Growth doesn’t elude those who connect to customers


Jeff Bezos and anyone else holding Amazon stock must be pretty happy this past week after seeing the stock shoot up 15 % as the last quarter revenue was up 34%.  Grwoth and performance are the cats’s meow in capital markets!  But Amazon is afterall just an internet company, right?  Steve Henn of NPR interviewed Ben Rose, president of Battle Road Research who offered a little perspective. 

 while Amazon made $190 million dollars in profits last quarter – McDonald’s, which is now worth less on the stock market, earned more than 1.2 billion. .. the reason so many investors are excited about Amazon is that it is growing – fast.

 

Fast growth means a lot to the street, investors as well as senior managegment.  The double hockey stick, or ability to repeat performance over time before hitting the point of stagnation sounds precisely in keeping with our expectation of CEOs and yet their inability to knock them out of the park consistently puts Bezos into a very exclusive class.  

The difference in earnings for  Amazon and McDonalds illustrate that there’s a lot more to the picture. Rapid growth requires more than stepped up demand, but an ability to also step up quality, supply and  delivery efficiency, generate positive experiences while sustaining your reputation increasingly matters.  

For years, McDonald’s strategy for growth emphasized opening more restaurants to reach more customers. The problem was that as the efficiencies from scale began to stagnate , flattening the upward  trajectory of the growth curve.  As masters of scale and efficiency and even quality, the price advantage certainly helped them during the recession but by their own standards of success they recognized they needed to do more.  They turned to their innovation team and began to set in motion a series of tests that not only allowed them to upp sales per customer but returned their growth rates to an upward trajectory.  Design helped them completely shift their thinking and relinquish some of the central control and dictates allowing the individual outlets flexibility to satisfy the local tastes and prefrences from menu items to the restaurant design itself. 

 

The shift from central to decentralized control  is not merely the return of the pendulum swing. 

 John Kotter, writing for Forbes,  observing the ever-increasing rate of change and the inability of many organizations to thrive, also observed that static management principles stymie timely transformations.  What stops organizations from adapting or flexibly responding to the larger dynamics at work in the market?  

20th-century, capital “H” Hierarchy (a sort of hardware) and the managerial processes that run on it (a sort of software) do not handle transformation well.

I read this comment and immediately began to understand something I had failed to grasp.  It’s easy as an outsider to recognize and empathize with the challenges of an organization whose leadership voice the words and know deeply they they need some of that innovation. I thought it was thier lack of vision, or their inability to appreciate and value the customer experience or a series of solutions that have been echoed in innovation circles by business strategy, design thinking  and change management professionals.  What I missed was a lesson I had learned and quickly forgotten because it was a painful chapter when I worked for Fortune 50 banks and found myslef the change agent.  Most managemetn teams are responsive up the chain, and in my experience the marching orders they followed were reinforced with clear rewards for delivering performance. 

Getting to the C Suite requires making all the right moves, delivering the results that were expected and that’s the system you know. The trend to outsource was an innovation to cost reductions and creating efficienciey when what mattered was being lean and oil was bad for your diet.  Consumers adapted becasue they never did know the difference between a local company paid customer service rep who spoke english and seemed to know the score and one paid by an outsource firm and could repeat the tasks for multiple companies.  

The price for that efficiency is the loss of control, the ability to truly be agile, nimble and responsive to shifts in the market. You may have surrendered to the forces that Joe Pine describes commodotized your business, swapping out tasks to experts while stepping up the your investment in the new new thing.  

The entrepreneurs who are running circles around the larger providers can do it becasue either they control every inch of their value chain, or the are able to begin by leveraging technology that is fully integrated, seamless and allows for transparency across the system. 

Its unclear how long Amazon will be able to keep up their growth rates by challenging new business sectors failing to make the transition.  Revisiting your structure and decision-making hierarchy certainly helps ….

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Help others tell your story


Every time we open our mouths words come out. But people listen and naturally attend to stories. Really,  they do, they are far more effective, persuasive and enjoyable. let me explain. There is a pattern and a sequence that is far more subtle than merely having a beginning, middle and end. A story is a summary of an experience.

If you are lucky enough to spend time with three-year old children, you will notice that they typically don’t bother with  pretense, they go straight for the action.  They don’t care who as much as what someone else is doing, and then they pretty quickly want to do it themselves. We begin to mimic others as babies and by the time we push past toddling, we have enough language and ability to connect our movements to get what we want or more specifically compels us to do, to take, to grab and engage.

Direct experience in my mind remains  the best way to learn; but it’s also what gives voice to the stories we share. It’s exactly why if you’re not telling stories that your customers, clients and friends can repeat about you, then you are missing opportunities.

I know, because my story is malleable, liquid. It took me a long time to suppress my enthusiasm and obsession with detail to notice that I was losing my audience. Then again, we often are quick to qualify if not underestimate our audience as well by not giving them a clear handle on our interests, capabilities.  A one word label isn’t a story, but a simple gesture generates responses that put you on a path to a shared story.

Map of Chicago's community areas, grouped by c...

Map of Chicago's community areas, grouped by color by "side" (Photo credit: Wikipedia)

A neutral simple question such as where do you live can open or close the conversation.  When people ask me, I try to honor their knowledge by asking a question that helps me formulate a meaningful response.  I could simply answer with the name of my neighborhood, or even the town where I grew up, but very few people find them familiar.  I offer them a couple of larger landmarks or reference points and then lead them to my place.  But I don’t stop there.  Because I want to share a little of how it feels to live with south and east facing windows a mile or so from the center and magnificent skyline that characterizes Chicago,  I paint that picture.  Then I add in something about the diverse ethnicity and history of my neighborhood.  How the first time I stepped out on my balcony, the building was still under construction missing interior walls, and I discovered it was my destiny to live here.  That day in February was typically cold and overcast.  My eyes took in the panorama and tracked past the major intersection, gravitating east and focusing on the storefronts until in the middle of my frame, a billboard separated the street and the dramatic skyline.  For me an iconic image came into focus on this west-facing wall.  The bold black letters read Kaplan’s against a fading wash of yellow.  I suspected it was my great-uncle Dave’s store , which I instantly confirmed with a phone call to one of my older brothers.  I looked to live in this neighborhood because it was near where my mother had grown up, and the coincident discovery that I was between my parents childhood travels I realized I found my new home.

Were you listening? or was your mind painting some pictures?  The brain, cognitive psychologists explain, backed up by work in neuroscience, psychology and economic research, loves stories.  Rather than demanding attention or confronting people with facts and figures to present your case, tell a story.

Help your customers, clients feel at home with you, your products and services by taking them there.  Are you telling them the what, or the hows without the why?  In an era of information and sensory overload, consumers are finding it simpler to control, filter or ignore your message.  The brain’s two systems–the limbic and neo-cortex (or the sensory and thought processors) naturally filter input based on prior experience and novelty .

Think of the limbic system as the bouncer, it only allows the sensory data that passes muster to get through tho the neocortex for further processing.  In those moments where you can’t think straight?  Paradoxically, you must be pretty “safe” or the limbic system‘s antennae would shut down access.  Conversely, our multitasking abilities  support several functions at once, and make it possible for us to daydream while driving, walking, reading , cooking etc.  Data is instantly routed and cues up behavior that after the first experience quickly  reverts to routine processing. Uncannily, we can simultaneously breathe, walk with great coordination, even whistle, listen to birds, notice the flyers and traffic as we gently negotiate our surroundings, think about a novel we are reading,  or dinner scheduled later with friends while half listening to the chatter of a child who is holding our hand.  That is until you’re confronted, disrupted or challenged.  “Are you listening to me?”

The challenges are ever-present. Each of us want our own messages to be heard, our presence known, fully considered; yet we also want some natural escape and respite from the omnipresent sensory assault on our bearings. Story, regardless of the subject or language, our brain finds them comforting.  We relax and naturally attenuate to stories.

More often it’s the emotions not the facts and figures that sway our conscious brain to check in. Few stories in our lives begin with once upon a time or end in happily ever after sentiments.  They don’t need a formula, yet there is a pattern.

This week, Northwestern University’s Kellogg school of Business and Segal Institute of Design hosted a conference.  Academics and business minded professional came to hear about the ROI of Design.  The accomplished presenters demonstrated how their focus on bettering experiential elements created comfortable contexts and reference points of customers and the financial performance gains that followed.  Each presenter shared stories of the transformations in their respective businesses, from the perspective of their customers.

Sure, there is much more to storytelling than discerning a beginning, middle and end. The more we appreciate and acknowledge the value of the experiential elements on our customer and audience, the more stories become the byproduct.  Your customers will be telling and sharing stories about you–what are you doing to help them tell good, if not great ones?

I promise I won’t leave you hanging wondering how to be better at story making, but in the interim go test this hypothesis.  Take some time to be a better listener and surprisingly you’ll discover how you will naturally find a story that matches what you are hearing, but the story will be yours, authentic to you…not because you lived it but you own it.

Taking the jump


Kansas' Thomas Robinson (0) fights for a rebound with Ohio State's Deshaun Thomas (1)

It’s hard not to be swept up in the enthusiasm and excitement of the NCAA basketball tournament finals.  In the men’s final, Kansas Thomas Davis and Kentucky Anthony Robinson may be taking the lions share of the attention, but this is basketball, a team sport.

March madness,  aptly named doesn’t merely test the NCAA players’ individual strengths and abilities, it also tests the players’ resilience in the face of intense competition.  The tournament teams demonstrate performance derived from a highly orchestrated and elaborate combination of planning, coordination and engagement, all of which  makes the games so watchable.

Recruiting the talent, the vision and leadership of the coach, the  mechanics of the practice regiment, codes of conduct, the branding of both the tournament and the individual teams and the general environment converge to attract the network contracts and endorsements that all create the frenzy atmosphere of the tournament.

The value of Together, or Team

March Madness may be about college basketball but it’s also a lesson about  performance which if extended into other domains could change the reverence for the power of the individual,  the dominating paradigm in American culture.  Let me explain.

Vision, inspiration is often associated with individuals, especially those who take on leadership roles.  In any sport or any physically demanding activity, an individual earns recognition based on their level of play,  raw ability and talent. In American culture our heroes are largely sports figures because they illustrate the best of what’s possible. Independent of their ethnicity, their socioeconomic status or native environment, their natural talents catapult them to success.  This is the idea behind the phrase picking ourselves up by our own bootstraps.  Sure, ability plays a role, but there’s far more at work and if we don’t recognize it and help others understand it, Americans will fail to get the success that follows when we take the jump  whether we make or miss the shot.

Reflection and broadened horizons

One crucial piece of vision includes the coach, an individual who  receives significant credit for the player’s realized success.  The strength of a coach, who may or may not have been a former player or performer, recognizes that the vision of victory must be shared.  Sure, the one player who may see they have a shot needs to consider whether someone else may have a better chance of success.  The collective, or how one player’s strengths can play off  another, requires a collective vision of victory, that relies on more than a single player’s ability. Successful coaches promote the best of the abilities in all their players, not just the stars. In basketball, the unparalleled success of Phil Jackson extends from what he gives. © AP Photo/Kathy WillensAs one of his players explained, he learned how to give themselves to something they never thought of before. The Washington Post in 2009 suggested Jackson’s success extended from his willingness to broaden his player’s horizons to try things  and challenges beyond basketball.

Unlike school, the NBA is not the place for unproven or untested stars, so Jackson started with a great talent pool.  But few players who ever played under Jackson’s leadership will deny how much greater he made them.  He takes individual stars, and teaches them to be great leaders and confident thinkers and not just executors.

Performance is an art form 

Performance is an art form. No results are certain, no matter how well a team practices, rehearses and plans. Basketball players recognize no matter how great their individual contribution,  the game depends on coordinating their actions to seize the opportunities as they present on the court.  They have to look beyond themselves, learn to help their team mates move and position themselves in response to the events as they unfold.The only way to gain that trust is by working with each other on and off the court. After all, success is determined by the number of games the team wins and loses which includes not only the combined tally of every player’s winning shots, but their assists and passes and blocks.

In school, children are taught to work in teams too, a transfer of the successful team approach. Evaluation however remains stuck on measuring how well an individual performs and largely ignores the impact of the collective effort.  We judge schools and teachers by individual performance scores on standardized tests and miss the value of assists, passes and knowledge sharing.  Missing the parallel to “the game”, or the tournament, limits the validity of students’ ability to apply and execute what they have learned in more natural environments.

OK what about in your organization, what parallels to “the game” do you use to measure the interdependency of the combined abilities that  you’ve hired?  How often does the hiring plan take on a balanced approach? Who is the coach that goes out of their way to help individuals work and play with each other better?

Performance in the mix not the individual

American organizations need to learn and replicate more of  what Phil Jackson does, maximize potential in everyone. Scott Williams blog suggests “He creates a culture of focused chemistry.  The number one priority in coaching and leading is to create a strong culture by developing leadership, empowerment, communication, authentic care for others, relationships, trust, and motivation.”

Much to the benefit of every American, it’s not just successful basketball coaches who recognize that helping individuals persevere, and self-correct during times of challenge and crisis is a critical skill set.  HBR blog on leadership recounts how the US army, includes resiliency as part of its overall leadership training. The curriculum’s success depends on getting people to think about their thinking, or what psychologists call meta-cognition. Beginning in 2009, the Comprehensive Soldier Fitness program draws on many of the same principles that Jackson uses to differentiate both his approach and the teams he has coached.  For example CSF teaches individuals

“To identify and leverage their own strengths and the strengths of others to overcome challenges. People are on a team for a reason, so figure out why and let them use their potential to accomplish the mission.”

Self-reliance, deeply embedded in the American character shaped the philosophy of the school system and the character of many of our entrepreneurial heroes.  The inventors that idled alone, the industrialists who knew how to make prudent investments and the more recent code jocks who have helped create the future.  They all find the area that maximized their particular abilities and strengths, right?  They took the jump shot and it paid off handsomely for all of them.  They didn’t make every shot, but their own persistence and resilience helped them win as they battled against the tide. They fundamentally believed they could make the shot they did and just as importantly they kept trying, they didn’t give up they didn’t let the system define them, or limit their talents.

I’ll close with some perspectives from Sir Ken Robinson who advocates for an end to the linear thinking and persistence of knowledge frames that don’t enable different strokes for different folks. If you haven’t heard this talk, I highly recommend it.  The hallmarks of standardization and consistency for efficiency characteristic of the American school system that measured personal merit quite narrowly, contributed to pyramid style organizations that excluded creativity.  We need to regain the ability to value an array of different types of performance, to measure performance based on the cumulative interactions of multiple strengths and abilities. I’m not advocating for more variance on the indicators or standards we have, but more variety in what we recognize as performance that counts.

We have made college too big a prize, in spite of the most famous college dropouts business success. Like the army, other organizations need to help people develop the strengths and confidence at every stage to keep working at learning and to keep practicing, the very qualities that make high performance and resiliency possible.  We need more leaders, like Phil Jackson who are willing to prove the clear value of every member of their teams contribution but works with each to develop their skills and abilities.