I catch up with Joe Calloway in the hotel lobby during OneVoice, the 2008 Broker-Dealer Conference organized by the Financial Services Institute. A busy man with a tight schedule of speaking engagements, he arrived in Orlando the night before and is leaving later in the day for another event in Houston.
Who: Joe Calloway, branding consultant and business author
Where: Trevi’s, Omni Hotel, Champions Gate, Fla., January 28, 2008
On the Menu: Minestrone soup, learning constantly and avoiding becoming a commodity.
He begins lunch at the hotel’s Italian restaurant by ordering a minestrone soup and starting to rehearse his keynote speech, to be delivered in two hours. It takes me a little while to get him off a string of fairly generic observations of what makes managers succeed and into the meaty stuff that has earned his books praise from the New York Times and a variety of industry publications.
“The greatest danger financial advisors face is commoditization,” he finally declares. Like bankers, whose conference he will be addressing later, FAs are increasingly selling a very similar range of products across the industry. The industry trend has been a shift from selling specific branded products toward working for the client, which means selecting the best product that meets the client’s needs regardless of where it has been manufactured. Moreover, industry deregulation and a revolution in information technology ensure that best products are quickly emulated by other firms.
Sure, some stock pickers do better than others. But over time the law of averages obtains. Calloway, who seems masterful in applying today’s headlines out of the newspaper, especially from the sports pages, to problems in business management, observes that it has been a while since anybody in Major League Baseball hit .400 over an entire season.
The result for the FAs, says Calloway, has been that they run the risk of becoming a commodity. “And once you’re a commodity, price becomes the only factor that differentiates you, which means that your margins will come under a lot of pressure.”
The only way to differentiate in this industry, to provide true value-added, is by providing superior customer service. By developing a relationship with your client which is exclusive, which makes you indispensable and which distinguishes you from your competitors.
This message Calloway has made his trademark, which can be seen from the titles of his best-selling book, Becoming a Category of One: How Extraordinary Companies Transcend Commodity and Defy Comparison. His newest is called Indispensable: How to Become the Company Your Customers Can’t Do Without. Both are devoted to the same theme.
Excellence Across IndustriesCalloway believes that best practices exist across industries. In fact, he is convinced not only that successful managers do things similarly regardless of what they do, but that they look at other, often unrelated industries to learn lessons that can be applied to their own field. Once more, he is quick to quote the day’s paper.
“I was just reading about the New England Patriots,” he says referring to the upcoming Super Bowl. “A large part of their success is how many ways they have to score. Robert Kraft, the team’s owner, has been highly successful in business. It’s not surprising that he is applying his business strategies to football.”
There is a lesson here for the financial planning industry. By teaming up and going into partnerships with other professionals, such as accountants, legal advisors and even psychologists, FAs can provide a wider range of services to their clients, to lock them into a relationship, as it were.
Looking around and learning constantly, not resting on one’s laurels, is another prerequisite for success. Like Calloway’s own ability to read the paper and to draw lessons from unexpected sources. In the morning, he read a piece about Tiger Woods, the world’s premier golfer, and his obsessive quest for improving every aspect of his game.
“What happens in business is that today’s innovation quickly becomes the norm,” says Calloway. He cites Enterprise Rent-A-Car, a company that introduced client pick-up. While this feature distinguishes it from its competitors, if successful it will be emulated by others.
Designing from ScratchCalloway has unexpected advice on improvement. Most people, he says, look to improve areas where they lag behind their competitors. This is obvious, but a better way, he suggests, may be to look at areas where you are already a leader.
“Some of my most successful clients ask themselves: ‘How can we do better something that we are already doing well?’ This is often a good way to keep the competition off balance.”
Everyone can innovate, says Calloway, despite the fact that people sometimes claim that they do not know how. The most effective way is to look at a process or activity and to try to forget how it is currently done. “Try to wipe your mind clean,” he advises. “Forget everything you know and then try to create it from scratch.”
Sometimes this exercise will merely confirm the conventional way of doing things. Occasionally, however, you might discover unexpected new approaches.
The unexpected is Calloway’s stock in trade. Although he admits that his clients in the financial services industry — and in plenty of other industries as well — are currently quite nervous about an economic downturn, he encourages them to see the current environment as an opportunity, not just a danger.
The best time to think of improving your business is when the market is down, he says. Rising markets are a time for making money, but it is when markets are falling when you should think of building up customer relationships and finding ways of differentiating yourself from your competitors. It is also when clients tend to change their advisors.
“I was recently speaking to a group of construction companies,” says Calloway. “I asked them when it is the best time to build market share. They looked at each other and agreed — in a recession.”
Calloway himself practices what he preaches. Based in Nashville, he drove to Atlanta, where the Financial Services Institute is based, to meet with the client and to discuss in person how to make his keynote speech better. “I know my competitors. They all provide an excellent product. To stay in the game, I must distinguish myself by taking better care of my clients.”
But there is a catch. If his approach works, this kind of “extra mile” treatment may become the industry norm. Then, he’ll have to think of something else, shrugs Calloway.
Alexei Bayer runs KAFAN FX Information Services, an economic consulting firm in New York; reach him at firstname.lastname@example.org. His monthly “Global Economy” column in Research has received an excellence award from the New York State Society of Certified Public Accountants for the past four years, 2004-2007.