A question I always ask at interviews is "tell me about a company outside oil and gas which you admire". I recommend the question - it gives massive insight, as to the external orientation of people, as well as what matters to them.
I guess I should answer my own question for once (thereby destroying the value of the question for anyone who has done the due diligence of reading my blog). Like everyone else this shows some bias and some cultural lens - I'm a retailer so my choices are all B2C, and I'm a European so they are all from here. But still, there is one common factor which might be interesting.
Gold medal for me goes to IKEA. What a story. From a little under-populated corner of Sweden came this concept which has now globally and single-handedly transformed a whole category of business. Like many European concepts, they had some initial problems in the US, but they seem to be past those, and the concept appears to work everywhere else with only minor tailoring. IKEA stores are now destinations - when one is opened the whole local road network needs to reflect a massive shift in traffic (once a UK store opened, and gridlock ensued in a 10 mile radius). Even the restaurants are superb and distinctive.
One thing I especially like about IKEA is the way they refresh their selection. It would be so easy to get a bit lazy and to milk the margins a bit by slowing the rotation of selection. For the first few years the effect would only be to increase profitability, as stock write-offs and development costs reduced. But then customers would start noticing that other people had the quirky stuff in their houses that they had... and the fundamental loyalty to their brand would dilute. Well done IKEA.
Key factors in the success:
- A relentless focus on customer needs
- Taking competitive advantage in the form of growth
- Considering the customer as friend and the industry as enemy (rather than trying to protect the industry overall, IKEA focuses on destroying it)
- An internal culture which is frugal and designed to be customer centric (all staff are treated as family, head office is tiny, and the founder is known to arrive in a store anywhere unannounced and start moving stock around). Shame about the Nazi stuff, but that shouldn't distract from the sheer brilliance.
Silver medal goes to Easyjet (US readers might prefer Southwest). Simple application of simple principles of customer back and driving out waste. I always choose Easyjet to fly with now, and would do even at price equality. It is simpler, they are more reliable (no one has spare planes so a cock-up is always a disaster with everyone, but their processes and staff strength make a cock-up less likely and they do everything quicker to respond), and their staff obviously have more power and more fun than their competitors.
Think about how wonderful it is that they can turn a plane around from stopping engines to starting again in 30 minutes. There are a lot of moving parts and interconnected processes involved. I watch this at Schiphol and just admire it - all of us who claim our businesses are complex should take note.
Hardly rocket science. Doesn't say much for the competitors, does it, that they have just been left standing for years? Actually, when they try to copy (eg BA's GO) they fail. Because they don't get the basics. They are always looking for margin, they want to earn money from the customer not serve them, they don't trouble to find the true needs etc.
Critical success factors? Exactly the same four items as for IKEA. In the case of Easyjet, the culture is driven by a head office in an aircraft hanger at Luton Airport. Can you the CEO of Air France being satisfied with an office in a portacabin? Interesting that a debate is raging currently between Stelios and the new management team of Easyjet, about trading some volume for margin during the downturn. I wonder if that is the beginning of the end of the dynasty?
Bronze medal goes to Tesco. The main key to their success was spotting the potential from new planning laws in the UK in the 1980's. But wow, how they exploited it! In a business where stealing 1% market share is a slow and painful game (without silly discounting) they have applied a squeeze to their UK competition relentlessly over 20 years and ended up unassailable, and more likely than most supermarket retailers to be able to expand globally with success (jury still out on that one). The supply chain focus, buying, and category exploitation, including of fuel, has been brilliant, and sustained over a long time. Perhaps I should add strategic longevity as an extra critical success factor - certainly all the medallists have it.
Critical success factors? The same four items. I remember when I was dealing with both Tesco and Sainsbury back in the early 90's. The culture difference was amazing. The Sainsbury senior managers sat in their 12th floor suites in plush central London offices and passed time among themselves - probably their spouses understood the business better than they did! Tesco executives always met you in store, were active with staff and customers, current, and their head office remains in a trading estate in commuterland.
Unlucky medal loser? Toyota. Different type of company, but the same critical factors, including the one about strategic consistency. Detroit have tried to copy for years, article after article has been written, Toyota hide nothing, yet the others just don't get it. Oh dear Detroit, where to from here?
So are there any lessons for us? As individuals, certainly, in terms of how we get close and intimate with customers.
Maybe corporately too?
Shell is always the one looking for industry solutions, sponsoring Joint Industry Studies, etc. All very logical, but a critical driver of the wrong mindset?
In the early days of SEOP we were all carted out of our head offices and out in buses to sites. It became one man's crusade and that man was turfed out, and perhaps it was taken too far, but personally I thought the idea had many more good things than bad.
In retail, Tesco did to us what Easyjet did to BA and the others, at least in the UK. First we derided them as low quality and tiny, then we conceded that a segment of the market could be theirs, and finally we panicked as we saw that segment grow and grow. Lesson for marketers - segments can get smaller and bigger!
One strategy tool I like, written up in Blue Ocean Strategy, is about customer attribute analysis. All our medal winners could have used it - the logic is to look at your service and that of competitors attribute by attribute from a customer point of view. Look for underserved areas, white spaces, or blue oceans. Therein may lie opportunity. Do the opposite of the competitors, don't just bash away at them.
Who are your medallists?
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