5 New Rules For Starting Something New
What’s the difference between innovators who dare to start something new and managers who are content to improve what already exists? This simple question is at the heart of every strategy, technique, and case study presented over the last few blogs. Whether, as with classic start-ups such as Zappos or Life Time Fitness, the opportunity was to establish a new company around blank-sheet-of-paper ideas, or as with the reinvention of MGM Grand and DaVita, the challenge was to unleash blank-of-sheet-of-paper innovation inside an established company.
I’ve tried to describe and make sense of what it takes to change the game in fields defined by too many competitors chasing too few customers with products and service that look too much alike. Which, by the way, defines pretty much every field.
How do you control the future? By inventing it yourself. That is, by doing more with less, by reacting quickly to setbacks and surprises rather than agonizing over how to avoid them, and by never losing sight of why you got started in the first place – the impact you aim to have in your field and in the world. So whether you aspire to shake up your industry with an independent start-up or shake up your company with an internal venture, here are five new rules for starting something new.
Most traditional thinking about strategy and competition emphasizes the intricacies of money, power, and business models. Robert Macdonald, the one-of-a-kind entrepreneur says that starting something new is a matter of ‘reminiscing about the future.’ Ray Davis, the customer obsessed CEO of Umpqua Bank, argues that the real work of leadership is to ‘find the revolution before it finds you’ – that is, to be the driving force of transformation in your field, rather than a lagging indicator. The real promise of starting something new is not merely to improve on what exists. It is to transform what’s possible.
Tony Hsieh, the high profile CEO of Zappos, understands that his fast growing company is revered among shoe lovers for the vast array of footwear it offers, and that it owes much of its success to its mastery of this one product category. But he is adamant that as a brand and as a culture, Zappos is not primarily about selling good shoes – it is about delivering great service, a most-of-something commitment that can take the organization into all sorts of related (and unrelated) categories without diluting what makes it distinctive. Already, Zappos offers clothing, bags, and other fashion accessories, plus housewares and skin care, and Hsieh is reluctant to rule out expanding into all sorts of new fields.
“Most people know us for footwear,”he explains. “But internally we think of our company pretty differently. We want the Zappos brand to be about the very best customer service and customer experience. Our hope is that ten years from now, people won’t even realize that we started out selling shoes online, they’ll just think of us as standing for the best possible service. We’ve had customers email us and ask: ‘Will you start an airline?’ We wont do that this year or next, but thirty years from now? I wouldn’t rule out a Zappos airline.”
Kent Thiry and his colleagues at DaVita make no apologies for an outsized corporate culture that wears its heart on its sleeve – it’s how they avoid being worn down by the demands of their business. “So much of what we do, with the rituals and the costumes, are little ways, cute ways, cheesy ways, of reminding us what we hope to create and how we want to behave,”the CEO explains. “Why do people meditate every day? To remind themselves of how they aspire to live and behave every day. To be reminded of the values that are important to you.”
That’s the simple (and powerful) lesson behind Gallup’s research on the relationship between companies and their customers. The differences in behavior between customers who were ‘rationally satisfied’ with products and services versus those who were ‘emotionally engaged’ were striking – and had a striking impact on business performance. Overall, Gallup found, ‘fully engaged’ customers ‘deliver a 23% premium over the average customer in terms of share of wallet, profitability, revenue, and relationship growth.’ And these terms of engagement, the research adds, are driven as much by psychological connections as by business considerations. “Every interaction an employee has with a customer represents an opportunity to build that customer’s emotional connection – or to diminish it.”
That’s the appeal of Gamal Aziz’s ‘working backward’ methodology at MGM Grand. It turned blank-sheet-of-paper thinking into a routine part of thinking about the business. For decades, the Las Vegas model of innovation has been to literally ‘blow things up.’ Companies would dynamite a hotel or casino that had lost its luster, and, from the ashes, build something more glamorous. At the MGM Grand, Aziz demonstrated that organisations can embrace deeply disruptive ideas without deep-sixing what came before, as long as leaders give everyone the tools to work backward from the future. “We have kept morale high even in this environment,”he says. “Our people are coming up with extraordinary ideas. There is an ongoing organization, a commitment to fresh thinking, that is as powerful in tough times as in good times.”