Flip (14 page)

Nevertheless, this is a sign of things to come as Target attempts to carry their 'cheap chic' story to Australia from the US. In Australia, Target has lifted earnings 16 per cent to A$248 million on sales of A$3.2 billion.

Cirque du Soleil is another great example of bringing the four elements together. From its origins in the work of two Montreal street performers, Guy Laliberté and Daniel Gauthier, Cirque du Soleil has become a worldwide phenomenon with multiple touring companies and permanent residencies at Walt Disney World in Orlando, Florida, and no less than four Las Vegas casino-hotels.

The secret of Cirque du Soleil is nothing other than 'Superficial is Anything But'. Cirque du Soleil takes the traditional elements of circus performance and stitches them together into story concepts such as
Love
, an interpretive stage production done to a musical score of Beatles songs at a specially built theatre in the Mirage Hotel- Casino in Las Vegas;
Kà,
a martial arts fantasy performed at the MGM Grand in Las Vegas, or
Mystère
at the Treasure Island Resort in Las Vegas, which has as its theme the origins of life in the universe. Cirque du Soleil's other resident companies and touring productions have similar narrative themes that make the familiar circus formula of acrobats, animals and clowns new again.

EVERY DECISION YOU MAKE MUST BUILD THE STORY

In the last chapter I mentioned how Toyota has responded to the fact that all the major car manufacturers in North America, Europe, Japan and Korea now build good-quality cars. Toyota not only leverages its manufacturing and service expertise to maintain a lead in being fast, good and cheap in customers' eyes, it also adds an X-factor with innovations like its pioneering hybrid engine technology, and thus appeals to customers as 'Fast, Good, Cheap, Green – Pick 4'.

Toyota has developed another X-factor in its Scion range of vehicles for Generation Y consumers, offering the attributes of 'Fast, Good, Cheap, Hip – Pick 4'. The Scion is a perfect fit for the customised car culture that has sprung up within the hip-hop generation of consumers worldwide, as evidenced by television shows such as MTV's
Pimp My Ride.
Toyota acted on this trend much sooner than the competition, just as it did with hybrid engines.

Launched at the end of 2003, the Scion has been a smash hit. Dealers sell Scions as fast as they get them, and they reap significant marginal profit from customers' desire to customise their cars with side-panel graphics, roof racks for snowboards and mountain bikes, and so on. More on this in chapter 6, 'To Get Control, Give It Up'. These things have absolutely nothing to do with the vehicles' performance on the road and absolutely everything to do with their performance in customers' lives.

At launch, Toyota set a 2006 target for US sales of 150,000 cars. In the early autumn of 2006, Toyota saw that it was on track to sell 175,000 Scions in the US by the end of the year. Industry analysts said that Toyota could quickly ramp up US sales to 250,000 Scions a year. But instead, Toyota did another flip. It looked at the prospect of those easy sales and huge profits and decided that ramping up sales volume would be foolish in the long run, because it would undermine the Scion's brand identity.

Toyota announced that it would limit Scion production and distribution to ensure that it sold no more than 150,000 vehicles in the US in 2007. Further, it restricted Scion television advertising, which was never very extensive anyway, to a few late-night television shows – like
Adult Swim
on the Cartoon Network – that are popular with Generation Y consumers. It also suggested that it might eliminate Scion television advertising entirely and concentrate instead on event marketing and branded entertainment. The Scion play already includes a music label for emerging artists and the Scion Release clothing line. Instead of using commonly known sports stars or celebrities to sell their cars, they use DJs.

The way Toyota USA vice-president Mark Templin puts it is, 'Because we no longer have to focus on brand awareness, we can be even more edgy and more risky.' The way I put it is, to sustain Scion's brand awareness as a vehicle that helps customers make their lives into a hip and exciting story, they have to become even more edgy and more risky.
⁵
They have to do an even better job on 'Superficial is Anything But', and as the moves I've sketched out indicate they're well on the way to doing so.

As this and previous examples show, designing the total ownership experience can have as much to do with process as product. In the case of Scion marketing, the medium is the message. DJs instead of celebrities. Edgy shows instead of mainstream. The differentiator in any particular instance depends on the story a product or service tells about customer?' lives, their aspirations and their sense of community. The story could emphasise simplicity, ease of use, beautiful design, community or some combination of these things.

So to the big question:

WHAT'S YOUR STORY?

Bang & Olufsen, Toyota and other flipstars understand not just what their customers' desired story is but what their individual brands stand for. They find the common ground between their own reality and the wants of their customer, then design everything they do to build and tell a story that reflects that common ground. As you consider the competitive position of your company or your hopes for your own career, what compelling story can you offer to your customers, your staff or your employers?

Finally, as you take the flip that 'Superficial is Anything Bu?' to heart, don't lose sight of the previous flip. 'Fast, Good, Cheap – Pick 3' is still the price of entry, and the standard of what constitutes fast, good and cheap is continually on the rise. You must have a solid product or service that matches your competitors' offerings, but to make your own offerings stand out from the pack you must also make magic from the small stuff.

The story changes slightly from customer to customer, and it also changes for each individual customer over time. The point is that if you really want to distinguish your products or services from the competition, you have to give thought to the experiences that they engender or support. The products and services we love the most become part of the story of our lives.

Five Things To Do Now

1. Make a short list of your potential X-factors.

2. Think about the sort of activities you could engage in for the social good. How could you leverage these to impress customers and attract more staff,
in an authentic way
?

3. Pick one of your products and develop a story about why someone should buy that product, including detail, characterisation and language. Role-play it, pretending you are a customer telling your best friend why you spent a premium to buy this product instead of your competitors'.

4. Do an 'Easy Audit'. That is, review your 'buying' and 'ongoing service' experiences and decide if they are designed to make life easier for you or for your customer. If they're designed to help you, change them so that they help the customer.

5. Create two compelling lists. One for how your brand appeals to Aspirational Inside and another for how your brand appeals to Aspirational Outside.

In
The Godfather Part III,
the murderous Don Licio Lucchesi (played by Enzo Robutti) tries to smooth over a difficult moment by telling Michael Corleone (Al Pacino), 'It's not personal, it's only business.'

A client recently said the same thing to me in justifying why his bank was offshoring its call centre operations to Bangalore, India.

'What do you mean, it is not personal?' I said. 'Forgetting that you are my client for a second, I am a customer of this bank and I have to tell you it is very personal to me. I have choices, you know. So do the rest of your customers. Other banks ask for our business every day with credit card offers in the mail and in their advertising. The interest you pay or charge us is no different from what it is at other banks and you tell me that banking is not a personal relationship. It is now, it was yesterday and it will be tomorrow. Besides, all business is personal. It is about trust, and when customers call the bank they want to feel comfortable with the people who answer and they want to feel respected by them. Outsourcing the customer service part of your business is insane in my view.'

My protest was in vain. The decision had been made. I bet the decision will be reversed at some point in the future, but by then there is no telling how much damage the bank will have done to its customer relationships and its bottom line.

I'll be coming back to my bank's decision a little later in this chapter, but I want to register the general point that, more than anything else in life, relationships rule. Most pundits in and out of the business world consider this the information age, or its recent fashionable variant, the knowledge age. We hear a lot about knowledge workers being the most important part of the economy, the ones who will reap the greatest benefits from the dizzying pace of technological, social and cultural change.

Sure – but lots of people in developed countries are knowledge workers in some way, shape or form. Being a knowledge worker is not going to offer competitive advantage in and of itself. Not in a truly global economy, it won't. The pundits are living in the past. We are fast exiting the knowledge age and entering the relationship era. The what'sold- is-new-again flip is that 'Business is Personal'.

I am not talking about the traditional cynical adage, 'It's not what you know, it's who you know that counts.' Although it is certainly a part of human nature that people look out for their family and friends and scratch each other's backs to get ahead, the ideas that what you know and who you know determine your success are both flawed because they are static rather than dynamic.

In the years ahead, two things will count the most. The first is your ability to unlearn the things that are losing relevance, to flip yourself free of old scripts and to learn the things that are gaining relevance. The second is whether people come to know and trust you as they struggle to bring their own learning forward. That is, do you really care about and respect them? Sounds soft I know, but especially in western economies it will be the hardest of business imperatives.

In early 2007, Ben Stein wrote an article in
The New York Times
called 'That hard rain that's falling on capitalism', which later appeared in
The Age,
talking about the success of capitalism over the past fifty years. It focused on a fear that this success may not be carried on into the future. Why? Because of a lack of trust.
⁵
Capitalism is built on trust. Trust that the goods you send to your neighbour will be paid for. Or that the cheque you send to your supplier will be honoured by the bank where you have previously deposited your hardearned cash, and that your supplier will in turn send you the goods. Goods you bought, by the way, trusting that they will live up to the quality and performance that your supplier said they would. Capitalism is built on trust, and it is through building trust with your clients, customers and staff that you will future-proof your organisation.

In fact, a focus on building trust is having a well-deserved renaissance in contemporary business thinking. A comprehensive 2004 study by leading market research company Yankelovich, Inc. – they coined the term 'baby boomers' and have the longest continually running database on American consumer attitudes, lifestyles and buying behaviours – found that 'trust increases retention, boosts spending, enables premium pricing, and provides lasting competitive advantage.'
²

The fact is that globalisation has made knowledge and expertise almost as much pure commodities as any goods and services are. In a world as fast-changing as ours, no body of expertise, no matter how valuable it may seem, lasts five years, much less an entire career. And no proprietary system is immune to competitors who can cheaply acquire the information necessary to copycat you on quality and beat you on price. Any product or service your company offers, any knowledge and expertise you possess can be outsourced and commoditised.And it is not just about people. It is technology as well. Legal contracts that were the domain of lawyers billing hundreds of dollars an hour can be downloaded from the internet for $20 a piece.

Trust cannot be commoditised, however, and neither can the ability to engage others to believe in your vision, or to inspire them to behave in a certain way. In other words, outsource the commoditised information and knowledgebased elements of your business,
not
the relationships parts. The most valuable thing you or your business owns is the relationship you have with your customers and clients.

You can see the effects even in medical care. One of India's fastest growing industries is health care. Middle-class Americans are going to India for their heart operations.

Australians, too, although many choose places like Malaysia. Let me share a personal example of how trust can ensure your product, service and knowledge remain the product, service and knowledge of choice in the eyes of the marketplace. I recently had laser eye surgery. Two friends had both had it done and raved about the great results. One had paid about $6000 for his surgery at a Sydney clinic. The other had his done in Kuala Lumpur at one-fifth of the price. Both were successful, each having 20/20 vision as a result.

I decided to do a little more research. As it turns out, both places use exactly the same equipment to perform the operation. And having had it done, let me tell you this is significant.With the exception of administering some Valium (much needed by the way), putting in some eye drops and placing a clamp under my eyelid (I am getting freaked out just thinking about it), the doctor basically did nothing. Oh, sorry, he did input the appropriate data into his computer based on the pre-surgery tests that I had done, which were also conducted almost entirely by machine.

Furthermore, both surgeons had trained in exactly the same place – here in Australia. I was headed to KL in a couple of weeks anyway, so in effect I did not need to cover the cost of my flight or accommodation. It was a simple choice. Did I want to pay $1200 or $6000?

I paid the $6000, and would do it again in a heartbeat.Why? I met the Sydney area surgeon before deciding to have him do the operation. I even quizzed him on the Malaysia option.

'Pete, I care,' he replied, 'because my livelihood depends on it. If something happens to you, in addition to my feeling awful about that, my business would suffer a blow that it would struggle to recover from. If something went wrong,
A Current Affair
and
Today Tonight
would be all over it like a rash. Do you think the surgeon in Malaysia has that much on the line when he operates on you? Who would you trust with your sight? Me, who lives and works in the same neighbourhood as you and your wife, or someone who lives many thousands of miles away?'

Sold!
Why? Because like everyone else in the world, I want to do business with people that I know, like and trust, and that I can rely on for help in the future.

Recall my friend the perspex manufacturer, whose struggle with Chinese imports I discussed in 'Fast, Good, Cheap – Pick 3'. He eventually sidestepped those imports, and avoided having his business torpedoed by them, through capitalising on the relationship of trust and confidence that he had built up with his customers. This allowed him to transition his business to concentrate on doing the most profitable special orders and one-off displays rather than fight a losing battle to keep a sustainable share of bulk order displays. Special orders and one-off displays require a deep understanding of the client's business and customer base. You can't outsource that! This does not mean that 'Business is Personal' negates the need to be fast, good and cheap (at the cost). As a partner in an Australian law firm said to me recently, his clients were increasingly demanding that he meet the price of his competitors even though the clients had been doing business with the firm for ten years.

At the end of the day it is people – customers and staff – who keep you in business. What applies to your relationship with customers applies equally to your relationship with staff. Both groups are looking for experiences that give their lives meaning and enhance their sense of purpose in the world. Both want to be treated with respect, and be stimulated to grow and learn. In short, people not only want to do business with, they also want to work for and with, people they know, like and trust.

STAFF AND CUSTOMERS – CO-NUMBER ONES

If there is a disconnect between how you treat staff and how you treat customers, it is going to hurt your business. I don't for a second mean that you can't expect and demand high performance from staff. In fact, treating staff with care and respect supports higher and higher staff performance, especially with regard to meeting customer needs and wants, a subject I'll return to at the end of the chapter.

For now, let me give you an example of how this applies in the legal fraternity, which is definitely dealing with the four forces of change. The Australian market for legal services is a mature one, with most national firms looking to Southeast Asia for new market opportunities. Building market share domestically means stealing that share from the competition. This is as opposed to the organic growth that increased the size of the market for all until recent times. A rising tide lifts all boats. But when that tide turns, it's easy to get stuck in the mud.

Australia's big national law firms are now in a nasty fight for market share and profitability. One strategy they are all employing is throwing tens of thousands of dollars at the graduate market to woo the best young lawyers, and then spending hundreds of thousands of dollars to develop them. The net result of that, however, has been a disappointing 50 per cent employee retention rate for many of these firms after three years.

In this regard, Australian law firms are experiencing a common global dynamic. In every category of goods and services, there is global oversupply and global underdemand. At the same time the opposite is true in the skilled labour market. The world-class talent required to out-innovate and out-market the competition is scarce on the ground, and the most talented and best credentialed individuals are accordingly making demands of organisations that are rocking the foundations of the way business gets done. These circumstances put firms into a squeeze between downward pressure on fees and prices and upward pressure on wages and perks for highly skilled staff.

Recently I conducted a consulting project on recruitment and retention for one of the largest law firms in Australia. This firm has enjoyed an extremely successful commercial practice in Australia, New Zealand and Southeast Asia over the last several years. But upon receiving a prestigious award for market-leading client service, the firm's former CEO said that 'the client comes first', that staff 'did not have a right to a personal life', and that they must all sacrifice whatever is important to them in order to meet the expectations of clients. The mainstream business media caught onto the story and wouldn't let it go.

The former CEO was not trying to attack his staff. He was trying to say that customers, the law firm's clients, were number one. But his comments were not reported that way, nor were they viewed in that light by those the firm needs to recruit, the top Generation Y graduates who, like all of their peers, are renowned for placing work and personal life balance at a premium in deciding which job to accept.

The firm had to start sucking up, and hard. They had to reposition themselves proactively in the talent market, or watch their competitors get the cream of the crop of each year's law graduates. For a firm so used to getting the best of the best, nothing short of a mindset flip would be required to keep them at the cutting edge of their market.

My advice to the firm was to go soft. That is, they needed to extend to their potential new recruits the same world-class service they gave their clients. Or put another way, to make the attraction and recruitment experience more 'personal'.

Making staff co-number one with customers is a flip that many organisations resist. But if you don't have talented, creative, dedicated staff on board with your thinking and mission, you can't reach clients and customers effectively. A competitor who gives staff higher priority will get there before you.

In conjunction with the partner responsible for staff issues, I presented these ideas to a group of key partners in the firm. As you can imagine, there was some protest from the hardened senior lawyers in the room, most of them ambitious baby boomers and Gen X'ers. All of them had played by the old rules and sacrificed everything outside the job to get where they were. They expected Generation Y to do the same. 'Young lawyers should be grateful to work in such a prestigious firm?' was the cry. But to their credit they were able to come to terms with the new dynamic in the labour market and
flip!

Through a series of educational sessions for the interviewing partners and changes to the way recruitment was handled, they made the process a much friendlier and more personal one. Although I am not at liberty to share exactly what we did, you can use your own team to come up with a strategy to personalise your recruitment process in a way that is aligned with your company's employer brand.