Category Archives: Strategy

The AI Apocalypse is Here

3 Reasons You Should Celebrate!

The AI Apocalypse is Here

GUEST POST from Robyn Bolton

Whelp, the apocalypse is upon us. Again.

This time the end of the world is brought to you by AI.

How else do you explain the unending stream of headlines declaring that AI will eliminate jobs, destroy the education system, and rip the heart and soul out of culture and the arts? What more proof do you need of our imminent demise than that AI is as intelligent as a Wharton MBA?

We are doomed!

(Deep breath)

Did you get the panic out of your system? Feel better?

Good.

Because AI is also creating incredible opportunities for you, as a leader and innovator, to break through the inertia of the status quo, drive meaningful change, and create enormous value.

Here are just three of the ways AI will help you achieve your innovation goals:

1. Surface and question assumptions

Every company has assumptions that have been held and believed for so long that they hardened into fact. Questioning these assumptions is akin to heresy and done only by people without regard for job security or their professional reputation.

My favorite example of an assumption comes from the NYC public school district whose spokesperson explained the decision to ban ChatGPT by saying, “While the tool may be able to provide quick and easy answers to questions, it does not build critical-thinking and problem-solving skills, which are essential for academic and lifelong success,”

Buried just under the surface of this statement is the assumption that current teaching methods, specifically essays, do build critical thinking and problem-solving skills.

But is that true?

Or have we gotten so used to believing that essays demonstrate critical thinking and problem-solving that we’ve become blind to the fact that most students (yes, even, and maybe especially, the best students) follow the recipe that produces an essay that mirrors teachers’ expectations?

Before ChatGPT, only the bravest teachers questioned the value of essays as a barometer of critical thinking and problem-solving. After ChatGPT, scores of teachers took to Tik Tok and other social media platforms to share how they’re embracing the tool, using it alongside traditional tools like essays, to help their students build skills “essential for academic and lifelong success.”

2. EQ, not IQ, drives success

When all you need to do is type a question into a chatbot, and the world’s knowledge is synthesized and fed back to you in a conversational tone (or any tone you prefer), it’s easier to be the smartest person in the room.

Yes, there will always be a need for deep subject-matter experts, academics, and researchers who can push our knowledge beyond its current frontiers. But most people in most companies don’t need that depth of expertise.

Instead, you need to know enough to evaluate the options in front of you, make intelligent decisions, and communicate those decisions to others in a way that (ideally) inspires them to follow.

It’s that last step that creates an incredible opportunity for you. If facts and knowledge were all people needed to act, we would all be fit, healthy, and have absolutely no bad habits.

For example, the first question I asked ChatGPT was, “Why is it hard for big companies to innovate?” When it finished typing its 7-point answer, I nodded and thought, “Yep, that’s exactly right.”

The same thing happened when I asked the next question, “What should big companies do to be more innovative?” I burst out laughing when the answer started with “It depends” and then nodded at the rest of its extremely accurate response.

It would be easy (and not entirely untrue) to say that this is the beginning of the end of consultants, but ChatGPT didn’t write anything that wasn’t already written in thousands of articles, books, and research papers.

Change doesn’t happen just because you know the answer. Change happens when you believe the answer and trust the people leading and walking alongside you on the journey.

3. Eliminate the Suck

Years ago, I spoke with Michael. B Jordan, Pixar’s Head of R&D, and he said something I’ll never forget – “Pain is temporary. Suck is forever.”

He meant this, of course, in the context of making a movie. There are periods of pain in movie-making – long days and nights, times when vast swaths of work get thrown out, moments of brutal and public feedback – but that pain is temporary. The movie you make is forever. And if it sucks, it sucks forever,

Sometimes the work we do is painful but temporary. Sometimes doing the work sucks, and we will need to keep doing it forever. Expense reports. Weekly update emails. Timesheets. These things suck. But they must be done.

Let AI do them and free yourself up to do things that don’t suck. Imagine the conversations you could have, ideas you could try, experiments you could run, and people you could meet if you no longer have to do things that suck.

Change is coming. And that’s good news.

Change can be scary, and it can be difficult. There will be people who lose more than they gain. But, overall, we will gain far more than we lose because of this new technology.

If you have any more doubts, I double-checked with an expert.

“ChatGPT is not a sign of the apocalypse. It is a tool created by humans to assist with language-based tasks. While artificial intelligence and other advanced technologies can bring about significant changes in the way we live and work, they do not necessarily signal the end of the world.”

ChatGPT in response to “Is ChatGPT a sign of the apocalypse?”

Image credit: Pixabay

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There are Only 3 Reasons to Innovate

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Which One is Yours?

There are Only 3 Reasons to Innovate

GUEST POST from Robyn Bolton

You know that innovation is something new that creates value.

(But not too new)

Sometimes the value can be hard to describe, let alone quantify. You know that, ultimately, the value needs to be financial – more revenue, lower costs, higher profit. You also know that the value created in the short term will likely be more intangible – increased satisfaction, improved brand perception, and greater loyalty.

Your challenge, especially in tough economic times, is to tell a story that connects success indicators seen in the short term to the financial returns realized in the long term and maintain support and funding as the story unfolds.

That is a HUGE challenge! One that overwhelms most managers because they don’t know where to start let alone how to maintain support and momentum.

But you are not “most managers.” You know that the best place to start is at the beginning.

What is the Goal of Innovation (i.e., why are we investing in this)?

Goal #1: Create (or keep) a competitive advantage

Innovation is essential because it keeps you ahead of the competition.

Your business is already a leader in something that creates a competitive advantage, and your innovation efforts focus on keeping it that way.

For example, imagine you’re the President of Big Machine Co (BMC). You’ve been in business for decades in an industry with commoditized products, few competitors, high barriers to entry, and medium barriers to switching (i.e., it can be done, but it’s a pain).

You know that customer relationships and loyalty are the fuel that drives your business and why you’re #1 in the market. As a result, you focus your innovation efforts on creating new products or services that deliver unique value to your customers and provide easy and fast resolution to service issues.

Goal #2: Avoid (or overcome) competitive disadvantage

Innovation is essential because it keeps your business alive.

Your business is falling behind the competition either because you’re not keeping up with their pace of innovation or because you’re failing to deliver on table stakes like quality, price, or accessibility. You invest in innovation to catch up to the competition or regain your place in customers’ consideration.

Let’s go back to Big Machine Co. Because of the amazing growth you achieved as President, you’re now CEO (congrats!). The new President continued your innovation strategy but got so excited by everything new he forgot to pay attention to the “old” things – existing products, manufacturing capabilities, and people. Now, you’re #2 in the market and losing customers at a concerning rate.

It’s time to get back to basics and invest in “new to BMC” innovations by creating products that customers want and competition can already offer, investing in manufacturing equipment and processes that improve efficiency and quality, and retaining people who have the knowledge, experience, and relationships that are the heart of the business.

Goal #3: Build a reputation for being innovative

Innovation is essential because doing it makes the company look good (and executives and shareholders feel good), regardless of whether it produces results.

Your business demands innovation, new news, and big splashes. Your customers want novelty, not perfection. Image is everything, and perception is reality. You invest in innovation to show what’s possible, provoke conversation, and stay in the spotlight.

Believe it or not, this is on your mind as CEO of Big Machine Co. Your customers demand perfection, not novelty, but they need to shed the perception that they’re boring companies in a boring industry moving at a glacial pace to attract and retain the next generation of talent. You can help.

You look beyond the market to identify trends and technologies in the news but not yet in your industry. You identify the ones that could transform industries and make your customers’ eyes light up with wonder and excitement. You create proof of concept prototypes that make the vision tangible and discuss the plan and timing of the first step toward that vision.

How to Goal Helps

Your reason for innovating informs everything else – your strategy, structure, activities, metrics, and governance.

That is why you can only have one ‘Why’ at a time.

Yes, it’s tempting to try to do a bit of everything, but that often results in achieving nothing.

Think back to Big Machine Co:

If the products break, don’t perform as they should, or aren’t available when needed, it doesn’t matter how excellent the customer service is or how cool the new products are. You must achieve Goal #2 (avoid or overcome competitive disadvantage) to earn the right to pursue Goal #1 (create or maintain competitive advantage)

If the products are the right quality, perform as expected, and arrive on time but the customer service is poor, and there are no new products, it’s hard to believe that a company that struggles to deliver incremental innovation can deliver on a radically innovative vision. You must make progress against Goal #1 to have permission to pursue Goal #3 (build a reputation).

The next time you face the challenge of connecting your innovation’s short-term success indicators to the long-term financial returns and maintaining support and funding, don’t be overwhelmed.

Go back to the beginning and explain, “It achieves (Goal #) so that we earn the right to invest in (Goal #).”

Image credit: Pixabay

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Why Business Strategies Should Not Be Scientific

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Why Business Strategies Should Not Be Scientific

GUEST POST from Greg Satell

When the physicist Richard Feynman took the podium to give the commencement speech at CalTech in 1974, he told the strange story of cargo cults. In certain islands in the South Pacific, he explained, tribal societies had seen troops build airfields during World War and were impressed with the valuable cargo that arrived at the bases.

After the troops left, the island societies built their own airfields, complete with mock radios, aircraft and mimicked military drills in the hopes of attracting cargo themselves. It seems more than a little silly, and of course, no cargo every came. Yet these tribal societies persisted in their strange behaviors.

Feynman’s point was that we can’t merely mimic behaviors and expect to get results. Yet even today, nearly a half century later, many executives and business strategists have failed to learn that simple lesson by attempting to inject “science” into strategy. The truth is that while strategy can be informed by science, it can never be, and shouldn’t be, truly scientific.

Why Business Case Studies Are Flawed

In 2004, I was leading a major news organization during the Orange Revolution in Ukraine. What struck me at the time was how thousands of people, who would ordinarily be doing thousands of different things, would stop what they were doing and start doing the same thing, all at once, in nearly perfect unison, with little or no formal coordination.

That’s what started the journey that ultimately resulted in my book, Cascades. I wanted to harness those same forces to create change in a business context, much like the protesters in Ukraine achieved in a political context and countless others, such as the LGBT activists, did in social contexts. In my research I noticed how different studies of political and social movements were from business case studies.

With historical political and social movements, such as the civil rights movement or the United States or the anti-Apartheid struggle in South Africa, there was abundant scholarship often based on hundreds, if not thousands of contemporary accounts. Business case studies, on the other hand, were largely done by a small team performing a handful of interviews.

When I interviewed people involved in the business cases, I found that they shared some important features with political and social movements that weren’t reported in the case studies. What struck me was that these features were noticed at the time, and in some cases discussed, but weren’t regarded as significant.

To be clear, I’m not arguing that my research was more “scientific,” but I was able to bring a new perspective. Business cases are, necessarily, usually focused on successful efforts, researched after the fact and written from a management perspective. We rarely get much insight into failed efforts or see perspectives from ordinary customers, line workers, competitors and so on.

The Halo Effect

Good case studies are written by experienced professionals who are trained to analyze a business situations from a multitude of perspectives. However, their ability to do that successfully is greatly limited by the fact that they already know the outcome. That can’t help but to color their analysis.

In The Halo Effect, Phil Rosenzweig explains how those perceptions can color conclusions. He points to the networking company Cisco during the dotcom boom. When it was flying high, it was said to have an unparalleled culture with happy people who worked long hours but loved every minute of it. When the market tanked, however, all of the sudden its culture came to be seen as “cocksure” and “naive.”

It is hard to see how company’s culture could change so drastically in such a short amount of time, with no significant change in leadership. More likely, given a successful example, analysts looked at particular qualities in a positive light. However, when things began to go the other way, those same qualities were perceived as negative.

So when an organization is doing well, we see them as “idealistic” and “values driven,” but when things go sour, those same traits are seen as “arrogant” and “impractical.” Given the same set of facts, we can, and often do, come to very different conclusions when our perception of the outcomes changes.

The Problem with Surveys

Besides case studies, another common technique to analyze business trends and performance are executive surveys. Typically, a research company or consulting firm sends out questionnaires to a few hundred executives and then analyze the results. Much like Feynman described, surveys give these studies an air of scientific rigor.

This appearance of scientific rigor is largely a mirage. Yes, there are numbers, graphs and pie charts, much as your would see in a scientific paper, but there are usually important elements missing, such as a clearly formulated formulated hypothesis, a control group, and a peer review process.

Another problematic aspect is that these types of studies emphasize what a typical executive thinks about a particular business issue or trend. So what they really examine is the current zeitgeist, which may or may not reflect current market reality. A great business strategy does not merely reflect what typical executives know, but exploits what they do not.

Perhaps most importantly, these types of surveys are generally not marketed as simple opinion surveys, but as sources of profound insight designed to help leaders get an edge over their competitors. The numbers, graphs and pie charts are specifically designed to look “scientific” in order to make them appear to be statements of empirical fact.

Your Strategy Is Always Wrong, You Have to Make It Right

We’d like strategy to be scientific, because few leaders like to admit that they are merely betting on an idea. Nobody wants to go to their investors and say, “I have a hunch about something and I’d like to risk significant resources to find out if I’m right.” Yet that’s exactly what successful business do all the time.

If strategy was truly scientific, then you would expect management to get better over time, much as, say, cancer treatment or technology performance does. However, just the opposite seems to be the case. The average tenure on the S&P 500 has been shrinking for decades and CEOs get fired more often.

The truth is that strategy can never be scientific, because the business context is always evolving. Even if you have the right strategy today, it may not be the right strategy for tomorrow. Changes in technology, consumer behavior and the actions of your competitors make that a near certainty.

So instead of assuming that your strategy is right, a much better course is to assume that it is wrong in at least some aspects. Techniques like pre-mortems and red teams can help you to expose flaws in a strategy and make adjustments to overcome them. The more you assume you are wrong, the better your chances are of being right.

Or, as Feynman himself put it, “The first principle is that you must not fool yourself—and you are the easiest person to fool.”

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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Branding versus Bonding

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The Importance of Community in Marketing

Exclusive Interview with Mark Schaefer

Mark W Schaefer Conventional marketing wisdom says that communities are a great way to connect with your target audience in an engaging and meaningful way. Typical justifications for building communities include:

Creating an opportunity for your brand to stand out from the competition
Providing a platform for customers to interact and collaborate with you and each other
Monitoring and responding to customer feedback quickly
Helping build trust and loyalty with your customers
Driving organic growth and engagement

But successful communities go beyond company-outwards branding and instead create customer-inwards bonding.

I had the opportunity recently to interview Mark Schaefer, a globally-acclaimed author, keynote speaker, and marketing consultant. He is a faculty member of Rutgers University and one of the top business bloggers and podcasters in the world. Mark is the executive director of Schaefer Marketing Solutions, Chief Executive Officer of B Squared Media and on the advisory board of several startups. He has been a contributor to Harvard Business Review and Entrepreneur magazine.

His latest book is Belonging to the Brand: Why Community is the Last Great Marketing Strategy and explores how companies can make more effective use of communities in their marketing activities.

Below is the text of my interview with Mark and a preview of the kinds of insights you’ll find in Belonging to the Brand presented in a Q&A format:

1. Marketers are trained to reach the right audience with the right message to be successful. How is community different from audience?

From a brand marketing perspective, an audience — a group who opts-in to your content — is very important because they’ve allowed themselves to be connected to your message. However, an even more powerful opportunity exists if you can turn that audience into a community.

There are three distinguishing features of a community:

There is communion. People know each other. They may become friends, collaborate, and help each other. This is important because that emotional benefit transfers to the brand!
Purpose. People need a reason to gather. They want to grow something, change something, build something. How does this purpose intersect with the purpose of the brand? That’s when the magic starts to happen.
Adaptability. The priorities of a community will change over time as the world changes. A community cannot be rigid in its structure or it will become irrelevant.

2. Why should marketers invest in learning how to build and connect with communities?

I have been in marketing nearly four decades and I can say with some authority that our job is harder than ever! Many traditional channels just don’t work any more. We are in a streaming media society now and most people sim0lt block us out.

Community provides a new way to connect in a meaningful way with customers. In fact, it might be the only type of marketing people won’t block. It’s the only kind of marketing people actually need because community is essential to our psychological health, especially now.

So, I think it makes sense for businesses to at least consider community since that may have no other choice.

3. Why do people join communities?

Psychological studies show that community is not just a nice-to-have. It is essential for our social well-being. Studies show that we are even physically better off when we have meaningful relationships in a community. So this is a deep-seated need in us from the beginning of time and it will always be there.

4. How can we be more connected than ever before, but also more alone?

I think social media gives us the impression that we are just a click away from a relationship but we’re not. Much of this time online is empty social calories. There is definitely a positive role social media can play in connecting people and building relationships, but it is also a powerful source of disconnection, depression, and isolation. Much of this problem was amplified by the pandemic, but the global mental health crisis has really been creeping up on us since the 1960s.

5. Are there secrets to intentionally building a community?

My book provides a framework for building a community. Some of the essential steps include:

Assessing the culture — Community is a business strategy, not just a marketing strategy. Is the organization behind the idea?
Establishing purpose — is there a meaningful reason to gather?
Building a tribe — Where are the important early members?
Leadership — Nurturing a community is much different than what we are accustomed to in a traditional marketing role.
Building — Building a community is constant hard work
Measurement — This is difficult in a community but my book provides a path forward

6. What should marketers be most careful of when using community as a marketing strategy?

Most communities fail because they are designed to sell stuff! Obviously, we do need to sell stuff, but that’s not a reason to gather. If you provide great value to your customers, they will naturally be attracted to your products and services.

7. Should everyone be equal for a community to be successful?

I’m not sure if people are ever equal in every way. We all have our own unique talents. In a community, leaders will naturally emerge. A big part of community management is recognizing emerging leaders and bestowing them with status.

8. Where should companies build a community?

There is no cookie-cutter answer to that. But it helps if the community is part of a person’s natural daily organic experience. For example, if your customers like Facebook and visit there every day, it would be easy for them to find your community there. Try not to build your community in a place that requires new skills or an extra click.

9. Who in the marketing department should own community strategy?

I’m not sure that is important as long as it IS the marketing department. It’s unbelievable to me that 70% of existing brand communities do NOT report to marketing. This is frankly hard to understand. A community is the front line of your business — the most important customer connection. How can that no be part of marketing?

10. What does community success look like?

In the long term, there has to be a financial benefit, but in the short-term, engagement is probably the most important metric. For example, Sephora is a global cosmetics retailer with hundreds of brick-and-mortar locations. However, 80 percent of their revenue comes from their online community.

Their most important metric? Engagement. If people are talking about the company’s content and activities, it is a sign that are staying relevant and moving in a way that will lead to more brand advocacy and sales.

In the context of social media, I’m not a big fan of engagement as a metric, but in community, it is probably the most important leading indicator of financial success.

Conclusion

Thank you for the great conversation Mark!

I hope everyone has enjoyed this peek into the mind of the man behind the inspiring new title Belonging to the Brand!

Image credits: BusinessesGrow.com (Mark W Schaefer)

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Struggling to Innovate? Try This Instead

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Struggling to Innovate? Try This Instead

GUEST POST from Robyn Bolton

Everyone is an innovator on January 1.

That’s the day when each of us resolves to do something new that creates value.

Start working out so I lose weight, look better, and feel healthier.
Stop smoking, so I live longer.
Turn off my computer and phone at 6:00 pm so I focus on family.

Only 20% of people are innovators on February 1. The rest of us gave up our resolutions and decided to keep doing the same things that create (good enough) value.

Your business is no different.

At the start of the fiscal year, you resolve to innovate!

Explore new offerings, customers, and business models
Experiment with new ways to get things done
Enter new markets

Then something goes wrong, and you divert some people (not everyone!) from innovating to fixing an operational problem.

Then the first quarter starts coming in below expectations, and you cut budgets to stay on track to deliver the bottom line.

Then something else happens, and something else, and something else, and soon it’s “February 1,” and, for excellent and logical reasons, you give up your resolution to innovate and focus all your resources on operating and hitting your KPIs.

Resolve to Revive.

Innovation is something NEW that creates value.

New is hard. It’s difficult to start something new, and it’s challenging to continue doing it when things inevitably go awry. Investing in something uncertain is risky, primarily when more “certain” investment opportunities exist. It’s why New Year’s resolutions and Innovation strategies don’t stick.

Revival is the creation of new value from OLD.

When you work on Revival, you go back to the old things, the things you explored, tried, implemented, or even launched years ago that didn’t work then but could create more value than anything you’re doing today.

Your business is filled with Revival opportunities.

How to Reveal Revivals

Ask, “What did we do before…?”

Everything we do now – research, development, marketing, sales, communication, M&A – was done before smartphones, laptops, desktops, and even mainframes. Often new technology makes our work easier or more efficient. But sometimes, it just creates work and bad habits.

If you are trying to make Zoom/Teams calls less exhausting and more productive, try to remember meetings before Zoom/Teams. They were conference calls. So, next time you need to meet, revive and schedule a phone conference (or a cameras-off Zoom/Teams call).

Find the failures

Most companies are highly skilled at hiding any evidence of failure. But the memories and stories live on in the people who worked on them. Talk to them, and you may discover a blockbuster idea that failed for reasons you can quickly address.

Like Post-It Notes.

While some parts of the Post-Its story are true – the adhesive was discovered by accident and first used to bookmark pages in a hymnal, most people don’t know that 10 YEARS passed between hymnal use and market success. In that decade, the project was shelved twice, failed in a test market, and given away as free samples before it became successful.

Resurrect the Dead

The decision to exit a market or discontinue a product is never easy or done lightly. And once management makes the decision, people operate under the assumption that the company should never consider returning. But that belief can sometimes be wrong.

Consider Yuengling, America’s oldest brewery and one of its old ice cream shops.

In 1829, David G. Yuengling founded Eagle Brewing in Pottsville, PA. The business did well until, you guessed it, Prohibition. In 1920, D.G. Yuengling & Sons (formerly Eagle Brewing) built a plant across the street from their brewery and began producing ice cream. When Prohibition ends, brewing restarts, and ice cream production continues. Until 1985, when a new generation takes the helm at Yuengling and, under the guise of operational efficiency and business optimization, shut down the ice cream business to focus on beer. TWENTY-NINE YEARS later, executives looking for growth opportunities remembered the ice cream business and re-launched the product to overwhelming customer demand.

Just because you need growth doesn’t mean you need New.

Innovation is something new that creates value. But it doesn’t have to be new to the world.

Tremendous value can be created and captured by doing old things in new ways, markets, or eras.

After all, everything old is new again.

Image credit: Pexels

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The Reality Behind Netflix’s Amazing Success

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The Reality Behind Netflix's Amazing Success

GUEST POST from Greg Satell

Today, it’s hard to think of Netflix as anything but an incredible success. Its business has grown at breakneck speed and now streams to 190 countries, yet it has also been consistently profitable, earning over $12 billion last year. With hit series like Orange is the New Black and Stranger Things, it broke the record for Emmy Nominations in 2018.

Most of all, the company has consistently disrupted the media business through its ability to relentlessly innovate. Its online subscription model upended the movie rental business and drove industry giant Blockbuster into bankruptcy. Later, it pioneered streaming video and introduced binge watching to the world.

Ordinarily, a big success like Netflix would offer valuable lessons for the rest of us. Unfortunately, its story has long been shrouded in myth and misinformation. That’s why Netflix Co-Founder Marc Randolph’s book, That Will Never Work, is so valuable. It not only sets the story straight, it offers valuable insight into how to create a successful business.

The Founding Myth

Anthropologists have long been fascinated by origin myths. The Greek gods battled and defeated the Titans to establish Olympus. Remus and Romulus were suckled by a she-wolf and then established Rome. Adam and Eve were seduced by a serpent, ate the forbidden fruit and were banished from the Garden of Eden.

The reason every culture invents origin myths is that they help make sense of a confusing world and reinforce the existing order. Before science, people were ill-equipped to explain things like disease and natural disasters. So, stories, even if the were apocryphal, gave people comfort that there was a rhyme and reason to things.

So it shouldn’t be surprising that an unlikely success such as Netflix has its own origin myth. As legend has it, Co-Founder Reed Hastings misplaced a movie he rented and was charged a $40 dollar late fee. Incensed, he set out to start a movie business that had no late fees. That simple insight led to a disruptive business model that upended the entire industry.

The truth is that late fees had nothing to do with the founding of Netflix. What really happened is that Reed Hastings and Marc Randolph, soon to be unemployed after the sale of their company, Pure Atria, were looking to ride the new e-commerce wave and become the “Amazon of” something. Netflix didn’t arise out of a moment of epiphany, but a process of elimination.

The Subscription Model Was an Afterthought

Netflix really got its start through a morning commute. As Pure Atria was winding down, Randolph and Hastings would drive together from Santa Crux on Highway 17 over the mountain into Silicon Valley. It was a long drive, which gave them lots of time to toss around e-commerce ideas that ranged from customized baseball bats to personalized shampoo.

The reason they eventually settled on movies was the introduction of DVD’s. In 1997, there were very few titles available, so stores didn’t stock them. They were also small and light and were easy to ship. Best of all, the movie studios recognized that they had made a mistake pricing movies on videotape too high and planned to offer DVD’s at a level consumers would buy them.

In the beginning, Netflix earned most of its money selling movies, not renting them. However, before long they realized that it was only a matter of time before Amazon and Walmart began selling DVD’s as well. Once that happened, it was unlikely that Netflix would be able to compete, and they would have to find a way to make the rental model work.

The subscription model began as an experiment. No one seemed to want to rent movies by mail, so they were desperate to find a different model and kept trying things until they hit on something that worked. It wasn’t part of a master plan, but the result of trial and error. “If you would have asked me on launch day to describe what Netflix would eventually look like,” Randolph wrote, “I would have never come up with a monthly subscription service.”

The Canada Principle

As Netflix began to grow it was constantly looking for ways to grow its business. One idea that continually came up was expanding to Canada. It’s just over the border, is largely English speaking, has a business-friendly regulatory environment and shares many cultural traits with the US. It just seemed like an obvious way to increase sales.

Yet they didn’t do it for two reasons. First, while Canada is very similar to the US, it is still another country, with its own currency, laws and other complicating factors. Also, while English is commonly spoken in most parts of Canada, in some regions French predominates. So, what looked simple at first had the potential to become maddeningly complex.

The second and more important reason was that it would have diluted their focus. Nobody has unlimited resources. You only have a certain number of people who can do a certain number of things. For every Canadian problem they had to solve, that was one problem that they weren’t solving in the much larger US business.

That became what Randolph called the “Canada Principle,” or the idea that you need to maximize your focus by limiting the number of opportunities that you pursue. It’s why they dropped DVD sales to focus on renting movies and then dropped a la carte rental to focus on the subscription business. That singularity of focus played a big part in Netflix’s success.

Nobody Knows Anything

Randolph’s mantra throughout the book is that “nobody knows anything.” He borrowed the phrase from the writer William Goldman’s memoir Adventures in the Screen Trade. What Goldman meant was that nobody truly knows how a movie will do until it’s out. Some movies with the biggest budgets and greatest stars flop, while some of the unlikeliest indy films are hits.

For Randolph though, it’s more of a guiding business philosophy. “For every good idea,” he says, “there are a thousand bad ideas it is indistinguishable from.” The only real way to tell the difference is to go out and try them, see what works, discard the failures and build on the successes. You have to, in other words, dare to be crap.

Over the years, I’ve had the chance to get to know hundreds of great innovators and they all tell a different version of the same story. While they often became known for one big idea, they had tried thousands of others before they arrived at the one that worked. It was perseverance and a singularity of focus, not a sudden epiphany, that made the difference.

That’s why the myth of the $40 late fee, while seductive, can be so misleading. What made Netflix successful wasn’t just one big idea. In fact, just about every assumption they made when they started the company was wrong. Rather, it was what they learned along the way that made the difference. That’s the truth of how Netflix became a media powerhouse.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Frontier Airlines Ends Human-to-Human Customer Service

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Frontier Airlines Ends Human-to-Human Customer Service

GUEST POST from Shep Hyken

In a bold move to cut costs, Frontier Airlines announced that it would no longer offer human-to-human customer support. As a customer service expert, I was surprised at this move. I have waited to see the fallout, if any, and thought the company might backpedal and reinstate traditional phone support. After almost two months, it hasn’t returned to conventional customer support. The dust has settled a bit, and people (passengers and employees) are adjusting to the decision.

The decision to go digital is different from the decision Northwest Airlines (which eventually merged with Delta) made in 1999 to introduce online check-in to its passengers. The idea behind that technology, and eventually the technology driving online reservations, was to give the customer a better and more convenient experience while at the same time increasing efficiency. The big difference in that decision versus Frontier’s was that there has always been (and still is) an option to connect to a live agent. If passengers didn’t want to use the self-service tools the airline provided, they could still talk to someone who could help them.

That does not appear to be the case with Frontier. There is no other option. The airline is relying on digital support. If you check the website for ways to contact them outside of their self-service options on the site or mobile app, you can use chat, email or file a formal written complaint. Chat is in the moment, and can deliver a good experience—even if it’s AI doing the chatting (and not a human). Email or a written complaint could take too long to resolve an immediate problem, such as rebooking a flight for any last-minute reason.

For some background, Frontier Airlines is a low-cost carrier based in Denver. It has plenty of competition, and when you combine that with rising expenses in almost every area of business and a tough economy, Frontier, just like any other company in almost any industry, is looking to cut costs. In a recent Forbes article, I shared the prediction that some companies will make the mistake of cutting expenses in the wrong places. Those “wrong places” are anywhere the customer will notice. Cutting off phone support to a live human, just one of Frontier’s cost-cutting strategies, is one of those places the customer may notice first.

If a customer wants to change or cancel a flight, make a lost-luggage claim and more, if they have the information they need on hand and the system is intuitive and easy to navigate, the experience could be better than waiting on hold for a live agent. Our customer service research found that 71% of customers are willing to use self-service options. That said, the phone is still the No. 1 channel customers prefer to use when they have a problem, question or complaint.

Frontier’s decision to stop human-to-human customer support has generated controversy and criticism from customers/passengers and employees. The company’s management defends its decision, stating that they need to cut costs to remain competitive. They claim you can eventually reach a human, but their passengers will first have to exhaust the digital options. While self-service automated customer support may help the airline cut costs and increase efficiency, it obviously frustrates customers and negatively impacts employees.

The big concern is that 100% digital or self-service support is still too new. We are still a long way from technology completely replacing the human-to-human interactions we’re used to in the customer service and support worlds. Efficiency is important, but so is the relationship you maintain with your customers and employees. It takes a balance. The best companies figure this out.

Consider this: Video did not kill the radio star. ATMs were predicted to eliminate the need for bank tellers. And for the foreseeable future, technology will not kill live, human-to-human interactions. Frontier customers looking to save money will be forced to adapt to its new way of customer service. Knowing this upfront will help. But also consider this, something I’ve been preaching for several years: The greatest technology in the world hasn’t replaced the ultimate relationship-building tool between a customer and a business, and that is the human touch.

This article was originally published on Forbes.com.

Image Credit: Pixabay

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The Five Gifts of Uncertainty

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The Five Gifts of Uncertainty

GUEST POST from Robyn Bolton

“How are you doing? How are you handling all this?”

It seems like 90% of conversations these days start with those two sentences. We ask out of genuine concern and also out of a need to commiserate, to share our experiences, and to find someone that understands.

The connection these questions create is just one of the Gifts of Uncertainty that have been given to us by the pandemic.

Yes, I know that the idea of uncertainty, especially in big things like our lives and businesses, being a gift is bizarre. When one of my friends first suggested the idea, I rolled my eyes pretty hard and then checked to make sure I was talk to my smart sarcastic fellow business owner and not the Dali Lama.

But as I thought about it more, started looking for “gifts” in the news and listening for them in conversations with friends and clients, I realized how wise my friend truly was.

Faced with levels of uncertainty we’ve never before experienced, people and businesses are doing things they’ve never imagined having to do and, as a result, are discovering skills and abilities they never knew they had. These are the Five Gifts of Uncertainty

Necessity of offering a vision – When we’re facing or doing something new, we don’t have all the answers. But we don’t need all the answers to take action. The people emerging as leaders, in both the political and business realms, are the ones acknowledging this reality by sharing what they do know, offering a vision for the future, laying out a process to achieve it, and admitting the unknowns and the variables that will affect both the plan and the outcome.

Freedom to experiment – As governments ordered businesses like restaurants to close and social distancing made it nearly impossible for other businesses to continue operating, business owners were suddenly faced with a tough choice – stop operations completely or find new ways to continue to serve. Restaurants began to offer carry out and delivery. Bookstores, like Powell’s in Portland OR and Northshire Bookstore in Manchester VT, also got into curbside pick-up and delivery game. Even dentists and orthodontists began to offer virtual visits through services like Wally Health and Orthodontic Screening Kit, respectively.

Ability to change – Businesses are discovering that they can move quickly, change rapidly, and use existing capabilities to produce entirely new products. Nike and HP are producing face shields. Zara and Prada are producing face masks. Fanatics, makers of MLB uniforms, and Ford are producing gowns. GM and Dyson are gearing up to produce ventilators. And seemingly every alcohol company is making hand sanitizer. Months ago, all of these companies were in very different businesses and likely never imagined that they could or would pivot to producing products for the healthcare sector. But they did pivot.

Power of Relationships – Social distancing and self-isolation are bringing into sharp relief the importance of human connection and the power of relationships. The shift to virtual meetups like happy hours, coffees, and lunches is causing us to be thoughtful about who we spend time with rather than defaulting to whoever is nearby. We are shifting to seeking connection with others rather than simply racking up as many LinkedIn Connections, Facebook friends, or Instagram followers as possible. Even companies are realizing the powerful difference between relationships and subscribers as people unsubscribed en mass to the “How we’re dealing with COVID-19 emails” they received from every company with which they had ever provided their information.

Business benefit of doing the right thing – In a perfect world, businesses that consistently operate ethically, fairly, and with the best interests of ALL their stakeholders (not just shareholders) in mind, would be rewarded. We are certainly not in a perfect world, but some businesses are doing the “right thing” and rea being rewarded. Companies like Target are offering high-risk employees like seniors pregnant women, and those with compromised immune systems 30-days of paid leave. CVS and Comcast are paying store employees extra in the form of one-time bonuses or percent increases on hourly wages. Sweetgreen and AllBirds are donating food and shoes, respectively, to healthcare workers. On the other hand, businesses that try to leverage the pandemic to boost their bottom lines are being taken to task. Rothy’s, the popular shoe brand, announced on April 13 that they would shift one-third of their production capacity to making “disposable, non-medical masks to workers on the front line” and would donate five face masks for every item purchased. Less than 12 hours later, they issued an apology for their “mis-step,” withdrew their purchase-to-donate program, and announced a bulk donation of 100,000 non-medical masks.

Before the pandemic, many of these things seemed impossibly hard, even theoretical. In the midst of uncertainty, though, these each of these things became practical, even necessary. As a result, in a few short weeks, we’ve proven to ourselves that we can do what we spent years saying we could not.

These are gifts to be cherished, remembered and used when the uncertainty, inevitably, fades.

Image credit: Pixabay

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What Business Are You In?

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(Hint: It’s Probably Not What You Think)

What Business Are You In?

GUEST POST from Robyn Bolton

“What business are you in?”

How do you answer this all-too-common question?

Do you name the company you work for?

The industry you’re in?

The function you perform?

Bad news, your business isn’t defined by the company, the industry, and even your function.

Good news, the business you’re in is defined by your customers.

And their definition unlocks incredible potential for innovation and growth.

The 2:00 am Answer

In my first few months as an Assistant Brand Manager at P&G, I had a truly terrifying experience. Sitting in a training session, a senior executive locked eyes with me and asked, “What is Brand Equity?”

My first thought was, “you tell me, buddy. I’m the newbie here.” My second thought, and the one that came out of my mouth, was probably something straight out of a marketing textbook.

“Wrong!” he exclaimed. “Brand equity is what a consumer says if you wake them up from a dead sleep at 2:00 am and scream ‘What is [brand]?’ in their face.”

I don’t know what scared me more, being yelled at for being wrong or the idea that breaking and entering and screaming brand names at unsuspecting sleepers was suddenly part of my job description.

The 2:00 am Answer is the business you’re in

The 2:00 am answer applies to more than just brand equity.

It reveals the business you’re in.

Because it’s the Job-to-be-Done your customers hire you to do

As the training went on, we learned how this mantra manifests in everything a brand (or company) does – its products, pricing, packaging, distribution, and marketing.

For example, if the most important thing to you about laundry is that clothes come out of the washing machine clean, you have dozens of options and probably buy the cheapest one.

But, if you want to be sure that clothes will be immaculate after the first wash because you know your kids will wear anything, even if it has stains, which will lead the other parents to judge you, you have one option – Tide.

Why the 2:00 am Answer matters

The 2:00 am Answer also defines where you have a right to play and to win.

Sometimes this space is bigger than you expect, revealing incredible opportunities for innovation and growth.

Sometimes it’s smaller than you want, exposing a strategic misalignment between what you offer and what your customers want. This happened to LEGO and took the company to the brink of bankruptcy.

In 1998, LEGO posted its first loss in company history. To reinvigorate growth, it shifted from being in the business of Toys to being in the business of Play. This led to two decisions that, while strategically aligned with Play, almost bankrupted the company. First was the introduction of new toys specifically designed to be built in less than 10 minutes so kids could start playing quickly. The second decision took LEGO into other aspects of play – video games, amusement parks, and a TV show supported by a line of action figures.

In 2003, LEGO reported a $238M loss, and with only one profitable product line, the future was bleak. So, LEGO started talking to customers (though probably not at 2:00 am). Through the conversations, LEGO learned that its expansion into all forms of play and the prioritization of Play over creation (building) wasn’t LEGO-y in the minds of consumers. So they rejected the new offerings. Instead, people loved LEGO because it offered “creative play” – the freedom and ability to turn ideas into tangible and interactive 3D models.

LEGO listened and went “back to the brick.” The results speak for themselves. In 2015, LEGO overtook Ferrari to become the world’s most powerful brand. In 2021, LEGO earned $8.06B in revenue, a 27% increase from the prior year.

How to get and use the 2:00 am Answer (without committing a felony)

First, get clear on the business you WANT to be in. Ask yourself and your colleagues, what do we want our customers to hire us to do? Push beyond the easy and obvious answers (usually functional Jobs to be Done). How do you want customers to feel after hiring your company (emotional Jobs to be Done)? How do you want them to be perceived (social Jobs to be Done)? What Job to be Done do you want to do uniquely well?

Second, talk to your customers one-on-one at a time and place of their choosing. Ask them why they hire your business. Again, push beyond the easy and obvious answers to understand what they want to feel and be perceived after choosing you. Ask what other options they considered and why they hired your business.

Find and close the gap. What’s the difference between what you wanted to hear and what you actually heard? If the gap is bigger than expected, how can you expand and innovate your business to grow into all the Jobs people want to hire you to do? If the gap is smaller, how can you shift or redirect efforts to grow in ways where you have permission to operate?

The 2:00 am Answer can be the key to defining, growing, and transforming your business.

Who says nothing good happens after midnight?

Image credit: Unsplash

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Agility is the 2023 Success Factor

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Agility is the 2023 Success Factor

GUEST POST from Soren Kaplan

Agility, the ability to think fast and move quickly, is an imperative for every team this year.

That’s because there’s never been more uncertainty – around technology, the economy, global-political turmoil, and just about everything else.

I’ve led teams in both big companies and startups. I’ve built new teams. And I’ve helped fix dysfunctional ones.

There’s no shortage of research on the success factors for creating high-performing teams. In a landmark study, for example, Google identified “psychological safety” as the top characteristic of its most successful teams. Teams with people who feel safe to take risks and be vulnerable with one another showed better results.

Psychological safety is indeed important. Yet we can’t lose sight of another critical success factor for navigating today’s highly uncertain world, especially in 2023: agility.

Three Steps to Strategic Agility

The concept of “agility” in business originated from the field of agile software development. Agile software development involves “sprints” in which teams define short-term goals (typically two weeks), work diligently to achieve them, and then apply what they learned from the sprint to their next sprint’s goals.

Any team can apply the principles of agile software development to create greater overall agility. Whatever your team’s cadence of work, consider using the following approach to structure your work:

Define short-term goals: What do you need to accomplish by the end of your sprint?
Do the work: What work must be done and how will you do it?
Evaluate progress: Based on what you achieved, what did you learn, and what’s the next logical set of short-term goals?

Approach these steps as a repetitive cycle. For example, you might have a project you expect to take three months to complete. Most traditional teams might go through a single cycle — they define their end goal, create a three-month plan, do their work, and then after the three months are up, they reflect on their progress.

If you were to work in two-week sprints during the three-month project, however, you would have five cycles of defining goals, achieving them, and then applying your learning to make your project even more effective along the way. The agile approach accelerates and leverages continuous learning, which reduces the overall risk of your project.

Instill Agile Mindsets, Abilities, and Know-How Into Your Team

The definition of agility isn’t just about being adaptable. Agility is the ability to think and understand quickly, so you can move faster and easier. It’s a mindset. That’s why it’s important to instill specific attitudes and beliefs in your team around the importance of being flexible and accepting that goals and work can, and should, change on a regular basis.

In my latest book, Experiential Intelligence, I highlight the importance of understanding and developing your team’s mindsets, abilities, and know-how.

From the book Experiential Intelligence

For example, consider reinforcing the following mindsets, delivering training to build certain agile abilities, and providing certain tools to help your team apply specific skills as you implement your projects:

Mindsets (attitudes and beliefs)

Flexibility is a key success factor
Assumptions always exist but can be tested
Iteration drives learning and success

Abilities (high-level competencies)

Strategic thinking
Pattern recognition
Learning by doing

Know-how (knowledge and skills)

Project and task prioritization
Assumption testing
“Five whys” analysis

Agile teams possess mindsets focused on moving quickly and modifying plans on a regular basis. It’s the exact opposite of how many big companies set annual plans and stick to them no matter what. Agile teams go from sprint to sprint, challenging their mindsets and identifying the abilities and know-how necessary to achieve the goals of the following sprint. That is, before they complete a sprint, they’ve already started planning for the next one. Agility becomes a core competency of the team, supported by know-how in agile methodologies and tools.

As we’ve seen over and over, every product, service, and business model eventually gets disrupted. Agility may ultimately be your only source of sustainable competitive advantage.

BONUS: Get a free sample chapter from my latest book Experiential Intelligence – here.

Image credit: Pixabay

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