So you want to know the secret of a successful company? I can tell you: keep improving value for customers and staff, listen and learn, and have the courage of your convictions plus the discipline of consistency. That’s it.
Douglas Adams revealed the secret of the universe in The Hitchhiker’s Guide to the Galaxy (Answer: 42). Here’s the secret of business success: a set of clichés that are easy to say, just very hard to do.
Take continuous improvement in customer value. This is so breathtakingly obvious that hardly anyone does it. Sony built a reputation for breakthrough products such as the Walkman, and it was an early pioneer of downloadable music. But then it took its eye off the continuous-improvement ball, holding back for fear of cannibalising Walkman sales. Today, it’s overshadowed by Apple’s iPod, while its core electronics business languishes in the financial doldrums as competitors such as Sharp close in on yesterday’s competitive advantages. So, even the iconic Sony found continuous improvement in customer value daunting.
Now add continuous improvement in staff value to the mix. It’s one thing to make working lives simpler, easier and more rewarding; it’s quite another to do this while also improving customer value. Many companies end up opting for one at the expense of the other. But the only sustainable way forward is to find a strategy that connects the two: where improving value for staff helps improve value for customers, and vice versa.
Take Ford (and General Motors) versus Toyota. They both make cars on a mass scale. But while Ford’s production line made the machine an enemy of the man, Toyota’s lean production system builds human control – what it calls “respect” – into everything it does: giving each worker the right to stop the production line to fix quality issues, relying on staff to make suggestions for process improvements, and so on. Ford’s system was designed to minimise human input, while “The Toyota Way” depends on maximising human input. Guess which one is proving more successful?
But to create its lean production system, Toyota had to think independently. For instance, when Toyota looked at Ford’s production line it didn’t see what Americans see – economies of scale and low unit costs. Instead, it saw “flow”: everything in the right place at the right time – zero waste. So that’s what it pursued.
Enter our second cliché about listening and learning. Almost by definition, creating a win-win relationship between staff and customers requires new thinking: being endlessly curious, taking an experimental approach and thinking stuff through for yourself. According to the latest Coca-Cola Retail Research Group study, the hard discounter Aldi is now the strongest retail brand in Europe, ahead of Tesco. As one of its managerial triumvirate, Dieter Brandes was an architect of Aldi’s success. Aldi, he says, never had a grand “strategy”. “We just groped our way forward. It was a dynamic process driven by intuition, incremental adjustments and decisions, whose consequences were not always foreseeable”.
Real thinking and listening go hand in hand. Most “thinking” simply follows well-worn synaptic rat-runs to generate routine reactions (it’s very hard to think a new thought). Likewise, most of us feel we are listening when, actually, our own preoccupations and prior assumptions (say, about what we think the other person is trying to say) dominate.
Listening is not the same as researching. Research pursues a pre-identified agenda – that of the researcher. Listening gives other peoples’ agendas top priority. Because it can pick up both looming dangers and new opportunities, listening lies at the heart of effective innovation. But it is very hard to do.
One of the acid tests of a listening culture is leaders who expose themselves to the realities their staff and customers experience by direct personal contact, rather than relying on second-hand reports and third-hand research. “Believe me, when you experience the emotional strength of a customer’s reaction, you are much more likely to do something about it,” says Feargal Quinn, founder of the widely admired Dublin-based supermarket Superquinn.
But while listening alerts you to problems, it doesn’t solve them. Truly solving problems is invariably painful, especially for managers. Take Toyota’s “Five Why” system. There is a puddle of oil on the shop floor, so what do you do? Clear it up, of course. But you also ask “why?” Because the machine leaked (so fix it). But why did the machine leak? Because the gasket isn’t working (so change it). And why is the gasket not working? Because it is made of inferior material (so change the specification). Why is it made of inferior material? Because it was purchased at a discount price. Why was it purchased at a discount price? Because buyers were more concerned with short-term cost savings than end outcomes. Leave the problem at levels one or two and it becomes a problem for the worker. Pursue it through the Five Whys and almost inevitably it becomes a problem for management. A much bigger problem than appeared at first sight.
Nobody could possibly say that continuous improvement in value, listening and learning are bad things, but they actually require real courage: the willingness to act on your convictions. Look at any outstanding company today – one that’s setting the agenda for its industry – whether it’s Apple in music, Dell in computers, Hennes & Mauritz in mass fashion, Ikea in furniture, Southwest Airlines in aviation, Aldi, Tesco and Wal-Mart in retailing, or Toyota in cars, they all have one thing in common. They all did their own thing. Not because of a “strategy” of differentiation, but because they thought it was the best thing to do, even when nobody else did.
Which leaves us with discipline and consistency. Try this experiment. Walk down the road with a friend and stop to tie your shoelaces while your friend walks on. You’ll be surprised at how hard you have to run to catch up, which is why bursts of initiative and lurching from one strategy to another leave companies trailing behind. Truly successful companies find their overall direction and then keep at it, moving forward relentlessly and building momentum as they go. Having the discipline to keep at it is the real test of character.
There are two things about these “secrets of success”. First, the clichés. Clichés are conceptual vaccinations: a tiny dose fools the receiver’s mind into believing he’s got it, and from then on he’s immune to the real thing. Second, the items on the list are dead simple. But then, keeping things simple in a complex world is an art in its own right.v