichick, Tom Landry, Pete Carroll, Nick Saban, etc. Sure, they all played football in college, but they were not Pro Bowl caliber. Why were they selected to lead others? In every case, they were spotted as having two key coaching talents early on: They lifted up others' performance and had a high football IQ.
That's what should drive our management assignments. We should learn to ignore the individual performance and zero in on that leadersish style, combined with a strong sense of the business. When Jordan talks about the ability to "make everyone else better," he's talking about the ability to deliver the following:
Marcus Buckingham, co-author of the management classic First Break All the Rules, directly applies this thinking to cube-farm living. He once told me that the superstars soar with their strengths, while the average performers struggle to conquer their weaknesses. The superstar manger, on the other hand, it the one that focuses the superstar on his or her strength to begin with.
Here's the takeaway for leaders and HR professionals: Before you promote that superstar to the next level, question his or her leadership strengths. You might be robbing the system of several more years of top production, just to fill a mangement role with a strong resume. What you are looking for will not usually show up on paper, which means your ability to pick managers is going to be driven by your eagle-eye on others' ability to lift up others rather than break records.Tweet
August 21, 2014
Mentorship is an opportunity to build relationships and give gifts. Mentoring up, to those above you in rank or stature, may be one of your best career boosters. Really. This post will show you how to do it without getting shot for the message.
There's a common misconception in our business culture that mentorship is a top-down activity. In The Hero's Journey, the mentor is often case as the Wise Old Man or the Wise Old Woman. Think Obi Wan Kenobi in Star Wars or Miyagi in The Karate Kid. In this theory, one must have achieved success to pass on wisdom to the young or the new.
If you actually research the origins of the mentor, however, you'll find a different story. According to the fabulous writer's tool The Writer's Journey by Christopher Vogler, "the name 'Mentor', along with our word 'mental', stems from the Greek word for mind, 'menos', a marvelously flexible word that can mean intention, force or purpose. Menos also means courage."
He illustrates why courage can be required to mentor: "Many of the Greek heroes were mentored by the centaur Chiron, a prototype for all Wise Old Men and Women. A strange mix of man and horse, Chiron was foster-father and trainer to a whole army of Greek heroes including Hercules, Actaeon, Achilles, Peleus and Aesculapius, the greatest surgeon of antiquity. In the person of Chiron, the Greeks stored many of their notions about what it means to be a Mentor. Chiron was not always well rewarded for his efforts. His violence prone pupil Hercules wounded him with a magic arrow which made Chiron beg the gods for the mercy of death."
Here's the idea: When you mentor others, you are a provider of knowledge to assist them in their journey. Regardless of their seniority, you do this because they need the help and no one knows everything. This is especially true when times are filled with disruptive changes.
In my experience, mentoring up has been a tool to build powerful relationships and a source of inspiration for my continual learning. When I worked at broadcast.com (1997-1999) and Yahoo (1999-2005), the Information Age was just taking hold. I poured myself into books and trade publications that gave me insights on topics such as eCommerce, permission marketing, digital technology and new media. I became wise beyond my experience in years.
When I had opportunities to sit with legacy leaders such as Howard Stringer at Sony or Jim Keys at 7-11 or Mike Rawlings at Pizza Hut, I mentored them on the new world of Internet enabled business. I shared insights from books, case studies from trade journals as well as my perspective on "how the new world would work."
At first, much like Hercules, some of them pushed back hard. One leader wrapped up our conversation within five minutes and reacted dismissively to my suggestions. I apologized via an email and sent him a book that underscored the point I was making about the disruptive nature of eCommerce. I included my cliff notes from the book. Within a month, he invited me back and included his VP staff in the meeting. Eventually we did millions of dollars of business together.
I've also had the audacity to mentor my managers and even executives a few clicks above me. By mentorship, I mean that I shared information and perspectives that I felt would assist someone in solving a problem or gaining a strategic insight. Usually, it was a single point or observation, backed up by experts or statistics. I knew that because I was mentoring up, I couldn't just make an assertion based on my experience. Only the Wise Old Tim could get away with that. It led to strengthened relationships and in one case, a champion who enabled me to become the Chief Solutions Officer of Yahoo!.
Today, you have a unique opportunity to mentor up. It might be to your customers, prospects or your bosses or executives. The world is changing fast. Digital/Cloud/Mobile/Social/Global forces disrupt business in a compressed period of time. Whether or not your superiors (I use that term loosely) know they need it, information if required for their continued success.
Or as George Clooney's character in Our Brother Where Art Thou often said, "When times are tough, people are looking for answers."
Here's how to mentor up without getting hurt:
* Gather knowledge. Lots of it. Become a knowledge pack rat. If you tell someone something they already know, it's not mentorship. If you fully commit to this, others will sense it as you share with them and be more receptive.
* Seek first to understand, then to be understood: This nugget of wisdom from Dr. Stephen Covey applies here. You need to listen to your superiors to understand what they already know, what they fear and then what they need to know. If you jump in too quickly, you may offend or worse, miss the mark completely. When mentoring up, you likely have one chance to impress.
* Make sure you are helping a benevolent hero. I've always looked for superiors that I respected and trusted to be the-bigger-person in any conversation. Every time I mentored up, I really wanted those legacy leaders to succeed and admired their past accomplishments. If I sensed they were mean spirited or overly defensive, I kept my trap shut. Remember Hercules.
* Be respectful and follow up with proof. No one is ignorant or stupid just because he or she isn't yet calibrated to the times. There is a knowledge gap that needs to be filled. While he may not know how to use social media or why digitization is a threat to the core business, he can likely run circles around you in areas like finance, strategy or operations.
I'm aware of the concept of reverse mentoring, where a senior leader asks for help. But this is a different concept all together, because it's the junior leader that takes the initiative. And that's why it's so much more impactful.
If you follow these simple rules, you'll enable yourself to become closer to leaders that will help you on your journey too. My mentorship efforts to Stanley Marcus Jr. in the area of eCommerce led to him sharing insights with me about Customer Relationship Management and Talent Experience Design. As he told me in our last lunch meeting, "You'll never get dumber by making others smarter."Tweet
August 07, 2014
Your work culture is a conversation, led by leaders or troublemakers, about how things are done around here. If the leader isn't driving the conversation forward, troublemakers can move it sideways or backwards. Troublemakers include the naysayers, doomsdayers and taker-types.
Much of our work life is spent in conversations with others. When these conversations move forward, we make progress. When they go sideways, confusion reigns. When they slide backward, conflict and negative emotions ensue.
“Conversation is a game of circles,” wrote Ralph Waldo Emerson. In other words, a conversation is useful but often is complicated by each player’s agenda. And yet, through this highly interactive process, we shape our attitudes and beliefs. That's why it's important for leaders to take charge of the conversation.
Too many conversations at work are moving everyone in the wrong direction. They can be historical, bringing up old-and-outdated subjects. This leads to a collective hangover, where we can't shake off the weight of our past failures or the phantom menace of a long faded competitor. There are conversations which exchange gossip information, usually about people. Gossip is the fast-food of workplace conversation and often reduces its participants to base level thinking.
The most paralyzing conversations are led by the Chicken Littles, who drum up fear through declarations that "the sky is falling." They have the blogosphere and big media as their stronghold, and often punch much bigger than their weight. All of these conversations must be led by leaders to a better place.
One way that leaders can change the conversation is to directly challenge the historian, gossip or Chicken Little. One manager who attended one of my talks took this to heart. "When I spot a Chicken Little spinning up his coworkers unnecessarily, I ask him where he's coming from: Fear or confidence. I use the experience to coach him on the difference between constructive information and fear-mongering."
A second approach is to divert the conversation forward. One way to do that is to reframe the bad news as an instant brain-storm about what each conversational participant can do about it. Focus on the solution, not the problem. You can introduce a connected issue that leads to a discussion about a current project that everyone can contribute to. You could simply introduce a progressive subject and drive the conversation towards it and away from the previously bad one. While this requires finesse, great leaders have the strength to drive the conversation forward. Each. And. Every. Time.
Ignoring a sideways conversation is not an option. Like a sore, they fester without your attention and often bubble up as a collective malaise. Your job is to find the balance between empathy at a personal level and leadership at a conversational level.
This comes from Principle Two from Today We Are Rich: Move the Conversation Forward.Tweet
August 01, 2014
Read any recent white paper on leadership, and you'll see numerous references to agility as a key area for development. From learning agility to innovation agility, it's clear that leaders need to focus on how to go fast but stay graceful.
Prior to my recent talk on this subject at a leadership conference, I conducted research to uncover why agility has become so critical to success. The answer was quite simple: The time it takes for a new business concept or technological innovation to disrupt and industry is compressing ... fast. What took a decade to wreck and industry in the 60's takes a little more than two years today.
Think about how fast smart phone apps have disrupted various industries that manufactured one-off devices (guitar tuners, navigational devices, watches, video cameras, cameras, and so on). Think about how fast Uber has disrupted transportation. How fast has AirBnB disrupted hospitality? This is why I call today's leadership a downhill ski-sprint where one must go fast, stay on their feet and not crash too many gates. Even in non-tech industry like consumer packaged goods, we've seen concepts like GMO-free products take hold in a fraction of the time it took for organic-and-local to achieve traction. This is what life for a leaders looks like today:
To survive, the leader must be on the ready to move his or her enterprise in a novel direction to capture an opportunity or defend their customer base. But the risks are high, when fast-to-market is the paradigm, so often times people talk about being nimble but still hold steady until it's too late. I believe that agility is a capability we build up through practice, just like a champion skier perfects their ability to make it down the hill in record time in one piece. Here are a few ways you can boost your agility:
I'd love to come speak on Leadership and Agility at your event. Contact me for more information or suggest me to your speaking bureau agent.Tweet
July 23, 2014
What it takes to succeed as a leader has been redefined by changes in the workforce and mega trends. Gen Y is more motivated by identity, mastery and purpose than they are by money, power and stability. Tech-Globalism accelerates the rate of change, be it in consumer attitudes, retail habits and government regulatory actions. As the world gets faster and deeper, leaders will face unique challenges, requiring a retooling of the traditional hierarchical models of yesteryear.
Leadership development needs to change, adjusting to these trends. According to a paper published by the Center for Creative Leadership, the required skills for leaders have changed – requiring more adaptive thinking abilities. They summed up the challenge, “There is a transition occurring from the old paradigm in which leadership resided in a person or a role, to a new one in which leadership is a collective process that is spread throughout networks of people.”
Here are five areas of leadership development for the future:
1. Influence – Leaders must move their charges to action by aligning them with the company’s values. Influence is the key to building strong culture, which is quickly becoming as important as strategy to global organizations. Command and control are outdated tools in this regard, and instead new skills must be attained such as empathy, story telling and system wide mentorship. To be competitive, power and innovation must be dispersed throughout the organization. Leaders today must ask the right questions, encourage the right people and move the conversation forward. Resource – Influence: The Essence of Leadership
2. Finesse – Napoleon Bonaparte often said that the leader’s role is to “define reality, then give hope.” His point was that there is a precarious balance that must be struck between the challenges of the day, and the promise of tomorrow. This requires a sense of emotional talent or finesse. Leaders need to feed their mind the right stuff, so they can respond to adversity with innovative thinking. They need to possess clear communications channels with managers, to understand assets that can quickly be brought to bear when adversity strikes. When they implement them, they need to balance the emotional and financial impacts it will have on the enterprise. Resource: Fall of the Alpha Leaders by Dana Ardi
3. Agility – Business cycles has compressed from decades into years. Technology driven industry changes require legacy companies to radically shift their strategies, adopt emerging technologies and kill off out-of-date models. Consumers are empowered with information now, changing how they buy and influence others. Not only does the leader need to be agile, she must effectively hire for it and make it the linchpin of employee development practices. Sticking with your guns is a recipe for defeat. Resource: Learning Agility by the Creative Center of Leadership
4. Creativity – In an IBM study 1500 CEOs named the most important skill of the future leader as creativity. It is one’s ability to produce original work that is appropriate to the situation. Today’s leader must expand her level of curiosity to uncover patterns of behavior that reveal new routes to value or innovations. She must develop a tolerance for ambiguity – the hallmark of the creative thinker. Moreover, she must manage a culture that encourages innovation, along with candor. She must neutralize the naysayers. Resource: Creativity Inc. by Ed Catmul
5. Higher Purpose – Nothing motivates tomorrow’s talent more than a sense of purpose and the belief that one’s work makes a difference to the world. While a company needs to make a profit to keep the doors open, it’s not going to motivate the entire company to take chances, finish tasks in the face of adversity and serve as brand ambassadors on social media and in the real world. Leaders must constantly look for a higher purpose that the business serves, and empower their entire company to participate to that end. Resource – Drive: The Surprising Truth About What Motivates People by Dan Pink
(From my upcoming keynote address at the Womens Foodservice Forum New Orleans.)Tweet
May 29, 2014
The concept of mentor first appeared in Homer's Odyssey, and since then has grown into a widely talked about concept. Many of us seek mentors, especially during the beginning of our career. Many of us act as mentors, helping others on their journey to greatness.
What I've learned through my mentorship practice is that not all engagements are the same. There are three distinct flavors:
Pick your mentees wisely. Don't promise what you can't deliver. The best time to deliver Flash Mentorship is when the opportunity presents itself. Carpe Diem! In many cases, you start out as a Flash Mentor and over time, you take on either Program or Life Long mentees.
All of us should practice one flavor of mentorship every single week. If you haven't found the opportunity, you either aren't looking hard enough OR you aren't feeding your mind enough to share.Tweet
February 28, 2014
For many of you, the last recession put you into survival mode. This is especially true if you are in banking, financial services, construction, retail or automotive. Those industries were hit so hard, all growth plans had to take a back seat.
Shrinking expenses was the order of the day.
As long as we continue to watch cable news (CNBC, etc.) or let the doomsdayers continue to beat the drums of double dip or next-bubble, we'll stay in neutral, letting our competitors pass us by.
Here's my analogy: A downturn is like a car crash during a NASCAR race. The yellow caution flag comes out, we all coast in the same position. At some point the green flag is waved and everyone scrambles for the lead.
Here's where business turns out differently: The "game on" flag is invisible, just like the hand of the market that Adam Smith wrote about. Some leaders see it early and others see it too late. In 2009, a New Yorker article (Hanging Tough) isolated some of the great leaps in history that were made by companies that got back to growth, innovation and employee development before their competitors. When they saw the green flag, just as the worst of the crash was over, they hit the gas. Kraft, Kellogg's, Hyundai and Apple are all examples of this phenomenon.
Here's a news flash for you: The recession is over. The run up is on. If you wait for any more of a clear sign, the next downturn may be upon you and there's nothing left in your tank. It's time for you to think about growing your business, buying companies and investing heavily in your talent.
As one leader recently told me, "By the time you realize you should have been focusing on growth, it's too late. Your competitors have been doing it long enough to build up not only a lead, but barriers to you being able to draft on their success."Tweet
February 12, 2014
Recently, I was booked to give the closing keynote at an annual corporate meeting for an industry leader. Their CEO had a vision for the meeting: Create A Mindset Where Winning Is the Only Acceptable Outcome. She picked me because I'd worked at a company (Yahoo) that famously developed this outlook, then lost it over time.
I was intrigued by this assignment, and immediately thought of lessons learned from studying Paul Galvin of Motorola (video clip from one of my talks about him). Researching post-Galvin case studies led me to A.G. Lafley's days at Procter and Gamble and ultimately his book, Playing To Win: How Strategy Really Works.
Lafley believes that strategy is "an integrated set of choices about how to win in the marketplace." In other words, strategy is not about accomplishing a certain task or reaching a certain goal. Those are tactics. Being strategic is about making the hard choices to achieve a sustainable competitive advantage in the eyes of customers.
He's got an attitude about leaders that see it any other way. He picks on companies like Saturn, a GM division, that was 'Playing for the sake of playing.' They never intended on beating the Japanese at their game. They just wanted to sell cars in 'the low end of the market,' so Saturn was created. They were not resourced to outperform Toyota, Honda, Nissan, Kia or Hyundai, and eventually, the division was shuttered.
He's even harder on leaders that Play To Survive. In his view, "a company must seek to win in a particular place and in a particular way. If it doesn't seek to win, it is wasting the time of its and the investments of its capital providers." He's right too. Around 2003, I witnessed the Yahoo culture shift from winning to "hanging in there". This was the beginning of the sideways years for the company. We watched competitors like Google leapfrog us with moonshots (Google Earth), while we played it safe by incrementally improving products (Click To Print Map).
Over and over again, Lafley stresses the choices leaders must make in their strategy. The first choice is 'What is our winning aspiration?' which leads to a cascade of choices which build on each other.
I like this cascade (based on the work of Michael Porter, one of Lafley's mentors). It starts with our aspiration or purpose, which according to Jim Collins, should be audacious. Lafley points out that "too many companies eventually die a death of modest aspirations." They made modest choices that the beginning of the strategy cascade, which then led to market-mediocrity.
Then, the second strategic choice is location - where are we going to win? This narrows the market, sometimes to a specific niche where a true winning opportunity lies. Narrowing the market is a hard choice for many, making it even more strategic. But to narrow the market is to narrow the scope of competition as well - making it easier to win.
The next difficult choice has to do with our weapons in the market, the sources of our competitive advantage. In Lafley's view, they need to relate to the perceived value the company delivers to its most important customers. Then, the next choice is about which resources need to be marshaled to deliver that competitive advantage over time. Finally, choices about management systems are made to ensure a high degree of operating excellence. This is a great exercise for any business leader or entrepreneur thinking through their strategy. Each choice is limiting, and serves to give the company a true sense of focus.
One of his stinging points is that "Too many leaders define strategy as the optimization of the status quo." In his view, this leads to sameness, which is not a strategy but "a recipe for mediocrity."
To Lafley's cascade, I added a six element: How Do We Close Value Gaps? This is based on the work of Sandra Vandermerwe in her book Customer Capitalism. Stanley Marcus Jr. told me about this book back in 1999 when he was sharing a case study about the Mercedes Smart Car launch in Europe.
The idea is that you can't lock in a customer anymore with contracts or proprietary technology. Your efforts to do so have decreasing returns over time. The key to winning over time is to get the customer to lock on to your company that solving all their problems in the activity space. For Mercedes' Smart car launch, the activity space they focused on was short haul mobility. The car was designed for trips up to about 100 kilometers at most. For such a specific activity focus, there are obviously value gaps that they need to close: Repair, Renting a bigger car, Insurance, Maintenance and so on.
Here's the idea: Each value gap is an opportunity for a competitor to enter your customer's life and steal them. If you've rented a car at Avis, for example, you likely drove a GM product such as a Malibu or an Impala. If you drive another brand, that's an example of a value gap they didn't close, which might lead you to switch later. Mercedes anticipated this in their strategy, so they provided rental car services to close that gap.
For my keynote, I used a more contemporary example from the medical care industry. For Baxter Healthcare's Renal Bag product line, they built a strategy around the activity space of maintaining kidney health. As they built a wining strategy, they realized that the customer has pre-during-post needs. Up until then, they only played in the 'during' phase, where their bags were part of treatment.
From pre-treatment advice to post-treatment therapy, Baxter had value gaps a competitor could drive a truck through - dropping off samples of a competitive core product. So the team built or partnered their way into an airtight approach to the market, which served the activity space with their product serving as a piece of the puzzle and not a commodity.
My audience was intrigued and provoked into action at the same time. Several focused on choice #2 (where do we win?) and #6 (how do we close value gaps?) as key questions to answer quickly in order to protect their winning hand.
My closing words echoed Lafley's perspective: If you are not playing to win, at best case, you are losing a little more each day. It's a matter of tough choices about the things that matter ... to the customer.