Brilliant post by fellow Corante contributor Grant McCracken this week. Just brilliant. In Innovation for The Innovator, Grant spells out the fundamental shift (and struggle for survival) faced by corporations today:
"The corporation once had a "perfect world" scenario: create an extraordinary product in a blue ocean (i.e., new) category and defend a fountain of profit with good strategy and smart tactics.
In the perfect world, change came in increments. Some competitors would enter the category with some variation on the theme. Others would look for "nook and cranny" weaknesses. The corporation would secure it's position with incremental responses...and profit poured forth.
The world changed."
"Now, the corporation is subject to blind side hits. Now the problem is not incremental challenges, but fundamental shifts. For Time Warner, this was the rise of an advertising based revenue model. For The Coca-Cola Company, it was the rise of the non-corbonated soft drink. For Microsoft, it was the rise first of the internet and then server-based software. For Detroit, it was Japan. (The irony: while American corporations are being encouraged to set out in search of "blue oceans," the real challenge are the great masses of water that come looking for them.)"
And here's the rub:
"These changes require fundamental shifts in corporate assumption and practice. And this is hard. Corporations rise to greatness because they are good at, say, CSDs (carbonated soft drinks). The advent of Snapple and Gatorade forces them to take on the new, but often this feels like a betrayal of the very things that make the corporation exceptional. "Sure," goes the complaint, "we can make fruit juice, but what we exist to make CSDs!"
It is, finally, a cultural problem. CSD assumptions supply not just the "what" and the "why" of the corporation, but it's deepest, most powerful, and least visible assumptions, the "unknown knowns," we might call them (with apologies to Donald Rumsfeld).
The problem at corporations like Time Warner, the Coca-Cola Company, Microsoft and "Detroit," is not intellectual laziness, a failure of the imagination, or, God knows, a failure of will. The problem is that non-incremental change forces the corporation off its game, out of its competence, and away from its deepest understandings of the world. Adaptation is possible, but a voice of warning sounds in the head of the senior manager: that way lies the destruction of the extraordinary intellectual, strategic, and cultural capitals that make us who we are. That way lies chaos."
Fear? Say it isn't so! For young companies, fear of the unknown and an aversion to risk seemeasy to overcome, but an aversion to change is pretty much a survival mechanism for our larger, much older incumbent competitors and friends. That aversion to change, that conservative need to stick by core competencies, proven methodologies and core product lines are part of their corporate DNA. You can't fault them for holding on to what they know. For holding to to their core. To the very foundations of their brands.
Yet, in order to survive... no, to strive in this new and ever changing business landscape, a few changes need to be made, and Grant offers a few keen suggestions:
"There are lots of ways to rethink the corporation so that it can address the problem of non-incremental change. (...) The corporation is learning new tricks. The new corporation is being invented fitfully, gradually, and painfully. But it's coming.
Innovator's innovation 1
What I would like to see, for deeply self interested reasons, is the creation of an observation platform from which we can keep an eye out for the next new things. In keeping with our Tsunami references, let's call it a wheelhouse, a conning tower, or a ship's bridge.
The trick would be to find 5 or 6 really smart, well educated, well informed, well connected, deeply curious, utterly practical people. These qualifications create a tiny Venn intersection, but, hey, we only need 5 or 6 people.
Innovator's innovation 2
Once potential changes are identified, it is time to see what difference their difference will make. How will the corporation as it is presently constituted in these particular waters? This will help us to find, extract and replace the "unknown knowns" in the corporate culture.
Innovator's innovation 3
Ok, now we need to build a series of simulated corporations, fit them out, run them in a tub somewhere, and refit as necessary. (Will someone please scuttle the naval metaphor, please!) We can't wait till the future is here to start the work of adaptation. We want to have done the conceptual work for eventualities well before they eventuate."
This sounds dangerously like... another "think tank" but because of its focus on practical applications, it might actually have some merit. Only there are just too many industries and different kinds of companies making different kinds of products for a small team of brilliant Rennaissance men to cover anywhere near enough ground.
Perhaps another way to help transform the corporation into an adaptive, evolution-savvy entity is instead to rethink the way business management is taught and practiced around the world. The very structure of corporations may also need a healthy revision.
The key here is to incorporate into corporate cultures the very notion that change is not only inevitable, it is also the natural vehicle by which corporations evolve. (And yes, I am talking about evolution here, and not just growth. There is a difference.) Corporations, through their leadership and processes, should be energized by change instead of being paralyzed by it. The way to accomplish this is to make change easy to assimilate. In other words, corporations should learn to become more agile. More nimble. More flexible.
Grant's idea of creating corporate conning towers is excellent. Why not form an advisory group composed of trend-savvy multi-dimensional executives (or consumers) to help point the way and make course adjustments? Make these people completely independent from Senior management. Don't even pull them from the corporation's ranks. Set them up with offsite offices. Pay them as consultants instead of employees. Keep them completely outside of the sphere of influence exerted by the corporation's board and leadership. Make them accountable, sure, but protect their independence and insulate them from any unwanted political/financial influence.
More importantly - and for this to work - corporations must fill their ranks and executive suites with intellectually curious, practical, open-minded, men and women. Leaders instead of just managers. This requires a fundamental shift in corporate culture and HR practices. It also requires a fundamental shift in the way that Business management is taught in Universities and business schools. And lastly, it requires a certain measure of courage (and faith in our own abilities) on everyone's part. There are no failsafes. Proven methodologies only prove that they have worked in the past. The past is nice, but the present and future are a little more uncertain. Facing them both with the knowledge that fifty years of success are not enough to ensure the same success for another fifty, or twenty,or five takes huevos. It takes the wisdom and confidence to be able to readily admit that as a CEO, you have absolutely no idea if what you're doing now is the best way to address your company's goals.
Sure, everything might look good. The numbers and research might be supporting your hunch... but you really don't know. Plan A: Your Germans had better be better than their Germans. Plan B: You had better be at the helm of the kind of corporation that can make quick course adjustments when it turns out that their Germans were better than yours after all. (Plan C: Make sure you're hiring the right kinds of Germans... and that they have a great reason to stay.)
Safety in the world of business is an illusion. At best, it's a crutch. It's 4% growth. It's always being second or third to market. It's being a player but never a leader.
Wait... did I say "at best?" Darn.
I guess it depends how you choose to look at it.
Times, they're a-changing. The corporation that will adapt and evolve to the new market and business landscape will survive and grow. The corporation that doesn't evolve will simply wither away and die.
Welcome to the new jungle. Welcome to the real world. Welcome to the world of endless business and innovation possibilities.
Now... about that corporate conning tower team...
John Moore recently wrote a piece on his Brand Autopsy blog in which he answered this question from a reader:
Judy: “Can you tell me what it means to create an employee experience? How do the best companies ensure that the employee experience is aligned to the customer experience?"
The question is as unusual as it is insightful - and considering the amount of posts recently that address the issue of employee morale and its impact on brands, it couldn't have come at a better time.
John answers "creating meaningful employee experiences revolves around making the company something employees can believe in (tribal truth #32). It’s also about a company realizing that its products do not make great brands but rather, its people make brands great (tribal truth #37)."
"The best companies, namely those listed as one of Fortune Magazine’s "100 Best Companies to Work for in America," spend just as much time marketing to its employees as it does to its customers. In other words, these companies realize that happy, knowledgeable employees will usually translate into happy, knowledgeable customers."
Sound familiar? (I swear - and mea culpa, John - I had completely missed that post until now. Good to know we're all on the same page though. I feel all validated and stuff.) Here's more:
"For example … The Container Store is a Dallas-based privately held company specializing in selling boxes, bins, and everything in-between to help consumers organize all their stuff. They have been highly successful with sales in 2005 topping $425 million with just 37 locations in 12 states.
New Container Store employees are given more than 240 hours of training in their first year compared with the industry standard of 7 hours of training per new employee. Employees are paid two-to-three times more than the industry average. And employees are given a generous 40% discount for anything purchased at the Container Store. The company is renowned by retailers and customers as delivering great customer experiences which helps to explain why the company is so successful.
With its focus on making the employee experience matter (tribal truth #33), The Container Store astonishes its employees who in turn, astonish its customers with great customer service.
Given this Container Store example, one sure-fire way to ensure the employee experience is aligned with the customer experience is to treat employees like you would want employees to treat customers. Sounds simple. But if it was so simple, more companies would be doing it ... right?"
And why aren't they doing it? Mostly, because they just don't know any better. Because nobody told them. Because the concept of happy employees (and happy customers, for that matter) doesn't get much play when it comes to grown-up things like internal politics and maximizing shareholder return.
That's changing, but not nearly fast enough. Yet.
David Taylor (of the brilliantly named Where's The Sausage blog) picks up where John left off with his "brandwashing" concept:
The whole are of "brand engagement" is booming, with companies launching into big and expensive initiatives to help employees "live the brand". However, in my experience many of these are a total and utter waste of money, as they fail to address the basics of making a company a nice place to work. Many of them are more like exercises in "brandwashing".
Yeah. Pep rallies. "Go team" chants. "Brand Spirit" weeks. If you're a joiner, great. If, like me, you're a little more independent, good luck with that. The caffeine-induced exuberance, the forced propaganda and the attendance-required motivational meetings don't work. Thanks for trying though. Most of us are moderately intelligent, educated,well adjusted people. You aren't fooling anyone with your lame "let's talk about how awesome it is to work here in dingy cubicles for a fraction of what we should be making" meetings.
Please spare us.
And spare your employees. They aren't stupid.
"One of the most successful companies at creating great and consistent customer service is sandwich shop chain Pret a Manger, and I wrote a little case on them for the new book, Brand Vision (out in Jan 07). This was inspired by the findings of an FT journalist who went to work at Pret to understand the secret of their success. And as you will see below, engaging people with the brand did not figure:
1. Managers are not over-qualified and embittered:
- 75% of mangers are promoted from within
- Other 25% have at least 2 years relevant experience
- Join in and help instead of ‘barking orders’
2. Staff are not ‘routinely humiliated’:
- Smart uniform, not polyester nightmare
- No dressing up for kiddie parties
- Most stores have no toilets, so no cleaning of the loo
3. Staff are paid well:
- Team member: average £6.58 vs. £5.68 for competition
- Team leader: average £8.39 vs. £7.52 for competition
4. Staff have a say in who joins:
- Candidates work in store for a day and team votes whether to hire them.
5. Hire nice people:
- Large number of well-educated international students
The other really important thing is that the product people are selling is 10 times better than your average fast-food of course. It reminds me of the story of a kid working at McDonald's who when asked where he worked preferred to say he was unemployed!
So let's see: Hire great people, treat them well, pay them well, give them the opportunity to move up if they so desire, make sure that they can be proud of the product they sell and the job they do, and let them have a say in who gets hired (or doesn't get hired).
Is it really that hard? Really? Does it still make more sense to treat employees like a commodity and treat them like children when it comes to motivating them? Is it really so hard or expensive to be genuine and caring? Are those words really not part of the business lexicon? Cynicism is an ugly thing, and it has no place in business. None.
One last question for you: If a company doesn't make the effort to treat its employees as well as it can, how do you think it will treat its customers?
More on that in future posts. In the meantime, here are some other great posts on the subject:
- Kathy Sierra's "Knocking the exuberance out of employees"
- Dumb Little Man's "50+ Ways a Manager can get Employees to Quit."
- The BrandBuilder's "Exorcise your organization's inner dysfunctions today."
- Francois Gossieaux's "CEO's with big egos are always bad news."
Have a great Thursday, everyone. :)