It Takes Two to Tango – Transformation & Innovation

There are two really big things that all enterprises have to do to succeed today – continuously Innovate and Transform. Like good dance partners, transformation and innovation need each other, in fact they each make the other possible.  

A company cannot truly transform without innovating a new business model and the transformation of a company, done well, sets off a surge of innovations throughout the enterprise.

When Howard Schultz returned as CEO of Starbucks he knew he had to transform the entire business model and culture (the way we do things around here) to pull it out of a vicious downward cycle. He fundamentally changed the business from a ubiquitous coffee chain focused on the velocity of sales to a global lifestyle company that reignited the passion for quality and the commitment to human connection. To do that he had to help the company open up innovations in sourcing, social media, technology, customer service and product development (to name a few). As the company moved to transform its business model and culture, a surge of innovations began to spring up, for example:

• MyStarbucksIdea.com – a social media platform/online community that empowers customers to create, vote and discuss ideas for improving the Starbucks experience. Nearly 75,000 ideas were submitted in less than six months after its launch.
• VIA Instant Coffee – a product innovation that ‘reinvented a commodity’ and expanded the company’s reputation for being the coffee authority in a new, untapped market

Starbucks is now in a virtuous cycle of continuous transformation and innovation. If you look at companies that are winning in their field you will see this same virtuous cycle. We could bring up the particulars of Apple as another great example but you already know the Apple story.

Now it is important to note that the Transformation & Innovation dance is best set to music of Depth & Duration.

Depth:

There are three levels of depth for both transformation and innovation. There is “Surface Presentation” – looking better, branding differently, telling a better story. Going deeper, there is “Basic Performance” – improving the way you are organized and executing or improving the basic performance of what you offer, i.e., a fundamentally better technology. Finally there is “Deep Transformation” – making a ‘whole system’ change “of” the enterprise (not just a program change “in” the organization), and a game changing total redesign of the customer experience (think of the integrated iPod, iPhone, iPad system that turned multiple industries on their heads).  

The Depth Challenge – Don’t settle for “surface change” or even “performance improvement,” go for “deep transformation” in both changing the enterprise and creating innovations you bring to the market. This means you have to go for it. As they say, you can’t cross a chasm in two leaps.

Duration:

You can make a lot of positive changes quickly but true transformation and innovation requires staying with it for the long haul. With transformation, there is an initial break-thru period that sets the new direction in motion. But to truly manifest the full power of the transformation there must be a commitment to continuous transformations. And if there is not a rippling effect throughout all aspects of the enterprise for long periods of time, it is unlikely the break-thru transformation will take hold. The gravitational pull of the status quo has defeated many enterprise break-thru plans that failed to make a complete change “of” the enterprise. 

This same long-term view thinking holds true for innovation. One trick pony innovations may make a brief splash but the real innovation, that changes the game in your favor, depends on building a long-term series of disruptive innovations, innovations that redefine the marketplace (again… iPod, iPhone, iPad). There is an axiom in Silicon Valley that says: “the faster you have to go to market with new innovations, the further out you have to think”.

“Leaders of the future will be ones who know the dance of Transformation & Innovation and can teach it to all of their people.”

—Dan Beam  

“Screwing Up” the Retail Status Quo

                             

To achieve success in this complex 3.0 world, companies are challenged to open their lens of thinking and envision new and innovative ways to leap ahead of their competition. Some of the world’s most admired brands – Apple, Virgin and Southwest Airlines to name a few – are also some of the most disruptive forces in modern business, setting new standards that fundamentally redefine their industries.

At BEAM, we often tell our clients that in order to truly transform their companies and sustain long-term growth, they have to “screw up the status quo” – shifting away from the ‘old’ ways of doing business to tap into what is emerging and relevant to their customers now. Lululemon, recently featured in an article in the Wall Street Journal, is an example of a company that has “screwed up” the apparel industry by courageously ‘zigging’ while other retailers are ‘zagging’. The article attempts to uncover the ‘secrets’ behind its success…

According to the article, Lululemon attributes part of its success to its small footprint and ‘scarcity model’ – producing a limited supply of stock to create high demand. Cultivating a sense of scarcity creates buzz in the marketplace and breeds excitement among ‘fanatical’ shoppers who are eager and willing to pay full price for merchandise. While other retailers have fallen victim to the destructive ‘vicious cycle’ of mark-downs – relying on discounting to drive sales – Lululemon has used its pricing power to its advantage, conditioning customers to snatch items off the shelves before they sell out.

Lululemon has also strayed from conventional wisdom by eschewing traditional market research (such as tracking customer data and facilitating focus groups). Ms. Day, CEO of Lululemon, firmly believes that she can connect more deeply to the needs and desires of customers through direct observation – getting a true ‘feel’ for what is important to them. Folding tables are strategically positioned near the fitting rooms so employees can overhear customer complaints and shoppers are encouraged to write their feedback on chalkboards in the stores. The company has recognized that they can gather valuable information about their customers without the false reassurance of spreadsheets.

Lululemon’s unique business model has yielded results that have even surpassed the expectations of analysts. Now valued at $10.4 billion, the company’s sales have continued to grow for the 12^th consecutive quarter and Lululemon has booked a record of $1,800 in sales per square foot. Looks like “screwing up” isn’t so bad after all…

—Julia Hammerschlag

Have Deeper Conversations, Your Future Depends On It

In an earlier blog, I wrote about the connection between deeper conversations, happiness and innovation. I noted that…

• Happy people talk about meaningful topics and have deep conversations with their friends and colleagues.

• The New York Times reports that research by Dr. Mehl, a psychologist at the University of Arizona, has found that deeper conversations make for happier people. Unhappy people have three times as many “small talk” conversations as happy people.

• To create game-changing innovations, we need the creative insights that come from our innermost intuitive explorations that often arise from deep conversations. This process of more meaningful discourse and successful creation can also create greater satisfaction and happiness.

Let’s look at a couple of examples from business:

• A deeper conversation about your customer –

With a recent client we shifted the planning discussion from just another listing of new product ideas to a deeper conversation about customer’s personal lives…what is important to them, how they live, what gives them joy. We then had the leaders broaden the conversation to cross-functional teams throughout the company who gave the customers names, developed a narrative of their lives, envisioned what kind of products will best meet their desires and needs, and developed the market messages that would resonate with them. This was all supported by research and more conversations with customers who fit this profile. The outcome of this enterprise-wide conversation was the development of a whole new, game-changing category of products that were meaningful to a new market segment. The business not only opened new growth opportunities, it broadened and deepened the appeal of its brand.

• A deeper conversation about your future –

With another client, we moved the focus of the strategic planning discussion from the superficial problem-solving pattern to one of a deeper conversation. Through this discussion, we found that they had been defining themselves by their products (always a danger sign). The future emerges, not from product or services, but from the essence of who you are and how you connect to the hearts and values of your customers. In uncovering this “essence of the business” from which the future will flow, our deeper conversation opened up a whole field of possibilities. As a result, the company is no longer defined by a single category of business but instead has a portfolio of businesses. This diversity of businesses has allowed them not only to adapt to the many ups and downs of the market, it has also enabled them to grow a company and brand that is one of the most respected and successful in their field.

Want to build a better future? Have a deeper conversation.

—Dan Beam



Dive Deeper - Be Happy & Innovate

Happy people talk more about meaningful topics and have deeper conversations with their friends and colleagues.

The New York Times reports that research by Dr. Mehl, a psychologist at the University of Arizona, has found that deeper conversations make for happier people. Unhappy people have three times as many “small talk” conversations as happy people.

This research got me thinking about conversations at work. Sure, there are often very “serious” conversations in the work world (“Sales are falling, what are you going to do about it?”) but how deeply meaningful are most conversations?

Our experience with thousands of groups shows that when we enable people to engage in deeper conversations they not only find them more satisfying, they also dive deeper into the intuitive pool where the gold coins of creativity await.

There are three levels of innovation – surface innovations (change the look of something), base innovations (change the basic way something works) and deep innovations (tap into the creative insights to fundamentally change the whole game). 

Whether an enterprise is changing its products, its messaging or the business model that will define its future, its leaders must dive beneath the surface.

So what kind of conversations have the people in your organization been having lately?

Happy Innovations!

—Dan Beam



Happiness in the Air

There is happiness in the air. This word, this idea, this desire is everywhere.

In addition to the many popular books on happiness, with sources ranging from the Dalai Lama to Harvard professors, happiness is a topic of discussion in board and staff meetings. 

Over the last few years, working with a broad array of clients, we have seen that happiness is an idea whose time has come. When leaders do their long range planning and envisioning, they now express the desire and need to create happiness. This is more than quality of life or standards of living. They want happiness for their people and for the impact of what they produce and provide to the world.

No so long ago, planning teams in business and not-for-profit enterprises didn’t use this word to describe what they wanted for the future. They would have squirmed in their leather boardroom chairs if a word like happiness was brought up. Instead, they talked about the "hard-nosed" metrics of success…profit, pay-off, returns, volume, market penetration, etc.

It’s not that these previous metrics for measuring success have gone away, it is that when all is said and done happiness is the greater goal. And the big time leaders who are shaping the future increasingly state openly that happiness is what they want.

As one board member from a mega corporation expressed… “Why shouldn’t we be setting a goal of happiness when the conservative President Sarkozy of France is suggesting that countries consider establishing happiness metrics to measure the success?”

Yes, and why not invite your enterprise to explore how happiness could be a goal worth establishing?

—Dan Beam