Uncommon sense, the key to business success
Common sense can help a company along. But, by developing a distinctive belief system, can (un)common sense beat competitors? London Business School’s Julian Birkinshaw, Jules Goddard and Tony Eccles explain their approach.
What makes a company successful? What elevates it into the stratosphere of the global elite? Slick products, inventive customer service, and attractive employee opportunities – all of these are necessary for success. But in a crowded, ever imitative business world, the best weapon in an owner or business manager’s arsenal is simple. Stand out from everyone else.
Apple. Google. Virgin. What makes these companies unique and innovative in their approach is something that can be called (un)common sense. Strong leadership and robust business models aside, a company’s core beliefs can have the greatest impact on its sense of distinction, the kind of distinction that can capture the world’s attention.
None of this is new, of course. In a 1994 article for the Harvard Business Review, Peter Drucker argued that the underlying beliefs held by a company, usually developed naturally over time, reflect how that company ultimately operates. Knowing that, how can business manager deliberately build a core belief system appropriate to his or her own company? And, even more importantly, how can an executive develop such (un)common sense and turn it into focused action?
Very few companies stumble onto a winning formula by simply throwing out ideas and testing them in a proverbial vacuum. In fact, most dig out a whole array of benchmark assessments, industry projections, strategies and other common tools in the hopes of forging a successful business model. Unfortunately, by using them, companies miss the opportunity to understand what really drives customers toward certain products and services – or away from others.
Really, it is the ‘blue ocean’ strategy (a market or potential market with no obvious competitors) that makes a truly distinct belief system possible. While the companies at the bottom of the proverbial food chain compete for a stake in the marketplace, those at the top simply invent new ones, ultimately diversifying their services and further cementing the unique persona they want to portray.
For example, Sam Walton, founder of American retail giant Walmart, credited his success to putting stores in small rural and semi-urban towns in need of his one-stop shop for affordable retail goods. The three-ring spectacle, Cirque de Soleil, continues to draw audiences by blending the artistry of a live circus with the theatrical polish of a Broadway production.
But these kinds of blue ocean opportunities are rare and most are smaller in scale. Consider HCL Technologies in India, whose employees first, customers second philosophy has actually led to stronger client relationships. Likewise, Arup (a leading multinational engineering consultation firm) places a higher premium on providing an interesting and rewarding environment for its employees than on pursuing financial success.
In other words, companies do not win competitive footholds by accident. It is our perspective that those who find success first adopt a deliberate, self-actualised core belief system, one that makes them stand out from the crowd. And they work constantly to stay ahead of the market, predicting which trends are on the rise, what customers are after and how even their own employees respond to their market decisions.
But it is not enough to simply have a set of core beliefs. Those beliefs also have to ring true with consumers, or at least more closely than the competition’s. A company must know something that its competitors do not, and both customers and prospective customers alike must feel it. That is really the essence of uncommon sense – a set of beliefs that make sense because they are true and are uncommon because they are like no others in the world of business.
That is not to say that an ironclad system of beliefs will always be so. Trends fade. Markets collapse. Customers lose interest and move on to more promising avenues of service. Companies need to regularly assess the value of their market position and experiment with developing new strategies and beliefs as old ones expire.
For almost five decades, IKEA, the Swedish furniture retailer has struck gold with a unique business model by providing inexpensive but high quality furniture to the many who cannot afford Italian-made leather sofas and designer coffee tables.
It is no surprise that IKEA grew internationally by simply repeating their working formula in each new country. But when the company noticed that the formula was not working in Japan and the United States, its executives started looking for answers. They soon realised that they had not considered the obvious – what might work in one culture will not necessarily work in another. Upon opening stores in other countries, they had made decisions without understanding the larger questions: how will this new audience respond to unfamiliar names and expansive showrooms? Will these new buyers be receptive to assembling furniture pieces if it means lower prices?
Their experience illustrates that companies need to stay current with the evolving needs of customers, lest they lose sight of what is likely to catch on.
But how does a company sell itself as the unique, cannot miss alternative to what is already widely available? We often talk about alternative thinking as a means of getting ahead of the competition. But it is not enough for a company to simply carve out a new and unique niche and then sit back, hoping to reap the benefits once customers come flocking. It is just as important to undermine the competition and its ability to move in to imitate novel success.
How do companies pull it all together? Successful companies, we have found, strategise carefully and test new beliefs on the market in the least risky way
Consider the case of 24/7 Customer, a growing California-based business-to-business firm that specialises in fulfilling its clients’ customer service needs. Noting that most of their competitors were peddling large call centres, 24/7 Customer chose a different route. The firm devised an online destination that could learn over time and offer a database of solutions for customers before they even needed to phone for help.
The company’s innovation lab is the source of the firm’s fresh ideas. It employs 100 creative individuals who are tasked with thinking up new service ideas, testing and developing the most viable options. Even those that fail in testing often lead to a greater understanding of how to better serve customers the heartbeat of the company’s success.
Make no mistake it is not always this easy. Finding that fresh, competitive foothold in the marketplace means keeping up to speed (even at the upper management level) on what is in, what is out, what is working and what is not. It makes sense that companies such as 24/7 Customer have found success by bucking the status quo and taking a fresh stab at the marketplace, given that they are led by their founder and the entrepreneurial spirit is – by nature – creative and non traditional. But that does not preclude older, more entrenched companies from shedding their baggage and embracing new ideas and beliefs.
In other words, yes, it is tough to get an executive to change the way he takes his coffee, much less the manner in which he operates his company. But for many who took the leap, their decision quite literally paid dividends. In our opinion, many businesses explore strategy by beginning in the wrong place. They look at what their competitors are doing, at existing customer needs or at specific topics (such as the need to reduce costs).
We believe it is advantageous to begin by examining the company’s underlying beliefs and determining which are true and which are unreliable. It is that (un)common sense — the ability to revolutionise business by replacing the old with something entirely new, unique and exciting — that holds the potential not simply for new market opportunities, but for genuine long lasting success.
SEVEN STEPS TO UNCOMMON SENSE
- Assemble the best and brightest employees, (especially if they have worked for competitors). Their familiarity will be invaluable in understanding where the opportunities for new market strategies lie.
- Have those employees tell you what they think the basic beliefs and assumptions of your company are, from the business model to the management model. Ask them what they think about the future of the industry as a whole.
- Compile the viewpoints and lay them all out and look for clusters of agreement and outlying ideas that only a few people have mentioned.
- Consider common beliefs first. How do you know these beliefs are actually true? How can you go about discovering if any of them are inaccurate reflections of your company? The goal here is to weed out the ‘common nonsense’, or anything that might cloud your understanding of where your company currently stands.
- Now look at the uncommon beliefs. What information or insight causes those employees to hold them? Are they valid? Again, you want to understand which beliefs have value and which are based simply on biased or erroneous ideals.
- Once you have eliminated the bad ideas, brainstorm with your team and talk through any new beliefs that might warrant adoption.
- With any luck, at this stage you now have a set of new beliefs in hand that your company might adopt. Because knowledge is the key to advantage, list ways you can test these beliefs to see if any will float.