Dr Lee Styger, Director of the Executive MBA at Sydney Business School, University of Wollongong, discusses with Darren the importance of innovation in businesses, but innovation that is based on developing and delivering enhanced customer experiences, rather than being yet another management fad.
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Transcription:
Darren:
Welcome to Managing Marketing. Today I’m here with Lee Styger who is the Director of the Executive MBA at Sydney Business School, University of Wollongong and it’s a great opportunity because we’re going to be discussing a hot topic, which is innovation. Welcome, Lee.
Lee:
Thanks, Darren.
Darren:
Except that it’s not a hot topic, is it? Because everyone’s talking about it from the boardrooms down to the grassroots or the factory floor but there doesn’t seem to be a lot of innovation actually happening.
Lee:
What we discussed in the Green Room – we’re old enough to look at the history of management fads from business process re-engineering, total quality management, all of these things and about every 18 months a new one comes around and I think innovation is currently one of these perceived magic pills by leaders all around the place.
You say innovation; by what measure? How are you doing your innovation? What is innovation? What does it mean to you and your customer? What happens? You’ve got a department for it that ticks a box for it on the annual report.
Darren:
I think I measure fads by the number of consultants that are pushing the particular service because certainly my LinkedIn feed over the last three years has suddenly bloomed with people giving advice on how to become more innovative, which I think is an interesting promise because from my perspective innovation is at the very core of a business culture isn’t it, or not?
Lee:
It should be or not. Now, where do you go with this? It’s about core. I sat in a meeting recently when we were looking at a little bit of re-engineering of an organisation and the team brought in to do this were all describing themselves and their strengths. Not once did they mention customer.
So, we’re going to innovate our own strengths to create a super team with no connection to customer. If you’re going to innovate, if you’re going to change, if you’re going to do anything new, exciting, who are you going to do it for? And if it’s about business then it’s got to be customer.
Darren:
Absolutely.
Lee:
And good old Deming told us that all of those years ago and somewhere along the line we’ve lost it.
Darren:
We said before it’s either core or it’s not except that it was also Edward Deming who said you don’t have to change after all there’s no mandate to survive. If you don’t want to change just prepare yourself for business death
Lee:
The inevitable.
Darren:
And yet you see so many companies (Einstein’s definition of insanity) that are doing the same thing over and over again in a market that is being disrupted by technology. Technology is disrupting the economics. It’s disrupting the business processes and therefore disrupting categories, and yet it seems like Boards and the C-suite for a lot of companies are absolutely paralysed in the face of change.
Lee:
Yeah.
Darren:
So, why?
“Technology should be an enabler and not the thing that delivers the magic pill of innovation.” – Dr Lee Styger
Lee:
Short-termism. They don’t get it. They’ve lost the appetite for it, payback on. If just talk about the technology issue for a second and by the way I don’t uphold technology as the answer. People, product, process—that’s where you innovate.
Technology should be an enabler and not the thing that delivers the magic pill of innovation.
Darren:
I agree and we say to people all the time, ‘technology is never the solution; it’s the tool that helps deliver it’ except that so many other people are embracing technology to actually drive change in various areas, like Fintech.
Lee:
Technology yes, but there is a big difference between deliberate users of technology where you write it into your strategy, and those that think that throwing a bucket load of technology at any problem is going to solve the problem, which it doesn’t; it never has. You can track that back to the Middle Ages.
But stop a second. These companies are spending half of their capital budgets on IT to make us more efficient. Are we more efficient? I’m looking at this, now where is my rocket pack I was promised by now?
Darren:
My flying car.
Lee:
Where is my four-hour working week because technology was going to enable a much more relaxed utopian lifestyle? It hasn’t happened. Why hasn’t it happened? It’s made us more connected. We get more crap through the door all of the time that we have to react to.
I do a little piece, which is the three-legged stool. You’ve got people, product, process are the legs. If you get one of those longer than the others what happens? Your stool falls over. You get legs that are too high; that are not supported by anything, what happens? It crumples in on itself.
As any leader, what have you got to do you’ve got to be able to stand on that stool and you’ve got to be able to juggle all of those balls all day. The trouble is we’re too busy juggling the balls on a one-legged stool to be able to have any hope of balance.
And if you want some strength in that stool what have you got to do? You’ve got to provide some structure around that stool. And that’s where your quality management systems come in.
“If you’ve got a bunch of companies truly running a ‘quality management system’ then they are mandated to have innovation.” – Dr Lee Styger
At no point yet have we ever spoken about innovation. But stop right there. If you’ve got a bunch of companies truly running a ‘quality management system’ then they are mandated to have innovation. Why? Because if they’re running ISO then the mandate is to provide the resources necessary to satisfy the customer, as a management team.
We’re hiding behind the word of innovation when the systematic process of innovation has been removed from companies because of a short-term cost mentality. Now why has that happened? Various schools of thought; I thought it was GFC, mate Cameron reckons it was Y2K but you and I are both old enough to remember the lead-up to Y2K (I’ve got a CD with the stuff still on there) during the Y2K audits the millions made of the fact that planes were going to drop out of the sky.
Darren:
Yes, fresh milk was going to disappear overnight.
Lee:
I actually lived by an airport in 1999 and I remember staying up to see if planes would drop out of the sky and it was bloody disappointing that they didn’t. We did all of that work and gee weren’t we great.
But at some point, something happened and Cameron’s argument is that we invested so much into stopping a problem we didn’t have the cash available afterwards to continue that drive for newness.
Darren:
Yes.
Lee:
Differentiation, all those other buzz words that we talk about. I thought that GFC when we completely ripped the heart out of the knowledge capital of businesses at that time most businesses did. They fired the people like you and me. They kept the younger ones because they were cheaper and we lost that knowledge capital.
But whether it was Y2K, whether it was GFC, whether we got a double-hit we kind of lost our appetite and more importantly our ability to do that stuff.
Darren:
Being older than you I actually remember back in ‘87 the big stock market crash and the impact that had, particularly on marketing because that was the area that I was focussed on is that post ’87 there was this huge clear-out of middle management.
Lee:
Yeah, there was.
Darren:
And so you ended up with marketing departments with very few senior people and lots of graduates, graduates who were never able to be mentored and ten years after that we then had this area where those juniors had now risen into senior positions but had never actually been mentored in the business.
All that they had was the degree that they got from the university in marketing, which at best is a nebulous and broad topic, and then a succession of ten years of experience where they were rewarded for not making a mistake. And to not a mistake is actually to avoid risk and to avoid trying anything new.
Lee:
Well, this gets me onto my other pet project of course, which is the more risk-averse a company becomes, the more it drives itself into grey mediocre, and what do you need to do with grey mediocre? You need to do the same as everybody else.
“The more risk averse a company becomes the more it drives itself into grey mediocre” – Dr Lee Styger
Now, what do we know? First to market with any product – 99% of the time wins, and yet we’re told it’s better to be a fast follower—really? If you’re in the grey middle commoditised ground the last thing you want to be is first to market. You want to be last to market. You want to prolong that product, that output of your business, for as long as you possibly can.
So, with this risk-averse mentality, business takes on a different dynamic that says the last thing we want here is change, the last thing we want here is innovation or people who are creative anarchists in our organisation, which puts you and me out of a job of course because nobody wants you and me.
And this is what we’ve seen over a period of time but without those creative anarchists in an organisation who are there to mentor the new ones coming through in terms of what innovation means to our organisation, so it’s not just an engendered culture it’s actually an ability to enculturate that back into an organisation.
So, not only have we lost the appetite, we’ve lost the capability of doing this stuff. People won’t step out of their box. How many workshops do you run, how many workshops do I run where it’s not the getting to know you stuff that the Psych like to play but actually trying to do something creative in that room?
Darren:
It’s hard work.
Lee:
They don’t do it.
Darren:
Because they fall into groupthink. Everyone wants to fit in with everyone else so there are no new ideas, there is no one being brave enough to put something out there. I’m sure the people in those workshops have ideas that are unique, different, innovative but they’re too scared to put voice to them because they could be outside of the group and you work hard.
Lee:
Yeah. There’s feedback from a group I was involved with earlier this year and everybody loved everybody else and we were all working very hard and there was this little thing on the bottom of my feedback, which the consultants did, ‘Lee, great guy; comes up with loads of ideas but some of them impractical.’
And I turned around and said, ‘but some of them are very practical’. You’ve got to have the impractical with the practical, but this notion of fear of failure. You’re going to open your mouth and look stupid. In any creative group that’s where it starts; the fun, the play, the ideas that are a little bit whacky.
Systemised product development, systemised design will knock the stupidity out and create something that is absolutely, humungously brilliant, but you got to get that core idea first and businesses I think they lost the appetite. By losing the appetite they lost the capability.
Darren:
I think there’s another component here. Remember when ASIC really came down on Boards, the importance of boards to really hold the CEO accountable and it was all about governance and accountability and it got to the point where even the Board was set up to not show due governance but just to crush anything that wasn’t doing more of the same.
Lee:
More of the same but then even in high driven, innovative product-focussed companies, category-killer companies— (who are the category-killer companies in the world?) and all of these guys come up every time because of the design, the customer focus, all of the stuff that Deming said you should have these guys do and then people wonder why they’re as good as they are.
But even within those organisations the governance process of innovation (people, product, process) is actually quite rigid. You stage-gate it. You have a new product development process that goes along these lines. You match it off against financial measures and everything else but at some point, someone has to say we got to take a punt on this.
Darren:
Otherwise you just get a business that’s running off in 50 different directions and never fulfilling on anything.
Lee:
And that’s the side of madness that everybody is so scared of—being an innovative organisation. But it’s not that at all. But when we’ve lost our capability to actually come up with an idea then those policies and procedures on how we do it get so dusty they become out of date and we set ourselves up for greater risk of failure.
So, what do we do? We outsource it. That’s why you make your squillions doing what you do. It’s why those of us on the other side become in great demand for our creative talents but the problem on that its black box design. It’s black box innovation so you’re just going to buy a bit of innovation and hope you can plug it into your company.
Darren:
And that’s where it doesn’t work.
Lee:
It’s madness.
Darren:
It’s either black box or you pay all this money to outsource it but then you never have the cultural process to actually embrace the ideas that are provided to you.
Lee:
Absolutely right.
Darren:
And so it ticks the box. We’ve invested X million dollars in innovation. We’ve got someone to come up with some ideas and that’s the end of the story. They don’t actually implement.
One of the big questions we get asked all the time is ‘what’s an idea worth?’ Well there’s a saying that ideas are a dime a dozen and they are until someone’s willing to invest in it and make it work.
Lee:
Absolutely. The best example I’ve seen of a company embracing innovation and all of its roads to change is actually in Hong Kong, and a mate of mine has worked with them now for five years and he’s external to that organisation and so he will challenge anybody within that organisation. They are a commodity service provider. Their retention’s gone up. Their profitability’s gone up. Their ability to take on new markets has gone up. Their ability to offset the challenge of the rest of Asia is there and what have they done?
They’ve basically gone back to grassroots stuff that you and I learnt in the 80’s from guys that were doing it in the 60’s and 70’s. And this whole innovation culture has become so embedded within this organisation that their base employees come out of that building not only smiling but bouncing on their heads telling the world about how wonderful it is to work there and so on.
They argue that you can hear a smile over the telephone and this isn’t about paycheques. This is about how can we make this better for our customers? You make it better for your customers; you make it better for yourself.
Darren:
It’s that word empowerment and in fact, most organisations make the mistake of thinking innovation somehow exists in a little group of people. It’s a bit like agencies that bother to have a section called ‘creative department’ as if creativity only exists there. So, here’s our innovation department because that’s where innovation happens.
Lee:
But we’ve got an accounts department and we do that, and an HR department—we’ve got to have one of those. We’ve got all of these departments–what else in this departmental silo kind of thing? Yeah, business education.
We’ve taught this silo kind of speciality far too long. You talk about somebody coming out with a marketing degree this nebulous cloud; they’ve done international marketing, HR with marketing, communications for marketing—all of these kinds of siloed titles but have they ever looked at that process of marketing with a holistic, multi-faceted, multi-cultural, multi-functional organisation? The answer is ‘no’—too complex.
“The expectation of new talent coming into business is it’s all about managing that silo structure like we did back in 1865 out of Westpoint.” – Dr Lee Styger
You get business leaders coming out with business leader’s degrees and they’ve done their finance and their governance and their HR but have they ever looked at a multi-disciplinary approach? And the answer to that is most times, ‘no’. Because most of this stuff is taught as a silo.
And the expectation of new talent coming into business is it’s all about managing that silo—structure like we did back in 1865 out of Westpoint.
Darren:
The old military structure, yeah. That’s why a friend of mine talks about the T of capabilities. He said that people should or will fall naturally into the type of personality that goes very deep in a narrow subject or else very broad across many subjects and take a more holistic total functional approach and yet there’s no mechanism currently in HR or in most organisations to be able to separate out the two or even work out how they come together because the whole organisation is so siloed.
You have to go into a silo and maybe if you can leap across a few by the time you get to general management you’ve got a broader view.
Lee:
You can’t leap across them because if you are a great piece of natural talent in the accounts department are we going to let you go to marketing? Like hell we are because then we’ve got to have somebody else to train up so we going to keep you exactly where you are.
So, you’re never going to actually get rewarded for the talent you’ve got anyway because you’re more beneficial to me (your leader) to keep you where you are doing what you’re doing otherwise you’re going to make my job hard by leaving.
So, what happens with career progression? We are forced to go out and do something else and we take our natural talent with us and then have to get re-enculturated somewhere else with all of these new ideas we want to implement but can’t because the culture we’ve got into stops us from doing it.
You’ve got this unvirtuous circle of blocking what should be a natural creativity.
Darren:
It sounds like short-termism and view in business and performance planning. Short-termism in career development or talent management because it’s all about people having to chop and change and yet innovation is not actually short-term, is it?
Lee:
I think it’s too simple to say short-term because you’re a CEO, you’re there for two or three years and it’s about returning shareholder’s – we get that. Shareholders need to wake up to the fact that if they want to be shareholders in five years’ time they might actually need to invest a bit back into the business. I’m not sure that shareholders have got that quite yet.
But moving outside of blame the CEO for short-termism and personal career progression and so on, let’s think about what is actually going on here. If we go back to basic principles of running a business there are thousand million people who have said ISO is the ultimate standard for running your business so why are we not doing that?
And it tells us what we should be doing. There are mandated clauses that include all of the governance, good financial management and so on, and it talks about customer focus. Now, we’ve got ever-changing markets, the pressure of technology change, social change, globalisation, but what happens is your customer base will move or change and your mandate in ISO is to keep an eye on them. You either keep them or design your next lot.
How many of us are actually doing that? And you turn around and you look at the category killer companies and they are. There is a framework for doing this. A thousand consults say they’re going to give you a bucket-load of innovation and you’re going to be o.k. And I’m not talking about agency work, contract design, contract product development all of the stuff that you and I grew up in, I’m actually talking about good guys providing good acceleration, catalysts, support, specialism and so on: the role of the consultant.
But when you’ve got others coming in offering fairy dust, it’s going to have absolutely no impact on the organization because they haven’t got their house in order in the first place.
Darren:
And you see that time and again because there is a scorecard mentality as well.
Lee:
Oh yeah.
Darren:
There are a lot of people out there that are change managers and lots of people that say it’s all about making the changes that need to be made, but in actual fact the most effective change comes from the organisation itself.
My experience is that I’ve never seen an organisation changed by someone externally trying to change it. External factors are the reasons that you should change but the change has to come from the ground up.
“How much can organisations cut costs before they cut the business?” – Dr Lee Styger
Lee:
And you need resilience to do that and it’s not a thick skin, it’s actually the determination to engender that change and how many of us have the stomach for it? Is it that we’re driving for or is there something else going on, driving for short-term gains? And yet how much can organisations cut costs before they cut the business?
The classic stories of fastener companies going down the tubes and screwing our auto industry when we had it because they cut too much. How many times does this risk happen somewhere because we’ve cut, cut, cut? How many times have we had sub-standard product and product recall because of it, and the suicidal results of that kind of thing?
It’s all too easy to say all we have to do is focus on cost. Remember, Deming said, ‘it wasn’t about focusing on cost; it was about focusing on unnecessary waste’ and that completely changes the view in an organisation.
Darren:
And he said, ‘reducing cost or improving efficiency without improving quality is a waste of time because it’s always about improving the customer experience, the product or service that’s being delivered.
And yet going back to the short-term financial reporting for shareholders is that if you are not adding to the top line then you can cut your way to profit in the short-term.
Lee:
Yes, you can.
Darren:
So we’ve seen successions of quarters where profit has been reported but you can never ever cut your way to growth. I was in the U.S a month ago and last year the U.S government reported that 48% of the Fortune 500 had revenue losses last year. On average 7.3% decrease in revenue. Now if that’s not a tipping point…
If 2016 doesn’t go down in history as the point where U.S enterprise has cut its way to shrinking then I don’t know what is because there has to be a wakeup call that says if we don’t start driving growth rather than just focusing on cutting cost when are we going to wake up?
Lee:
What do we do next? We put up trade barriers. We become more nationalistic in terms of what we should be supporting and where we should be buying and going on our holidays and so you get systematic change in economies just to protect inefficiency and the fact that we can’t compete in a free and open market.
It was on the news this morning, the treaty between Europe and Japan. In an age when people are looking to create barriers these people are going, ‘no, it should be open because it’s where your innovation, efficiency and best value product as a customer is going to come from.’
It’s too easy to say short-term. We have become more and more short-term and we have lost the ability, and therefore appetite, to innovate.
Darren:
But part of this is also a lack of leadership, isn’t it? Because short-term is just meeting the short-term needs of investors or shareholders whereas leadership actually creates vision and long-term planning in the face of short-term reporting.
Lee:
So then do we extrapolate that and say that we have two kinds of leaders; bureaucratic and the entrepreneurial?
Darren:
If you see the world as existing as dichotomies, yes. There are probably ten but let’s pick two.
Lee:
Let’s pick two; two we can count on one hand. If that’s the case are the shareholders looking for the bureaucratic but at the same time demanding that the bureaucratic become the entrepreneurial? I don’t know.
Darren:
How many times people say to me, ‘oh, we’d like to be more like Richard Branson and Virgin or Apple, the Ubers, and the Amazons of the world and be disruptive and be innovative’.
Lee:
You’re boring me now.
Darren:
They just look at what other people are doing and are seen as successful.
Lee:
Why don’t they turn around and say we’d like to be what our customers want us to be?
Darren:
Well, that’s a fresh thought.
Lee:
When was the last time you heard that? I can’t remember the last time I heard that.
Darren:
I’ve never heard it.
Lee:
Probably not.
Darren:
Not in my short-term memory span—no.
Lee:
So, who’s your customer? Now we know who your customer is and the data on that is very interesting because most organisations don’t have a clue. They will name it for a sector but they don’t actually know who their customer is. And if you can actually define who your customer is or going to be then surely you can design the route to get you there and by designing the route to get you there and inject the innovation necessary to satisfy your customer.
You don’t have to be like Uber, Amazon or the guy next to you. You have to be like your customer wants you to be.
Telecom—almost twice the cost to get the name in our service providers at the moment and we’re still not getting broadband we were promised. Who’s your customer? What do they want? If you can define customer, what do they want, differentiation, be in that space, carve a little niche for yourself—little niches can become very big in the economy and we haven’t mentioned the ‘I’ word in quite a while now.
Darren:
No.
Lee:
Because the ‘I’ word then just becomes embedded in everything else we’ve spoken about. And that’s where good agency stuff, education, catalysts come along and creative anarchists come in and do their bit—it’s all of this stuff because there’s value in what we do at that point.
We’re not just preaching to an empty church and the choir’s gone home.
Darren:
This is 101. This should be at the very basis of every organisation. It’s lost or there is often a profound sense in businesses that they are treading water. That we’ve forgotten that we can determine our own future.
Lee:
We can get onto self-determination—let’s not go there.
Darren:
That’ll be for another time.
“If you can define who your customer is or who you want them to be everything else will fall into place.” – Dr Lee Styger
Lee:
With this concept of treading water—why? We would say it’s strategic direction, leadership or whatever but let’s go back to customer. If you can define who your customer is or who you want them to be everything else will fall into place, now that’s a marketing silo of course. Some might argue it’s a sales silo but it’s not. It’s a basic DNA link between company and customer, which is where your whole system comes from. But unless you focus your business on your customer you’re screwed.
Darren:
The whole concept of what’s the purpose of this business is to deliver shareholder value but in actual fact why businesses start is to fulfil a need of the customer. The shareholder part came later. It’s chicken and egg; organisations start because there’s an opportunity or a gap in the marketplace that they can fill.
Then the shareholders come along at some point and start pouring money in and want their money back on that investment.
Lee:
In the short-term.
Darren:
Yeah, every quarter we want to know that you are growing the business so suddenly the focus for the CEO is about keeping the investors happy and not the reason the business existed in the first place.
Lee:
And we based that strategy on a Mr Micawber economic view, which is if you earn sixpence and spend threepence you’ve done o.k. but if you earn six pence and spend a shilling then you’re screwed. We are looking at it from that kind of viewpoint as opposed to going “who is the customer?”.
Can we grow the market with this customer base? It’s a completely different view of how businesses should be focused and it doesn’t say take away your governance, shareholder view, your view of the balance sheet of profit and loss or any of this stuff.
What it says is how are we going to grow the marketplace?
Darren:
Which, to use an automobile metaphor, is the engine and all those other things are the telemetry. It’s the dashboard that sits there and says is the engine working efficiently and are we heading in the right direction?
Lee:
Didn’t we do that before you and I got into the workplace?
Darren:
Except that now everyone is looking at the telemetry.
Lee:
There’s a helluva racket coming from the front end.
Darren:
Oh, we don’t seem to be doing; let’s get the cheaper petrol.
Lee:
And by the way, the floor pans have rusted out in this car but it’s still o.k. because we can keep our feet on the pedals.
Darren:
There are two things you’ve raised. The first is this idea of marketing. I just read a Harvard Review article that said that CMOs fall into three camps. The first is commercial; they just largely do marketing comms. The strategic who are involved in developing growth strategies for the business and then the true chief marketing officer because they have enterprise P&L responsibility so they’re not just responsible for growth but also profitability across the organisation.
Now, the breakdown from this U.S study was almost 50% are just comms people. Just under 30% are the strategic, having the input into the C-suite about where growth is going to come from and about 20% are actual P&L responsible proper CMOs.
I’d love to see that study done here in Australia because I think that commercial area would be slightly larger and the strategic would be smaller but a lot of places that are called marketing departments 20 years ago were the advertising departments.
Lee:
Yea, brand police or whatever.
Darren:
They did the comms where in fact marketing is completely distributed throughout the organisation. The pricing people are over there and the product people are there and the distribution’s over there so when people are putting to marketing they’re actually pointing to marketing comms and blaming marketing, but in actual fact it’s only a quarter, if that, of the marketing mix (if you base it on the four P’s).
“I’ve worked with some of the world’s great marketers and I’m in awe of them, but the brand police I’ve got no time for; it doesn’t help an organisation.” – Dr Lee Styger
Lee:
I’ve worked with some of the world’s great marketers and I’m in awe of them but the brand police (all you need to do is a little bit more promotion) I’ve got no time for; it doesn’t help an organisation.
But in those organisations where marketing is linked to profitability they’ve been the guys that have been more customer focused, innovative or product driven they’ve been able to carve out niches where no one else can and been able to defend those niches against massive global change and global pressure.
Why can they do that? Because they’ve now got the ability to be innovative within that organisation and not to tweak but do some real structural stuff to make it happen and keep it happening and those are the companies where the employees come out bouncing and wearing the corporate tie home or doing whatever they have to do because they’re proud to be part of that organisation and input back in.
Now how many of us do that? And how many of us have that connectivity as opposed to here’s the latest colour that we’re putting on our cards or here’s our latest web campaigns—window dressing.
Darren:
And the second point that you raised (if you sell it for six pence and it costs you three pence); that is a transactional view and not an investment view of business.
Lee:
Absolutely.
Darren:
Snapchat is still pre-profit and yet it’s valued at billions of dollars when it floated on the stock exchange when it hasn’t even done a transaction that’s delivered a profit.
Lee:
You’ve got me in a space where I kind of smirk for the radio again, but dot coms, all of the app growth and collapse, and this tech space now, and tech ads and so on we still haven’t got our arms around what this really is.
You and I don’t remember the Tulip bubble burst, but how many times do you ride these waves? How many times do people come on to invest and so on? History goes back 1,000 years on this technological investment and then bang. The idea is you get in quick, do your bit and then get out quick but nobody knows when that’s going to happen really.
You came up through that science background, what’s a scientist doing in marketing and communications? I came up through a product development side. What I have witnessed for many many years (a good generation and a half) is that those curves are already in place and being well done ever before the markets catch up.
So, when other people want to jump in that curve’s already past. How are we going to predict this? Really you got to be doing your own. your whole pre-emptive curve on platforming your product, your offerings and so on becomes critical to that, which has then brought us back round to this innovation, how are you going to do it, product led through the customer.
So, you’re then not relying on somebody else’s technology to give you that boost; you’re actually relying on your own innovative connection to customer to give you that boost and exploit technology. So, do you want to invest in a lot of technology that may or may not pay back in the period you’ve got?
How many software upgrades, how many times do we have to do this? Or do you want to invest in the stuff that’s going to connect you back to your customer and then work out what technology you need?
Because the argument over whether it’s going to be iPads or mainframe suddenly goes away when you know what you’re doing for your customer.
Darren:
It’s about the customer and ultimately the purpose of business is to create customers. And I also think businesses need to have discussion around short-term investment for return and longer-term investment for future returns that even though our accounting system says that on the very last day of the financial year all your customers effectively die and are reborn on the first day of the new financial year but there has to be money held today to invest for future growth.
Constantly sucking the money out of the marketplace and not investing back into it is true short-termism because it will get to the point where there’ll be nothing left. It’s like a mining paradigm; you’ve got your coal mine—while you’re digging that you should be looking elsewhere for your next deposit of coal and the next one and the next one.
Coal probably isn’t a good one because it’s probably going to be replaced by alternative energy.
Lee:
But the problem with alternative energy—it’s almost a metaphor for what we’re talking about here. You talk to the wind people; the answer’s wind. You talk to the wave people; the answers wave. You talk to the solar people and the answer’s solar. Try to get all three in the same room and they going to fight like hell and the answer is this holistic all of them.
Darren:
It’s a combination of all three.
Lee:
Marketing people and the answer’s this, operations people and the answer’s this, financial people and the answer’s this—when are we going to actually say this is the customer—what are we going to do about it?
Darren:
So, the CEO is actually the chief customer officer.
Lee:
Should be but how many of them truly are? They’ve got to report to the shareholders on a daily or twice daily basis.
Darren:
And when you look at the average CEO’s communication it’s 90% to the shareholders and staff and very little to the customer.
“The great leaders of business have always been connected,
haven’t they?” – Dr Lee Styger
Lee:
You mentioned Sir Richard and (God rest his soul) Mr Jobs; they were connected—still are in so many different ways. The great leaders of business have always been connected, haven’t they? And it’s not that we necessarily view them as superheroes and latter-day gods in our society but there seems to be this connectivity.
Darren:
Understanding their customer
Lee:
Whether that was just good PR or they actually had an insight into all this—you could quote 1,000 books. But it would be interesting to see the airport filled with books on how they connected with their customer as opposed to life story—it might just change a mindset. Perhaps we should do that.
Darren:
Sounds like a plan, Lee, thank you very much for your time—it’s been fascinating as always.
Lee:
Cheers, mate.
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