Many business leaders make decisions based on education and experience with the intention of putting their companies on the growth track. Unfortunately, their actions can have the opposite effect, unintentionally limiting growth or making it harder to attain. As the market has evolved, due to intense competition, technological advances and customers’ demands, things that used to be effective no longer are. Don’t fall prey to these mistakes:
Mistake #1: Thinking like a company leader
Leaders who think inside-out make decisions from the companies perspective. When planning for a recent bank grand opening with a client we disagreed about a specific promotional plan. The operations manager objected based on how “hard” it would be for the bank employees to add an extra step to their routine. The upside was it would appeal to the target customer and attract them to the new bank. Inside-out thinking prioritizes feasibility. Its opposite, outside-in thinking, looks at the situation through another’s eyes—the lens of the customers we are trying to serve.
In an article published in the July-August 2014 issue of Harvard Business Review titled, “Managers Reject Ideas Customers Want”, Professor Jennifer Mueller of the University of San Diego shares the results of a recent study on new product development. Customers and executives were each asked to rate each idea on creativity, feasibility and profitability. The bottom line? Customers wanted the most creative ideas. The company leaders are choosing feasible ones. Mueller explains, “The focus on feasibility can make it harder to even recognize when ideas are creative.” There are “how” mind-sets that describe how to do things and “why” mind-sets which emphasize why people do things. People with a “how” mind set, which is related to feasibility concerns, rated innovative ideas as less creative than those with a “why” mind set. New ideas can involve more unknowns which is at odds with the desire for ROI and metrics. Steve Jobs had the “why” mindset asking his people to do the “new thing” without regard to how they would make it happen. The challenge isn’t that we aren’t generating creative, innovative ideas—we aren’t choosing them!
Is it possible your company is thinking inside-out with a focus on feasibility instead of outside-in with a focus on why? Staying in touch with the customer’s why will help you be relevant even as the market changes.
Mistake #2 Not asking “why”
Few companies make decisions without data but what data are they looking at? Traditional financials are not enough. By now we have all heard the phrase “Big Data” to represent the overwhelming data points available through automation and technology. Yet, there are too many companies who have not yet discovered how to collect, analyze and apply customer data to a myriad of company decisions. Perhaps it is time to identify which decisions would most benefit from relevant and timely data. Start where you can gain the most benefit and be sure to understand the reason, or the “why”, behind the numbers. (The study below focuses on marketing but keep in mind that they define marketing similar to Drucker, “everything that impacts the customer” which includes pricing to service and everything in between.)
In a study called Marketing2020 more than 10,000 marketing executives shared their use of their organization’s data analytics capability which was then compared to their company’s market performance. Would it surprise you to know that 52% of over performers said that their organization leveraged all data and analytics to improve marketing effectiveness, while 35% of underperformers do the same? According to an article written on the study, ( HBR July-August 2014 The Ultimate Marketing Machine) high performers are distinguished by their ability to integrate data on what consumers are doing with knowledge of why they are doing it (there is that word again!), which yields new insights into consumer needs and how to best to meet them.
Companies who seek to engage their customers and grow with them need to understand not only their behavior but the “whys” or underlying motivation of their behavior. The specific way a company meets needs changes over time, but the underlying motivation or need rarely does.
Consider these examples and ask the question: Are you focused on meeting the need or how you are meeting the need? The latter may grow in the short term but the former can grow over the long term.
|Who||How they meet the Need||Fundamental Need|
|Zappos||Shoes Online||Online customer service that makes life easier|
|Ace Printing Company||Printing||Increase Communication Effectiveness|
|Hallmark Cards, Inc.||Greeting Cards||Honoring Life Events|
|Lee Jeans||Blue jeans||Fit|
|Sante Fe Railroad||Railroad||Transporting Goods|
|Ford||Model T, Ford 150||Top Rated Personal Vehicles|
Mistake #3: Not thinking “big” enough
Recently, I published a whole blog on the topic of not thinking big enough (You can read it here if you missed it). So here is the surprising truth in a nutshell: It’s often easier to make something 10 times better than it is to make it 10 percent better. When you have been eeking by with a 3-5% revenue gain year to year, 8-10% looks really sexy. But what you have to do to triple growth taxes the limits of the organization as it currently is defined and structured. We tell ourselves if we work hard enough, invest wisely enough and make smart/lucky choices we can do it. What if we took the same effort and rethought the entire market approach–rather than layer on more stuff, changed the entire strategy and corresponding structure. It is a ready-aim-fire approach that requires more time to ready and aim but with a much bigger splash when you do pull the trigger. One choice may improve the company; the other may transform it. If you are going to subject yourself, your colleagues and the employees to one of these options, which one gives the greatest reward?
The next time your leadership team meets ask whether you are engaging in any of these practices and what to do differently if you are.