Quick takes

Citation

Gorrell, C. (2002), "Quick takes", Strategy & Leadership, Vol. 30 No. 4. https://doi.org/10.1108/sl.2002.26130dae.004

Quick takes

Editor's note

Catherine Gorrell's "Quick takes" presents the key points and action steps contained in each of the feature articles.

Page 4Customer experience places: the new offering frontierJames H. Gilmore and B. Joseph Pine II

Marketing at many companies is floundering. The causes range from the demise of mass markets, ineffectiveness of many traditional types of advertising, and failure to use the Internet effectively. The common cause: people have become relatively immune to messages broadcast at them. The way to reach your customers is to create an experience within them. For numerous companies, this shift in approach is proving to be a very successful way to acquire new and energize old customers.

How to do this shift? Consider a new view: instead of marketing products or services, practice marketing "experiences." That is, create an engaging, robust, compelling, memorable, involving experience, where customers can sample offerings as they enjoy themselves. Peter Drucker stated, "The aim of marketing is to make selling superfluous." The next step the authors suggest: "The aim of experiences is to make marketing superfluous."

Seven best practice suggestions are offered to guide you to success. Numerous real world company examples are cited to illustrate each point:

1. 1.

   Establish a flagship venue where customer visits are engaging experiences. Treat the experiences you create as a distinct economic offering. Experience places designed by Volkswagen, Johnson Controls, Heineken, General Mills, and Case Construction are used to illustrate this point.

2. 2.

   Take the funds for creating a marketing experience from traditional marketing. Carve out 20 percent of your traditional PR and advertising budgets and put it into the realm of physical experiences.

3. 3.

   If you have a successful creative marketing team or agency, use them for your experience R&D. However, the teams designing physical goods or new services are unlikely to have the skills, etc. to design and build an "experience."

4. 4.

   Create a rich portfolio of experiences – both real and online: creating a series of related experiences that flow one from another creates demand up and down at every level for new revenue. A location hierarchy model for where and how companies can create real and Internet experiences is offered. Lego's business practices are described to illustrate this point.

5. 5.

   Integrate physical and virtual experiences; for example, use the Web as a "pre-show" for a live experience. Vans Shoes and Disney are cited.

6. 6.

   Make the experience so attractive that customers will pay for admission.

7. 7.

   Recruit a Chief Xperience Officer (CXO).

The opportunity for new revenue growth within any company lies not only in driving sales of existing goods and services, but in creating experiences that customers will visit en masse. That is the role of the chief experience officer.

Page 12Weird ideas that work: an interview with Robert SuttonAlistair Davidson

In this interview Robert Sutton talks about some of the counter-intuitive practices he believes spur innovation. Based on extensive research, he proposes that companies should adopt 11ø practices:

• •

  Hire slow learners (of the organizational code).

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  Hire people who make you uncomfortable, even those you dislike.

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  Hire talented people before you need them.

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  Use job interviews to get ideas not just to screen candidates.

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  Encourage people to ignore and defy superiors and peers.

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  Find some happy people and get them to fight.

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  Reward success and failure and punish inaction.

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  Decide to do something that will probably fail, and then convince yourself and everyone else that success is certain.

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  Think of some ridiculous or impractical things to do, and then plan to do them.

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  Avoid, distract, and bore customers, critics and anyone else who just wants to talk about money.

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  Do not try to learn anything from people who say that they have solved the problems you face.

• •

  Forget the past, especially your company's successes.

In sum, he believes that creative companies and teams are inefficient and annoying places to work.

Page 15How leaders of multi-business groups can add valueStewart Early and Bruce McBratney

Does your company need business groups? Or if you have them, do the group leaders really add value? Now is the time for a reassessment. Competitiveness does not allow for a group executive to be "just another" span breaker, bottle-neck, and/or transaction cost in the decision-making process.

The group executive can be an important node in the corporate network by seeking opportunity for group businesses. "How to" achieve this lies in the answers to these questions:

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  Strategy. What is the business case (the value proposition) for bringing a collection of businesses together under the leadership of a group executive? Examples of strategy frameworks discussed are R&D, supply chain, distribution, sales, manufacturing, staff services, core capabilities, types of business challenges.

• •

  Role. How do you define the roles of the group executives? Eight "choices" are discussed. This menu is a starting-point for identifying and placing emphasis on which role(s) are most critical to delivering on the group's value.

• •

  Leadership. What leadership competencies are most critical for the group executive? How do they differ from those of the general manager? Five core competencies are described and five experiences are singled out for their value in preparing the group executive.

The answers to the strategy, role, and leadership questions are intertwined. Strategy sets the expectations for the business group. Group strategy defines the group's "value added" and drives the definition of the group executive's role. The role suggests what competencies and experiences will be most valuable. These competencies differ significantly from those required of a business unit manager, and are much closer to those found in successful CEOs.

Interestingly, research has shown three key points:

1. 1.

   "Success profiles" undergo a complete reversal from entry-level management to executive management. Styles essential to success early in the career can become a liability later in the career.

2. 2.

   Many group managers were not expected to enhance competitive advantage; they were expected to be portfolio managers. Without a mandate to add significant value, group executive (out of habit) would build small functional staffs, just as business unit managers do. Too often this activity cost more money than it returned, slowed decisions, and added bureaucracy.

3. 3.

   Many executives rise to the group level without receiving formal preparation. Frequent negative results are doing the business unit leader's job, complacency, diminished boldness, and ambivalence about the value of the corporation.

Page 23Business transformation through outsourcingJane C. Linder, Martin I. Cole and Alvin L. Jacobson

Outsourcing is rapidly evolving beyond the simple reengineering of support processes. For many companies, outsourcing partnerships are being used to achieve rapid, sustainable improvement in enterprise-level performance.

More specifically, in addition to the baseline value of reducing costs and offloading unimportant activities, partnership with an outsourcing vendor can be used to gain access to competitive skills, improve service levels, and increase the company's ability to respond to changing business needs.

To classify an outsourcing program as truly "business transformation," it must change the way the client company works by using outsourcing to achieve a rapid, sustainable radical improvement in performance – as measured by dramatic growth, market repositioning or rapid diversification. The resulting performance improvement can be measured in dramatic gains in share price, market position and return on capital. In short, it is a comprehensive approach that seeks to create new capabilities and then use them to achieve a clear strategic objective.

To understand the paradigm shift in thinking for the "business transformation," begin with an understanding that business transformation outsourcing achieves results by integrating five essential process components: top-level leadership, bold strategic agenda, innovative financial structure, outsourcing to transform critical processes, and focus on enterprise outcomes.

Next know that there are key issues that make the difference in execution of the outsourcing deal. They include:

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  Crafting the deal using different criteria from for conventional outsourcing vendors.

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  Leveraging the outsourcing partner's brand.

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  Aligning incentives around enterprise-level outcomes for the outsourcer as well as the client company. Make no mistake: it will be a radical departure from doling out bonuses and penalties based on service-level agreements.

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  Making agreements flexible.

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  Putting both partner names on the line with publicly announced intentions.

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  Betting money on the outcome with shared ownership.

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  Invoking the full power of both partners' incentive structures to deliver individual rewards

If your business has slipped behind, more often than not it means that skills and capabilities needed to succeed are lacking. Consider using business transformation outsourcing to regain the lead.