First Combined Issue, Monday, June 11, 2001
Made in New Zealand - twice winners of the America's Cup

"Celebrate weakness. Play the fool in your group or your company by embracing inversion, absurdity, and perseverance. Inverted thinking may help you leapfrog the competition. And just think of the innovations that rose from failure: Post-it Notes, the telephone, Silly Putty, the lightbulb.
Annette Moser-Wellman, author of The Five Faces of Genius
quoted in Fast Company's Fast Take newsletter June 06, 2001


EDGE FIRST is an email magazine dedicated to making you a better leader, by providing provocative thinking about what it means to be a leader, and the tools, techniques and best-practices that drive leadership improvement. This would have been the 24th issue. Award is a free fortnightly email magazine featuring the tools, techniques and best-practices that deliver high performance in the new economy

ONE BIG IDEA!® Values Beat Value
What do your customers really want? Futurist Ryan Mathews, co-author of "The Myth of Excellence," says forget the lowest price or the biggest discount. Show a little respect. And tell the truth.
Ryan Mathews has been around. First degree in Mongolian history. Post grad philosophy. Tended bar for two years at an inner-city bar in Detroit while working as a fine artist. Migrated to gonzo feature writing for the Detroit Free Press. A stint as a medical writer. Publishing. Copy editor and rewrite man. A remarkable run as editor of Progressive Grocer, one of the most highly regarded trade magazines in the US.
Then, three years ago: Futurist. At FirstMatter LLC. Integrating 30 years: historian, philosopher, listener, reporter, artist, experience-crafter, speaker, performer, consumer-products and retailing expert.
And now add to that résumé coauthor of “… a smart, insightful, entertaining, and useful book about companies, customers, and the art of competition”.
With Fred Crawford, Mathews has written The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything (Crown Business, July 2001), “… a delightful, winning combination: part strategic-analysis model, part charming storytelling, part philosophical treatise. All together, it is a great read and a focused contribution for business leaders who want to analyze their own approach to customers -- and learn how to reconfigure their businesses into much more customer-centric operations”, says Fast Company Founding Editor Alan Webber.

Here's our usual EA (extreme abbreviation) version of an interview from the June issue of FC.

“It used to be”, Mathews said, “that what customers wanted from businesses could be described as "feature and function advocacy." They wanted things that worked well – or reasonably well – and as advertised. Businesses made things that worked reasonably well, and they expected customers to give them money. It was a transactional world. You brought your goods or services to market; I paid you for those goods or services: Reasonable happiness on both sides of the transaction.

That worked then, but this is now.
Then, there were genuine efficacy differences – there was a time when Tide actually did clean clothes better than its competitors. There were Craftsman tools that came with a lifetime guarantee – and that was a superior offer. Same for appliances, cars, clothing, and furniture.
Then, as people lived their lives, then, they had lots of sources of institutional reinforcement. Authority figures were generally regarded as good guys. Schools worked. Leaders were leaders; people played by the rules. Emotional, psychological, and social values were reinforced by all kinds of supporting institutions.

Fast forward to now.
Rapid technological change; general dislocation. Mature industries; the closing of the efficacy gap. Tide may still get your clothes cleaner than any other laundry powder, but you'd need an electron microscope to tell. Tools don't break, so the Craftsman guarantee isn't as important. Cars, more or less, have the same degree of quality. And then there's the decline of leadership, a collective failure of the institutions that reinforced people's values.
So? An unexpected and interesting result: People have turned to commerce to reinforce their personal values.
And that hasn't happened before.

Mathews and Crawford didn't set out to find that answer. Between them they've got about 40 years of experience studying consumer behavior. They designed a simple 5,000-person survey, asking people about price, product, access, service, and experience.
“Before we even sent it out,” Mathews said, “we knew what the answers were going to be.”
Trouble is, they weren't!
“Fred and I were amazed that 5,000 consumers could get such simple questions wrong! So we did thousands of follow-up interviews to figure out why people couldn't give us the right answers. We found that what we thought were simple questions had impossible answers. No one could get them straight. The whole pattern of answers was the reverse of what we thought they should have been”.
“Those results made us go back and redrill through our research. When we did that, we got a commercial version of Alice in Wonderland. When we gave people a choice, they said things that we'd never seen before. Words like discount, sale, and price didn't show up at all. But value-proposition words – respect, trust, sincerity – showed up with incredible strength.
It turns out that it's the values, not the value. Not just what you're offering the customer; it's the values of the business, reflected in the way it does 'the business'. What did people say they want? “To do business with people who are fair and honest … who respect us as individuals. Don't give us phony discounts. Don't give us a fake smile. Don't have a greeter at the door who's there like a zombie, pretending to welcome us, but who's really checking for shoplifters."
The message: In a world where people think that the government is corrupt, that the church is corrupt, that the schools are corrupt, show us a business that isn't corrupt, and we'll do business with you for life.

OK, said interviewer Webber, what do I do Monday morning to do a better job of customer relevancy?
Peter Drucker once said that if you were a world-beater, in most businesses you'd probably have about 30% of the market – and 30% of the market would make you a killer success story. Drucker's next line, of course, is that 7 out of 10 people aren't doing business with you. Go talk to those seven people – they're more important than the three who are doing business with you.
Deal with alignment issues: Find out what store, what airline, what business your employees are patronizing, your managers are patronizing, your vendors are working with. Analyze your direct competitors – go talk to their customers too. Then you not only know who your customers think you are, you also know what your competitors' customers think they are.
Are your offerings in alignment with what the market is responding to. Most companies aren't in alignment. Most companies aren't running businesses for their customers; they're running businesses for themselves.

At the heart of The Myth of Excellence is a five-by-three matrix that consists of the attributes of businesses and the levels of performance businesses can achieve. Here's Mathews' crash course on that model.
All transactions are broken down to five attributes: product, price, access, service, and experience. And there's is a similar hierarchy within each of those: You dominate the market in one of the attributes, assign that attribute a value of five; differentiate your business on that attribute, assign it a four; you simply meet the market (you're as good as the market but no better) assign it a three.
A winning strategy for a company is to dominate in one attribute, to differentiate in a second, complementary attribute, and to meet the market in the other three. The five attributes are easy to understand:
Price. Do you dominate, differentiate, or meet the market on price?
Product. How good are your products?
Access. How easy are you to use?
Experience and service. A little trickier.
Experience is how I feel about me having done business with you.
Service is how I feel about you having done business with you.


For each of these attributes, there are three levels.
Take service. At the base level (you just want to meet the market) you have to accommodate me. Then, if you're going to differentiate on service, you have to educate me – because that will make me feel more comfortable with you. Finally, if you want to dominate on service, you have to demonstrate to me that you're prepared to customize things for me.
Take experience. At the base level, experience is an internal measure: I have to feel respected. At the second level, I not only feel that you respect me, but I also feel that you care about me – when I do business with you, I feel that you care. And finally, at the highest level, I feel that you not only care, but also that you care so much that you're prepared to do things on my behalf, things other people aren't prepared to do. And those things make me feel very good.

Contact Ryan Mathews ( ryan.mathews@firstmatter.com ) by email
Next issue of EDGE First 23/24 June. Next issue of Award 16/17 June (ish), 2001
Reader contributions warmly received
Copyright © 2001, Macpherson Publishing All rights reserved
EDGE FIRST and Award are trademarks of Macpherson Publishing
Contact us at macalex1@xtra.co.nz
Visit our web site at www.baldrigeplus.com.
Written and edited by Malcolm Macpherson
File size ~ 15kb. Formatted in html
Emailed version
~ \\\\ //// ~