Sunday, February 27, 2011

New Rules of Thinking

Today consumers are changing companies continually. Overall attrition rates are seeing attrition rates as high as 40-65%. While this trend is growing, companies are searching for increasing bonding stickiness.

We all know that it costs 3-5 times more to acquire a new customer than it does to keep one. What this means is that every company, big or small must have a customer growth plan to keep in touch with its strongest and most loyal customers.

We also have to increase our innovation knowledge on disruption. The old adage if it ain't broke, don't fix it needs to be destroyed.

Reed Hastings of Netflix did not reinvent the movie rental business. Rather he capitalized on a weakness. People hate late fees, he simply created a simple model deployed over the web with subscription fees instead of unit sales.

Learn from other's mistakes

I love to shop at Pottery Barn, Crate and Barrel as their furniture and products are beautifully styled and appeal to the home maker in me. However, look at Home Decorator's Collection (HDC) -- a no frills, discount offer that look the same as the beautiful ones in the expensive furniture catalogues and everyone loves a bargain.... so finding market holes is an important scanning skill to cultivate in your organizations. Every company has weaknesses - just need to look for them.

A few questions to ask:

1.) Would the Founder of Netflix been successful if he had followed the traditional video distribution model?
2.) Would Amazon continue to be be successful if they had stayed focused on pure bookselling strategy only?
3.) Would Apple be successful if they had not thought ecosystem vs product - ie: iPhone , iPAD, etc?
4.) Would Android be successful it had not been open?

The Cluetrain Manifesto is now an old book, but one thesis still holds true: Markets are conversations.

What Cluetrain failed to discuss is that human nature remains the same. For any conversation to continue their needs to be trust and reciprocity. You can expand your reach, but if the consistency in the experience, expansion of customer connectedness, people simply drift.

My partner, Alex Blom has the approach right to his over 40,000 twitterer followings, and now as one of the top digital media influencers in NA, he takes pride in responding to each of his followers, and returning their tweets, or building on their tweets, yes and he does not sleep very much.

There is a point where he and I both know he cannot sustain this personally and he is now at the tipping point, but he knows that the conversation is valuable and needs to continue and needs to be genuine.

In summary, as executives concerned about innovation and creating cultures that flourish on new ways of working, we need to develop practices that reward talent for thinking outside the box, giving them opportunities to break practices/processes as reinvention keeps you on the edge and agile.

To survive in an increasingly interconnected and web smart world - companies need to embrace change. It is the only constant fuel for growth and sustainability.

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