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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Real-world strategies for uncovering potential and capitalizing on opportunity Innovation is worth little unless it generates lasting success, and gaining measurable results from new ideas requires more than creative risk-taking. Successful innovation demands a tactical approach, and Getting Innovation Right reveals how your company can secure real traction and growth in the marketplace. With Seth Kahan's outcome-based approach, based on his experience leading innovation initiatives at a diverse range of organizations, you will identify the inflection points that generate market opportunities for your company and leverage the best techniques for securing a foothold in a lucrative new space. * Offers a framework of 7 key activities for results-driven innovation, from intelligence-gathering through execution * Goes beyond abstract advice to offer hands-on approaches that are relevant and applicable in any organization * The companion and follow-up to Seth Kahan's bestselling first book,Getting Change Right and FastCompany.com blog Leading Change Grounded in market-based reality, Getting Innovation Right is an indispensable resource for leaders looking to drive results and move in fresh directions.
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Veröffentlichungsjahr: 2013
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Table of Contents
Praise Page
Title Page
Copyright
Dedication
List of Figures and Tables
Introduction
Seven Key Activities for Getting Innovation Right
Notes
Chapter 1: Pursue and Leverage Inflection Points
Four Targets for Innovation Strategy
Inflection Points Defined
Using Inflection Points to Create Success
Seeing Around the Curve
Success Rules
Notes
Chapter 2: Build Innovation Capacity
Three Forces That Jeopardize Innovation
The Innovation Foundation
A Sturdy Foundation Supports Success
Success Rules
Notes
Chapter 3: Collect Intelligence
The Three Areas of Focus for Intelligence
The Eight Steps of an Intelligence Effort
Use an External Provider for Intelligence
Success Rules
Notes
Chapter 4: Shift Perspective
Working the Angles
Four Techniques for Shifting Perspective
A New Way of Seeing
Success Rules
Notes
Chapter 5: Exploit Disruption
The Four Forces of Disruption
Turn Turmoil to Advantage
The Opportunity Window
Build Flexibility and Responsiveness
Value Assessments
Understand Disruption to Exploit It
Success Rules
Notes
Chapter 6: Generate Value
The Innovation Profit Cycle
The Facets of Value
The Three Types of Added Value
Value Objects and Value Drivers
Creating New Value
The Subjective Nature of Value
Success Rules
Notes
Chapter 7: Drive Innovation Uptake
The Four Thresholds of Engagement
Create a Shared Stake in Success
Build Presence Through Value Pulses
Success Rules
Notes
Appendix A: Sample Business Intelligence Contract
Situational Summary
Objective
Measures of Success
Value to the Organization
Methodology and Time Line
Joint Accountabilities
Terms and Conditions
Acceptance
Appendix B: High-Level Outline of a Typical Business Plan
Appendix C: Simplified Business Plan Financial Model
Acknowledgments
About the Author
Index
‘‘ With Getting Innovation Right, Seth has delivered a guide for leaders everywhere to help accelerate their team's innovation through real-world examples and pragmatic insight.’’
—Kevin Parker; president, CEO, and chairman of the board, Deltek, Inc.
‘‘As a client of Seth's I am happy he has written a book that spells out the successes he has had with a number of organizations. There are great lessons here. He took on tough challenges and turned them into success stories. Getting Innovation Right will resonate far beyond the industries his book covers. We can all learn from others’ success when it comes to innovation.’’
—Ralph Nappi, president, The Association for Suppliers of Printing, Publishing and Converting Technologies
‘‘Seth is a boundless strategic thinker and motivator. Getting Innovation Right can propel your organization's next move upward. Finding that elusive formula is the key to achieving sustainable, profitable revenue growth, and Seth gets the job done in an entertaining way.’’
—Mike Panaggio, chairman, DME Holdings, LLC
‘‘Seth does it again with his latest book, Getting Innovation Right, by providing a simple approach to attacking innovation. It is having the courage to innovate that will differentiate us from all the rest and is what we all strive for. After reading this book, you will not only have an approach to utilize, but the tools to help you make things happen quickly and succeed.’’
—Michaela Oliver, senior vice president of human resources, Rosetta Stone, Inc.
‘‘Getting Innovation Right emphasizes a maturity that all business executives should develop. I highly recommend this book, as it captures both basic business fundamentals and a dynamic approach for executives to rethink processes and strategy on an ongoing basis.’’
—Anthony J. Cancelosi, K.M., president and CEO, Columbia Lighthouse for the Blind
‘‘In this massively disruptive and mostly distracting business environment, you have but one choice: innovate, or evaporate. But you must get it right, which isn't easy. Enter Seth Kahan's Getting Innovation Right.’’
—Matthew E. May, author, The Laws of Subtraction and The Shibumi Strategy
Cover concept by Faceout Studio
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Portions of this book are taken from posts that appeared in “Leading Change,“ the author’s column at fastcompany.com, and are copyright © Mansueto Ventures, LLC.
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Library of Congress Cataloging-in-Publication Data
Kahan, Seth.
Getting innovation right : how leaders leverage inflection points to drive success / Seth Kahan. -- First edition.
pages cm
Includes bibliographical references and index.
ISBN 978-1-118-37833-5 (cloth); ISBN 978-1-118-46144-0 (ebk); ISBN 978-1-118-46143-3 (ebk.);
ISBN 978-1-118-46142-6 (ebk.)
1. Strategic planning. 2. Technological innovations--Management. 3. Diffusion of innovations.
4. New products. 5. Leadership. I. Title.
HD30.28.K335 2013
658.4′063- dc23
2012048517
For visionary leaders of all kinds: may these tools and techniques help you innovate successfully for the benefit of all life.
List of Figures and Tables
Introduction
Innovation is about success. It is not innovation if you come up with something new and it cripples or kills you. If you pour in your effort and are only marginally better off than when you started, you have not achieved innovation.
Innovation is the successful introduction of a market offering that profits everybody involved, both you and your customers. Innovation happens when a new product or service creates a return in the market that far exceeds the time and money it takes to develop and execute. When a new offering is accepted and embraced, generating the resources that make it possible to support and grow its place in the market—that is innovation. That's a positive inflection point. That is what you must aim for.
I once worked on an initiative that was destined for greatness. My team at the World Bank was building a cutting edge internal network and our timing could not have been better. We called it knowledge management; it was a new term that highlighted the value of knowledge. It was our intention to bring knowledge management to life through the private internal communications network we were developing.
Our staff members around the world were clamoring for greater connectivity. We brought in the best of the best to design our intranet, the face of our internal network. We had highly paid, well-recognized, and experienced experts applying their best efforts.
We recruited content providers from within our ranks through a careful winnowing process that ensured we had relevant topics with excellent intellectual property. We enrolled technically savvy professionals to help us build a network that everyone would be able to put to good use. We had high hopes of forever changing the way our organization worked, uniting our people, and providing them with the knowledge they needed exactly when they needed it through the miracle of technology.
And yet it flopped. It failed in a big way. We built it and they did not come. We had created a comprehensive taxonomy—it looked like the index of the Encyclopedia Britannica. We had mapped every major topic area in the organization and all the corresponding nooks and crannies. The problem was they were mostly empty because the taxonomy was so large and initial participation was small. As a result when people went looking for content they came up empty-handed most of the time. This turned them off and they stopped using the system.
Even though we had a very cool system—the geeks loved it—even though we had made major progress in creating the taxonomy that would eventually catalog the Bank's internal knowledge, it was not an innovation. It did not succeed with our customers. It did not generate the value we needed to justify support and growth.
We had done a poor job of engaging our customers, the people we built the system for. There were about 12,000 people inside our organization who we hoped would be active and engaged in the new system. We had less than a hundred who understood what we were doing and only a fraction of them participating heavily. Our engagement tactics had been weak at best. As a result we were unsuccessful at creating something new that people used. Instead we had a well-developed, cutting-edge service that sat mostly dormant.
Meanwhile just down the hall in the same building where we were working, another, less dramatic effort was going on. A single man, Steve Denning, with no budget was cobbling together bits and pieces of other people's efforts with some unique ideas of his own to create a different way of doing business for the World Bank.
Steve was putting together what would become the Bank's first successful knowledge management initiative. He was playing with a fundamental innovation in the way our $20 billion a year organization carried out its core activities by leveraging knowledge as our primary asset rather than relying on what was in the vault. This was a change from a traditional bank model that relied on the forecasting of investment returns to guide the process of loaning money. Instead of focusing on the World Bank as loan processor, Steve was looking at the Bank as a global poverty alleviator. It was a radical, far-reaching idea. It was also in line with the organization's true mission in a way that traditional banking was not.
Steve's innovation was not high tech. It was social. Because it was built around the experience and expertise of people, it was realized in communities of professionals we called Thematic Groups. When it became clear to me that the new intranet was going nowhere, I left that effort and ended up down the hall on Steve's team.
It was 1997 when we realized that Thematic Groups were key to our success. This is where the action was: informal groups of people working together, sharing what they know, and applying it to the toughest problems they were facing. It was a major innovation for the World Bank—these groups were practically nonexistent at the time. In fact, I would say the organization was toxic to them, putting them out of business wherever and whenever they began to form.
When we initially went looking for them we had a hard time finding them because they were off the grid. We discovered them in the cafeteria or the bar across the street, but they were extremely rare in conference rooms. We had to invent new ways of working, create new jobs that didn't exist before (like community builder and knowledge analyst), confront entrenched systems and business processes that were antithetical to our goals, drive uptake (the absorption of new ways of working), help people get and demonstrate results, and convince hostile senior managers that the new ways of working were better than the existing state of affairs. It wasn't easy work.
But we did it and it paid off quickly. By the summer of 1998 there were over one hundred Thematic Groups up and running across the planet. Their work was producing dramatic results in line with the Bank's mission of poverty alleviation. We were experiencing major success—the returns on our hard work was overwhelming. We had created a positive inflection point.
We collected the stories and used them to convey the Thematic Groups' successes. It became clear that these communities were exceptionally effective at pushing the Bank's mission forward. Collectively they were a global force advancing our cause. From environmental sustainability to nutrition and health care, from infrastructure development to disaster response, these Thematic Groups were getting results on the ground.
By outside accounts the effort was a success also. Stories upon stories were being told about victories this new way of working was making possible. For example, we had leaders in Central and South America, Africa, and Asia working together to share and implement successful innovations in urban renewal, serving the urban poor. This was an area that had been extremely challenged in the past. Case studies about successes like this were being spread far and wide by other organizations. We received international recognition and praise. A panel of outside experts studied our efforts in 1999 and concluded that the Thematic Groups were “the heart and soul”1 of our successful knowledge management program. The success we experienced resulted in $60 million of annual allocation.
More important, our success persisted after we left.
A study was conducted twelve years later. This was eight years after the team I was on disbanded. It also happened after institutional budgets had swung back and forth more than once, after the glow of our novelty had worn off, after two presidents of our organization had come and gone, and after knowledge management had swung out of favor, back in, and out again. After all this turmoil—the dramatic changing of the guards at the top of the organization, and the regular reallocation of funding to other activity—an assessment was done to learn what had happened to these groups. The study showed that ninety-six Thematic Groups remained and said “much good work is being done.”2
This was my first big lesson in what it takes to get innovation right. It is not enough to bring in experts, strike at the ripe time, encourage creativity and freewheeling experiments, hold a tolerance for mistakes and failures, play, and cultivate intuition and curiosity. To succeed you must master the activities required to create the kind of products and services that get traction and grow, bringing you significant and measurable success in your market.
Some will tell you innovation is about good ideas. In my experience there are plenty of great ideas floating around, untested, untried, and unimplemented. A great idea is simply not enough to get you through the obstacles that new notions, products, and services inevitably raise or confront. The real trick is building something people are compelled to use or acquire, getting it into their hands in a form they can put to use, all the while moving ever more firmly into the black. I define innovation as the creation and successful delivery of new products and services.
I work with leaders all the time who have ideas they know will improve their customers' experience. But it seems they fall short when it comes to important details. They don't invest in the internal capacity required to successfully develop new products and services. They don't do market research to ensure circumstances are conducive to their new offering. They don't take advantage of disruption and use it to best effect. They don't think through the value from the customers' point of view. They don't drive the required uptake to increase and accelerate market acceptance. These are all things I will show you how to do in the pages ahead.
The truth is that, as a result of misguided effort, intentions often come to naught, or worse, waste precious resources. That's why I wrote this book, to highlight the activities you must engage in to drive success in the marketplace for your innovations.
Seven Key Activities for Getting Innovation Right
In my experience since 1998 working hand-in-hand with over a hundred leaders and their organizations, I have distilled seven key activities that lead to successful innovation. Leaders who carry them out put themselves ahead of their peers and the competition. The vast majority of executives do not practice any one of these with discipline or emotional intensity. Yet it is these activities that make the difference between those who are haphazardly shooting in the dark with good ideas and those who consistently and systematically uncover potential, capitalize on opportunity, and generate traction that drives success in the marketplace. By simply taking just one and putting it into practice you are putting the odds on your side. When you combine them, bringing them all to bear on your efforts, the result is an advantage that stacks many variables in your favor.
The Seven Key Activities to Getting Innovation Right are
In the chapters ahead I will explore each of these seven activities one by one. Along the way I will provide tools and techniques you can put to use immediately. Follow the templates, guidelines, and step-by-step instructions and you will be best prepared to successfully innovate; that is, drive success in your market. That is where the gold is, not in my words but in your application.
Since 1997 I have worked with leaders in over sixty organizations, including Shell, World Bank, NASA, Prudential Retirement, Arent Fox, American Geophysical Union, American College of Cardiology, National Apartment Association, Johns Hopkins University Applied Physics Laboratory, Peace Corps, and the HR Certification Institute. The techniques I present are based on real-life experience with CEOs, executive directors, and senior managers of these world-class organizations and others developing new products and services and delivering successfully to market.
My work is about getting results for my clients. I have written this book for them so they can learn from each other and for you so you can take what is here and put it to good use. It is designed to provide you with the explanations and devices you need to make the best possible impact.
I know that humanity occasionally rises to potential and achieves miracles worthy of the human spirit. We can innovate and change things for the better. Our collective efforts in that regard give me hope. For that reason I wrote what I think is a practical book, not one filled with suppositions and hypotheses. Instead I want it to be full of methods you can put to work and stories that recount direct experience so you can figure out how best to apply the material to your situation. Take what you can. Adapt it to your situation. Find satisfaction in the process and results.
Imagine what your tomorrow will be like when your ideas come to life as sustained successes. Let me help you make that a reality.
Seth Kahan
Washington, DC
Notes
1 Prusak, Larry. Action review of knowledge management: report and recommendations. World Bank, IBM Institute for Knowledge Management, Armonk, NY, 1999.
2 Internal World Bank document: TG 2.0 initiative: Communities of practice at theWorld Bank, 2008.
Chapter 1
Pursue and Leverage Inflection Points
An inflection point is a dramatic and decisive shift in your relationship with the market for better or worse. It can be positive, increasing your success, or negative, as you fall out of favor. Masterful leaders anticipate inflection points and use them to their advantage, like using a wave's energy to carry them to a new and better position or preparing for a setback in conditions to minimize damage to their position. Because an inflection point springs from your relationship to the market, the change it brings comes about one of three ways: (1) you move in relation to the market, (2) the market moves in relation to you, or (3) you move in relation to each other.
Most inflection points fall in the third category, simply because conditions are constantly changing—both yours and the market's. In fact, you are a subset of the market, so change on either side results in change on both sides. But it is helpful to think in terms of the first two to get a handle on how to use market shifts to your advantage. This is done either by anticipating a major change in conditions (the market moves) or by planning a decisive pivot that puts you in a better position to succeed (you move).
An example of the market moving in relation to an organization, generating a negative inflection point, is the recent demise of the Visiting Nurse Foundation (VNF), a nonprofit that served stroke victims in Pittsburgh. VNF, founded in 1989, had as its primary revenue source the administration of flu shots. In 2007 state legislators passed a law permitting pharmacists to give flu injections and the organization's main source of funding dwindled severely.1 The legislative process was transparent and the coming inflection point would have been visible to anyone who was looking—apparently they were not looking. As a result VNF failed to build other revenue sources and the change led to their demise.
An example of an organization designed from the beginning to create a positive inflection point is Gazelle.com. As of this writing they are the US leader in re-commerce,2 a business founded on buying old or expired electronics so consumers can buy the latest and greatest. Re-commerce as a successful innovation was officially recognized in 2005,3 and Gazelle.com was founded in 2006 to take advantage of it. They have achieved dramatic and consistent success with 2011 year-over-year growth of 65%.4
Discovering inflection points in their early stages is a powerful ally to successful innovation. But this is often easier said than done. It takes leaders who understand the power of inflection points, who invest their time and direct their staff to seek out the signals that portend significant changes, and who direct their organizations to respond strategically.
One client of mine discovered how difficult it can be to cut through the mind-set that prevents sensing an emerging inflection point. Yet as you will see, turning a potential negative into a positive inflection point can be done.
I had been hired to work with a large oil and gas operation in the Americas to determine the value of new technology that had been mandated by headquarters. This was the 2000s and every major exploration and production company was putting technology down hole, deep in the ground, to better monitor and model what could be extracted.
The technology was a major innovation, a breakthrough in how oil and gas was identified and existing oil wells and gas fields were optimized to produce more. Further, this breakthrough was generating a global inflection point. As underground digital technology became available around the world, oil and gas operations that adopted it gained a financial edge—my client's competitors among them.
Yet some of the folks in the Americas remained unconvinced of its utility, and as the top-producing division of the company's global operations, their resistance was significant. If they denied the inflection point, not only would they lose the value of the innovation at the cash register, they could also stall the enterprise's progress around the world and put themselves at a major disadvantage in the industry.
On the other hand, if they saw the inflection point and jumped on it, the new technology had the power to propel significant increases in the amount of oil and gas they retrieved from existing wells and fields, with great impact for the financial success of the entire enterprise, propelling them forward as global leader.
The inflection point had been identified at headquarters, but the folks in the Americas did not see it yet. To them, it seemed like just another mandate from above.
Everything came to a head in a meeting I called, bringing the two groups together. We assembled in New Orleans. Major players were present. The first two hours were civil even though it was clear that there was a rift. Slowly the two sides engaged and argued until finally we reached a point where the tension was palpable.
I thought the guy from the Gulf of Mexico was going to jump out of his chair and throttle the analyst from headquarters. “You expect me to believe those numbers? I don't trust those numbers and I don't trust you because you gave me those numbers. There is no way in hell that you can tell me you know what this technology will do. There are just too many variables at play. Is that what you believe? I mean do you believe these numbers?”
The room was dead quiet. Everyone waited to see what the analyst from headquarters would say.
It had been two years since headquarters had mandated the new technology that could produce exceptional results. But it had been announced with flashy brochures loaded with propaganda and unsubstantiated claims. The guys in the Gulf didn't like it then and they didn't like it now. They had reluctantly agreed to do a pilot but made damn sure the rig they tested it on would demonstrate the new technology's utter lack of utility. I had seen that before.
Sure enough, the trial proved the technology was not cost justified on that oil platform. Then Katrina hit. The whole issue was shelved, pushed to the back burner for well over a year while other, more pressing decisions were made and while New Orleans began to recover.
But headquarters did not forget. They believed in the technology. It was already up and running in Africa. Indonesia and the North Sea were testing it on platforms, where it would do well. But the Gulf still rejected the mandate. This was the single most profitable region and they were not about to be told how to run their business. They had clout because they led in generating profit. But was it worth maintaining their independence if it meant missing the inflection point that could carry them forward or leave them behind?
The analyst from headquarters caved. “You are right. We cannot say this technology is solely responsible for those results.” But he was quick to add, “In my gut I just know this is the right thing to do; this is going to change the whole industry and we have to be there, too!” The guy from the Gulf joined him, “You know, I can respect that. Let's take a closer look and see what this can do for us.”
What brought them to agreement was the guy from headquarters shifting from the propaganda platform to saying that he knew in his gut that an inflection point was on them. Down-hole technology was changing the oil business.
I ended up taking a lead consulting position with the Americas division as they implemented the new technology. Two years later there was a futuristic room in the Gulf of Mexico's main office that looked like the bridge on Star Trek. But it was not its looks that made it innovative—it was the value it brought to operations and the hydrocarbon they took to the bank as a result. This company used the inflection point created by down-hole technology and rode it to maintain and even increase its position as the most profitable energy company in the world.
This is the story of a how one company rode an inflection point into a better future. But if you don't see an inflection point for what it is and act decisively, it can take you out of the game entirely. I have sat in rooms with leaders who just don't see them. The whole world is changing and for some reason their radar is not picking it up. I am going to show you in the pages ahead how to make sure you never join their ranks.
I will lay out the four types of inflection points so that you can recognize them as they are emerging. This way you will be able to see them in advance more readily and then align your offerings to best take advantage of them. You can also better prepare to drive your own positive inflection points, jetting your organization into growth mode.
Take for example the Human Resources Certification Institute (HRCI). Created as a separate organization by the Society of Human Resource Professionals in 1973, it is solely and independently responsible for developing and administering certification exams in the field of human resources.
Initially growth was slow. By 1981, under the name of the Personnel Accreditation Institute, they had certified around 2,500 human resources (HR) professionals. In 1988 they established their two mainstay certifications, the Professional in HR® and the Senior Professional in HR®. Growth was incremental, steady. But all that changed in the middle of the first decade of the 21st century when the group introduced a sequence of game-changing products and services.
The time seemed ripe. Although companies had for years been giving lip service to the idea that people are their biggest assets, the age of the knowledge economy made that a reality, and HR deserved its place on the frontier of strategic talent development. People had become the primary competitive advantage for knowledge organizations.
The inflection point was the strategic use of HR; that is, developing and acquiring the talent explicitly to drive success in the market. Globally organizations were moving from viewing HR as the birthday-benefits people to HR as the source of the leaders required for growth.
HRCI determined it would be at the forefront of this inflection point, establishing itself as the midwife of professional standards required to succeed in a global marketplace. Innovation would be their tool of choice. Here is a high-level timeline of HRCI's tactical innovations designed to drive a positive inflection point for the organization in relation to their market:
Each of these innovations combined to increase awareness of HRCI among its target clients at a time when HR was becoming more visibly crucial to business success. They demonstrated that HRCI was moving aggressively into a new role as a thought leader at the forefront of strategic HR, not just a purveyor of certifications. The global certification of 2004 was a huge step forward, providing practical guidance in a complex world of increasingly multinational organizations. The online exam was one of the first to enable applicants to test electronically, ensuring HRCI's leadership in an increasingly Internet-enabled world. And so on. Each of these accomplishments moved them forward decisively as a leader in their field.
The combined result was a reputation for being at the forefront at a time when strategic HR was a competitive advantage. The success of these efforts could be measured in certifications issued. By 2008 the count was up to about 96,000. At the time of writing, summer 2012, their certificant base had reached over 125,000 in 100 countries.5
This sequence of steps was intentionally designed and executed to garner a positive inflection point for the organization. You can feel the results when you walk the halls of HRCI's offices. The buzz is palpable. Leadership is on a roll. The level of productivity is off the charts, with synergies being cultivated and harvested faster than any one person can orchestrate.
HRCI is on the ascent. They are an organization to watch, appreciate, and join. They have changed the game from HR certification to HR leadership, and as a result their market success is on an upward climb. HRCI's sphere of influence is expanding to include CEOs, business leaders, and other players who understand the need for talent management as a critical component of organizational strategy and success.
HRCI's positive inflection point has resulted in a growing customer base, increased purchases as individuals choose to take more than one certification, loyalty during an economic downturn, and a real move up market, claiming and owning their niche.
Four Targets for Innovation Strategy
Recognizing and leveraging inflection points can make a real contribution to four strategic targets:
Which of these targets best fits your current situation? Let's consider the gains that can result from aiming at each, and the tactics to do so in more detail. I will use HRCI's example to illustrate.
Growing Your Base
Expanding your customer base depends on five factors:
Any one of these factors can significantly limit or enhance the development of new customers. Done well together they create synergies that enhance, reinforce, and build upon each other's capacity to grow your base.
Current customer satisfaction describes how content today's customers are with you. The higher their satisfaction, the easier you'll find it to build the base. Satisfied customers become evangelists, provide positive reviews, and refer people to your business.
Desire for your offering is an indicator of the pull for your products and services; it tells you how much the market wants what you have and therefore how likely it is to embrace your offering.
Your reputation as a provider contributes significantly to the trust the market puts in your ability, which in turn accelerates acceptance.
A value proposition you can deliver is essential. If the other factors are in your favor, customers will give you a try, and then it's up to you to provide the goods. This is what makes your offering credible.
Effective outreach means that you are getting the attention of the people who matter; that is, you are in front of your target audience delivering messages they want to hear in media they prefer.
Bring these five factors together and you have the makings of a solid growth effort. For example, the HRCI activities rely on effective communication to a base of satisfied customers who want the value of certification and trust HRCI to deliver, with quality certification and recertification keeping certificants relevant and up to speed in an ever-changing field. Satisfied customers lend credence by recertifying, obtaining certification in more than one area, sharing their stories, attending events, and spreading the word to their peers. Each of these strengthens growth in HRCI's market and contributes power to their positive inflection point.
Getting a Bigger Buy
A bigger buy means that you are growing the amount of spend your customers are giving you, as opposed to other providers they can choose for the same services or products.
HRCI got a bigger buy from their audience by expanding the certifications they provided, making it possible for individuals to pursue more than one. Professionals in the field can expand their expertise as they rise through the ranks from Professional in Human Resources (PHR) to Senior Professional in Human Resources (SPHR). If they are operating in a global environment they can also become certified as a Global Professional in Human Resources. Those who already hold PHR and SPHR credentials and want to become expert in regulations and legal mandates specific to the state of California can earn the additional certificates, PHR-CA and SPHR-CA. In this way HRCI has increased the spend clients can give them.
There is an important nuance to growing a bigger spend. I call it customer-centric competitive differentiation. Here is an example to illustrate. If you are a hardware store competing with two other stores in your locale, your customers are spreading their business across three stores. Getting a bigger buy in this situation means differentiating yourself from the other two in a way that causes customers to choose you over them. Some of those you are courting are already your customers, but they go to the other two stores, too, for a variety of reasons. Your job is to figure out why and bring everyone to your store whenever possible. This is competitive differentiation.
If you are engaged in winning customers from others (that is, operating in a competitive environment), it's helpful to think of the customer base as existing in three spaces, as in Figure 1.1.
Figure 1.1 Customer Spaces in a Competitive Environment
On the far left inside Your Operation, you see the D-zone, so named because this symbolizes your dedicated customers. These people have already decided that you are the provider for them. Your primary activity in this space is maintaining this group, ensuring they stay dedicated. This is your home base. There is no competition here. However, you always want to be alert to any indication your customers are migrating to one of the other six zones.
On the far right are similar D-zones. These are your competitors' home bases. D-zone A represents all the customers who are dedicated to doing business with Competitor A, and D-zone B is the same for Competitor B. D-zone AB indicates those customers torn between your competitors, but not considering you—in other words, they are dedicated to A or B. Since you are not in the mix, this is not an area of competition for you. You can only compete where customers are torn between you and another.
In the middle are the C-zones, named for competition. Here is where the battle rages. C-zone A represents those customers deciding between you and Competitor A. C-zone B represents those doing the same with you and Competitor B. C-zone AB are those wrestling between you and A or B.
The key to competition is not just what distinguishes you from your competitors. It is what differentiates you in the areas your customers care about.
For example, you may have lower prices and feel this is your unique differentiator. But customers may be looking for convenience and willing to pay more for it. If stores A and B get their customers in and out of the store in less than half the time as you, you are misplacing your resources to focus on price. Hire a few extra people to work the floor, teach your cashiers to operate with speed even if it means you have to raise your prices to pay for the extra staff. Conduct a marketing campaign to highlight how you get your customers in and out of the store more rapidly than your competitors.
It is critical that you understand what your competitors are providing that is central to your customers. That is the front of the battle. To gain customers from the competition you must differentiate yourself and compete here. Thus the name, customer-centric competitive differentiation.
To compete successfully you must work hard to understand what motivates potential customers to choose you over your competitors. Then you are in a position to turn their behavior. If you only focus on what you offer, you miss the actual competition zone, the front in the battle where customers are won.
Another look at our chart in Figure 1.2 and you will see the three intersection zones that overlap with Your Operation form “the front” of the battle. This is where you compete.
Figure 1.2 The Front in the Battle to Win Customers
