BEYOND THE FAMILIAR

LONG-TERM GROWTH THROUGH CUSTOMER FOCUS AND INNOVATION

PATRICK BARWISE AND SEÁN MEEHAN

JOSSEY-BASS www.josseybass.com         2012

PART 1

Front cover

Beyond The Familiar offers a practical framework to help companies achieve long-term organic profit growth. It focuses on actionable customer insights flowing freely through the business and ultimately leading to consistently great customer solutions and experiences and a strong brand.

It gives specific advice and examples on how to:

v  Offer and communicate a clear, relevant customer promise

v  Build customer trust by reliably delivering that promise

v  Drive the market continuously improving the offer, while still reliably delivering it

v  Get further ahead by occasionally innovating beyond the familiar

v  Support all this with an open organizational culture

If you’re looking for valid, practical guidance on how to achieve long term organic profit growth, it’s in your hands.

Preface

Persistent growth is elusive. According to one estimate, during the 15-year period 1990-2004, only 24% of 6000 large public companies sustained profitable growth over any five consecutive years, only 5% over any ten consecutive years, and just 1% over the full 15 years. Even the best companies lose the ability to generate long-term growth from time to time, in some cases irrecoverably. General Motors lost it in the 1970s, IBM in the 1980s, Motorola in the early 1990s, and Procter and Gamble in the late 1990s. GM and Motorola still haven’t recovered.

Long-term growth results from driving the top line organically or through acquisitions, combined with good cost management. Beyond the Familiar focuses on organic growth, but also covers how to prioritize resource allocations and cost reduction. Many of the reasons why sustained profit growth is so hard to achieve are organizational: poor framing, fear, vested interests, complacency, and denial. In our research we have again and again seen how these block the free flow and discussion of the market information and the ideas that power customer-focused execution and innovation and, ultimately, long-term growth.

Open organization is, therefore, at the heart of our framework. It is the underlying imperative for firms aiming for long-term organic growth. It enables them to achieve the other four imperatives that directly drive revenue and profit:

v  Offer and communicate a clear, relevant customer promise

v  Build customer trust and brand equity by reliably delivering that promise

v  Drive the market by continuously improving the promise, while still reliably delivering it

v  Get further ahead by occasionally innovating beyond the familiar

For long-term success, you can’t pick and choose from these imperatives. For instance, in the short-term, innovating beyond the familiar is risky and may be optional, but in the long-term, failure to do so is riskier still and can even lead to extinction. At the same time, even a famously innovative company like Apple also needs to put a lot of unglamorous ‘grunt work’ into execution and incremental improvements, most of which never reaches the headlines. It is this hidden foundation that enables Apple and other long-term growth exemplars to innovate successfully ‘beyond the familiar’.

Understanding customers’ varying and evolving needs and preferences better than the competition is a recurrent theme of this book. Seeing the world through customers’ eyes provides an unfamiliar, fresh and sometimes uncomfortable perspective that enables you to focus on what’s actually most relevant to the market, rather than on what you just assume is most relevant.

In our earlier book Simply Better: Winning and Keeping Customers by Delivering What Matters Most, we looked at ‘differentiation that matters’, that is, differentiation through the eyes of the customer. We argued that, despite marketers’ obsession with uniqueness, what most customers want are products and services that just work, rather than offering unique features and benefits.

We build on this here by showing what managers need to do to ensure that valid, actionable customer insights are not only generated (from a wide range of sources, not just formal market research) but then reach those with the power to act on them and that they then do so. We see growth as an outcome, a consequence, of promising and consistently delivering better and better customer solutions and experiences. Further, we see this process as building a valuable long-term asset, the company’s reputation in customers’ minds (brand equity), which is then the platform  for further growth.

To illustrate the framework, we have used a wide range of real-world cases of companies that have beaten the odds with sustained organic growth. Our examples aim to show the universality of the framework: they cover the spectrum from start up to mid cap and blue chip. Both new and established markets, both B2B and B2C companies, and both products and services.

In summary, Beyond the Familiar offers a practical framework to help executives master the challenge of achieving long-term organic growth by building strong brands based on actionable customer insights flowing freely through the business and ultimately leading to consistently great customer solutions and experiences.

This is an optimistic book. It offers no single bullet but, true to its message, it has a clear customer promise – a strong one: If you read this book and really apply the recommendations, you’ll load the dice in favour of your business’s likelihood of delivering long-term, market driving organic profit growth.

Chapter One: What Every CEO Wants

Every CEO wants sustained, profitable, organic growth. Even firms that grow mainly by acquisition – with its high failure rate – usually need to show that they can increase value through top-line growth of the combined business as well as through cost-cutting. Organic growth therefore lies at the heart of long-term shareholder value creation for almost all businesses.