4 business success stories so crazy they just might work

November 15, 2012 at 09:37 AM
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The winning companies of the future aren't the ones that serve great products and services. They are the ones that deliver important ideas to reshape what is possible for their customers and colleagues. That was the opening salvo from next-level entrepreneur and thought leader Bill Taylor as he spoke at the Thursday morning keynote session at NAILBA 31.

Taylor is the co-founder and founding editor of the revered management magazine Fast Company. He is also the author of Practically Radical: Not-So Crazy Ways to Transform Your Company, Shake Up Your Industry and Challenge Yourself.

Taylor drew upon lessons he learned while writing Practically Radical and from elsewhere to share with the NAILBA audience what it really means to craft a successful business of tomorrow. It isn't about being stronger or faster, entirely. But it is about being smarter, being clever and being human. They are touchy-feely concepts, Taylor admitted. But they are the key to the future of business.

"We are living today in age of disruption. We can't do big things anymore. We are facing hyper-competition and nonstop dislocation," Taylor said. "The only way to stand out from crowd is to stand for something special. Originality will be the acid test of your strategy."

Gone are the days where the strong take from the weak, Taylor said. Now is the age where the smart must take from the strong. It is less about outcompeting rivals, but more about embracing unique ideas in what Taylor called "a world filled with copycat, me-too thinking."

Success story #1: Umpqua Bank

To prove the point, Taylor told the story of Umpqua Bank, a small community bank in Portland with six branches, a vanilla approach and a mere $18 million in market capitalization. Over 10 years, it transformed itself into a community banking juggernaut with 600 branches from Seattle, WA to San Jose, NM, with $9 billion in deposits and $1.5 billion in market capitalization. How did it change itself so thoroughly?

Its branches look and feel more like a local Starbucks than a bank branch. They appeal to all five senses; each branch is uniquely designed to reflect the neighborhood that they are in. They brew fresh coffee and cappuccino on site for customers and let them buy $13 dollar bags of branded beans to take home. They end each transaction by presenting customers with chocolates bearing the Umpqua logo. They pipe in music provided exclusively by local indie bands. And when the banks close for the day, the branches re-open as community centers for local book clubs and Chambers of Commerce and other neighborhood groups to gather.

But why do innovative companies bother? Why work so hard to be different? Umpqua is clearly not a bank that appeals to everyone, Taylor noted, but it's a passion brand in an industry lacking one. It is an example of the kind of thought leadership that Taylor says is the only truly sustainable form of business leadership today.

"In a world where there are so many opportunities to cut corners, whether you are a company of five people, 50 people or 500 people, you cannot be special, distinctive and compelling in the marketplace if you cannot first crate something special, distinctive and compelling about yourself. Your culture is your strategy. Your strategy is your culture."

Success story #2: DaVita

Taylor also told the story of DaVita, a leading provider of kidney dialysis services, which ten years ago was a classic corporate basket case about to be shut down by its lenders. Today, the company is a huge success, more profitable than ever. The secret, Taylor said, was how CEO Ken Thiry changed the company by first changing the culture. But why? A dialysis patient has one of two outcomes: they either get a kidney transplant or they die. Case in point: even though DaVita was the best at what it did in the world, it loses 17% of its customers each year to mortality. Dialysis itself requires three treatments a week every week of the year, making some 18 million touch points for the company to possibly get something wrong with its clients.

"There is no way to make a purely rational financial business case for people at a business such as this to care as much as they need to care if the business is to behave as it wants," Taylor explained. "It needed a sense of commitment to something deeper. Its people had to commit to one another."

Thiry rebranded the company by recruiting some 800 nurses to come up with a new company name. It presented three finalists, and the entire company of some 10,000 people voted on it in a kind of election night. The employees have written — and now sing — corporate fight songs. They do not refer to Thiry as the CEO, but as the mayor. Their departments are "neighborhoods."

Success story #3: Panera Bread

"I know the business you are in," Taylor said of the NAILBA crowd. "And it is a business that is the cornerstone of people's security and well-being, and it gives them a sense of stability in their lives. The way you create value over the long term is to always ask what holds you together as colleagues. What are you really committing to each other? Why would great people want to be part of what you're doing?"

Success is passion, emotion, identity and sharing values, Taylor said. It is not just financial. "The huge opportunity, the real source of leverage is how to make everything we do more memorable to the outside world? I know you sell insurance contracts. But what is the emotional and psychological contract you sell to clients that let you stand alone in your field?"

Taylor spoke of how a Panera Bread store in Nashua, N.H. scored a huge social media victory when a young man contacted the store and asked if they would make some clam chowder for his grandmother, who was suffering from cancer. She had a hankering for Panera clam chowder on a Tuesday, but the store only made it on Fridays. The store not only made her the chowder, but it also sent over some fruit, some flowers, and a get well card signed by everybody at the store.

If this were neighbors doing this for each other, Taylor said, it would not be a big thing. But this came from a company, and so it was. The grandson went on Panera's Facebook page to tell his story about this. Within two weeks, the story had a mind-boggling 800,000 likes, and some 33,000 comments. It was the single biggest social media event in the history of the company, and it had nothing to do with technology, but everything to do with humanity.

"In a world that in so many ways has been reshaped by huge forces, the smallest acts of compassion or kindness take on disproportionate importance," Taylor said. "Be clever. Be kind."

Success story #4: Lexus

Some 25 years ago, Toyota announced that it would enter North America's most competitive auto market: the luxury market. For a company whose products were best known for being reliable and incredibly boring, the move was roundly scoffed at by Mercedes, BMW, Cadillac and others. But Toyota listened to, and studied, none of them. Instead, it looked for the kinds of missing opportunities that hide in plain sight to those who fail to see things differently.

For its research, Toyota executives spent a week working at Four Seasons hotels, understanding how the chain managed to deliver consistent, knowledgeable excellence with a sense of personal service. And it exported this to its dealerships, where customers were greeted with flower vases and marble floors, and where service departments offered what amounted to turndown service in clients' cars, leaving little boxes of chocolates on the seats.

A few years ago, Toyota moved to phase two and once again took its cues not from its competitors, but from those who were already delivering the same kind of result it wanted to deliver. It studied the ultimate retailer — Apple — which makes an average of $6,000 per square foot of retail space. The world's No. 2 retailer, Tiffany & Co., makes half that. Coach comes in at No. 3 at $1,800 per square foot.

Toyota learned from Apple how their stores all revolve around the Genius bar, which is less about fixing gadgets but restoring people's relationships with their technology. After all, when you have your life's work, your family photos, your every phone number on one of these devices, you need service reps who approach the job as armchair psychologists, not gadget geeks. Toyota saw the opportunity in their own products, where $80,000 Lexuses were crammed with so many electronics they made their owners feel stupid. So it started the Lexus Answer Bar in its dealerships, and its customer satisfaction ratings, already high, went through the roof.

Knowledge vs. imagination

Umpqua. DaVita. Panera. Lexus. All four firms faced unique challenges that it turned into raging successes not by outmuscling or out-hustling their competitors, but by outthinking them. This is the key to crafting sustainable success, Taylor said as he closed. Each of these success stories were the kind of groundbreaking thinking that could have been — or actually were — derided as being too crazy to have worked. And yet, they did. And that is the point, Taylor said. "You can't let what you know limit what you can imagine."

For more coverage from NAILBA 31, see:

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