When it comes to strategy, one way to meet the radically new expectations of your industry is to take inspiration from the impressive and surprising strategies that are used in other industries. Why can’t interacting with an insurance company be as responsive and transparent as interacting with Uber? Why can’t hospital check-in be as easy as hotel check-in? These are the kinds of questions that more and more customers are asking themselves, and the questions that a winning business strategy must answer. You won’t find those answers if you limit your strategic vision to what other companies in your field are doing. Remember that your competitors aren’t always who you think they are.
Most executives think they know who they’re competing with – big companies in their field or entrepreneurial “ankle-biters” with a new technology or business model. But what happens when your competitors aren’t who you think they are? Specifically, how do you design a winning business strategy when competing not only with incumbents or newcomers to your industry, but also with the ever-changing expectations of your customers, whose encounters with products and services will well beyond the established boundaries of your industry. ?
The answer, I believe, begins with insight I first heard from Bridget van Kranlingen, a senior executive at IBM. “The last best experience anyone has anywhere,” she noted, “becomes the minimum expectation for the experience they want anywhere.” In other words, if you’re a car dealership, customers don’t just rate how you’ve treated them based on how they’ve been treated by other car dealerships, they compare you to how they were treated by an amazing hotel or fashion retailer. If you’re a financial services company, customers don’t rate your online banking system against the competing systems of two or three other financial companies, they compare it to the ease of use of Grubhub, Airbnb and others consumer applications.
The ultimate test of your strategy is not whether you measure up to what your rivals are already doing, but whether or not you measure up to what your customers think you can and should do.
One of the first business leaders to understand this shift in mindset (and they understood it long before Bridget van Kranlingen made her statement) were the Toyota executives behind the launch of Lexus , one of the most successful new luxury brands of the last quarter. century. It was a bold strategic gamble: Reliable but boring, Toyota would launch a new brand and a standalone company to take on BMW, Cadillac and Mercedes-Benz.
But this brand, they realized, wasn’t just about introducing a new car; it was about inventing a new approach to luxury in the automotive industry. “Our customers don’t compare us to other car brands,” David Nordstrom, who is now Lexus vice president for Asia-Pacific, told me several years ago when I was researching the launch and growth of the business. “They compare us to other luxury brands. You have some experience with Tiffany or the Four Seasons. It’s the experience you expect from Lexus. People don’t say, “Well, it’s the automotive industry, so our expectations should be different.”
This is an extremely important strategic vision, which has guided Lexus’ approach to sales and service ever since. Early in the brand’s development, the company sent 500 dealers and general managers to train at a Four Seasons resort in Carlsbad, California. They noticed all sorts of little techniques the hotel used to create a distinctive experience, then revisited them for the concessionaires: flowers in the showroom, marble floors in the bathrooms, bottles of water and chocolates in the cars when customers picked them up. of the service department. Years later, Lexus was impressed with the positive energy and problem-solving skills of the Genius Bars in Apple stores. So it created Answer Bars in its dealerships, modeled directly on Genius Bars, to teach customers about sophisticated vehicle technology, troubleshoot problems, and make them more enthusiastic about their cars.
A few months ago, while visiting Savannah, Georgia, I hung out with an entrepreneur named Jesse Cole, owner and CEO of a baseball team called the Savannah Bananas. To say that Cole engineered a radically new way to compete in his sport would be to underestimate his strategic innovations. He and his colleagues have simplified the economy of attending a game, revolutionized the experience of being in the stands, and even rewritten the rules of baseball itself. The result is a huge commercial success that has attracted all sorts of attention from economic commentators and the sports world. ESPN went so far as to call the Savannah Bananas “baseball’s greatest show” and aired a five-part documentary about its rise.
When I spoke with Jesse Cole about how he devised his strategy, he made it clear that his goal was not to do things a little differently from other baseball teams, or to do them a little better than the way the Bananas have done them in the past. Its goal was to rethink and reimagine what is possible in terms of the entertainment experience of a baseball game and the emotional and psychological relationship between a team and its fans. Which means he drew strategic inspiration from Disney, Broadway and Apple, rather than the established practices of other baseball teams or the sports world in general.
Lior Arussy, who has advised some of the world’s best-known brands on the relationship between strategy, innovation and customer experience, says many companies fail to design winning strategies because they don’t think enough to what is possible in their industry. The problem is not that organizations are inefficient or out of touch. The problem is that they are narrow-minded. And narrow-minded organizations do not lend themselves to a revolutionary strategy. “We live in a new world,” he told me. “Clients no longer accept ‘correct’ work. It’s exceptional or nothing. Impress me, surprise me, do something I’ll remember, that’s what customers want. This is what organizations must offer.
So when it comes to strategy, one way to meet the radically new expectations of your industry is to take inspiration from the impressive and surprising strategies that are used in other industries. Why can’t interacting with an insurance company be as responsive and transparent as interacting with Uber? Why can’t hospital check-in be as easy as hotel check-in? If I can get pre-approved for a home loan in less than 30 minutes on the Rocket Mortgage app, why does the real estate industry still need a small mountain of forms, tax slips, and other documents to approve for a one-year apartment lease?
These are the kinds of questions that more and more customers are asking themselves, and the questions that a winning business strategy must answer. You won’t find those answers if you limit your strategic vision to what other companies in your field are doing. Remember that your competitors aren’t always who you think they are.