"The Messiah Complex and the Search for Best Practice", Ken Wong, Nov. 21, 2002, 12:40 p.m.
Ken Wong, Queen's Business School, at "Strategy on the Edge: Charting the course in turbulent times", Strategic Leadership Forum, at the Design Exchange, Toronto, Nov. 21, 2002, 12:40 p.m.
These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).
Introduction
Ken Wong, professor, Queen's Business School
Founded science and technology program at Queens' Business School
[Ken Wong]
Minor case of laryngitis.
Messiah concepts and the question for best practices.
Why do messiah concepts fail to deliver?
Messiahs to solve the biggest problems or improve productivity.
As a boomer, child of the 1960s, do we really need another messiah concept?
Are there really that many permutations on things that drive business?
e.g. Micheal Porter: Competitive Strategy
e.g. Tracey & Wiersma: Discipline of Market Leaders
e.g. Kenich Ohmae's Mind of the Strategy
All three deliver the same basic message: best, cheapest, or focus.
An exam question: translate from one to the other.
Messiah concepts do play a valuable role.
The #1 role is that enable us to combat management's serial killer strategies.
In Boston, during doctoral studies, David Berkowitz, "son of Sam" serial killer of 13 New York individuals.
In the trial, tried to enter a plea of limited capacity.
If could prove loony tunes, then no death penalty.
When the moon was full, Berkowitz heard a dog howl, and then thought it was his mission to kill the devil.
The devil was anyone with long hair.
Defence attorney asked psychologist, from California: Would you say he's a rational human being?
Reply: Probably the most rational human being I've ever met.
Psychologist says you need to understand the choice of terms.
If you accept the premise that the howl is the message of God, ..., and you accept the premise that the devil has long hair, then you can't deny the chain of logic.
You can deny the premise, but not the chain of logic.
Think about strategy, and the biggest problem:
Getting everyone to line up behind the premises.
Every manager has the same high degree of rationality as that of serial killers.
Believe that when we have the differences of opinion, then that's when strategy goes awry.
If start debating strategies, then end up doing an executive offsite on mission, vision, strategy.
Mission strategies are about political compromise.
Strategy is about asking the right questions, and gaining rationality.
Now we know what really counts
Thus Messiah solutions serve to focus us on whether the premise is correct.
Why can't this be done by repeating what was done last year?
1. People, and how they think
Vertical vs. horizontal thinking, right brain vs. left brain, guardian vs. visionaries, ...
Teachers recognize this.
What makes good teachers?
Students get assigned to a class that think and explain to the way they do.
The "Macintosh" of teaching -- it seems like common sense.
Thus, Porter or Tracey and Wiersma may work better for you.
2. People, and what Messiah concepts help them think about it.
e.g. the value chain concept
All organizations exist to transform inputs into outputs.
The price of the output exceeds costs.
The challenge: it doesn't tell you what value to create.
The shirt that Ken is wearing is special.
It's made by a company that only makes two kinds of shirts: this shirt, and the other as Polo by Lauren
This shirt sells for $45 USD, but it's unbranded.
It's made on the same assembly line, by the same person, with the materials, and even the design is rip-off of the Polo brand shirt.
It lacks a Polo player, and sells for $65 less than the Polo brand.
If the function of a shirt is to protect and adorn the body, the Polo shirt wearer says that they have the world's most value left nipple.
Most men that wear Polo brand shirts didn't buy them from themselves, but were gifts from someone else.
It's not protection and adornment, but a symbol of love and respect from the giver.
If you're looking to create value, most of it is on inbound logistics, operations, and outbound logistics, then there's no value in marketing and services.
How do we avoid this type of message?
We need to review about "what you do", but it's about the outcome you generate.
Got idea from George Stalk, on "Time, the Next Basis of Competition".
Stalk was the first to really think about reengineering, before Michael Hammer.
How to do and not do reengineering.
Most people do reengineering from beginning to end, then everything makes sense.
But if you start from the customer and work backwards, then you can see the value.
Same notion from Greg Lowes and Alice Keung today.
The value we're trying to create.
The outcome: survival and growth
The key is survival and growth in a world of margin-sucking maggots.
There's a movement away from a concern on volume, to a concern on margin.
Realize can't approach all customers in the same way.
Fire that account that doesn't deliver margin.
Aren't some relationships more high-maintenance than others?
How much time could you say by liberating yourself from high-maintenance relationships.
The Secrets of Software Success, HBR and McKinsey, characteristics in 200 most profitable software companies.
On average, each firm declines on 40% of their business.
They couldn't make any money on that business.
Today, it seems we want volume.
Six margin-sucking maggots:
Customers: they want the best quality, best service, at lowest price.
If you have problems doing this, they'll move.
Suppliers
Employees: people who don't work hard at the right thing.
Technology: automating things that don't give competitive advantage; although some find ways to innovate.
Competition: who forces us to play their game.
Ourselves: when we fail to focus on the real drivers of profitability.
Will focus this talk on customers
What are the "best practices"?
A comparison of three products, which are all similar.
Which product is cheapest?
Product A: $1.01
Product B: $1.00
Product C: $0.999 ...
The answer is obvious
Now, compare three products:
Product A: "Wonderful Quality"
Product B: "Great Quality"
Product C: "Smokin' Good Quality"
More information? Suppose it's a podium
Try better information: The snowboard team at Nagano.
Not enough to say what the product was; needed to know who the customer is.
A demonstration, in retailing.
How do I improve my retailing experience?
Sample advice
Personalize the experience
Help the customer find their way
Explain product differences
Show them you care
Up-sell
EDI, e-tailing ...
Last year, best of times and worst of time, on Christmas Eve, no gifts, yet.
Have a 4-year old, the Queen, easy to buy for: pastel-coloured toys
12-year old: video games
16-year old: just wanted cash
The wife was the hard one to shop for.
What do you buy the woman who has everything?
Only one gift left, lingerie.
Went to a lingerie store, looking at the ground, waiting to be served.
Two clerks, one making change, and the other looking at cards doing inventory.
When a man sets foot in a lingerie shop, he's not there to browse!
A motivated buyer: get in, buy, gift wrap, get out.
Someone trained in retailing:
Clerk started at low end, up one wall, and down the last wall for 15 minutes.
Then at higher end, the clerk offered to feel the goods.
After 15 minutes of being there, just took it there.
What should she have done?
Start with high price merchandise.
Tell him that you can return the gift.
Say he'll get lucky.
She should have considered the outcome, not the process.
With the customer, not feel-good doing of the right thing.
Types of buyers:
Diagram:
Y-axis price sensitivity
X-axis value from differentiation
Price buyers:
Can't do much to interest them in the product
The Tango buyer
e.g. suppose you don't buy into the idea of life insurance
Now, if you try to get a mortgage, you need a life insurance.
Thus, the criteria is the lowest acceptable compliance.
The best marketing to that client is the least amount of marketing: the least amount of time.
This means key success is low cost producer.
Key indicator is success
Then typical Messiah follow-ons:
Prove you work, not that you're the best.
Let buyers perform the work themselves (like ATMs, carrying own bags).,
Can't have a proliferation of products.
Can't have many services, because they're not scalable.
Minimize marketing costs.
Maximize distribution
Convenience buyers:
See them at airports, getting gifts.
Then, productivity availability
Wide market coverage
Distribution intensity capacity
Point-of need capability.
This is a success for Coke, where it's at hand.
Not tied to grocery stores, but on-premise consumption.
Relationship buyer:
Buy cheap, buy twice.
You only get what you pay for.
Reward you for quality and service
Don't think about price, also think about cost and use
Look for something that the supplier can do cheaper than the customer
Look for customers with a tough problem
Value-based buyer
McDonalds has done a good job at this.
Can order a Big Mac anywhere in the world, and get it delivered anywhere in the world
When you're mischievous, ask for a Big Mac with no sauce
This is a manually override of the system
This represents higher cost
Then ask them: without special sauce, don't you get anything off the price?
Value-based buyer doesn't want anything that they don't pay for.
Strategy and planning aren't about doing things better, it's about finding better things to do.
Best practice can't be evaluated with the outcome to be created.
e.g. fibre optic is good for data/voice, but it doesn't do much for a plain phone service
It's strong for a financial services company, but not the small business
Thus, 3 steps:
Indentify the outcome you want to create
Review existing activities
Look for new devices an dconcepts that will improve your ability to deliver the outcome
Then go play serial killer wit your margin-sucking maggots
Questions
Messiah concepts at the School of Business?
Why did the students focus on commerce? Because they could focus on getting jobs.
Then call a spade a spade.
Not about education, it's about preparing people for work.
Asked recruiters:
They can manage anything, but not people.
They can't implement
They have bad table manners.
How much can universities influence this?
Interpersonal skills.
Get left brain people to work with right brain people.
Grade in groups only.
"Wine and dine" class.
Seminar: client golf, because then should know to not discuss business for first six holes, and drop it if the client doesn't respond after the ninth hole
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