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