Understand what really motivates us

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This weeks blog from Guy Watson of Riverford Organic farms is one of the best pieces of attractive thinking that I have seen for some time.  It is prompted by his reflections on the election aftermath.

He accurately describes the human condition.  This condition is why I believe that business organisations which set out to help customers solve problems (value adders) do better than those who set out to extract the most money from customers (value extractors).  Three statements that stand out for me are

  1. What I find so depressing … is the apparent ubiquitous cynical belief that appealing to personal greed is the only way to get anything done.
  2. Ultimately we all want to feel good about ourselves and at work this falls broadly into three areas: feeling we are learning and getting better at stuff, feeling some control over our lives and feeling a sense of purpose.
  3. My plea .. is to have a little faith in people; we’re not as shallow, selfish or as dumb as you seem to think. Show some trust, give us some hope and we might even surprise you.

If you take this thinking and apply it to attracting more customers it takes you to a very attractive place.  (N.B.  We also like their veg)

Re-blog of post from Guy Watson www.riverford.co.uk

I believe that given half a chance, most people, most of the time, are smarter, fairer, more generous and capable of more empathy than our institutions give us credit for. I found both the election campaigns and the result hugely depressing without really understanding why; with the exception of the Greens I feel no more aligned with the policies of the losers than the winners. On reflection I realise the reason for my gloom is a conviction that the institution with the most cynical view of our behavioural motivations is the modern Conservative party.

I’m guessing that, as someone already personally rich, I will be richer under an unfettered Conservative government; but I don’t expect to be happier. What I find so depressing about modern post-Thatcherite Conservatism (and only marginally less so about post-Blairite Labour) is the apparent ubiquitous cynical belief that appealing to personal greed is the only way to get anything done. Considering the almost complete lack of evidence to back up this assumption, it has gained extraordinary traction in Westminster and the City over the last 30 years. In the real world, where businesses have to compete by getting the best out of people, it has largely been abandoned as a piece of failed, ideologically driven dogma.

For the most part, we are emotional beings responding to much deeper, less tangible but more powerful emotional motivators; ask anyone in advertising. Ultimately we all want to feel good about ourselves and at work this falls broadly into three areas: feeling we are learning and getting better at stuff, feeling some control over our lives and feeling a sense of purpose. To believe that ‘carrot and stick’ management is why a nurse will care for a patient, a parole officer will struggle to support a young offender or why a programmer would write exceptional code is crass to the point of incredulity. I suspect it is even more threatening to public services and well being than cuts and austerity.

Both hope and cynicism, given enough voice, can be self-fulfilling prophecies. My plea to Cameron and his team is to have a little faith in the people they lead; we’re not as shallow, selfish or as dumb as you seem to think. Show some trust, give us some hope and we might even surprise you.

Guy Watson

Why the ski industry needs better products to attract more skiers?

On Tuesday 5th May, I gave a short talk at Listex on how ski companies, tour operators and resorts can attract more customers.  Listex is a forum where the ski trade meets to discuss business development and why customers and suppliers do business

The talk discusses how the ski  industry has focused on keeping its loyal customers, but now needs to recruit new enthusiasts into the sport.  The sport is at risk of its current baby boomer customers retiring from the activity and not replacing them with younger blood.

Here are the slides with the transcript of the speech attached to each slide in the notes.

Attracting more customers

Attracting more customers

 

Here is the transcript of the talk

The idea for this talk was promoted by two articles that I saw in Planetski last week. The first was a quote from the 2015 International Report on Snow & Mountain Tourism which stated that visitor numbers in ski resorts have been declining year on year for 5 years in all the major ski markets. Even France and the US which had been doing better are now in a 5 year decline. The second story was from Phil Smith of Snowworks in Tignes. Phil reported he had enjoyed a great season and things are looking up. In fact skiing is so addictive, that people will always want to come skiing and there is nothing to be concerned about. How can both of these things be true?

The subject of this talk is how can we attract more people to skiing, whether as an industry as a whole, as a resort in particular or for your own business. If numbers are down, this is a matter we need to address.

For those of you I have not met yet, I founded Differentiate as strategy consultants to help CEO’s and business owners to bridge the gap between the insights they have about their customers and the creative decisions you make about developing products and creating marketing plans to attract customers. I used to be a marketing director at Pepsi and since I have consulted with global brands like Mars as well as high end B2B service providers in Finance, Law and Technology. I am also a director at Henry’s Avalanche Talk teaching skiers how to stay safe and have more fun off-piste. This involves avalanche awareness and off-piste equipment training.

My aim today is to prompt a debate about within the ski industry about the need for game changing new products and services that will attract more people to skiing and get some lapsed skiers to come back to the sport.

I will talk about the subject in three different sections.
First I will discuss why the numbers of skiers are down
Second I will talk about a principle of good marketing. I will discuss the debate about penetration vs loyalty and show why it is essential for good marketers to focus ion increasing market penetration. Or in simpler language, attract more skiers to take part.
Third, I will discuss why having better products is essential before discussing better marketing. I will show some tips on how to start the process of developing better products.

So are the numbers really going down? This report from Crystal shows estimates of the numbers of British skiers going on holiday over the past 5 years. Whilst there was an expected drop with the recession and a bad snow year, this is starting to look like a trend. Numbers are difficult to get here, but this is a trusted source.

The 2015 International Report on Snow & Mountain Tourism looked at all visitors to ski resorts in every country across the world. So this includes locals visiting the resort as well as people on longer holidays. What is interesting to us, is that the alps has shown a consistent decline over the past 5 years. There is growth in Asia, but everywhere else is down. So why might this be happening.

Skiing is often thought of as a younger persons game, just for fit people. Well in my experience, you need to be fit, but you don’t need to be young. When I am in ski resorts, I increasingly see large numbers who look more like this group here. A lot of us were recruited into skiing as young adults in the 1980’s and 90’s. This generation of Baby Boomers and GenX have fuelled the growth of snow sports, by joining in the then choosing to go skiing more often each year. But some of this group mare getting less able as they get older. And I am not convinced the sport is recruiting younger adults to replace them.

And younger people have a far greater choice of things to do than we could do in the late 20th Century. Exotic adventurous travel options have exploded, from Asia and America’s back packing to surfing to kit surfing, mountain biking, charity and physical challenges, yacht racing. All these things are competing for the adventurous travellers pound. Many of these activities are more accessible and less expensive than they were due to cheaper flights and the internet helping people discover ideas about what to do.

Another element in the mix is that sometimes people have bad experiences when they go skiing and it puts them off, especially if they are on the first or second trip. This research by the ski club measured net promoter scores for tour operators and resorts. This was done among 15000 skiers and they found that for some the experience was not good and they would not recommend it. This variability will be putting some people off.

So that covers my first point and offers some reasons why the numbers are down. I am sure there are other reasons you could come up with, but this is a start.

My second point is to discuss the marketing debate around Penetration vs Loyalty. There is quite a fashion for loyalty programmes and CRM. Now these are all useful to a point, but we must not lose sight of the fact that business only grow when they attract more customers. This was established as proven fact by an early marketing academic, Andrew Ehrenberg in the 1960’s. His work has been followed up by Byron Sharp who published a book on it in 2010. Study after study has shown that the difference between bigger businesses and small businesses is not how loyal the customers are, but how many customers they have. It is not possible to get growth without increasing your market penetration or in other words attracting more customers.

A second study conducted by the Institute of Practitioners in advertising has confirmed this. This study looked at 1000 entries for their marketing effectiveness awards. The winners were selected for the business results and cost effectiveness, not for their creativity. And 95% of the award winners had set as their objective to increase market penetration.. Only 5% of the awards went to campaigns that had set loyalty as their campaign objectives. Loyalty programmes did not win effectiveness awards.

So this is my second point, No-one ever achieved significant growth in their business without attracting additional customers. We have to attract more skiers if we are to grow the industry.

Now my third point is about why the best and easiest way to get more customers is to create better products, we cannot just rely on better marketing. It is better products that attract customers first. And as shown by Michelle in an earlier presentation, most great marketing campaigns either draw attention to product improvements or use product improvements as a tool to communicate the brand value and the brand attraction.

I will start by asking you how you view your customers? Do you see them as a target to be lassoed into your business and then you must find ways to attract as much money as possible from them? Are you like this cowboy looking to entrap and ensnare customers? I call this approach value extractors.

Or do you see your job is to find out what customers need and want, to find out what would really help them and then develop something that delights and surprises them. People buy things when they have a problem to solve or a need to address. If they see you offering the perfect solution to that need, if you offer the missing piece in the jigsaw, then all you have to do is let them know about it and then they will just buy it. I call this approach value adders.

In my experience prime value extractors are banks, insurance companies, utility companies, mobile phone operators. These businesses exploit our reluctance to switch providers. So they focus on how much money they can charge and how little they can do to help to ear that money. Whereas big successful branded companies like Apple, Google, Unilever P&G, Mercedes, Mars, they all know we have the freedom to switch, they cannot trap us so they invest in attracting us with better products.

Now all the big game changers in every industry are value adders. They are people who put … better products before better marketing.

So what are the characteristics of better products? What makes a product better? Here are a selection of brands and products that have all shaken up their industry when they launched. They each looked at their markets and said, “there has to be a better way”, “we can make the customer experience better”, “we can make it quicker, easier, better value”.

Easyjet challenged legacy airline carriers by making it easier to buy the tickets and removing all the complex terms and conditions that were designed to trap fliers into spending more money. Fridays speeded up property conveyancing to help people get their homes more quickly, Netflix ensured we could watch what we wanted at any time and made it easy to use, Paypal made it possible to transfer money and easier to pay for things online.

So these are characteristics of game changing products and services, I am sure you can think of some more.

And last week I saw this guy present the game changer in power supply. This will disrupt the energy supply industry. Elon Musk used the money he made from selling Paypal to invest the Tesla car, but he is now going further and has just launched the Tesla PowerWall. He looked at energy supply and climate change and said we have to do better. He noticed the sun provides more energy than we need. Solar panels are getting better, the problem is it does not work at night and we had not found a way to store energy from the sun.

This product is the first battery than you can install at home to plug the gaps when the sun does not shine. Read more here http://www.chrisradford.net/using-better-products-not-better-marketing/

The phrase he used repeatedly is “It just works”. This is I believe the ultimate attribute of better products. Iron out the glitches, find the disruptions, improve the customer experience, re-engineer the product, then you will find the game changer.

So how do we develop better products? Where do we start? The first principle is to start with the problem or need the customer has. No-one ever spends money without a problem to solve or an occasion to sort out or a need to fulfil. When you go to the supermarket, you do not have a list of products, you have a series of occasions and needs to fulfil. There are kids coming home from school, meal times to feed, people coming round, clothes to be washed etc etc. The start point for product development is understanding these problems and needs.

What might these problems be for skiers and ski holidays?

The first one is that we all like to spend time with our family in a nice way and are looking for ways to do that.  Skiing is a great way to do this.  People also love to spend time with friends and an activity like skiing is a great way to do it.  But you will notice that skiing is not the only answer to these problems.    But ensuring ski holidays  address this need in the best way is one way to develop better ski holiday products and services.

The second problem is that it is often a bit grey and gloomy at home in the winter. Many of us are looking for ways to escape the gloom, get some sunshine, get out doors and cheer ourselves up in the winter. Again, skiing is great for this, but it is not the only way to do it. This is a powerful driver for ski weekends as well I think.

The third problem that skiing addresses, is that increasingly we are looking to push ourselves a bit harder, we are looking for a physical challenge. Again skiing is a great answer, but not the only one. Other adventurous sports or charity challenges can do this equally well.

So that covers three problems and needs that people have that ski trips can address. But what are the things that stop people going skiing, what puts people off. This will provide some insight into developing ideas for better products and services.

It was hard to find research on this, but I tracked down two studies. The first is a report from the Ski Industries Association in the US, this looked at reasons regular skiers did not go in any one year. The top reason reflects the fact that skiing is a social activity and they said they had no-one to go with. They also cited that other activities sometimes seem like a better option. A significant number thought they were just getting too old for it. This is that Baby Boomer generation who are opting out of skiing. The last point was a fear of getting injured because of the consequences in the aftermath and the following months.

The second report I found was published by the University of Edinburgh and looked at PE students and teaches and what put them off going skiing. They raised quite a few points but this slide starts with the cost of the holiday and importantly the cost of acquiring the clothes and associated equipment. The sport is difficult to learn and this a big psychological hurdle. Some complained that the slopes are getting too crowded these days.

So these are examples of insights that can support and help product development and can help in the creation of better products.

So please remember “no-one ever achieved significant growth in their business without attracting additional customers”.

Customers are looking for something that solves a problem …

Our job is to solve it for skiers and prospective skiers and we need to provide something that is better than the alternatives.

So in this talk, my aim was to provoke a debate about the need for a game changer in products and services for skiers. This is the key weapon to attract more customers into the sport, into the industry and into your business. I have talked about why the numbers of skiers are declining, I discussed the need to increase market penetration and not just get more customer loyalty. The best way to this is to develop better products not just rely on better marketing. The start point for better products is to understand what problems and needs customers have that skiing holidays can address. Our job is then to develop better ways to solve these customer problems.

You can find a copy of this presentation and talk on my blog on ATTRACTIVE THINKING at www.chrisradford.net.

If you are interested in doing some research into customer needs or turning your insights about customers into better products and better marketing, then please do get in touch
You can Sign up at : chrisradford.net, you can follow me on Twitter : @chrisradford10 and I always welcome connections on LinkedIN

Contact: Chris Radford chris@differentiate.co 020 8432 9772

Tesla is disrupting the power industry using better products not better marketing

Tesla Powerwall

This is possibly the best example of attractive thinking applied to product innovation that I have ever seen.  It has bigger potential than any project I have contributed to.  This will be “a product that customers love”.

Elon Musk (founder of Tesla cars) launched three new products yesterday.

  • The Powerwall – a home battery linked to solar panels
  • The Powerpack – an industrial battery for commercial and factories
  • The Gigafactory – manufactures the batteries, this is an open source replicable design

Watch this video, Elon Musk explains it better than I can. Look not just at what he says but how clearly and naturally he presents. (BTW I often don’t watch videos as I find they take up too much time to say very little, but this one is worth the time)

What did I learn about creating better product from watching this?

This is not a not a new battery, this is a challenge to the whole power industry. The market opportunity for these batteries is not the size of the battery market. It is the size of the power supply industry.

Power supply companies would never have come up with this idea. It is so far away from their frame of reference and looks like a threat to their established stream of profits.

  1. A great product solves a real problem that customers have. Reducing carbon emissions is one, but the potential to remove all the unpleasant infrastructure associated with power generation and distribution is another hugely attractive feature.  For each of us there an opportunity to save money and detach ourselves from the utility company’s ever increasing charges.
  2. The top attribute of a better product is “It just works”. He uses this phrase several times. It is clear there is a lot of technology under the hood. But it seems that all that technology is about making it easy for the user.  Working overtime on the “it just works” will help us create better products
  3. Design matters, it is a part of the “It just works” The Powerwall will be an attractive feature of the home, it goes on the wall, it takes up no space.  It also looks good, unlike any battery I have ever seen before.  Design is function here.  This picture shows it located next to the car.

Tesla Powerwall

What did I learn about giving a speech from watching this?

  1. Be yourself, Elon Musk stumbles a little, but none of that matters because he is talking about something he believes in, he looks at the audience and he smiles. He has clearly rehearsed every detail, so the presentation is consistent with the product “it just works”
  2. Simple language – he uses no jargon, he use short sentences and short words.
  3. Use Graphics and photos not words in your slides. The images each reinforce a simple point that is hard to solely express in words.

So how much marketing will this product need?

I suspect it will need just two things. The first is simple.  Just create publicity to make sure we know about it. The second is harder.  Create the distribution so we can buy it.

But what this will not need is clever persuasion, or special offers, or loyalty schemes, or other marketing tricks to try to sell products that are not exactly what people need or want.

This is a stunning example of why we need better products not better marketing

This is my new standard to aspire to for creating products people love to buy.

It’s pensions freedoms day. Time to disrupt the industry?

Pension Wise, pension freedoms

There has been much discussion in the press and the pensions industry about George Osborne’s new Pension Freedoms that come into force today on April 6th.

The debate fluctuates from how the freedoms could create a whole series of new mis-selling scandals to a broad welcome that people are being given more control over their own pension money, rather than being told by government what they should and should not do.

The pensions industry generally welcomes the move, but the discussion seems focus on what others (govt and customers?) can do rather than on how the industry can change in ways that would help customers. The debate revolves around what the public and the government might be doing wrong, rather than whether pensions companies can develop new products to provide what people need.

I believe these freedoms are very welcome, they provide a trigger for change, it is a real opportunity for the industry to create new products that will help customers and transform this business. Until the industry focuses on what it can do to help customers rather than talking about why customers should save more or governments can provide advice and regulation, the public will not be properly served. This post discusses and analyses the opportunity for the pensions industry to develop new products

First: what are the concerns about the new freedoms?

The expert commentary largely revolves around three serious concerns. These concerns add up to a serious worry that the public could be worse off.

  1. If people withdraw all their pension pots in one go in one year they are still subject to a 25% tax which will be a windfall for the treasury but at the expense of the public’s ability to create income for themselves in the future.
  2. There are not enough quality advisors available to help people decide what to do and be sure it is in their best interests. And for many the cost of advice is simply not affordable. the government is offering free advice, but this is very limited in scope and seems to be fraught with implementation problems.
  3. Annuities are still the best option for some people as they ensure they do not run out of money. But they have have been criticised for being poor value. They have a bad press and may be dismissed by people for the wrong reasons and people will end up worse off.

Clearly these are all risks. Problems will happen to some degree.  There are things the government and the industry can do to minimise and mitigate these risks. But do these problems add up to an argument that these pension freedoms are a mistake? I believe it is not a mistake, because the move to giving people pension freedom was the only way the government could break a system in which a restrictive tax regime had been exploited by pensions firms who offered products that delivered poor value. And importantly since the products on offer no longer provide an adequate income in retirement, something had to change.

Second: Pensions industry is too focused on itself and not on customers

The Pensions industry seems to operate with three observations about the general public

  1. First, people do not save enough for their retirement needs. This is largely motivated by a desire to have things now rather than be prudent and save. The implication is that people are being foolish.
  2. Second, that saving and investing for income are complex matters that can only be grasped by professionals, this is made harder to understand by taxation complications. In addition products are generally complex and difficult to understand.
  3. Third, everyone’s situation is different and we all need personalised advice.

Now some of this may be true in some cases. But are people really that irrational that they ignore their future needs?  Are people all so different that everyone needs bespoke expensive advice?  It is distinctly possible that the problem is the products are too complex and unattractive rather than customers’ foolishness.

Why is that pensions and investment products are so complex and impenetrable to the average person?  I think it starts with the purpose behind pensions products.  The products are designed to make money for the provider and pass on the risk to the customer.  Most pensions firm products that have a cost structure that guarantees income and profit to the pension firm and leaves the customer with all of the risk. This structure and risk share is very off-putting to customers.

Third: it is time to disrupt the industry

Pensions is one of the few industries that has not been disrupted by insurgent newcomers. It is dominated by established players. Many industries are being disrupted by people creating better products that help customers. e.g.

  • EasyJet offered an easier way to book airline tickets at a better cost
  • Google are transforming the advertising and media businesses by making it easier to access for smaller businesses.
  • Apple and Samsung have pretty much destroyed other mobile phone makers with products that do what people want (and do much that people could never imagine they wanted)
  • Amazon are working their way through most retail industries with simpler easier lower cost customer service.
  • Airbnb are transforming hotels and travel.

There is an opportunity for someone in pensions to provide both accumulation and decumulation products that are designed to help customers first rather than be designed first to secure an income for the asset managers and product providers and only give secondary thought to how the product helps customers.  A few early thoughts are that a new better product would

  • Be easy to understand
  • Be managed online
  • Have fair and transparent charging (including risk share)
  • Be segmented to satisfy the majority of the population’s needs
  • Not need independent expensive financial advisers
  • Would be endorsed by the regulator

When someone does this (when not if!) the population will return to investing in pensions, ordinary people will be able to exploit the pension freedoms and be more more secure in their retirement. Whilst the current paradigm is maintained, then many will either avoid pensions, will make mistakes and will be poorer in retirement.

How to design such a product?

start by reading this article on AttractiveThinking

What Makes a City Attractive?

I borrowed this blog title from this video on How to Make an Attractive City?

This video presents an excellent example of “Attractive Thinking”. The producers have used one of the most important techniques in understanding what makes things attractive to people.  The video is all about using the insights to turn cities into places that people love to live in and to visit. The producers at The School of Life have identified the six characteristics that define cities where people love to hang out.

These six characteristics are what I would describe as the Power Drivers. By which I mean the most powerful attributes that characterise places that cause people to choose one city over another.  So what are these things

  1. Not too chaotic yet not too ordered. We like symmetry and order, but not too much. The best cities often have ordered buildings, squares and layouts. But not overwhelmingly mono in style. This is an ordered chaos. e.g. Paris, Rome, Bath, New York
  2. Has visible life. Whilst people claim to like privacy, we actually like to be around others and see other people enjoying themselves. We congregate in squares and streets where things happen. We do not visit sterile suburbs or anonymous business parks.
  3. Are compact. Cities are big but they have parts of cities you can get around easily by foot or public transport. These parts are not too big. They are broken up into squares and public places. People live in densely packed areas but have public parks and squares. The squares are just the right size whereby you could recognise and see someone across the other side
  4. Have orientation and mystery. Cities are big but they have places with lanes and streets where you can walk and get a bit lost and make discoveries. Alleyways feel homely and intimate. There is something to discover. We need wider boulevards to allow for mobility and fast access. But it is best when these are combined with warrens of streets
  5. Scale. Many cities make people feel small as the buildings and the transport roads dwarf them. Often the biggest buildings are devoted to large corporations and financial firms. These are not things people love. The most attractive cities have limited most buildings to 5 or 7 stories high and maintain regular sizes in any one street. When there is something bigger it is related to what matters to people, theatre, church, museums sports etc.
  6. Make it Local. Create individuality and use local materials not just another skyscraper of office tower that could be anywhere. Think of the stone in Edinburgh and Bath. The Portland stone of St Pauls, the style of Venice.

There is more in the video

The point I wanted to bring out, is that to make a product attractive to people, to make it into something people will love, you have to know the things that are most important to people. Some of that you can find out by talking to people. But some of it relies on your insight and imagination. More on discovering Power Drivers later….

Better products vs better persuasion?

creating better pensions productsI have been spending some time with pensions professionals who are grappling with how to make pensions work better for the whole population. There is clearly a problem for many of us.  Many people will not have adequate provision for income in their old age.  This kind of customer problem presents an opportunity for the industry to do some better persuasion and better marketing.  But it also offers an opportunity to create better products.

I have noticed that the debate about better pensions highlights two different ways you can approach trying to solve a problem for your customers.

The first is to try and persuade people to behave differently

The focus here is how to get people to buy what you provide or sell.  This is what many business leaders are trying to do in different industries.  It is an important activity to get growth.  This seems to be the main focus in pensions.

Much of the pensions industry discussion is about getting people to take pensions more seriously. It is about getting people to save in a responsible manner.  This is manifest through the government’s auto enrolment scheme; by advocating the provision of independent advice via IFA’s; via the development of training and financial education for people.

The implication of this approach is that people are behaving irrationally.  We just need to change our ways.  We are not looking after ourselves and need educating and coercing into investing so we have a pension.  Then we need advice to take income from a pension fund in a responsible way rather than blowing it all away on holidays. Then we will have a better retirement.  This financial education and advice sounds very worthy and well intentioned.

Now I can see that much of this analysis and the need for different behaviours is true. Many people are headed for a poor retirement as a result of their inaction. But I would argue it is blinkered to concentrate only on trying to persuade people to behave differently.  Most of my experience says that trying to educate people to behave differently is very hard, it is an uphill slog with few rewards.

Alternatively, it can be much easier to create something that people actually want, that they see as solving a real problem for them.  That way they will be attracted to the solution rather than feeling badgered into it. So …

The second way is to create better products

Is the pensions problem just that people are behaving badly?  Or maybe the products on offer could be better?  Maybe the problem is not just that people are behaving stupidly, but that the products and services that are available just do not meet the real needs of ordinary people all that well and that the industry could also help people by developing better products?  It is clear from the National Association of Pension Funds’ Workplace Pensions Survey October 2013 that there is a perception amongst many ordinary people that pensions cannot provide for their future.  There is a lack of trust.

In my experience, when there is a lack of trust then educating or marketing alone will be very hard work and may not be effective.  We need better products.

What are better products?

Better productsWell “better” usually means things like

  • easy to understand – so you know what you are buying
  • easy to access – online often does this, or being in the right shops
  • deal direct with the customer, no intermediaries – intermediaries often add cost and slow things down, they need paying and do not have the same priorities as the customer (think of travel agents)
  • better value for money –
  • solves a real problem for a customer – (Tesco click and collect service)
  • does not exploit the laziness or ignorance of the customer (utilities often do exploit this)
  • takes care of the customer (First Direct)

Online solutions often deliver a lot of these elements which is why there is so much growth in online products and services.

An good example of an industry transformed by better products is to try and remember the short haul airline industry before Easyjet, Southwest Air and Ryan Air. The airline industry has been transformed by these game changers. Look at how much better it is for customers today. Easyjet and RyanAir were Game Changers.

An easy mistake to make is to think your industry is more complex and more difficult than the industries where game changers have created change and that better simpler products are not possible.

The pensions industry knows it has unique challenges and is more complex than the airline industry was. That may well be true. But the top executives of traditional national airline carriers British Airways, Lufthansa, American Airlines all thought their business was complex and did not really innovate until the low cost carriers arrived with better products.

Come to our event on 29th May

Game-Changers-2-wordsWe are running an event next week that looks at how the most successful leaders have created better products and services to deliver real real game changers in different industries. The event is called Game Changers and is on 29th May at 1400 at Campus London in Bonhill St Shoreditch (see details here)

One of our headline speakers is Mike Harris who is the original financial services game changer. Mike created First Direct and the Egg card internet banking business.  Mike will talk about what it takes to be a game changer.  Mike will share some insights on how to do this.

Another speaker is John Scriven from South Bank University, Marketing Science and the Ehrenberg Institute.  John has some surprising and ground breaking insights under the title How brands grow – what marketers don’t know?  John will share insights that are used by many of the worlds top companies on how to present better products to customers.

More information about the event is here www.gamechangers1.eventbrite.co.uk. Tickets are free.  It is just 3 hours during the afternoon.  there will be some debate around the case studies and examples.

If you have any thoughts or comments on this please add them to this article which is posted in the GameChangersUK linkedin group.  This is an online group that will continue the debate.

Game Changers Event 29th May

Game-Changers-2-words

Game Changers event 29th May

This post is to tell you about our next event which is all about turning your products and services into things people love to buy. This is how to transform your industry as well as your business. I really hope you can come.
We have got great speakers, brand new content and an group of like minds where you can discuss insights, ideas and your experiences.  We are calling the event Game Changers because this is what Game Changers do.

Click on the logo to get more information about the event.

Why should you come?

This Game Changers event is for business leaders who are not content with the status quo and want their business to make a difference. If you are on this email list, it is highly likely this describes you.

The Game Changers event is a chance to explore and discuss how you can do this. You will have the chance to learn from the experience of others in driving for exceptional growth. This is about turning a business from ordinary into game changing. We will explore the characteristics of high growth businesses and draw out a number of critical lessons.

Game Changers turn their products and services into something customers love to buy. This needs not just game changing insights about customers, but also the ability to develop products and services that go beyond what customers want and deliver something they could not imagine today.

Speaker highlights

Mike Harris

The Original Game Changer

Mike Harris

Mike Harris

Mike’s first big play was to transform current account banking when he created First Direct: a bank without branches dedicated to making sure customers felt totally taken care of.

Mike went on to challenge the BT monopoly on fixed line telecoms and turned Mercury Telecoms into a profitable player.
Then he created Egg Internet banking, the first online only banking service. Mike now works with entrepreneurs to help them understand what it takes to be a Game Changer. Mike will tell us the most important things he learned and what makes the difference between business as usual and being a game changer.

click here for Game Changers event details

John Scriven

Game Changing Insights on Customer Behaviour

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John Scriven

John Scriven worked at South Bank University with a cutting edge research and insight team founded by Andrew Ehrenberg and later developed with Byron Sharp. The team’s latest book is called

How Brands Grow – what marketers don’t know.

Andrew Ehrenberg pursued empirical and behavioural studies to establish how consumers behave and uncovered a number of findings that blow away a lot of conventional thinking about customer loyalty and how brands actually get growth. His work is used today by many top global brands like Coca-Cola, Mars, Unilever & P&G. John will come and share the team’s top five insights.

These insights have been uncovered over 40 years of painstaking study and research about how customers actually behave and how markets evolve in response to consumer behaviour.

John will show how this applies to your business whether large medium or small, whether B2B, consumer or services and how you can use these insights to make decisions that will attract more customers and help you get more growth.

When Bruce McColl the global CMO at Mars discovered the Ehrenberg analysis, he described it as “an epiphany”

Here is Byron Sharp discussing some of the insights that John will share with us in a Tedx Talk. It may be 15 minutes, but it is worth it.

Click here for Game Changers event details

I hope you can come. Events are a great chance to catch up and meet some other interesting people. I already know that we have some great people coming, I hope you can join us.

We also managed to get a great venue in Shoreditch. We will be at Campus London. All events at Campus are free, so that makes it even better.

Learning from an entrepreneur who is guided by purpose

I just read this story on the BBC news magazine.  click here to read it.  I was so inspired that I spent some time studying the story to try and draw out some lessons.

So what can we learn from an entrepreneur whose whole business is guided by purpose and goes on to overcome huge obstacles and then succeeds despite remarkable odds being against him?

Arunachalam Muruganantham

Image from BBC world service

When I read the story of Arunachalam Muruganantham, I was in awe at the 1300 microbusinesses he has helped to create and amazed to learn about the 1 million jobs he has stimulated as well as the health and hygiene benefits he has helped Indian women obtain. It is incredibly inspiring. Possibly also like me; you are slightly in awe of his determination and courage?

Read his story click here

But sometimes perhaps we fail to learn lessons when we read about experiences like this. Especially when the circumstances seem so different from our own situation. So I took a long hard look at Arunachalam’s story.  Here were my five main takeouts.

Lesson one: PINPOINT the problem: Keep on researching until you have not only identified the customer problem but you really understand it.

Arunachalam’s doggedness in trying to understand the womens’ problems and the real reasons for their behaviour during menstruation (which was threatening their health, hygine and lifestyle) is remarkable. What I noticed is that he tried everything in this phase of his work. Despite the immense social and cultural stigmas he tried out prototype products, he talked to women about their worries, he observed their behaviours and finally he put himself in their shoes and experienced the issue as best he could. Funnily enough, he never showed them a concept board and said “would you buy this?”.  He did much of the research himself.

He combined this exploratory work with research into the competitors and their products and sought to understand the home made alternatives that women were using.

He spent 4 years working at this question, which is extraordinary, but probably explains why he came up with something that really works.

Lesson Two: POSITION the product by explaining what it does better than the alternatives. You have to explain how your product solves the problem better than the alternatives that the customer uses.

In some cases for the customer to see your product as a better, you may have to change how the customer see’s what is important. This is very difficult. The customers existing paradigm may not allow you to sell the product without education as to how it helps them.

In Arunachalam’s case, the alternative forms of sanitary protection that were available were either too expensive, unavailable or were unhygienic and ineffective homemade solutions. Apparently, Arunachalam had solved all these problems, so it looked like it would be easy to stand out.

But there was a bigger hurdle. Being private and discreet was overwhelmingly important and seen by women as a bigger issue than staying hygenic.  Homemade protection was an easy way to stay discreet.  Going out to buy pads was not discreet.  This is the barrier he needed to overcome.  As is often the case the reasons why people buy stuff or don;t buy stuff are personal and emotional.  Here was no different.

Arunachalam had to help women understand that being hygienic was more important to them so they would be willing to go and ask for a pad.  His solution was to use word of mouth advocacy and testimonials by the women involved in the local microbusinesses.

Lesson Three: Keep PERFECTing your purpose and your story.  As time goes by do keeep your resolve to do something that really helps customers not just makes money in the short term. It will keep you going and make your products and solutions even better.

Especially in this case where people will keep telling you “That will not work”  or “You must be mad”.

Instead of being put off, Arunachalam used what he learned on his journey to take his purpose to a whole new level. He had started out by trying to make sanitary pads that Indian women could afford. He ended up realising that the best way to do this was for women to make them locally.  He did not manufacture pads and maximise in a big factory for short term profit.  he designed a machine that local women could use to make the pads.  He helped to create 000’s of microbusinesses and millions of jobs which made the whole project even more fulfilling for him and for many small business owners and communities.

Arunachalam Muruganantham Sanitary pads manufacturing machine

Image from BBC world service

He clearly disliked the major branded manufacturers who charged high prices for sanitary protection that women really needed and then sold it to them with dreams of an active lifestyle whilst ignoring the real issues around hygiene. Arunachalam challenged the way that big business approached sales of sanitary protection by going local. He stuck to his guns on affordability and providing a hygienic solution as a result he also created new businesses and new jobs.

The quote from BBC news sums it up for me

He was once asked whether receiving the award from the Indian president was the happiest moment of his life. He said no – his proudest moment came after he installed a machine in a remote village in Uttarakhand, in the foothills of the Himalayas, where for many generations nobody had earned enough to allow children to go to school.

A year later, he received a call from a woman in the village to say that her daughter had started school. “Where Nehru failed,” he says, “one machine succeeded.”

This whole new level of purpose must have powered him forward when he hit obstacles.

Lesson Four: PROMOTE be available and understood: The product has to be available where the customers can buy it and customers need to understand what it is, what it does and where it comes from.

In this case Arunachalam realised that localised small scale production in the hands of a local group was the way to ensure the product was available where it was needed most and that this enabled sales to happen through word of mouth. One woman could explain to another how the product worked and where it came from. This method helped with the education task to reframe the women’s view of sanitary protection and help them see being hygienic was at least as important as being discreet.

Lesson Five: PITCH your story to get help: When you have clarity about purpose and have developed a solution then it may be that there are thousands of people out there who can help you deliver it.

Having a clear PITCH and story is essential to make this happen.  Arunachalam must have put an amazing amount of effort into explaining to women (pitching) why his machines to make sanitary pads would help them improve their lives. He is obviously still doing this today as he speaks with students and young entrepreneurs and shares his experience.

But then I read he is planning to go much bigger.

“My aim was to create one million jobs for poor women – but why not 10 million jobs worldwide?” he asks.

He is expanding to 106 countries across the globe, including Kenya, Nigeria, Mauritius, the Philippines and Bangladesh.

Read his story click here

There are lessons in here for both entrepreneurs and leaders in established larger businesses. There are parallels in your situation. So when you read stories about entrepreneurial success, do try and draw out the lessons for yourself.

Whilst I cannot promise that Differentiate will always help you show the dogged persistence and determination of Arunachalam, the decision points you face are the same as the ones that he describes here.

Each of the five steps in our approach to turning your purpose into products customers love to buy will force you to examine the same questions and apply them to your business.

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We cannot predict the future, so how to look forward?

I am going to this dinner and talk with the Real Time Club.

Everytime I go to one of their events, I come away with some great insights about the current business environment and what is changing, so we can plan for the future. For example In previous events I learned about

  • The Spinnaker project aiming to recreate the human brain with a giant computer
  • Google’s view that London is the number one location for technology startups after Silicon Valley,
  • The nature of artificial intelligence and how the world will be transformed by it
  • The deficiencies of IT education in schools in the UK and an alternative vision

Read more about the next event click here  and  click here

This event is about the nature of risk and how it is changing as a result of persistent market instability and the technology revolution. This makes predictions far less reliable (if they ever were) and requires us to look at underlying trends. It has massive implications for pensions planning, the culture of dependency and future employment patterns. This will affect decisions about your business or the kinds of jobs you might want to get.

Hear from Professor Ian Goldin, Director of the Oxford Martin School, who will provide a stimulating introduction to the major changes in society and technology that are likely to take place over coming decades, looking at the implications for businesses and individual choice, highlighting the hazards associated with prediction and the need to understand underlying trends and whether these trends will continue.

If you are interested, then there is only 1 day left to buy a ticket. I just bought mine

http://web.realtimeclub.co.uk/dinners/extraordinaryfutures/

I will report back after the event

Finding purpose – what’s the point?

Iconic Shift Mike HarrisLast week I was fortunate to be at one of Mike Harris’ ICONIC SHIFT mentoring events. It was motivating to be with an inspiring bunch of entrepreneurs covering industries from healthcare, pensions, financial services, fashion, food and business services; especially when each entrepreneur is aiming to challenge the way things are done in their industry and turn their business into a game changer that that delights customers and disrupts an industry.

Mike shared with us his model of high performance leadership drawing on his experience of creating game changing businesses in current account banking with First Direct, fixed line phones at Mercury Telecoms, credit cards at Egg and internet security at Garlik.
Like all the best ideas, you get a lot from them the first time but then you get more on the second, third and fourth time of hearing them.

But the real reason for this blog is that during the event it finally dawned what really bugs me, and I want to do something about.

Setting goals and purpose

Business owners and business leaders want to maximise shareholder value. It is an explicit goal of all public and of many private businesses.  But the irony is if the leader makes this the primary goal they will be less successful at achieving it than if they start with a bigger purpose that helps customers in some way.  Why is this true?

Value Adders vs Value Extractors

Starting with a focus on creating shareholder value will lead you to what I call value extractor strategies. These strategies are effective at maximising the short term revenue extracted from customers.  They are tempting, it appears a much faster way to hit this yera’s profit targets.  But in the process you engage in a stressful relationship with customers.

Value Extractor Cowboy, Differentiate

The value extractor tends to view their customers in the same way this cowboy regards his cattle.  They are there to deliver a source of income and to be reined in with the lasoo.

So for example, customer acquisition is done with value incentives and offers which lead to contracts that trap customers into buying more than they need. Mobile phone companies and utilities are expert at this. Energy firms leave us stranded on inefficient tariffs, mobile phone operators use tariff complexity to confuse customers into buying services they don’t need.

In consumer product and food companies it is a lot easier to shave a bit of quality and bank a £m on the bottom line than to perusade the finance director that the product quality improvements will deliver more revenue by attracting customers.  So business leaders are tempted to shave product quality to save money in the short term.

There is another way that delivers better results than this.

Value adders continually improve the product and service and find ways to go beyond what customers want because they know this will attract more customers in the long term.  By going beyond what customers want and they stay ahead of their customers and competitors.

JigsawI always think value adders are more like this cartoon character fitting the last piece of the jigsaw to make things just right.  they are supplying something that solves a problem for their customers and design it to fit.

Leaders who deploy these strategies know that if they offer something attractive to customers that really helps them, then they will come back for more and even more importantly tell their friends about it.

Value adders also create businesses that are more fun to work in as well as delivering better value to customers. Value adders believe businesses must engage all the participants not just the shareholders. They must engage the customers, the employees, the management and the local community as well.  And we have seen many examples of this.

  • Hotel du Chocolat transformed chocolate retailing with superior product quality and design whilst Thornton’s value engineered themselves into an empty market space between their high street stores and value products in supermarkets.
  • Galaxy reshaped chocolate products in the Middle East by bringing superior quality and design to everyday supermarket products
  • The most over-used example is Apple who reinvented mobile communications whilst Nokia made lower cost mobile phones using the technology they already had.
  • Miracle Gro has entered new market categories through it’s determination to make products that make gardening easier for everyone.
  • P&G have taken the excess margins out of skin care whilst delivering superior products with Olay.

What distinguishes these firms was a purpose beyond shareholder value

These firms created a purpose beyond money and this created better shareholder value than the ones that start with maximising shareholder value as the goal.  This is still business not a community or some higher purpose or campaign.  It is simply about helping improve people’s lives in a small but practical way.

These businesses also end up as the most rewarding to work in, deliver great shareholder returns and always experience the most growth. They deploy VALUE ADDER strategies that help customers, improve the products, enhance the customer experience and as a result grow by attracting more customers.

I know this idea has been discussed in many places such as by Jim Collins in Good to Great.  Collins talks about this from the perspective of the CEO and the mission.  But my take on this is that the principle can be adopted for every brand development, every growth strategy and every business.  What frustrates me is how many people still don’t seem to “get it”.

So every time I experience a value extractor business whether as a consultant, manager, advisor or as a customer, a voice inside me pipes up and questions why do they do this?  Don’t they realise there is a better way?   I don’t like it when people are not doing the best thing for their business. It is bad for customers, bad for staff and bad for shareholders, bad for growth.

SO WHAT NEXT – I will be less frustrated and take action!

I realised this week, I need to stop moaning about this and stop getting frustrated. I should do something about it.

My whole consulting service is devoted to helping value adders. So I need to work with more of them to create more examples of how this strategy works.  I have seen that value adders want to turn their products and services into things people love to buy.  That is what we do at Differentiate, so we can help.

So I set my own 10 year goal to help 10-20 business leaders transform 20 products and services into something that helps to make customers lives a little better.  It is much more satisfying to make customers smile than to extract money from them.  And I need these examples to get the message out there that value extraction is not best strategy for anyone, certainly not for customers, but not for staff and shareholders as well.

Clarifying purpose

It is an immense relief to have clarified my purpose and know the reason to build Differentiate in the next 10 years. I plan to share the bumpy road of experiences through this blog, my Google+ and my email list.

If you like this journey and want to explore it with me, please subscribe for blog updates (top right) or stay on my email list or sign up for email updates on the Differentiate website.  You can also follow me on Google+ and Twitter.

If you are even more interested in this, I am creating a group who will meet every two months to shape and develop this path and ensure we succeed.  Call it a non exec role, an advisory board.   If you are interested, please do get in touch?  More on that later.