Achieving Success in the New Year and Beyond
Making the Most of Future Trends
By
Jeffrey Balash
2021 metaphorically marks the beginning of a new decade, or possibly a new century, given the redefined consumer and the resulting need for a dramatically different business model.
Three critical issues define today’s business ecosystem:
The Post-COVID environment: dramatically changed conditions for all parties;
The
Digital Transformation imperative: Only 8% of McKinsey’s clients stated that their current business mode would survive digital transformation. Furthermore, 70% of the companies that have tried to transition have
failed; and
The Need for Diversity and Equal Opportunity.
Although some companies may evaluate these considerations individually, they are inseparably intertwined. Yet, there is one overarching common theme: the need to be truly customer-centric.
Namely, how can the company make its product or service more to the liking of the customer? Size, price, features, speed of delivery, individualization, better service, more responsive, improved awareness, better treatment and more matter and need to be considered.
Unless a company formulates and successfully executes a unified strategy to address these three issues, it will be left behind its competition and it will ultimately fail.
Bain notes that “only 8% of global companies have been able to achieve their targeted business outcomes from their investments in digital technolog.” Regarding the successful 8%, Bain further elaborates:
At the 8%, executive teams understand the core of a digital transformation is a business transformation, changing the way of engaging customers across channels, simplifying business processes, and redesigning products or services. Rather than asking which technologies they should add to become more digital, the 8% ask how they can improve the business and how technology can enable that change.
Essentially, digital transformation really is a business transformation supported by investments in new technology. These considerations and decisions are far too important to be delegated to the technologists. Senior management must be directly and intimately involved both to understand the critical issues and to make the trade-offs involved in implementing the solutions. These decisions chart the company’s future.
We recognize a business must address the diverse needs of its varied and multiple consumers if it is to achieve lasting success. In particular, a customer is:
- The person or the organization purchasing the good or the service, the “traditional consumer”. Still, if the transaction isn’t e-commerce, there is likely an intermediary, a distributor, wholesaler or retailer who is also a “consumer”, whose needs must be noted and satisfied.
- The employee. Unless a company sufficiently engages its employees and fulfills their needs, they will migrate elsewhere. The costs of employee churn are extremely high: identification of new potential employees, recruitment, screening, training, integration into the existing workforce, elimination of mismatches post-hire, and the associated losses in productivity.
- The vendor. All too many companies treat their vendors as “beholden to them” because of the business these companies provide compared to developing a true partnership. Vendors can vary significantly in the treatment of their clients. It is in a company’s interest to be considered a “favored customer”.
- The community. A business needs to be a positive influence on its respective communities, which goes far beyond United Way donations or Little League sponsorships. The business needs to listen to the communities’ leaders, comment on their ideas, offer thoughts and implement responsive solutions.
- The government and the regulators. A company that is co-operative versus adversarial and which provides clear, transparent information both improves government’s understanding of its business and makes the regulators’ jobs easier. The company thereby develops a meaningful relationship of trust.
Peter Drucker offers two highly relevant observations regarding the current situation:
- “The purpose of business is to create and to keep a customer.”
- “The best way to predict the future is to create it.”
Merging these two concepts crates success: innovate and define the future to create and to keep the customer(s). Yet, this merger is also accompanied by a “tug of war”. Organizations run and are stable because employees “color within the lines”. They know what is expected and perform to meet those expectations. Thus, innovation and value creation involve “coloring outside the lines,” or working against or in opposition to the traditional organizational norms. Put another way, the only way to create value is to be contrarian and to define new approaches and deliverables.
This is why it is imperative for the core senior management team to lead and to be intimately involved in making these decisions and changes.
First, it is they who are in a position to have an overall view of both the current business and where it is headed. Second, they are in a position to make the necessary compromises and decisions. Third, only they have the authority to make those decisions so that employees will accept and play by the new rules.
In McKinsey’s words:
Companies also thrive by testing their promising ideas with customers early in the process, before internal forces impose modifications that blur the original value proposition. To end up with the innovation initially envisioned, it’s necessary to knock down the barriers that stand between a great idea and the end user.
It is also essential to expand the resource base for ideas, innovation and intellectual property beyond the company’s own employees. McKinsey notes:
In the space of only a few years, companies in nearly every sector have conceded that innovation requires external collaborators. Flows of talent and knowledge increasingly transcend company and geographic boundaries. Successful innovators achieve significant multiples for every dollar invested in innovation by accessing the skills and talents of others. In this way, they speed up innovation and uncover new ways to create value for their customers and ecosystem partners. Smart collaboration with external partners, though, goes beyond merely sourcing new ideas and insights; it can involve sharing costs and finding faster routes to market.
That said, a culture which rewards internal innovation must be established as well, since employees understand the company’s processes, its shortfalls and areas for improvement.
One consulting management boutique has consistently been able to increase its clients’ earnings by 25% to 75% within two years across a broad range of industries. Its standard approach is to meet with employees, solicit their ideas, refine these ideas by applying the experience of that firm and develop pragmatic solutions that are implemented because they are “bottoms up” instead of “top down”, and are, therefore, readily accepted by the workforce.
My Personal Example
Early in my career, I was a factory foreman/trainee on a line where shipments were packed for the recipients. The task involved “solving” the following linear programming problem: minimize for the time used in packing, minimize for breakage, minimize for materials used, and minimize for cube (since you don’t want to ship air). The best performers made this an art form. They only had to be observed, listened to and their suggestions implemented to make a significant impact on the operation.
I asked the two best performers if they would come in a few minutes before shift to share their techniques. They were surprised that I thought that they could make a difference, but they agreed to start a few minutes early and to share their techniques with the others.
A week later I was pulled aside by the general manager who stated that: “We have a problem. Your production is through the roof and you don’t know anything.” I told him that he was correct on both comments.
The important conclusion is that no one has all of the answers. To develop a coherent strategy that meets the needs of all of the respective customers:
- Companies must recognize there is a tension between the established “rules” and the suggested improvements.
- Senior management must be actively engaged in developing, evaluating, shaping and implementing the new strategies and tactics.
- The Company must expand its knowledge and resource base beyond its own boundaries to include established and successful innovators in the relevant fields.
- The needs of each of the respective customer groups must be understood and addressed.
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