THE CONNECTED COMPANY “Management book of the year. Mandatory reading for any incumbent wanting to have a chance in the hyperconnected economy. The Connected Company. How Distributed Organism Businesses are Rising Against the Machine to Build a More Connected World. Dave Gray. Get Free Read & Download Files The Connected Company Dave Gray PDF THE CONNECTED COMPANY DAVE GRAY - In this site isn`t the same as a.
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READ|Download [PDF] The Connected Company Download by - Dave Gray ONLINE ebook free trial Get now. Download Read The Connected Company (Dave Gray) PDF Free PDF Free Donwload Here raudone.info?book= The. Connected, communicating customers and employees have more tive, what it meant for the future of the company as well as what it said.
For more information about Safari Books Online, please visit us online at http: You can access this page at: Its ideas build on those of generations of thinkers and innovators. A book like this one evolves slowly, through countless conversations that lead to countless suggestions of people who must be spoken to, companies that must be understood, books and articles that must be read.
And though the task was impossible, I did try to speak to everyone, understand every company, and read every book and article that was suggested. My desk piled high with books, papers, and transcribed interviews, which were soon were marked, folded, plastered with sticky notes, and supplemented with boxes and boxes of cross-referenced index cards, diagrams, and sketches. So many people contributed to this effort that it would be impossible to recognize them all in such a small space.
But I must single out a few people whose contributions loom large.
Connected Review vs. Shared Review
I soon collected a small posse of people who were tremendously helpful as a sounding board for the ideas as they developed. Richard Gray. I also had tremendous help and support from my colleagues at Dachis Group, specifically: Scott Matthews, and Aric Wood. Edwards Deming, many of whose groundbreaking ideas are only now being realized. I must single out for special recognition my friend, Bo McFarland, who took the whole project under his wing and spent many hours providing detailed feedback and serving as a high-level advisor to the project.
I cannot neglect the stellar team who worked ceaselessly on the design, production, and promotion of the book: And most of all, I need to thank my family, for their help and forbearance: To all of you: We all know that the competitive environment has changed forever.
Yet, surprisingly, while surpassing themselves at innovating with products and services, most companies are terribly slow at reinventing their management style, organizational structure, or institutional culture.
They remain inapt to a fast-paced and connected world in which customers instantaneously and globally voice their dissatisfaction over anything less than outstanding products and services.
These expired ways of organizing often result in unhappy clients, demotivated employees, and missed opportunities for new value creation. In my work on business model innovation with large, global companies, I am constantly confronted with this. In the face of a changing competitive environment, companies are forced to take action.
Smart and energetic executives generate amazingly innovative business models that have the potential to produce future growth, but then the organization is incapable of making things happen.
More senior or more established executives get the company to fall back on their historic business model and old ways of working, which made them successful originally. In the short term, this might offer the comfort of a known model, less risk, and maybe even short-term gains.
In the longer term, this often represents the roots of a decline into irrelevance or an increased risk of disruption by more nimble and often totally new competitors with innovative business models. To make it happen, we need to build new spaces for experimentation and learning. We need new organizational principles and platforms for autonomous teams to succeed. We need new incentive systems and institutional cultures to get employees motivated again.
In short, companies need management innovation. In an approachable style, with explanatory visualizations and fascinating examples, he weaves together the core elements you need to take into account when designing the connected company: Customers are adopting disruptive technologies faster than companies can adapt.
If you make customers unhappy on the Internet, they can each tell 6, friends. Connected, communicating customers and employees have more choices, and more amplified voices, than ever before. They have more knowledge than ever before. These trends are only increasing with time. Schultz, always in the habit of visiting stores around the world, had noticed that the Starbucks experience was deteriorating. The amount of money customers were spending was starting to dip.
Espresso machines, which increased efficiency, were too tall; they created a wall that blocked the line of sight between customers and baristas, a barrier to conversation and connection.
Flavor-locked packaging, which guaranteed fresh roasted coffee in every cup, also made the stores more antiseptic, depriving them of their rich, flavorful, coffee aromas. Streamlining store designs increased efficiency, but many customers perceived them as sterile, cookie-cutter designs. But it soon became much more than that. Schultz was shocked. Reporters were already calling, but Schultz was too shaken up to grant any interviews.
This had been a confidential memo to the CEO and a small group of senior executives in the company. The memo had first appeared on a blog called Starbucks Gossip and was quickly picked up by the mainstream media. The speed at which word spread, and the breadth and depth of the online conversations that ensued, astonished Schultz: The day after the memo was posted, the mainstream media picked it up like a whirlwind. The Wall Street Journal.
The New York Times. The Associated Press. Bloomberg, Reuters, the Financial Times. Online financial news sites and independent blogs. Articles quoted the memo and parsed my words, usually under dour headlines that implied, or stated outright, that trouble was brewing at Starbucks. Online, readers posted comments one after the other. Many of them stung.
Stunned as I was that the memo had been leaked, I was also astonished by the depth of conversation it unleashed, as well as the speed. Schultz says he took two very important lessons from his experience. First, nothing can be presumed confidential.
Second, Starbucks did not have a voice in the global conversation: The millions of dollars we invested in local communities. The health-care coverage and stock we extended to part-timers, at a considerable cost to the company. Starbucks had no interactive presence online. The leaked memo and its aftermath were a wake-up call for Schultz.
And because the memo was interesting, it cascaded through the network, gaining momentum as it went, like a tidal wave. These kinds of cascading effects are common in networks. An initial event strikes a chord: As a result, it is shared, commented on, analyzed, and argued about.
And as it moves through the network, it is amplified, sometimes to an exponential degree. Dell sucks. At the time, Dell had an internal policy not to reply publicly to blogs. So the company remained silent, and the PR nightmare snowballed. He became concerned as he watched baggage handlers on the runway throwing guitars. He filed a claim with the airline, but they refused to honor it because he had failed to make the claim within 24 hours. For nine months, he tried to negotiate with the airline.
Within one day of its release, it had amassed , views. In a few weeks, that number had risen to 5 million, and in December, Time magazine listed it as number 7 on a list of top viral videos of Once the video was released, United contacted Carroll to try to right the wrong, but it seems that their efforts were too little, too late.
Bob Taylor, owner of Taylor Guitars, gave Carroll two free guitars, and Carroll refused compensation from United, asking instead that they revise their customer service policies and give the money to charity. Kristy Hammonds, 31, later said in a company email that it was just a joke and that she was sorry.
But the damage had been done. Schiller resigned and the CEO was forced to step down shortly thereafter. While I hide it at work, my passion has been sapped. Within three days, 8, people had signed up to attend the event. So I stood up. With each person who RSVPs to this event, my heart swells. That same week, Bank of America dropped its plan to charge additional fees. Power in the network By changing the way we create, access, and share information, social networks are changing the power structure in society.
Customers like Kristen Christian can pick up a megaphone at any time, and if they have a message that resonates with the network, it can gain momentum very fast. Disgruntled employees can get their message out through leaks or anonymous memos like those from Starbucks and RIM. However it happens, once something is released to a network, it can rapidly spin out of control. Customers are connecting and sharing information at a far faster rate than the companies that serve them.
Networked customers can easily bypass formal channels to get information and support directly from each other. Think about where you go when you want to make a downloading decision today. In general, you go to peers first. If you want to go to a restaurant, you might go to Yelp!
Booking a hotel? If you care about comfort and service, you might go to Hotels. Want to watch a movie? These peer-to-peer conversations subvert traditional marketing channels. And customers have begun to recognize, and exercise, their power. This power, in and of itself, is not necessarily new.
Customers have always had the power to choose what they wanted to download.
Customers and workers have always had the power to share their experiences with friends and peers. Customers have always been able to vote with their wallets. Any dictator will tell you that in order to control the state, you must control the media.
So ask yourself: And which way are the trends heading? In February , a nonprofit organization called WikiLeaks began releasing classified cables between the US State Department and its consulates, embassies, and diplomatic missions around the world. It was the largest leak of classified material in the history of the world, and there was nothing the US government could do about it.
Wikileaks has demonstrated definitively that no secret, corporate or political, is safe for long. But customers will be kings and queens, not only in name, but in fact. One by one, customers are recognizing the power that comes from a world in which their choices are infinite and their voices are amplified.
They are connecting. They are organizing. They are gaining mass and momentum. All that is required is for a new company to come along and offer a better service. Connected customers will become aware of such services far more easily than they have in the past, and share the information more quickly, too. If the new service is interesting, it will quickly cascade through the network. That was a controversial decision at the time. Why would a retailer allow anyone to post information that would help a customer decide to not to download something?
You make money when you sell books. He understood that what connected customers value is a company that will help them make better downloading decisions. And today we all understand that. It will affect every business. It is already shifting the balance of power. It is changing the way power is controlled and exercised. It will change the way companies are organized and the way they do business. Eventually, every customer will be a connected customer.
And if you want to win over connected customers, you will need to become a connected company. Rodale Inc. Manufactured goods often can be evaluated before the completion of a transaction.
Service providers, on the other hand, usually can offer only their reputations. How New Ways of Living and Working Drive Post-Crash Prosperity, Richard Florida points to a shift from an economy based on making things to one that is increasingly powered by knowledge, creativity, and ideas: Great Resets are broad and fundamental transformations of the economic and social order and involve much more than strictly economic or financial events.
A true Reset transforms not simply the way we innovate and produce but also ushers in a whole new economic landscape.
It represents a reset. People who understand that will prosper. There will be winners and there will be losers. Economist J. Bradford DeLong points out that in , the richest man in the world, Nathan Rothschild, died of a common infection that would have been easily curable with modern antibiotics.
In the s, even the richest of the rich could not go to the movies or watch football on TV, and traveling from New York to Italy took at least a week. The material abundance we all enjoy was made possible by an industrial economy that focused primarily on mass-producing material goods. If you could produce great volumes of a product at a low cost, the market for that product would be virtually unlimited. In the early days, his idea held true, but eventually, every market gets saturated and it gets more and more difficult to sell more stuff.
As markets became saturated with material goods, producers found a new way to apply the principle of mass production in mass marketing. With a TV in nearly every house, producers had a direct line to customers. Increasingly, this producer-consumer economy developed into a marketing-industrial complex dependent on consumer dissatisfaction and the mass creation of desire for the next new thing.
New technologies of communication have splintered the channels of mass communication into tiny fragments. The megaphone is gone. And with the rise of blogs, social networks and other peer-to-peer communication channels, every customer can have his own megaphone. The problem is that the organizations that generated all this wealth were not designed to listen, adapt, and respond. They were designed to create a ceaseless, one-way flow of material goods and information. Everything about them has been optimized for this one-directional arrow, and product-oriented habits are so deeply embedded in our organizational systems that it will be difficult to root them out.
Our entire society has been optimized for production and consumption on a massive scale. Our school systems are optimized to create good cogs for the corporate machine, not the creative thinkers and problem-solvers we will need in the 21st century.
Our government is optimized for corporate customers, spending its money to bail out and protect the old infrastructure instead of investing in the new one. Our entertainment and advertising industries are designed to drive demand and keep the whole engine running. The whole approach of throwing trillions of public dollars at the old economy is shortsighted, aimed at restoring our collective comfort level.
Meaningful recovery will require a lot more than government bailouts, stimuli, and other patchwork measures designed to resuscitate the old system or to create illusory, short-term upticks in the stock market, housing market, or car sales.
We live in a service economy. And to succeed in a service economy, we will need to develop new habits and behaviors. And we will need new organizational structures. An emerging service economy Since , services have dominated US employment. Services are integrated into everything we download and use. Nine out of every ten companies with fewer than 20 employees are in services.
Companies like GE and IBM, which started in manufacturing, have made the transition, and now make the majority of their money in services. Three things: Product saturation When people already have most of the material goods they need, they will tend to spend more of their disposable income on services.
Increasingly, the products that companies want to sell us are optional; they offer not functionality, but intangible things like status, pride of ownership, novelty, and so on. And products, we have found, not only make life easier, but can also be a burden.
When you own a house, you have to spend money to fix the roof or the plumbing. And moving can be a big hassle when you have a truckload of stuff to lug along with you. Information technology A post-industrial revolution is delivering a new kind of abundance: Think about how you use the Web. While at first this shift was driven by the kinds of things we traditionally think of as information containers, like pages and images, now it has exploded to include many things that were previously undocumented: This digital revolution is ushering in new ways to deliver, combine, and mix up services, resulting in all kinds of enticing combinations: Urbanization In addition, there is an increasing trend toward urbanization.
Throughout the world, city populations are growing much faster than rural populations. We are becoming an urban society and living more urban lifestyles. Why are people moving to cities? Because cities are where the action is. And the more highly skilled you are as a worker, the more you stand to gain financially by moving to a large city. Cities pack a lot of people and businesses into a relatively small space, which is good for services companies in several ways.
Urban density makes it more attractive for companies to provide a wide variety of services. For example, a cable company can wire a city apartment building and serve hundreds of households for a fraction of the cost to do the same thing in a suburb or rural area.
Taxis find customers quickly in densely packed urban centers. One city block can support several specialty stores and a variety of restaurants. And in a reciprocal loop, that wide variety of services makes cities even more attractive places to live. Consider the quintessential industrial-age product, the automobile: A permanent parking space in New York costs more than a house in many other areas. Density creates demand for more services, like taxis, limousine services, buses, and subways.
It also creates opportunities for new services. For example, Zipcar is a car-sharing service that gives customers shared access to a pool of cars located throughout their city. RelayRide and Whipcar are peer-to-peer services that allow car owners to rent their cars to neighbors by the hour or by the day. Uber connects a network of professional limo drivers with city dwellers, who can order a car by SMS or mobile phone app; orders are routed to the nearest available driver, payments are automated, and driver tips are included, creating a simple, easy, seamless customer experience.
Cars themselves will increasingly become platforms for delivering services. In , GM created OnStar, an in-car subscription service that offers turn-by-turn directions, hands-free calling, and remote diagnostics.
If your car is stolen, GM can track the vehicle, slow it down, or shut off the ignition remotely. And Google is working on cars that will drive themselves.
If a car can be a service, anything can. Some people argue that the majority of services growth comes from low-wage jobs.
But according to the US Bureau of Labor Statistics, job growth will be led by health care, followed by professional, scientific, and technical services, as well as education. HarperCollins, Bradford DeLong. Did the UK reach a maximum use of material resources in the early part of the last decade? The Regional Economist, January They are co-created with customers and are interdependent with wider service networks and clusters.
Schools efficiently produce standardized students. Hospitals efficiently move the sick and injured through a diagnostic and prescriptive production line. Drive-through restaurants efficiently move drivers through an order-fulfillment pipeline.
Service-dominant logic But most of these services are not really services at all. They are factory-style processes that treat people as if they were products moving through a production line. Sure, many services require some level of efficiency, but services are not production processes.
They are experiences.
Unlike products, services are often designed or modified as they are delivered; they are co-created with customers. They may require specialized knowledge or skills. The value of a service lies in the interactions: Service providers often must respond in real time to customer desires and preferences. To this end, a company with a service orientation cannot be designed and organized around efficiency processes. It must be designed and organized around customers and experiences.
This is a complete inversion of the mass-production, mass-marketing paradigm, which will be difficult for many companies to adopt. Vargo and Robert F. Lusch describe a new paradigm they call service-dominant logic, a fundamental shift in worldview and orientation toward marketing as a social process. In this view, products are not ends in themselves but means for provisioning services.
The customer is seen as a co-producer, and knowledge is the source of competitive advantage. In product-dominant logic, production is the core of the value-creation process, while customer service is a cost to be minimized. But in service-dominant logic, products are the cost centers, and services become the core value-creation processes. Why such a fundamental shift?
Furthermore, products are anchors. Investments in manufacturing take time to provide returns, and during this time period, customer needs are likely to change. Like looking through a telescope the wrong way around, for many people who have become habituated to a product orientation, this inversion to servicedominant logic will at first feel unnatural and uncomfortable. The good news is that there is huge room for improvement, and companies that dedicate themselves to improving services stand to make significant gains in profitability and competitive advantage.
Another survey by American Express found that two-thirds of customers have not noticed improvements in customer service, and that fewer than 1 in 10 customers think companies are exceeding their expectations. An overwhelming majority of customers are willing to spend more to get excellent service, and more than half of them will switch companies to get it.
And for most companies, the biggest growth opportunities in the coming years will come through services. A product is a service avatar The first step to a service orientation is to change the way we think about products. Instead of thinking about products as ends in themselves, we need to think of them as just one component in an overall service, the point of which is to deliver a stellar customer experience.
Today, many people think of an avatar as the face or icon that represents you in your Twitter stream, or on your Facebook page. But the original word avatar comes from ancient Sanskrit, based on the root words ava descent, coming down and tatari crossing over. The original meaning is the divine made flesh: Energy transformed into matter.
The Connected Company
In the same way, a product can be considered to be a physical manifestation of a service or set of services: A car is the manifestation of years of learning, accumulated through research, crash testing, metallurgy, electrical engineering, design, and a score of other disciplines, including good old trial and error. And as we have seen, a car itself provides the service of getting you comfortably from one place to another.
The ratio of knowledge to matter in any product increasingly favors knowledge. A modern car contains more computing power than the system that guided Apollo astronauts to the moon. Consider the difference between a TV and a TiVo. The knowledge and services embedded in a product are what give the product its value. Consider an iPhone. Its value comes from the services it provides you: The job of the iPhone is to provision you with services.
The words we use to describe products are a dead giveaway. Think about the number of product names that are essentially verbs or job descriptions. Products as verbs You use an iron to iron things, a brush to brush things, and a bottle to bottle things. You ladle with a ladle and hose things down with a hose. You step on a step, drum a drum, handle a handle, and grill with a grill. You mail the mail, drink a drink, lock a lock, and microwave things with the microwave.
Cups cup things. You tape things together with tape. A washer washes things and a dryer dries things. The lawn mower mows the lawn. The heater heats, the boiler boils, and the air conditioner conditions the air. In your kitchen, the refrigerator refrigerates and the freezer freezes. At work, the copier copies, the scanner scans, the printer prints, and the computer computes. The doorstop stops the door. Lipstick sticks to your lips and eye shadow shadows your eyes.
They are servants. On the site, you can go to the store, browse for stuff, read reviews, and start reading a book, listening to music, or watching a film in less than a minute. Open a site book on your iPad, and the service syncs to the last page you were on. The site is a physical manifestation and extension of the services site provides to its customers: The customer must participate in defining and determining that value.
That car, beautiful as it may be, has value in an economic sense only to the degree that a customer is willing to pay for it. The company can only create an offer, value proposition, or proposal.
The customer must accept in order to create value. The bus can make an offer, but the customer still must step onto the bus for the value to be delivered. Co-created value requires a relationship: The relationship between a company and its customers develops gradually, as customers build trust in the company and its ability to deliver on its promises over time.
The product is an intermediate step, not an end in itself: If the company is lucky, they will like it enough to tell friends about it, educate others, promote it, download additional services around it, and so on. A service-dominant world changes the game significantly. Serviceorientation is a fundamental shift and creates opportunities for new business strategies, new sources of competitive advantage, new ways of interacting with customers, and new ways of organizing work.
A process is not a service We have developed a tendency to think of flows in terms of process, but services and processes are not the same. Processes are linked, linear chains of cause and effect that, when managed carefully, drive predictable, reliable results. A service is different. While processes are designed to be consistent and uniform, services are co-created with customers each and every time a service is rendered.
This difference is not superficial but fundamental. A process has only one customer: A process is rule-bound and tightly regulated. Service is work performed in support of another person.
At every point of interaction, the measure of success is not a product but the satisfaction, delight, or disappointment of the customer. Customers want services to be convenient for them, not for you. Consider insurance. Even though insurance is a service, in many ways it is sold like a product.
Our customers come to us when they need insurance. For example, Whipcar allows car owners to rent their cars out when they are not using them. PayPal is a super-granular payment service that is easy to plug in to any ordering system.
After all, downloading from another vendor is usually just one click away. Service networks thrive by making a set of complementary services more easily available to customers. Customers tend to like convenient clusters of services. But to be effective in networks, companies need to learn how to navigate and interact successfully in environments that are fluid, ever-changing, and mostly outside of their control.
One of the challenges the FDA is facing is that more and more drugs and devices are coming up for approval all the time, and the FDA has limited resources for evaluating and approving them. The more drugs and devices that come in to the system for approval, the fewer the FDA can actually look at in detail. In a world of limited budgets, this presents a major challenge that will only increase over time.
The same thing is happening in microchips. At one time, the chip business was focused primarily on chips for servers and PCs. The production cycles were predictable. But today, the world of devices has fractured into devices that serve all kinds of purposes, with all kinds of production cycles. Chips are embedded in almost everything, from sneakers to smart phones.
Competitive intensity is rising all over the world. Global competition and the Web have given customers more choices than they have ever had before. This means that customers can choose from an ever-widening set of choices, and it seems that variety only breeds more variety. The more choices that become available, the more choices it seems people want. Customers have lots of things they are trying to do, and lots of ways they are trying to do them.
And you have lots of competitors who are trying to offer them better, cheaper, faster, easier ways to do those things. As the front edge of technological change gets bigger, its surface area also grows, like an ever-expanding balloon. Every new technology adds one more set of capabilities that the next generation of technology can expand on. Technology has a lot of effects.
It reduces the friction of distance, it increases the variety of options and possibilities, it increases the velocity of just about everything, and it tends to also increase complexity and interdependency as more and more technologies build on and interoperate with each other. In the coming century, the world will create a lot of variety. This is great for people who want more choices, but it creates a real problem for companies. From drugs to microchips, from food service to entertainment, your customers will be expecting a lot of variety from you.
They will want better quality, and they will want it faster and cheaper. They will expect you to respond quickly to their demands for personal and customized services. What the market requires is not incremental improvement, but order-of-magnitude increases in performance.
Are you ready to respond to these rising expectations? They interfere. They just come in massive waves at the most inconvenient times. Then they get angry when they have to wait. Sometimes they can be really slow to figure things out. They want everything to be customized and personalized for them. They have no interest in efficient operations.
They want to have a conversation. And customers want to get on with their days. They want services to be convenient for them. They want to get a coffee, get their hair done, and have lunch. At the same time, competitors and even cooperating partners continually change the system as well.
Our companies have all been optimized for a perfect one-way stream, the line of production, and these pesky customers are mucking about in our operations, and we have now a completely different problem to solve. Why is it so hard to keep your service promises? Since services are created as they are delivered, the only way to sell them is by making a promise to perform. But most service companies fail to keep their promises, leaving customers frustrated, confused, and abused.
Why do so many service companies fail to keep their promises to customers? A study by American Express found that fewer than 1 in 10 customers say companies are exceeding their service expectations. Customers are not getting the service they want. Many feel abused. Customers have become accustomed to being abused by the companies they download services from. Their expectations for most services are low, low, low.
The most hated companies, and the most hated industries, are service providers. They are designed like factories, optimized for the mass production of inputs into outputs. This makes perfect sense in a rapidly-industrializing economy. Traditional management thinking looks at a customer service call as an input to the service factory.
But inputs from customers come in all kinds of different shapes and sizes. Every problem, every job that customers need to do, has its own unique profile. Most companies try to standardize these inputs as much as possible so they can process them efficiently.
As companies try to fit customer demands into standard boxes, customers become frustrated and angry. They give up. Sometimes they leave to find another provider, but even then they often hold little hope that anything will change. Customer support: Did you talk to a real person or an automated system? Did you have to ask to speak with a supervisor?
Did you lose your temper? Did you swear? Did you hang up the phone in disgust? Did you not even call at all, because you knew it would not be worth the time and effort? You are not alone. When customers are dissatisfied, there are only two possible outcomes. Trying to reduce or outsource your customer support costs might actually cost you a lot more in the long run, as you lose customers and they badmouth you to all their friends. Consider what happens when you focus on costs in your customer service operations: Maybe the customer will give up at that point.
Once again, you have two possible outcomes: Now that the customer has finally reached the right department, you still have two possible outcomes: At that point, there are still two possible outcomes.
Customers will put up with this kind of treatment only for so long. Eventually, they will find another company that treats them better. That would be great for you though, right? Yay for the cost savings team! Then, when your customer tells all her friends about her experience, you will lose more customers. Your call center costs will continue to go down. At some point, when the last customer has left, you can eliminate your call center altogether.
Total cost victory achieved. Many companies assume that cutting costs will lead to lower quality. But that is not necessarily so. Quality expert W. Edwards Deming once said that this is easy to understand. If you talk to a line worker in any factory, he said, just ask: Consider the cost of a frustrated customer who gives up and finds another provider.
Consider the costs involved in replacing customers that you lose through bad service. A company that truly serves customers well has vastly lower marketing and customer acquisition costs.
Happy customers are the best marketing department any company could ever have. All these costs are extremely important, but they are not easily counted.
Many companies focus on those costs that are easily identified on the financial statements. But by cutting those costs, they are playing a shell game. In actuality, they are just moving those costs around. They are eating their own future: Calling a company for support is usually a headache.
Usually, you start with a voicemail system and then you mess around for a while trying to find the right menu. Often, none of the menus exactly fit what you need, and it takes a while to get a real person on the phone.
Then, when you finally get someone, you have to give them all your information even though you have already entered it into the system. Vanguard customers have a vastly different experience. When you call Vanguard, you get a person on the phone, right off the bat. They stay on the call. They have inverted the traditional concept of control.
Companies must find ways to create, maintain, and develop deep connections as they grow. Running through every business success story is a common theme: This seems pretty obvious.
Customers, after all, are the one thing no business can do without. Paying attention to customers seems like such a fundamental thing. So why do so many companies do it so poorly? How do companies lose touch with their customers, and lose their grip on the realities of the marketplace? And yet, as companies grow, distractions multiply. Success can create such a dazzling array of opportunities that companies try to capitalize on too many of them, over-expanding and diluting their offerings.
The Connected Company -- A Manifesto
Internal efficiency and organization become paramount as companies struggle to maintain their growth trajectories and keep the factories and supply chain moving.
Political squabbles can erupt as people jockey for status, attempt to seize greater authority and control, or take credit for successes. Bureaucracies that emerge to handle increasing complexity and organizational challenges can also stifle creativity and innovation.
Focusing on the complexities and intricacies of growth, many companies take their eyes off of the customer, their most important asset. Ironically, a history of success may be the biggest reason companies lose touch with customers.
Success can fuel enormous growth and even lead to market dominance. But it can also lead to over-expansion, blind spots, and risk-avoidant cultures. Over-expansion Caught up in whirlwind growth, some companies become distracted by a landscape of opportunity and try to do everything just because they can.
How Starbucks lost touch In the early s, Starbucks focused on growth, expanding globally, opening new stores, and populating their stores with more and more products, like songs and books.
New stores were opening every day, and a seemingly endless parade of new products entered stores, until every Starbucks seemed to double as a gift shop. And dangerous. How Krispy Kreme flamed out It seemed as if Krispy Kreme had created the perfect business with all the right ingredients: Krispy Kreme had grown organically since its founding in , and after going public in , the company entered into a phase of aggressive growth.
It opened a flurry of new stores, selling its donuts in convenience stores, drug stores, gas stations, and big-box retailers like Walmart. New store openings were heralded on local news stations and customers lined up outside stores for a first taste of the fantastic donuts. Donuts, it turned out, might not be so addictive after all. By opening so many franchises so quickly, Krispy Kreme forced franchisees to compete for a limited market.
In addition, franchisees were required to download equipment directly from Krispy Kreme at marked-up prices. But by maximizing its short-term profits from franchisees, Krispy Kreme shot itself in the foot.
Many stores struggled to make a profit and some went out of business or had to declare bankruptcy. Sales dropped. One of its biggest franchisees defaulted on payments and later filed for bankruptcy. Other franchisees also declared bankruptcy, and Krispy Kreme found itself saddled with more stores than it could operate profitably. Krispy Kreme retrenched, sorted out its finances, and settled with the SEC in As companies grow, they increase in expertise and efficiency as they attempt to increase profits and market share.
When new technologies and business models inevitably come along to disrupt the status quo, the company has stuck all its eggs in one basket.
To that end, the group was wildly successful and has been credited with the invention of laser printers, bitmapped graphics, the mouse, the graphical user interface GUI , what you see is what you get WYSIWYG text editors, and Ethernet. But when it came to introducing these innovations to the marketplace, Xerox faltered. While this gave researchers great freedom to pursue new ideas, it also made it more difficult for them to convey the opportunities to senior executives.
At the time, copiers were generating huge profits, and Xerox still saw itself as a copier company. He was inspired. He was very excited. This is the greatest thing. This is revolutionary!
Xerox may have learned its lesson. Today, the company is focused on moving from being a copier company to a services company.
After taking your photos with the camera, you could remove the tape and put it into a playback device to display the images on a standard TV. Sasson reports the executive reaction: How would you store these images? What does an electronic photo album look like? When would this type of approach be available to the consumer? In 15 to 20 years, the devices would be available to consumers. What did Kodak do? Over time, it became more and more evident that the predictions were coming true.
Consumer digital cameras followed in the s. Customers could take film to a processor and get a CD back instead of prints. They could then view the CD on their TV with a special player.
Kodak executives met with technology companies, trying to find a way to partner. Bill Gates remembers Whitmore; he remembers Whitmore falling asleep in a meeting. First digital cameras, but it turned out the margins in that competitive industry were way too thin. Next, online services to help people manage their photos. No doubt, times are tough in the film business. But consider rival Fuji. As early as the s, it was producing videotape, computer tape, and audio cassettes.
In the s, it was selling VHS tapes and floppy disks. Today, Fuji is building on its experience and expanding into other industries, such as medical systems, digital imaging, optical devices, and specialty materials like the thin films used in making flat-panel displays and solar cells.
Fuji stayed in touch with customers and the changing market. In January , Kodak filed for bankruptcy. Risk-avoidant cultures When a company is large and successful, its size can be its worst enemy, especially when it is so dominant that it lacks serious competition. A company culture that drove success in the early days can become overly codified, rigid, and ritualistic.
Over time, bold new moves become much more risky; new business models may compete with existing businesses and cannibalize their sales. Slowly, great companies can lose touch with reality. Bureaucratic rigidity reigned supreme when young executive Jack Welch moved into GE headquarters in From the forklift drivers in a factory to the engineers packed in cubicles, too many people were just going through the motions. Passion was hard to find.
I wanted to face these realities. In fact, it was war. Welch declared war on the bureaucracy and entitled culture at GE. As the company grew, it continued to focus on its business customers and helping them process and manage the data it took to run their businesses. They needed a change agent. There was general permission to stop projects dead in their tracks, a bureaucratic infrastructure that defended turf instead of promoting collaboration, and a management class that presided rather than acted.
But Gerstner took a different tack. IBM regional managers were like powerful heads of state, and resisted him at every turn: After some investigation, we found that the head of Europe was intercepting messages at the central messaging node. Go talk about databases.
Changing the culture was the key to the transformation. Gerstner, like Welch, wanted a high-performance culture. Culture is deeply embedded in the ongoing habits and routines that permeate any company. What you can do is create the conditions for transformation. You can provide incentives. You can define the marketplace realities and goals.
But then you have to trust. Luckily, he did tackle it, and persistent effort paid off. Walmart dominates retail by relentlessly focusing on price-sensitive customers. Walmart and Nordstrom focus on two profitable but distinct market segments, while other retailers who try to be too many things to too many people, like Sears and JC Penney, get squeezed.
The world is constantly changing, and so are customers. There will always be customers who want great experiences, great service, convenience, selection, low prices, and fast delivery. A customer-focused company knows what its customers care about and builds capabilities and strategies that reinforce its advantages over time. Published on Jul 7, The future of work is already here. Customers are adopting disruptive technologies faster than your company can adapt.
When your customers are delighted, they can amplify your message in ways that were never before possible. But when your company s performance runs short of what you ve promised, customers can seize control of your brand message, spreading their disappointment and frustration faster than you can keep up.
To keep pace with today s connected customers, your company must become a connected company. That means deeply engaging with workers, partners, and customers, changing how work is done, how you measure success, and how performance is rewarded.
It requires a new way of thinking about your company: Connected companies have the advantage, because they learn and move faster than their competitors. While others work in isolation, they link into rich networks of possibility and expand their influence.
Connected companies around the world are aggressively acquiring customers and disrupting the competition.
In The Connected Company, we examine what they re doing, how they re doing it, and why it works. And we show you how your company can use the same principles to adapt - and thrive - in today s ever-changing global marketplace. SlideShare Explore Search You.
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WordPress Shortcode.Performance is easier to measure because the environment inside the shell or system boundary is stable. If the company is lucky, they will like it enough to tell friends about it, educate others, promote it, download additional services around it, and so on.
Customers and workers have always had the power to share their experiences with friends and peers. The focus in scientific management is on defining and measuring work in the form of words, charts, and numbers.
Focusing on the complexities and intricacies of growth, many companies take their eyes off of the customer, their most important asset.
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