You may have missed the first two days of my tweeting meaty and super-tight takeaways from Donald Keough’s Ten Commandments for Business Failure. No worries, I got ya covered.
Catch-up by reading and scrolling below. And feel free to play along by following me on Twitter this week. This experiment ends Friday.
According to Frederick Reicheld’s THE ULTIMATE QUESTION, there are bad profits and good profits which companies can earn from customers. Reicheld writes, “… bad profits are earned at the expense of customers, good profits are earned with customers’ enthusiastic cooperation.” In other words, bad profits result in creating customer detractors while the result of good profits is the creation of customer promoters. Detractors talk bad to others about companies while promoters talk good things to others about companies.
An example of a bad profit, which turns customers into detractors, is when an airline charges its customers $5 to use a blanket. Good profits happen every day at places like Whole Foods Market where customers gladly pay more for their groceries because they enjoy the shopping experience and the food quality enough to pay more for it.
In a special section on “Customer Service” (free access from AOL), the Wall Street Journal shared a few answers to why companies make the case for generating bad profits off good customers. One such answer involved rental car companies, who are notorious for finding ways to gouge its customers to earn bad profits.
For example ... if you fail to return a rental car with a full tank of gas, the company will charge you anywhere between 3 to 5 times more than the local price per gallon rate to fill the tank. I recently rented a car and noticed the refueling charge was $8.79 a gallon while the going rate in town was close to $2.75 a gallon. (Yikes.)
So … why do rental car companies charge such a high refueling fee? Here’s what the Wall Street Journal found out …
"You aren't paying for fuel," says Neil Abrams, president of the car-rental consultancy Abrams Consulting Group Inc. in Atlanta. Rental agencies set the price high to deter clients from bringing back vehicles with an empty tank and thus offset the steep cost of refueling.Rental agencies don't have efficient systems for shipping and storing fuel and gassing up vehicles en masse, says Mr. Abrams. Some companies don't even keep gas on site, so an employee has to drive the car to another location to fill it up. And a rental agency's goal is to get the car out to the next customer as quickly as possible; if the agency has to take time to refuel a car, the lost revenue and labor costs are huge, Mr. Abrams says.
Still, most rental agencies do offer a pre-pay refuel option at the time of rental so the customer can bring back the car empty and pay for a tank of gas at a price close to local market rates. Those few additional cents on each gallon can help to offset labor costs, since the average renter never brings back a tank bone dry, says Michael Kane, president of Vehicle Replacement Consulting Group Inc. in Royal Oak, Mich.
Hmm ... seems like an opportunity exists for a rental car company to distinguish itself from its competitors by solving for how it can profit by not charging customers such a high refueling fee. That’s what I would do if I was a marketer for a rental car company.
I bet you’ve never thought how the game of Rock, Paper, Scissors (a.k.a. Roshambo) can be applied to business growth. Marty Neumeier has. And brilliantly at that. In ZAG, the book I’ve been pimping all week, Marty explains how growing businesses go through the stages of SCISSORS, ROCK, and PAPER during its maturation.
According to Neumeier, small businesses and startups are SCISSORS-like in their sharp focus which allows them to carve out a niche to better compete against much larger companies.
A successful SCISSORS company will grow into being a medium-sized ROCK company.
ROCK businesses have lots of sales momentum going for them. To maintain and grow their momentum, ROCK companies expand their brand portfolio and thus, lose the sharp focus they once had as a SCISSORS business. ROCK businesses can crush SCISSOR companies who lack the resources needed to compete against the momentum of larger and broader-based ROCK companies.
Eventually, the momentum at a ROCK company slows and it then morphs into a PAPER company.
PAPER companies are typified by having tremendous size, a cadre of brands, and fleeting focus. Because of their size and reach, PAPER companies can smother ROCK companies.
As in the game, SCISSORS cut PAPER … ROCK crushes SCISSORS … and, PAPER covers ROCK. The business interpretation of this is … focus beats size, momentum beats focus, and size beats momentum.
SCISSORS cut PAPER | “focus beats size”
SCISSOR businesses are able to compete (and beat) expansive PAPER companies because of their sharp, niche-minded focus. Dollar General and Family Dollar are SCISSOR companies focused on selling inexpensive and close-out/odd-lot general merchandise. Because of their tight focus, Dollar General and Family Dollar are able to beat much larger PAPER companies like Wal-Mart and Target.
ROCK crushes SCISSORS | “momentum beats focus”
Starbucks is a ROCK business which trumps more focused, SCISSOR-like coffee joints. It’s not necessarily that Starbucks is better than smaller, upstart coffee shops. It’s just that Starbucks has tremendous momentum (convenient locations, adoring customers, etc.) and significant resources (stockpiles of cash, relationships with suppliers, etc.) which make it very difficult for other coffee shops to thrive against them.
PAPER covers ROCK | “size beats momentum”
Wal-Mart is a PAPER company that beats its general merchandise ROCK competitors (Sears, Kmart, Meijer) and its grocery ROCK competitors (Kroger, H-E-B, Publix). However, since it is a PAPER company, Wal-Mart is vulnerable and can lose out to SCISSOR businesses like Dollar General and Family Dollar.
Kate Newlin, former Faith Popcorn cohort at BrainReserve, has written a book that strives to challenge consumers to stop being obsessed with buying stuff on the cheap from the Big Box retailers. It’s called SHOPPORTUNITY: How to Be a Retail Revolutionary.
SHOPPORTUNITY revolves around 21 steps consumers should take to get the best, most meaningful experiences from every shopping opportunity. I can’t say all 21 steps are on-target but a few of them are chewy enough for us marketers to gnaw on and over ... such as these two steps:
(1) Relearn Anticipation>
Newlin argues that a key ingredient missing in many of our current shopping experiences is the lack of anticipation. Meaning, there are very few retailers out there that customers truly anticipate going to and shopping at. For the most part, consumers no longer anticipate and retailers have lost the ability to elicit feelings of anticipation.
Newlin is onto something here. In a recent Starbucks Tribal Knowledge presentation, I touched upon this point by telling the audience that “Destinations become expectations when they lose the feeling of anticipation.” By being omnipresent and super-consistent, Starbucks is losing the ability to elicit feelings of “anticipation” from customers.
Which retailers are eliciting feelings of anticipation? Are there any businesses you look forward to doing business with? What must your company do to relearn anticipation?
(11) Shop Where the Staff Knows More than You
Newlin is spot-on. As shoppers we are more likely to find deeper, richer, and more worthwhile retail experiences from businesses whose employees are smarter about the products they sell then are the customers.
There’s a difference when buying a complicated a product high-tech gizmo from a big box retailer than from a specialty retailer. That difference should be the employee at a specialty retailer knows more about the high-tech gizmo than a part-time staffer does at a big box retailer. (Unfortunately, that isn’t always the case.)
Last week Jena McGregor (BusinessWeek reporter) and I chatted about “authentic marketing.” This was in conjunction with the article BusinessWeek ran in its Sept. 18th issue detailing the recent marketing makeover at Safeway. You can access the audio of our conversation here but you might wanna familiarize yourself beforehand with the BusinessWeek story we reference in our chat.
BusinessWeek subscribers can read the article here, others can read the gist below …
The same-store sales pendulum at Safeway has swung from a negative 4.5% 2003 to a positive 4.3% in 2005. Safeway insiders are crediting its major renovation efforts as the reason for the dramatic change in sales.Beginning in 2003, Safeway committed to spending billions of dollars to remodel all 1,775 of its stores. The remodeling efforts were more than just cosmetic as Safeway made a concerted effort to improve the quality of the food it stocks, as well as the quality of the experience it delivers to customers.
Perishables have been upgraded to include more organic offerings and exotic choices. Beef and poultry have been upgraded and the floral department has also undergone a significant quality upgrade. Additionally, Safeway enlisted the assistance of Orangetwice to remodel its stores to exude a much more authentic look and feel.
Safeway wisely waited until its stores were remodeled and its merchandise was upgraded before it began running its “Ingredients for Life” advertising campaign.
DOWNLOAD AUDIO HERE
[17:29 minutes | 8.3 MB]
Jena McGregor & John Moore chatting about Safeway, Whole Foods, Starbucks, and "authentic marketing."
”Product reviews written by real people are perhaps the most underappreciated slice of the consumer-generated-media universe, the explosion of which has captivated the advertising and media worlds. But as marketers fixate on getting their virals on YouTube and making friends on MySpace, these relatively unsexy product write-ups have quietly become the most common form of consumer content -- Forrester [Research] puts it as the most-used form of peer-generated content -- not to mention the one with the most direct impact on purchase decisions."[SOURCE: Ad Age article, August 28, 2006]
For a nice sum-up of the Ad Age article with sharp analysis, read T. L. Pakii Pierce’s take.
“Many marketers view employee relations as a job solely for human resources—they see employees as tools. But employees—happy, rewarded employees—can work wonders for the company’s marketing efforts. There is no better spokesperson for a company, product, and brand than someone who is happy with his job and respected by his employer and peers. A happy employee will in turn, make customers happy. [Source: TRIBAL KNOWLEDGE (Kaplan, 2006)]
I jotted those words down after experiencing so many restaurants in Barcelona where the restaurateur has tight control of how customers experience his/her dishes. The most respected and sought-after restaurants in Barcelona have limited seating, limited hours, and their menus are limited to the ingredients the chef purchased that morning. But customers don’t seem to mind all the limits as all the dishes are right-on-the-mark in terms of tastiness.
For example, I had two superb lunches at Cal PEP during my trip. And as you can see from the image below, Cal PEP keeps very limited hours.
But the tight hours Cal PEP keeps doesn’t keep customers away. In fact, it all adds to the allure and to the story of Cal PEP where, on any given day, you’ll find customers lined up outside to grab a scarce seat once the doors open for lunch at 1:30.
But if the food wasn’t so delicious at Cal PEP, then its customers wouldn’t allow Cal PEP to dictate how and when they can enjoy the food.
These days, marketers are quick to point fingers at businesses clinging to top-down direction as opposed to bottom-up creation from customers. But if the product is right and their passion is right, then a business earns the right to be tight. Right?
Most grocery stores are open 24 hours/7days a week. Not Whole Foods Market. Whole Foods has limited hours but because their product is right and their passion is right, customers grant them the right to be tight. Can’t say the same for Kroger, Giant, or Vons.
Most fast food burger joints have seemingly unlimited menus. Not In-N-Out Burger. In-N-Out Burger has a very tight menu and a tight “hidden menu.” Customers willingly allow In-N-Out to get away with being tight because their product and passion are right. Can’t say the same for McDonald’s, Burger King, or Wendy’s.
Those are just two RIGHT & TIGHT businesses. Many more exist. Feel free to add to the list.
You’ve seen the YouTube video version, now read the print rendition of my jumboSHRIMP Marketing presentation …
During the same speech Carlos Ghosn delivered at the New York International Auto Show where he derided automakers for their reliance on discounts to drive sales, Ghosn challenged automakers to reinvigorate their businesses with passion. Ghosn believes passion, not rebates, will revitalize the auto industry.
Ghosn compared the auto industry’s current malaise to where Apple Computer was in the nineties. He said automakers should look to Apple and how its resurgence has been a result of an uncompromising focus on design. Ghosn wants automakers to become more passionate about the design of new cars and trucks and that passion will help reinvigorate the auto industry.
According to Ghosn, the reliance on discounts and rebates to sell cars has made the car buying process, “… less involving, less personal, and less emotional.”
Ghosen’s right on the money. Automakers must make the car buying process more involving, more personal, and more emotional. Just ask any Mini Cooper car owner and they will tell you just how involving, personal, and emotional their car buying process was.
”Dunkin' Donuts last year paid dozens of faithful customers in Phoenix, Chicago and Charlotte, N.C., $100 a week to buy coffee at Starbucks instead. At the same time, the no-frills coffee chain paid Starbucks customers to make the opposite switch.[SOURCE: Wall Street Journal article (sub req’d)]When it later debriefed the two groups, Dunkin' says it found them so polarized that company researchers dubbed them "tribes" -- each of whom loathed the very things that made the other tribe loyal to their coffee shop. Dunkin' fans viewed Starbucks as pretentious and trendy, while Starbucks loyalists saw Dunkin' as austere and unoriginal.
‘I don't get it,’ one Dunkin' regular told researchers after visiting Starbucks. ‘If I want to sit on a couch, I stay at home.’”
Take a look at the new prototype Dunkin’ Donuts … sure does resemble a typical Starbucks, right?
In addition to the new pastry case displays and granite-like countertops, Dunkin’ is also taking a page from the Starbucks playbook and playing music in its stores where previously it didn’t. While there will not be comfy chairs in the remodeled Dunkin’, there will be upscale sandwiches with a decidedly downscale name. Feedback from Dunkin’ customers was that “Panini” was too fancy a name to call a hot sandwich so instead, Dunkin’ will call this menu offering a “stuffed melt.”
And get this … Dunkin’ marketers are considering ways to allow its customers to text message their orders in. Wait! If “Panini” was too fanciful a name for Dunkin’ Donuts’ working-class customers to call a hot sandwich, then why would Dunkin’ marketers even bother with fanciful text messaging ordering ploys?
Furthermore, according to this Wall Street Journal article, internal Dunkin’ Donuts research also revealed just how uncomfortable Dunkin’ customers were inside Starbucks. Seems as though loyal Dunkin’ customers didn’t enjoy the atmosphere, didn’t like all the laptop-using customers hogging the tables, didn’t appreciate the tall/grande/venti lingo, and didn’t understand why someone would pay $4 for a cup of coffee.
Conversely, loyal Starbucks customers were just as uncomfortable inside Dunkin’ Donuts. Starbucks customers especially didn’t appreciate when Dunkin’ employees added cream and sugar in their coffee denying them the opportunity to customize their coffee as they desired.
Again I ask … given these research findings, why isn’t Dunkin’ accentuating the differences rather than blurring the differences between the two?
I’m reminded of what Rick Nobles said in a MarketingProfs article,
“If your brand is clearly defined enough to have the power to attract enemies, it also has the power to attract raving fans. And the raving fans of your brand are the ones who return again and again. They're the ones who will tell their friends about you. They're the ones who will wear your logo. They're the ones that almost enjoy the annoyance of your brand-haters and will keep coming back for more.So don’t fear the hate. Embrace it.”
Dunkin’ you’d be wise to fully embrace the differences that exist between yourself and Starbucks in everything you do. Why risk diluting the Dunkin’ difference by trying to be more like Starbucks? Your current customers want Dunkin’ to be Dunkin.’ So appeal to your raving fans by accentuating the hate. Dig?
Over at the Dig Tank blog, Howard Mann recommended the recently published LAWS OF LIFETIME GROWTH (Dan Sullivan & Catherine Nomura). Since Howard’s Brickyard thinking jibes with much of my thinking, I took him up on reading THE LAWS OF LIFETIME GROWTH.
Good book … lots of chewy statements to gnaw on which will help challenge/motivate anyone and any business to seek meaningful and continual growth. However, at times, the book gets a little too righteous in dispensing pious platitudes. Look beyond the triteness and delve into the “rightness” of each lifetime growth law.
Go ahead and gnaw on the following snippets from the book ...
Last November I wrote about RadioShack’s Holiday Irrelevance. My take was in response to RadioShack’s stated goals of increasing its relevance with consumers through a heavy-up Holiday advertising blitz. Given RadioShack’s dismal 4th quarter earnings, we now know the company’s problems extend well beyond holiday irrelevance to everyday irrelevance.
Following its disastrous earnings report where earnings fell 62%, RadioShack is planning to close up to 700 stores, shutdown two distribution centers, and fine-tune its bloated inventory.
Here’s a radical idea for RadioShack … stop trying to sell cell phones and satellite television service and start selling connection solutions for all the electronic gizmos we bought elsewhere. But that isn’t such a radical idea, is it? After all, isn’t that how most people use RadioShack? When I'm in need of some electronic component/connector the first place I go is RadioShack.
Forbes has a good run-down on RadioShack’s everyday irrelevance.
And if its everyday irrelevance isn’t enough, RadioShack’s CEO has been found to have falsified his resume. Ouch.
I was all set to compose a thought-provoking, idea-inspiring, and forward-thinking post to close out 2005 and kick-start 2006. However, the following vintage BRAND AUTOPSY post is far more thoughtful and inspirational than anything I could come up with today. Consider the following electronic reprint a BRAND AUTOPSY new year tradition...
Originally posted on December 31, 2004
Bruce Mau, a designer, thinker, articulator, and massive change provocateur, has a lot of ideas on a lot of things. His Incomplete Manifesto for Change is a list, an incomplete one at that, of 43 ideas to get you beyond thinking differently but doing differently. As 2005 turns to 2006, the message of doing differently is one we should all heed. Enjoy.
1. Allow events to change you. You have to be willing to grow. Growth is different from something that happens to you. You produce it. You live it. The prerequisites for growth: the openness to experience events and the willingness to be changed by them.
2. Forget about good. Good is a known quantity. Good is what we all agree on. Growth is not necessarily good. Growth is an exploration of unlit recesses that may or may not yield to our research. As long as you stick to good you’ll never have real growth.
3. Process is more important than outcome. When the outcome drives the process we will only ever go to where we’ve already been. If process drives outcome we may not know where we’re going, but we will know we want to be there.
4. Love your experiments (as you would an ugly child). Joy is the engine of growth. Exploit the liberty in casting your work as beautiful experiments, iterations, attempts, trials, and errors. Take the long view and allow yourself the fun of failure every day.
5. Go deep. The deeper you go the more likely you will discover something of value.
6. Capture accidents. The wrong answer is the right answer in search of a different question. Collect wrong answers as part of the process. Ask different questions.
7. Study. A studio is a place of study. Use the necessity of production as an excuse to study. Everyone will benefit.
8. Drift. Allow yourself to wander aimlessly. Explore adjacencies. Lack judgment. Postpone criticism.
9. Begin anywhere. John Cage tells us that not knowing where to begin is a common form of paralysis. His advice: begin anywhere.
10. Everyone is a leader. Growth happens. Whenever it does, allow it to emerge. Learn to follow when it makes sense. Let anyone lead.
11. Harvest ideas. Edit applications. Ideas need a dynamic, fluid, generous environment to sustain life. Applications, on the other hand, benefit from critical rigor. Produce a high ratio of ideas to applications.
12. Keep moving. The market and its operations have a tendency to reinforce success. Resist it. Allow failure and migration to be part of your practice.
13. Slow down. Desynchronize from standard time frames and surprising opportunities may present themselves.
14. Don’t be cool. Cool is conservative fear dressed in black. Free yourself from limits of this sort.
15. Ask stupid questions. Growth is fueled by desire and innocence. Assess the answer, not the question. Imagine learning throughout your life at the rate of an infant.
16. Collaborate. The space between people working together is filled with conflict, friction, strife, exhilaration, delight, and vast creative potential.
17. ——————————. Intentionally left blank. Allow space for the ideas you haven’t had yet, and for the ideas of others.
18. Stay up late. Strange things happen when you’ve gone too far, been up too long, worked too hard, and you’re separated from the rest of the world.
19. Work the metaphor. Every object has the capacity to stand for something other than what is apparent. Work on what it stands for.
20. Be careful to take risks. Time is genetic. Today is the child of yesterday and the parent of tomorrow. The work you produce today will create your future.
21. Repeat yourself. If you like it, do it again. If you don’t like it, do it again.
22. Make your own tools. Hybridize your tools in order to build unique things. Even simple tools that are your own can yield entirely new avenues of exploration. Remember, tools amplify our capacities, so even a small tool can make a big difference.
23. Stand on someone’s shoulders. You can travel farther carried on the accomplishments of those who came before you. And the view is so much better.
24. Avoid software. The problem with software is that everyone has it.
25. Don’t clean your desk. You might find something in the morning that you can’t see tonight.
26. Don’t enter awards competitions. Just don’t. It’s not good for you.
27. Read only left-hand pages. Marshall McLuhan did this. By decreasing the amount of information, we leave room for what he called our “noodle.”
28. Make new words. Expand the lexicon. The new conditions demand a new way of thinking. The thinking demands new forms of expression. The expression generates new conditions.
29. Think with your mind. Forget technology. Creativity is not device-dependent.
30. Organization = Liberty. Real innovation in design, or any other field, happens in context. That context is usually some form of cooperatively managed enterprise. Frank Gehry, for instance, is only able to realize Bilbao because his studio can deliver it on budget. The myth of a split between “creatives” and “suits” is what Leonard Cohen calls a 'charming artifact of the past.'
31. Don’t borrow money. Once again, Frank Gehry’s advice. By maintaining financial control, we maintain creative control. It’s not exactly rocket science, but it’s surprising how hard it is to maintain this discipline, and how many have failed.
32. Listen carefully. Every collaborator who enters our orbit brings with him or her a world more strange and complex than any we could ever hope to imagine. By listening to the details and the subtlety of their needs, desires, or ambitions, we fold their world onto our own. Neither party will ever be the same.
33. Take field trips. The bandwidth of the world is greater than that of your TV set, or the Internet, or even a totally immersive, interactive, dynamically rendered, object-oriented, real-time, computer graphic–simulated environment.
34. Make mistakes faster. This isn’t my idea — I borrowed it. I think it belongs to Andy Grove.
35. Imitate. Don’t be shy about it. Try to get as close as you can. You’ll never get all the way, and the separation might be truly remarkable. We have only to look to Richard Hamilton and his version of Marcel Duchamp’s large glass to see how rich, discredited, and underused imitation is as a technique.
36. Scat. When you forget the words, do what Ella did: make up something else … but not words.
37. Break it, stretch it, bend it, crush it, crack it, fold it.
38. Explore the other edge. Great liberty exists when we avoid trying to run with the technological pack. We can’t find the leading edge because it’s trampled underfoot. Try using old-tech equipment made obsolete by an economic cycle but still rich with potential.
39. Coffee breaks, cab rides, green rooms. Real growth often happens outside of where we intend it to, in the interstitial spaces — what Dr. Seuss calls “the waiting place.” Hans Ulrich Obrist once organized a science and art conference with all of the infrastructure of a conference — the parties, chats, lunches, airport arrivals — but with no actual conference. Apparently it was hugely successful and spawned many ongoing collaborations.
40. Avoid fields. Jump fences. Disciplinary boundaries and regulatory regimes are attempts to control the wilding of creative life. They are often understandable efforts to order what are manifold, complex, evolutionary processes. Our job is to jump the fences and cross the fields.
41. Laugh. People visiting the studio often comment on how much we laugh. Since I’ve become aware of this, I use it as a barometer of how comfortably we are expressing ourselves.
42. Remember. Growth is only possible as a product of history. Without memory, innovation is merely novelty. History gives growth a direction. But a memory is never perfect. Every memory is a degraded or composite image of a previous moment or event. That’s what makes us aware of its quality as a past and not a present. It means that every memory is new, a partial construct different from its source, and, as such, a potential for growth itself.
43. Power to the people. Play can only happen when people feel they have control over their lives. We can’t be free agents if we’re not free.
For more on Bruce Mau:
* Radio Interview | The Connection (WBUR-FM) | November 23, 2004
* Design Principal | Fast Company | October 2000
* Massive Change | website
* Massive Change | book
* Massive Change | radio show
* Bruce Mau Designs | website
* A collection of articles on Bruce Mau Designs | website link
In The WOW Project, Tom Peters wrote, “All work is project work. And you are your projects.” I couldn’t agree with him more. Throughout my marketing career, I’ve lived in the projects and that’s why I can relate to this visual of Project MISmanagement which I’ve titled, "The WHOA! Project".
In the comments section, Mark Lewis shares how Employees cause broken windows. While my theory synopsis didn’t touch upon the Employee variable in causing broken windows, Michael Levine, author of BROKEN WINDOWS BROKEN BUSINESS, dedicates a chapter to this issue and has some pointed advice for repairing broken windows caused by Employees.
Levine says employees often create the worst broken windows by writing,
“When an employee – any employee – becomes a detriment to the company, for any reason, that employee has become a broken window, and the ripple effect from his or her failure, however slight, can be devastating to your business.”
Levine continues his smart thinking,
“Your employees are human beings, and as such, they are given to human frailty. They will make mistakes, and those are not broken windows. Employees who learn from their mistakes, who become better at their jobs because of those errors, are the best possible workers you can employ.”
It is Levine’s contention that businesses are too slow to fire employees who continuously create broken windows. He advocates the quick dismissal of employees who can’t do their job properly because if left unchecked, poor-performing employees act as a sign to other employees that careless work behavior will be tolerated and accepted. Since broken windows are telltale signs that a business doesn’t care, poor performing employees can make for the worst, most destructive broken windows within a business.
If you have read Malcolm Gladwell’s TIPPING POINT, then you are probably familiar with the Broken Windows theory and its impact on helping to reduce crime in New York City during the 1990s. Gladwell writes,
“Broken Windows was the brainchild of the criminologists James Q. Wilson and George Kelling. Wilson and Kelling argued that crime is the inevitable result of disorder. If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge. Soon, more windows will be broken, and the sense of anarchy will spread from the building to the street on which it faces, sending a signal that anything goes.”
Michael Levine, author and media/PR expert, has just published a book, BROKEN WINDOWS BROKEN BUSINESS, applying the broken windows theory to business. Levine’s premise is that a broken window in business happens when someone isn’t paying attention to details. Levine writes,
"A broken window can be a sloppy counter, a poorly located sale item, a randomly organized menu, or an employee with a bad attitude. It can be physical, like a faded, flaking paint job, or symbolic, like a policy that requires consumers to pay for customer service. When the waiter at a Chinese restaurant is named Billy Bob, that’s a broken window. When a call for help assembling a bicycle results in a twenty-minute hold on the phone (playing the same music over and over), that’s a broken window. When a consumer asks why she can’t return her blouse at the counter and is told, “Because that’s the rule,” that is a broken window. They’re everywhere. Except at the really sharp businesses." [SOURCE LINK]
According to Levine, broken windows are telltale signs to customers that a business doesn’t care, that it is poorly managed, and or it has become too big and arrogant to adequately deal with little details.
He warns businesses that customers draw wide-ranging conclusions based upon their perceptions of the broken windows they find. These negative perceptions will undermine a business as they can turn once highly-satisfied customers into very-dissatisfied customers who choose take their business elsewhere.
Levine contends the best time to fix a broken window is the moment they occur. He continues by saying the only sustainable way to avoid and repair broken windows is to foster a culture where obsession to detail and a compulsive drive to fix broken windows permeates throughout a business.
I love the broken windows in business premise! It meshes totally with the Starbucks Tribal Knowledge of EVERYTHING MATTERS.
However, BROKEN WINDOWS BROKEN BUSINESS is a BROKEN BOOK. Why? Because this reader’s perception is what Levine says in 162 pages, could be said in less than 5 pages. Heck … you’ve already learned the book’s premise, gist, and proposed solution which took about 400 words.
My advice is to heed the BROKEN WINDOWS BROKEN BUSINESS message by reading and acting upon Levine’s well-written introduction (pdf) to his broken book.
“… if you always have to think outside the box, maybe it’s the box that needs fixing.”
That’s one of my favorite quotes (albeit paraphrased slightly) from Malcolm Gladwell [source article link].
And now, the forward-thinking Douglas Rushkoff has written a business book seemingly riffing off that profound line.
Over the next few weeks, Rushkoff will be posting short excerpts on his blog from his to-be-published book -- GET BACK IN THE BOX: Innovation from the Inside Out. Sure, Rushkoff is preaching to this choir of one … but that’s cool … cause what he is preaching sure is tasty. Here’s an excerpted excerpt:
American companies are obsessed with window dressing because they’re reluctant, no, afraid, to look at whatever it is they really do and evaluate it from the inside out. When things are down, CEO’s look to consultants and marketers to rethink, rebrand or repackage whatever it is they are selling, when they should be getting back on the factory floor, into the stores, or out to the research labs where their product is actually made, sold, or conceived. Instead of making their communications less [Saatchi & Saatchi] and more [Craigslist], they should be reinventing their core enterprise. >>MORE
SOURCE | Wall Street Journal article | August 25, 2005
Unfortunately, General Motors' discount detox didn’t last long. The automaker was to have ended its EDEO (Employee Discounts for Every One) pricing scheme on August 1. However, the urges and the cravings to discount were to strong for the company to resist. General Motors has decided to continue its addiction to discounting in order to increase sales. Yep, GM has again extended its EDEO pricing scheme.
It pains me greatly to see a business suffer so mightily from abusing low price marketing schemes. As a marketing doctor with Brand Autopsy, I’ve seen far too many businesses overdose on discounting. And once these businesses OD on discounts … they never seem to recover and regain the marketing vitality they once enjoyed.
So sad … so very sad.
That’s why I am introducing the Brand Autopsy Discount Detox Center.
The goal of the Brand Autopsy Discount Detox Center is to rid businesses of toxins accumulated by rampant abuse of discounting pricing strategies. The first step of discount detox is immediate withdrawal from any and all discounting activities. Once a business has stopped using discounts, fiscal and behavioral withdrawal symptoms may follow.
The nature and severity of the withdrawal symptoms vary greatly depending on the discounting activities used as well as the frequency of use. These days there are very few businesses using one discount tactic exclusively. It is common to see businesses in discount detox that abuse couponing, zero-down/zero-percent financing deals, and rebate programs. Discount detox is a process that applies to any business addicted to using low prices to drive sales.
Discount detoxification is performed in many different ways depending on where a business decides to receive treatment. As a highly trained detox facility, the Brand Autopsy Discount Detox Center incorporates counseling and therapy during all phases of the detoxification process to help with the fiscal and behavioral distress afflicted businesses may experience.
Detoxification at the Brand Autopsy Discount Detox Center covers all aspects of withdrawal and purification from discounting activities. The removal of residual discount tactics is a key goal in the Brand Autopsy’s proprietary discount detox process. Without this process, residual discount tactics can remain in a marketing department of a business and cause cravings for years after discounting activities have supposedly ceased. A vital step in a successful discount detox is flushing out these accumulated toxic residues so that the business no longer experiences unwanted adverse effects from the discounts they have used.
If you know of any business suffering from addiction to discounting, please consider contacting the Brand Autopsy Discount Detox Center – we are here to help.
Tom Peters is ranting again. (As if he ever stopped.) This time he has a list of 16 MUSTS in order for the little guy to eat the BIG GUYS’ lunch. Methinks Paul and I will adopt some of this to our jumboSHRIMP marketing concept of getting bigger by being smaller.
Recently I struck up an email conversation with Patricia Ryan Madson, author of IMPROV WISDOM.
Readers of this blog may recall I’m learning how to apply basic Improv skills into my every day business life. I’m also learning how to carry these lessons into my every day personal life and Patricia's book is helping me to do just that.
IMPROV WISDOM is a worthwhile read whether you are trying to become more open, accepting, and spontaneous in business or in life. While the book is geared more to encourage us to take chances and do more of the things that are important to us in our personal lives, the Improv Maxims Patricia shares are highly applicable to business.
The following is an excerpt of our email conversation where Patricia answers some questions on applying Improv in business. (The full email conversation is available as a PDF – click here.)
"Demystify" is the perfect word since a common misunderstanding of improv is that is a form of comedy done by witty and talented performers who, unlike most of us, are skillful in "coming up with fast, funny replies."
To "improv" or "improvise" is a way of doing things, a methodology that involves paying attention, responding supportively, and acting constructively. Anyone--a banker, a baker, a stay-at-home mom, an entrepreneur, a physician--can benefit from this way of working.
Since most of our daily lives actually are improvisations, doesn't it make sense to use some of the time honored strategies that the pros use?
I want the reader to know that his entire life has been the preparation for this moment. I want him to trust his mind and experience. I'm not really against any kind of preparation or analysis. It is simply that time and again I see people, business professionals in particular, who substitute preparation for action. They plan when they should be executing, or trying things out. Fear of failure invites inertia or at worst, paralysis.
Consider how different it is to hear someone "reciting a speech"/"reading a lecture" and the same speaker "just talking".
It is nearly impossible to make a written speech sound natural. The "sound" of reading is the kiss of death to really effective communication, in my view. I want a speaker to tell me something, to talk to me about the things they know, the product they believe in. Telling and talking have a human quality. Reading or reciting, even with correct emphasis, will never have the same persuasiveness or authenticity of natural speech.
What we may lose in elegant phrasing, we win in communicativeness if we allow ourselves to speak naturally. I suggest to work from a series of questions as prompts. Answering a question is usually easy. And, even if we struggle a little to access the best word, that process is a lively, human one.
The "Wake Up to the Gifts" maxim comes to mind. Project managers are often looking at the big picture, keeping their eye on what isn't working and why. If we constantly notice what is wrong we are likely to miss the hundreds of things that are going right or overlook them as givens. Great team leaders, project managers and bosses are champions at seeing the detail of what everyone is doing well, doing right, doing on time. They observe the contributions of others on a continual basis and express appreciation. They never take a team members work "for granted".
I want to make two offers to the readers of this blog. First, I have 10 copies of IMPROV WISDOM to share with anyone who would like to read my book, but can't afford to buy one. Just email me and I'll see that you get a copy.
Second, to anyone who already owns a copy, but who wishes they had it autographed, just contact me and I'll send you a hand-made bookmark with an autograph on it to tuck inside your copy.
Thanks to all your readers and especially the Brand Autopsy crew. You are doing great work.
Patricia Ryan Madson
[email protected]
We’ve all heard of EDLP -- Every Day Low Prices. Now, thanks to General Motors, we have EDEO (Employee Discounts for Every One) to add to our marketing vocabulary.
Faced with sluggish sales and rising inventory, General Motors decided to ditch its four year-old discount strategy of cut-rate financing combined with huge rebates for a less convoluted approach. Beginning in June, GM began offering customers the same price its employees pay for a new GM-made car.
GM’s Employee Discounts for Every One program offers customers an attractive selling price for a car anywhere from 3% to 6% below the dealer’s invoice. No haggling necessary with the EDEO pricing strategy since customers are able to buy GM cars at about the same price the car dealership does. (Car dealers are able to eek out a profit because GM will rebate dealerships around $1,500 per vehicle sold.)
For the month of June, GM increased sales by 47% and boosted its market share nearly 7% from the month prior. (Yowza!)
I cannot argue with the success of the EDEO program. However, all GM has done is trade the deep discounting of low financing and big rebates for a different discount with a different, albeit more compelling name.
For long-term vitality, General Motors and the entire car industry must overcome their addiction to discounting. Profit margins will continue to suffer, the equity of brands will continue to erode, and worst of all … consumers will continue to be trained to only buy a car on deep discount.
Seth Godin said it best in PURPLE COW, “Cheap is the last refuge of a product developer or marketer who is out of great ideas.”
No matter if you sell a car under an EDLP or EDEO pricing strategy … it’s still going the cheap route to motivate people to buy it. Aren’t we, as marketers, too smart, too savvy, and too damn creative to fall for this low price trap?
(Please say yes. Otherwise, I may have to change my livelihood.)
SOURCES:
Jonesin’ for some wisdom from today’s preeminent business sage? Get your Peter Drucker quote fix from BrainyQuote. Here’s a sampling:
For more Druckerisms, click here.
Last fall I finally began taking Improv classes. I say finally because for years that little voice we all have inside of us had been telling me to do it. Plus, since I’ve been evangelizing the merits of Improv in business … I felt it was time to practice what I preach.
After completing 18 weeks of improv comedy classes from the Austin-based Heroes of Comedy improv troupe, I’m set to graduate. For those living in the badlands of Central Texas, you’re invited to our Graduation Show at the Hideout Theatre on Tuesday, May 3 at 8:00 ($5).
I've learned a lot from the classes. But I still have much more to learn about the improv game in order to apply it to my every day business life. That’s why I’m calling the following ... Lessons Learning from Improv.
Failure is an Option
In business we’ve been conditioned to believe failure is bad and most be avoided at all costs. Improv believes in the opposite. In Improv, I’m learning failure is good because it means you are challenging yourself to take chances in pursuit of living in the moment. Failure happens. Mistakes happen. Learn from failures. Learn from mistakes. If we don’t take chances and fail, how else will we ever feel the pleasure of learning?
Practice Passionate Followership
Not everyone can be a leader all the time. Yet in business I’ve been trained to lead or get out of the way. In Improv, I’m learning to be a passionate follower. There is an interdependence in Improv where no one person leads. Instead, everyone leads helping to make the best scene possible.
Don’t Act, React
I’m learning to become a better listener and thus a better reactor. Contrary to what you may think, Improv is not about acting … it’s about reacting. If you act in Improv, then you’re a hack. (If you act in business, you’re also a hack.)
Go with your Gut
So much in business is preplanned. We develop precise, step-by-step action plans accounting for contingencies along the way. At least that’s what big businesses do. On the other hand, small businesses mostly rely on their gut instincts to make decisions and to deal with consequences as they emerge. I’m learning to apply that same thinking in Improv where performers must make lightening-fast decisions based on who they are, where they are, and what they are doing.
Don’t be a Blockhead
We’ve all been in ideation sessions where we’re told to leave our yeah-buts at the door. What if we were to always leave our yeah-buts at the door and instead spend our time supporting ideas and not negating ideas? (Hmm…) I’m learning to do just that through Improv. It’s a difficult lesson for me to learn because my ego tells me I always have the better idea. However, I’m learning to discard my yeah-but negative thinking for the much more positive, trusting, and less ego-driven approach of thinking yes … and.
Trust Others
Deep down inside I don’t trust people as much as I should. Improv is teaching me to trust others more. In business and in Improv, trust is critical to making things happen. At work, you must trust others will deliver on time, on budget, and on strategy. And in Improv, you must trust other players will work together to make things happen in a scene.
Make Others Look Good
In business I was taught to look out for me, myself, and I. (Why else do I feel the need to have a CYA email file?) The ‘me, myself, and I’ attitude doesn’t fly in Improv. I’m learning you are more successful when you make others look good in Improv. It’s living the Vidal Sassoon philosophy of “If you don’t look good, I don’t look good.”
The April edition of the Harvard Business Review has a great interview with Garry Kasparov, the recently retired World Chess Champion.
The interview explores the rich territory of chess as an analogy for business strategy/competition. It is a way worthy read for all and below you’ll find a scalpel/suture of my key takeaways from the interview.
Kasparov on … Chess as an Analogy for Business Competition
“There’s a massive amount of uncertainty and almost boundless variety in terms of the moves you can make in both chess and business. Think about it: After just three opening moves by a chess player, more than 9 million positions are possible. And that’s when only two players are involved in the game. Now imagine all the possibilities faced by companies with a whole host of corporations responding to their new strategies, pricing, and products. The unpredictability is almost unimaginable.”
Kasparov on … What it takes to be a Grandmaster CEO
“There is nothing cute or charming about chess; it is a violent sport, and when you confront your opponent you set out to crush his ego. The world chess masters with whom I have competed over the years nearly all share my belief that chess is a battleground on which the enemy has to be vanquished. This is what it means to be a chess player, and I cannot imagine that it is very different from what it takes to be a top-ranked CEO.”
Kasparov on … What Businesspeople can Learn from Winning Chess
”The first rule is: Never, ever, underestimate your opponent. Whenever I am playing at grand master levels, I always, always assume that my competitor is going to see everything I do—even when I plan to make an unexpected move in order to confuse him.”“It’s also critical to keep a psychological edge. I am not a big fan of pop psychology, but I do believe that getting the other guy off balance is a real skill. You have to go on fighting even if you are in a winning position—in fact, especially if you are in a winning position.”
“You also have to make yourself comfortable in the enemy’s territory. If you can convince your enemy that you’re comfortable on their ground, then you can often trick them into moving into your own territory.”
Kasparov on … Intuition in Chess (and Business)
“… it takes more than logic to be a world-class chess player. Intuition is the defining quality of a great chess player. That’s because chess is a mathematically infinite game. The total number of possible different moves in a single game of chess is more than the number of seconds that have elapsed since the big bang created the universe. I can think maybe 15 moves in advance, and that’s about as far as any human has gone. Inevitably you reach a point when you’ve got to navigate by using your imagination and feelings rather than your intellect or logic. At that moment, you are playing with your gut.”“It’s often at the very toughest moments of their chess battles—when they [great chess players] had to rely on pure intuition—that great players came up with their best, most innovative moves.”
Kasparov on … Staying Competitive After Accomplishing Everything
” Where does a virtuoso go after he has accomplished everything that he’s ever wanted to accomplish, even beyond his wildest imagination? This is the question for all world masters, whether they’re in business, sports, or chess.”"I call it the champion’s dilemma, and it’s a real problem for people and companies at the top of their game. In the end, I believe that there is only one answer: You must be lucky in your enemies.”
“For me it was Karpov, Karpov, Karpov. If it were not for Karpov, I would probably be the victim of the same complacency that dooms most other people. But in Karpov I found my archenemy, whom I had to fight. He never gave me the time to enjoy my title.”
“Without Bill Gates, Steve Jobs would surely not be the man he is today. If Karpov had not existed, you might not be talking to me today.”
As a marketingologist with the Brand Autopsy Marketing Practice, I give companies “Second Opinions” about the business and marketing activities they are currently doing or considering doing.
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