The Stanford Social Innovation review has a good article on Achieving Breakthrough Performance based on research with Bain & Company. In it, the authors talk about four management principles that are essential to creating breakthrough performance in any organization, with a focus on not for profit businesses. There are some commonalities between for profit and not for profits in the values that underscore those principles.
The one distinction the authors draw is when it comes to customers - two in not for profits, clients and funders, and one in for profits, the customers who buy your products and services.
As I was reading, I started thinking about how those principles would loosely apply to the evolution of business with the introduction of social media dynamics. These generate both feedback and feed forward movement where people hear from other people and the result of that conversation informs what kind of next experiences we have or seek.
1. Market reputation and authority create new options
There is more to it than just collecting testimonials and case studies with a few customers. Many more could be saying negative things about you. Digital information can be fast and is permanent. People rarely go back to amend unfavorable reviews and conversations with their peers spontaneously. This means that you need to be listening to what your customers are saying, and be a good steward for your brand(s).
Many companies and brands today are listening. So few are responding and engaging in conversations that it is still possible to break through the marketing noise using that novel button called "reply" or "comment." Resist the urge to overthink what your customers will do next - in many cases you don't even know your customers. Instead, let them teach you who they are and what matters to them.
How do you get authority online? Through participation, sharing, listening and responding where the answer may not necessarily be: your product or service.
2. Consider the costs of not doing
Businesses have gotten really good at figuring out the costs of doing things. In the current economic environment they are also squeezing many costs out of the system. While it is wise to manage expenses and build efficiencies, one cannot cut their way to greatness. Especially when the cutting is done without a real understanding of its impacts.
For example, if your business has a long sales cycle, what you cut today will not hurt until "x" months from now. If you think your business does not have a long sales cycle try and imagine how long it takes you to build relationships with your customers. There is a cost in doing the wrong things, too.
The hidden cost is that of not doing the right things. You do not see what you are losing in competitive advantage and consideration because those opportunities were not open to you in the first place.
Cutting advertising down may not hurt as bad when advertising was not working in the first place. That made it a cost - it costs you efficiencies and effectiveness. Not starting a portal where your customers have access to your front line experts and can discuss common issues and get to know each other is also a cost - a hidden one, in that it may cost you business to your competition that has those mechanisms in place.
3. Customers and markets don't stand still
Your customers' needs change and markets evolve to fill those gaps in services and products. Before Starbucks made coffee retail sexy, and profitable, the money was in growing and roasting beans as well as distributing and brewing the coffee. Then a whole industry shifted - where Starbucks actually helped create an ecosystem of profitable experiences.
Coffee is a good example also when it comes to information about pricing and market economics. Tim Harford wrote about fair trade coffee pricing strategies in his book The Undercover Economist. The book centers on free market economic theory. Fair trade coffee allows businesses to find customers who are willing to pay a bit more, if given a reason to do so. Coffee drinkers who are concerned about fair trade are less careful with their cash when buying - because they have a story that supports the pricing.
Harford explains that every well-run business would seek to charge each customer the maximum price he'd be willing to pay - and they do. If price is information, what we are buying has a perceived "x" value to us. That is what we're willing to pay for it. As a marketer, and a business person, your job is to figure out where that value has shifted to for your customers.
4. Simplicity gets results
How over engineered are your products and services? Do you need a road map just to explain how they fit together, never mind what they do? Take a look and see. Chances are your customers can remember up to three reasons why they want and need something. What are they? Start there. When you can answer those three basic questions, you will have created a more complete experience.
Setting expectations is a good way to lead to a better experience. Focus on a handful of strategic priorities - focus helps with execution. Attach short-term initiatives to those priorities and re-evaluate after you begin to achieve results. Complex contracts, operating manuals, and service agreements to fill out are marketing, too. What experience do they provide?
Make it easy for people to sign up and to sign off as well. I think there are enough examples in the marketplace today that speak to how the more a system is open, the more individuals can, and thus do, choose to be part of it.
What are your feedback and feed forward mechanisms? Is your business system open?