New startups are popping up daily. With so much competition, older companies are struggling to stay relevant.Bill Taylor, the cofounder of Fast Company and author of Practically Radical, studied businesses that are successfully reinventing themselves in today’s uncertain economy.
“Long-established organisations are really being rocked to their core,” he says. And if they don’t adapt, they’ll die.
Which companies are changing the right way? And how are they doing it?
We asked Taylor to reveal everything.
'We all do business the same way. We think we'll be a little better with our products, or a little cheaper with the service,' says Taylor. 'But, in an era of so much change and so many new ways to do everything, the middle of the road has become the road to nowhere.'
Instead, Taylor says to become the most of something. 'Maybe it's the most exclusive. Maybe it's the most affordable. The question is not, 'What products and services does a company sell?' The question is, 'What ideas do you stand for?' What are the ideas that distinguish how you do business differently from everybody else?'
'One of the questions Roy Spence, a great ad man who runs GSD&M, likes to ask clients is, 'If you went out of business tomorrow, would anybody really notice?'' says Taylor.
'So few organisations really stand for anything truly distinctive, compelling, or memorable; the ones that do are the ones creating all of the value in the economy.'
'So many leaders have a tunnel vision. They see things the way everybody else in their industry sees them and they chase after the same opportunities,' says Taylor.
Successful leaders see a different game.
'The biggest risk is being afraid to experiment,' says Taylor. 'At that point the game becomes, Can I go out of business a little slower than them?'
Vujà dé was coined by comedian George Carlin and is the opposite of Déjà vu.
'Déjà vu means going into a situation you've never been in before that feels like it was a previous life -- like you've seen it before,' Taylor explains. 'Vujà dé means looking at something you're vastly familiar with in an entirely new light.
'Can you look at an industry you've been working in for 20 years and somehow look at it as though you've never seen it before? Can you use all of your expertise with a new set of eyes to develop a really distinctive, disruptive perspective for the future?'
'A really dramatic reinvention is not just stuff you can do in high tech fields, or within the culture of Silicon Valley. Any industry, no matter how prosaic, no matter how traditional, no matter how established, can do it,' says Taylor.
'If you bring a creative enough mindset to it as a leader, you can do really exciting, compelling, dramatic things that lead to out-sized economic performance, even if the industry itself is really troubled.'
Find something that's working great for one company and apply it yours. It doesn't have to be a competitor in your industry either.
Taylor gives the example of Lexus copying Apple Stores. 'Five years ago Lexus wanted to refresh their offerings, so they studied Apple stores. One of the things they saw were Genius Bars -- people in black turtlenecks who fixed iPads and iPhones, then taught customers something while they waited.
'Lexus realised people were buying their $75,000 cars without understanding how to use all the features. So they installed their version of Genius Bars in dealerships, called 'The Answer.' These were completely ripped off from Apple. Give us a half-hour and we can show you how to really use your GPS.
'That little innovation has increased customer satisfaction for Lexus more than anything they've done in the past few years.'
'Give customers the experience of encountering you, whether it's walking into your retail establishment, talking to one of your people on the phone, or simply opening a product to find a personal message,' says Taylor.
'Send all kinds of messages, large and small, to show you want to connect in ways the competition doesn't.'
An easy, cost-effective way to do this? Pick up the phone.
'In the U.S. last year we spent an average of $10 billion dollars on software that automates and computerizes 1-800 customer call centres,' says Taylor. 'Customers call one of those numbers and get those damn computerized voice prompts; they spend 20-25 minutes bouncing around without ever reaching a human. We spend $10 billion each year to drive customers crazy.
'Well, here's an idea: just answer the phone when they call! That simple exercise buys you so much good will and such a sense of psychological connection with the customer.'
Evoke stronger connections with customers by considering all five human senses: sight, smell, sound, taste, and touch.
One bank, Umpqua, did this and made a drastic turnaround.
'Fifteen years ago, Umpqua's CEO, Ray Davis, realised there were 12,000 banks in the US, and that no one needed 12,001 of them doing the exact same thing,' says Taylor. 'So he re-imagined what the experience of visiting a bank could be like.'
For sight, Umpqua rented loft areas, bought beautiful furniture, and decorated walls with art from local painters and sculptors. Each branch now looks like a mini art gallery.
For sound, the bank created its own record label. It plays indie rock from local bands and sells CDs with greatest hits.
For smell and touch, the bank brews its own coffee for customers to hold while filling out paperwork. Umpqua also opens up branches after hours as community centres for customers to host book clubs, meetings, and more.
Umpqua now has 155 bank branches on the west coast and $8 billion in deposits.
'We are coming off such a top-down era of the all-knowing CEO,' says Taylor. 'The huge mindset shift today is that leaders in every organisation have to operate in a world where nobody alone is as smart as everybody together.
Taylor says the most powerful source of business genius is often within that organisation. These brilliant employees are trapped though, because CEOs don't create conditions for them to share what they think comfortably.
Taylor uses Rite-Solutions Software as an example for how to include employees.
'The founders created an internal stock market for ideas at the company. When you sign up to become an employee at Rite-Solutions, everyone gets $10,000 of opinion money. Employees create an idea prospectus, write it up, and it goes on the stock market with a ticker symbol. Then people start commenting on it, buying and selling the stock.
'Last time I checked there were 52 stocks in their idea market. The founders tell me many ideas have emerged from it. When you see the combined judgment of all the people in the organisation and a stock going from $10/share to $80/share, you can't help but say, 'Wow, we need to put some resources in that direction and see what happens.''
'The way you make a big change over a long period of time is to make a lot of small bets and do a lot of manageable experiments along the way,' says Taylor.
'In plenty of successfully reinvented companies, they've had things that didn't work, but they weren't newsworthy because the risks weren't made to be organizational-changing transactions.'
The greatest risk is being too cautious and conservative, says Taylor.
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