Innovative Express
"Improving effectiveness by making the complex simple and making the simple work!"
October 2006
In this issue:
I attended a two-day World Business Forum symposium in New York a couple of weeks ago with speaker lineup that included Bill Clinton, Colin Powell, Rudy Giuiliani, Jack Welch, Larry Bossidy, Jim Collins, Renee Maubourgne, Malcolm Gladwell, and Wynton Marsalis. It was great from the standpoint of recharging worn batteries. From my vantage point, Clinton, Gladwell, and Marsalis were the best. They brought a fresh perspective, were insightful, articulate, and humble. Giuliani and Bossidy were also good and spoke from the heart.
The so-called consultants were the worst! They recycled the same old ideas as the greatest since sliced bread, claimed questionable “research” backing up their claims, and were up there “performing” as if they were rock stars. The worst of all (and actually infuriating) was none other then Jack Welch. He took the cake in being a know-it-all, blowhard and made outrageous statements in his high-pitched, whiny tone such as the women’s progress in the workplace is limited because of the reality of their “biology,” how all the problems with public education in this country are a result of the teachers’ union, and how the media was too obsessed with H-P’s criminal tactics rather than the leaker on the board of directors.
I am glad I didn’t pay an extra $400 for a breakfast with Jack. Because honestly, I didn’t really care for what came “straight from the gut.” By the way, Larry Bossidy had a great definition for humility: “Humility is not thinking less of yourself, but thinking of yourself less.”
nspired to agree, disagree, or otherwise comment? We hope that you will let us know your thoughts.
Wishing you a productive and successful month ahead---both personally and professionally.
Abhay Padgaonkar
President, Innovative Solutions Consulting, LLC
“Smartest Guys in the Room”
Speaking of ends justifying the means, I recently attended the screening of a documentary called “Enron - The Smartest Guys in the Room.” It takes a scathing look at one of the greatest corporate disasters in history.
The former energy giant declared bankruptcy in 2001 after years of accounting gimmicks fizzled and the company was no longer able to hide billions in debt or losses in so-called “special purpose entities.” The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans. I find it ironic that as I write this, the chief architect of this fraud and CFO, Andrew Fastow was sentenced to six years in prison followed by two years of full-time community service.
It is fascinating how smart and powerful people blinded by arrogance, greed, and deceit can bring ruin upon themselves, along with thousands of innocent victims. It is also distressing how the energy traders, accountants, lawyers, investment bankers, brokerage houses, and Wall Street analysts shamelessly jumped on the gravy train. Most distressing was how, we as a society, let this evil machine go on unabated for so long and even anointed these morally bankrupt people as one of the most innovative!
The question that nagged me the most was: "Would I have gotten caught into this temptation if I was around?" One person who clearly didn't was Bethany McLean. This documentary is a testament to her strength and courage. She is the Fortune magazine reporter who began by asking some basic questions of Jeff Skilling such as “How does Enron make money?” He tried to bully her and her editors. He even called her behavior unethical! But she refused to give up and printed a story asking “Is Enron Overpriced?” when she couldn’t get a straight answer. That was the beginning of the end.
The Bottom Line: Ask Why? (You will know what I mean when you see the movie.)
What Clients Want
A colleague of mine used to say (jokingly, of course) that “life would be so much better if it weren’t for these pesky clients.” The fact is that we all have clients whether they are internal or external. It is so easy for companies to start breathing their own exhaust and believing their own marketing mumbo-jumbo.
Grant Fairley once said: “If you want loyalty—get a dog.” Like electric windows, anti-lock brakes, and air bags, what is innovative one day may be commonplace the next. As competition becomes more intense, clients view your products and services as a commodity. When low-cost, low-frills competitors enter the market, most buyers become unwilling to pay for an undifferentiated product or service—leading to price pressures. Loyalty to the best value replaces any previous loyalty to a supplier.
A very interesting article called “Customer Value Propositions in Business Markets” (Harvard Business Review, March 2006) discusses a very commonly used but often misunderstood term called customer value proposition---and more importantly, what makes one persuasive. The authors talk about three different approaches to defining a customer value proposition:
1) All Benefits: This is nothing but a laundry list of all the benefits one can think of for the product or service. This is a lazy man’s way because it requires the least amount of work. All you need to know is your own market offering. The drawback is that it is a hit-and-miss game. What if you claim advantage for features that don’t actually provide any benefit? And even if they do, it is not a given that they differentiate you from
2) Favorable Points of Difference: This approach highlights all favorable points of difference relative to the best alternative. It answers the question, “Why should the client purchase your offering instead of your competitor’s?” The drawback, however, is that it is presumed that the point of difference between you and your competitor is valuable to the client.
3) Resonating Focus: This, the authors say, should be the gold standard. This is the hardest but most effective. It is not enough just to articulate it. It requires customer value research to find out “the few elements that matter most to target customers, demonstrating and documenting the value of this superior performance, and communicating it in a way that conveys a sophisticated understanding of the customer’s business priorities.” In other words, “we can save you money” is hardly a value proposition!
According to a Leadership IQ Inc. survey of over 1,000 board members, 28 percent of CEOs were fired because they ignored customers! In a recent article called “Getting Inside Clients' Heads” that appeared in several publications such as Management Consulting News, Rain Today, The Wise Marketer, and Top-Consultant, I examine the ultimate challenge of doing customer value research and finding out what clients want. If the answer is that clients will simply tell you, think again!
The Bottom Line: Like beauty and contact lenses, value is in the eye of the beholder!
Personally Speaking...
I was recently approached by Paul B. Thornton, a management professor, who is writing a book called “Succeeding in Today's Business World." He asked me to contribute a paragraph that described the best advice I had ever received. Here is what I sent him:
“As a newly-minted engineer from a prestigious university in India, I was confronted with too many confounding career choices! Do I come to the U.S. and continue graduate education or do I stay in India and go for my MBA or do I take a job and start using the skills I had learned? My father took me to a see an acquaintance of his---a person who was the equivalent of a CEO for a large company. (The unfortunate thing is I neither remember the name of the company nor the name of my one-time mentor.) He advised me to jump on any opportunity to live and see another part of the world. He told me that he travels all over the world now, but stays long enough to get his ticket punched. I took his advice and came to the U.S. with a one-way ticket (for which my father had to borrow money) and $500 in my wallet. That was the best decision I could have made. After working in the corporate world in management positions for companies like American Express, I founded a successful management consulting firm. As Mortimer Zuckerman writes, ‘Immigrants come to America for many reasons, but mainly they come because it's the land of opportunity and upward mobility where achievement is more important than inheritance.’ I know firsthand thanks to my mentor's advice more than 25 years ago.”
The Bottom Line: Whether formal or informal, independent advice that is based on experience we receive can make an enormous difference in our personal and professional lives. As a consultant, I have never forgotten that lesson!
Disclaimer: "This written advice is absolutely intended to be used, and if used under expert supervision is known to improve organizational and individual effectiveness substantially."
© Abhay Padgaonkar 2007. All Rights Reserved.