Surprise and delight your customers to build long term trust & customer lifetime value

Surprise and delight your customers to build long-term trust and customer lifetime value 

Jeff Bezos letter to shareholders 2012

KEY MESSAGE 15/22

Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs  that gives you a snap shot / key takes outs of each letter, along with links to them all.

“When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to.”

Jeff Bezos Letter to Shareholders 2012

Takeaway

In the short term, spending money to deliver value above what your customers could reasonably expect looks foolhardy — in the long run, it could be your competitive advantage.

Proactively bringing value to your users and delighting them builds attachment and trust. Build enough of it, and you create a connection with your customers that becomes hard to break.

Challenge

On Wall Street, delivering value above and beyond what your customers expect is not considered a sensible decision — especially if it costs money. One early critic of Amazon derisively described the company as a “charitable organization being run by elements of the investment community for the benefit of consumers.” This kind of attitude has become so pervasive that for many businesses, it’s seen as safer to move in lockstep with your competitors, never falling behind but never advancing ahead of them either.

Solution

Building a great customer-centric business over the long-term doesn’t happen when you’re only reacting to your competitors.

Proactively delighting your users costs money, but it pays off when you distinguish yourself — your customers stick around for longer and they pay you more.

The longer a company is able to retain its customers, the less it needs to spend on acquisition or marketing. The more revenue it drives from each customer, the stronger its business.

For Amazon, building a high lifetime value among its customer base through proactive delight has been a powerful differentiator. The average lifetime value of a Prime customer was estimated at $2,500 in 2017, well over the $150 average in e-commerce.

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link to all letters to shareholders

  • 1997: Bring on shareholders who align with your values

Jeff Bezos Letter to Shareholders 1997

  • 1998: Stay terrified of your customers

Jeff Bezos Letter to Shareholders 1998

  • 1999: Build on top of infrastructure that’s improving on its own

Jeff Bezos Letter to Shareholders 1999

  • 2000: In lean times, build a cash moat

Jeff Bezos Letter to Shareholders 2000

  • 2001: Measure your company by your free cash flow

Jeff Bezos Letter to Shareholders 2001

  • 2002: Build your business on your fixed costs

Jeff Bezos Letter to Shareholders 2002

  • 2003: Long-term thinking is rooted in ownership

Jeff Bezos Letter to Shareholders 2003

  • 2004: Free cash flow enables more innovation

Jeff Bezos Letter to Shareholders 2004

  • 2005: Don’t get fixated on short-term numbers

Jeff Bezos Letter to Shareholders 2005

  • 2006: Nurture your seedlings to build big lines of business

Jeff Bezos Letter to Shareholders 2006

  • 2007: Missionaries build better products

Jeff Bezos Letter to Shareholders 2007

  • 2008: Work backwards from customer needs to know what to build next

Jeff Bezos Letter to Shareholders 2008

  • 2009: Focus on inputs — the outputs will take care of themselves

Jeff Bezos Letter to Shareholders 2009

  • 2010: R&D should pervade every department

Jeff Bezos Letter to Shareholders 2010

  • 2011: Self-service platforms unlock innovation

Jeff Bezos Letter to Shareholders 2011

  • 2012: Surprise and delight your customers to build long-term trust

Jeff Bezos Letter to Shareholders 2012

  • 2013: Decentralize decision-making to generate innovation

Jeff Bezos Letter to Shareholders 2013

  • 2014: Bet on ideas that have unlimited upside

Jeff Bezos Letter to Shareholders 2014

  • 2015: Don’t deliberate over easily reversible decisions

Jeff Bezos Letter to Shareholders 2015

  • 2016: Move fast and focus on outcomes

Jeff Bezos Letter to Shareholders 2016

  • 2017: Build high standards into company culture

Jeff Bezos Letter to Shareholders 2017

  • 2018: Wandering is an essential counterbalance to efficiency

Jeff Bezos Letter to Shareholders 2018

Protect your non-work time

smiley post it note on corkboard happiness versus depression concept
smiley cartoon face expression on yellow post it note surrounded by sad and depressed faces on cork message board in happiness versus depression and smile against adversity concept

Protect your non-work time

Leadership tip of the week #113

adapted from HBR

As more people are adapting to working from home, we are all learning to adapt:  jobs used to have very clear lines between when you’re “on” and when you’re “off.” But when you working from home — it’s important to protect your non-work time.

  • If you feel like work is taking over most of your waking hours, start by clearly defining what “after hours” means for you.
  • Take into account the number of hours you’re expected to work each week, as well as personal commitments like homeschooling kids , exercise, family and some me-time
  • When do you need to start and stop to put in the appropriate amount of work time?
  • Then, develop mental clarity about what needs to get done and when you will do it.
  • Keep track of your tasks and plan them out.
  • Make sure you block off time for an end-of-workday wrap-up, where you review and make sure you did everything you needed to do for the day. Even have a collective end of week drink with colleagues on a zoom call.
  • Lastly, communicate with your colleagues about how (or if) you want to be contacted during your off hours.

Really guard your time. If you don’t, you won’t get the mental break that everyone needs

 

 

what do customers want in this crisis?

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Customers want companies to act in 3 broad ways in this crisis

leadership tip week #111

adapted from HBR

In a fast-moving crisis, it’s important for leaders to communicate with empathy and honesty — not just internally, but externally as well. Of course, customers require a different approach than employees.

Recent research by Kantar was clear that customers wanted organisations to communicate how they act in three broad areas :

  1. For their customers
  2. For their colleagues
  3. For their wider community

 

1.For their customers

In the current crisis Asda CEO Roger Burnley and Sainsbury’s CEO Mike Coupe recently sent out a note to customers describing how they were acting in all three areas and have gained widespread plaudits, whereas Tim Martin Wetherspoons CEO has come under high levels of criticism for the video message he sent to his colleagues suggesting they take their skills to Tesco!

2. For their Colleagues

Grocery Retailers are focusing on protecting  colleagues with social distancing, perspex screens at check-outs, in-store cleaning procedures , increase limit on contactless to £45 and supporting colleagues with sick pay and Asda even committing to a bonus in June.

3. For their wider community

Coop are doing some great work supporting Food Banks with a guaranteed donation of Food. Iceland, Sainsbury’s and Asda have led by opening shops specifically at times for older customers or NHS workers , and many online retailers are prioritising delivery slots for older or vulnerable customers. M&S and Coop even starting local delivery services to vulnerable people.

Overall the focus that is working to build trust is

  • Focus on empathy rather than trying to create sales opportunities.
  • Deliver great Basics in store.
  • Rethink advertising and promotion strategies to be more in line with what’s happening in the world otherwise you risk sounding tone-deaf and alienating your customers ( removing multi-buys) or Coles in Australia shot an ad with their brand spokesperson encouraging its customers to stay safe
  • Look at your messaging from the perspective of your audience, and let your compassion drive your communications, rather than fear of doing the wrong thing

 

This tip is adapted from Communicating Through the Coronavirus Crisis,” by Paul A. Argenti

In lean times, build a cash moat

In lean times, build a cash moat

Jeff Bezos letter to shareholders 2000 
Key message 4/22

Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs  that gives you a snap shot / key takes outs of each letter, along with links to them all.

“The year 2001 will be an important one in our development. Like 2000, this year will be a year of focus and execution. As a first step, we’ve set the goal of achieving a pro forma operating profit in the fourth quarter. While we have a tremendous amount of work to do and there can be no guarantees, we have a plan to get there, it’s our top priority, and every person in this company is committed to helping with that goal. I look forward to reporting to you our progress in the coming year.”

Takeaway

Focusing on free cash flow or otherwise giving your business some form of cash moat (whether through outside equity, debt stakes, or tight operations) will help ride out difficult times when customers aren’t buying and/or financing has dried up.

If you’re able to maintain composure while others fall, you have the opportunity to come out ahead and capture a much bigger market share.

Challenge

The dot-com bubble took down a slew of internet companies, including Pets.com and fashion site Boo.com. Amazon, too, nearly went bankrupt.

Between 1995 and 2000, the NASDAQ rose from under 1,000 to over 5,000. Following its peak at 5,048, panic ensued, and the index lost trillions within the year.

While the majority of tech upstarts folded during the crash, Amazon stayed afloat. Since March 2000, the company has grown about 20x in market value.

Solution

One reason that Amazon was able to ride out the downturn was the tight cash conversion cycle.

While some companies left inventory in stock for long periods of time, Amazon was always focused on minimizing this to a few days at most, and collecting payments from customers before paying suppliers. This avoided lag times and ensured that Amazon continued to have cash coming in while others were bleeding dry.

Prioritizing free cash flow and being extremely disciplined with their operating cash flows gave Amazon a sound foundation they could use to ride out tough times and ultimately come out ahead.

Build on top of infrastructure that’s improving on its own

Bezos masterclass in management through shareholder letters 1999 #3/22

The current online shopping experience is the worst it will ever be. It’s good enough today to attract 17 million customers, but it will get so much better. Increased bandwidth will result in faster page views and richer content. Further improvements will lead to ‘always-on access’ (which I expect will be a strong boost to online shopping at home, as opposed to the office) and we’ll see significant growth in non-PC devices and wireless access. Moreover, it’s great to be participating in what is a multi-trillion dollar global market, in which we are so very, very tiny. We are doubly-blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.”

Takeaway

  • The biggest opportunities in tech are platform-driven.
  • When you build on an infrastructure that’s beginning to quickly develop and modernize, you reap the benefits of not just your own growth but also the growth of the infrastructure you’re building on.

Challenge

  • Building on established platforms is the easiest and most expedient route, but one with the least upside.
  • Established platforms offer the most integration, often have low barriers to entry, and have plenty of accumulated wisdom around them.
  • At the same time, their growth potential is often limited due to the high pace of technological innovation across industries.

Solution

  • With the rise of internet connectivity in the late 1990s, an increasing divide began to appear between industries. E-commerce, gaming, online financial services were industries where a strong footing established early could set the stage for huge growth.
  • While Bezos was helped by growth in the e-commerce field specifically, and in access to high-bandwidth connections more generally, he didn’t find himself there unexpectedly. Before Amazon, Bezos was vice president at the hedge fund D. E. Shaw & Co, where he saw the rise of the internet firsthand.
  • Bezos knew he wanted to build a technology company, and he consciously looked to hire the most talented infrastructure engineers he could find to build new solutions where none existed.
  • Building on a high-growth platform like Amazon did require a much higher degree of upfront investment in engineering and research, but on the long timeframe of technological improvement, it gives you a much higher chance of building a huge, long-term business.

Link to all letters to shareholders

  • 1997: Bring on shareholders who align with your values

Jeff Bezos Letter to Shareholders 1997

  • 1998: Stay terrified of your customers

Jeff Bezos Letter to Shareholders 1998

  • 1999: Build on top of infrastructure that’s improving on its own

Jeff Bezos Letter to Shareholders 1999

  • 2000: In lean times, build a cash moat

Jeff Bezos Letter to Shareholders 2000

  • 2001: Measure your company by your free cash flow

Jeff Bezos Letter to Shareholders 2001

  • 2002: Build your business on your fixed costs

Jeff Bezos Letter to Shareholders 2002

  • 2003: Long-term thinking is rooted in ownership

Jeff Bezos Letter to Shareholders 2003

  • 2004: Free cash flow enables more innovation

Jeff Bezos Letter to Shareholders 2004

  • 2005: Don’t get fixated on short-term numbers

Jeff Bezos Letter to Shareholders 2005

  • 2006: Nurture your seedlings to build big lines of business

Jeff Bezos Letter to Shareholders 2006

  • 2007: Missionaries build better products

Jeff Bezos Letter to Shareholders 2007

  • 2008: Work backwards from customer needs to know what to build next

Jeff Bezos Letter to Shareholders 2008

  • 2009: Focus on inputs — the outputs will take care of themselves

Jeff Bezos Letter to Shareholders 2009

  • 2010: R&D should pervade every department

Jeff Bezos Letter to Shareholders 2010

  • 2011: Self-service platforms unlock innovation

Jeff Bezos Letter to Shareholders 2011

  • 2012: Surprise and delight your customers to build long-term trust

Jeff Bezos Letter to Shareholders 2012

  • 2013: Decentralize decision-making to generate innovation

Jeff Bezos Letter to Shareholders 2013

  • 2014: Bet on ideas that have unlimited upside

Jeff Bezos Letter to Shareholders 2014

  • 2015: Don’t deliberate over easily reversible decisions

Jeff Bezos Letter to Shareholders 2015

  • 2016: Move fast and focus on outcomes

Jeff Bezos Letter to Shareholders 2016

  • 2017: Build high standards into company culture

Jeff Bezos Letter to Shareholders 2017

  • 2018: Wandering is an essential counterbalance to efficiency

Jeff Bezos Letter to Shareholders 2018

Meeting Managing & Exceeding Expectations

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Meeting Managing & Exceeding Expectations

Leadership Tip if the week #107 

adapted from HBR

If a brand is a promise, then the expectations people have of the brand are created by the promises we make. Meeting expectations is about the alignment of words and deeds.

Disappointment occurs when we don’t do what we say we’re going to do.

When we promise more than we can deliver or pretend to be something we’re not.

Ironically, we are the ones who are most disappointed when we don’t meet the standards we set. We have the power to change this, by prioritising building trust over making an impression and only setting the expectations we’re willing to live up to.

Easy to say. Harder to do.

That’s why it’s worth the effort.

Stay terrified of your customers

Bezos masterclass in management through shareholder letters 1998 #2/22

2. be afraid of your customers

 

Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series that gives you a snap shot / key takes outs of each letter.

“I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition, but of our customers. Our customers have made our business what it is, they are the ones with whom we have a relationship, and they are the ones to whom we owe a great obligation. And we consider them to be loyal to us — right up until the second that someone else offers them a better service.”

Takeaway

  • In business, the most important thing isn’t what your competition is doing. If you’re expending effort trying to follow your rivals’ every move, you’re losing the big picture.
  • Keeping pace with your customers is what will keep you informed, relevant, and competitive.

Challenge

  • Companies are usually wary of their competition.
  • Understanding where they stack up against rivals, particularly if they’re public and continually judged on relative value multiples like price to earnings (PE), is a key pillar of their business strategy. If they can come in top of class, it’s easier to attract investment.
  • But the issue with thinking like your rivals is that you start to make similar moves. In fast food, for example, McDonald’s, Burger King, Wendy’s, Chick-fil-A all start to blend together. The only ways to differentiate is to narrow down to price and brand. As competition heats up in these crowded areas, it’s increasingly difficult to gain an advantage.

Solution

  • Flip the focus inward and hone in on your customers. Obsess over their preferences, their shopping behaviors, the quality of their reviews. This will allow you to optimize product features and overall product mixes. You’ll be able to double down on what works and eliminate what doesn’t. If you have a self-service platform like Kindle, find out everything users are creating and where they’re hitting roadblocks.
  • This granular focus on your true partners will allow you to invent in ways you (and your peers) didn’t anticipate. You’ll begin to develop away from your rivals and stand apart from the pack. This is a core tenet of Bezos’ philosophy.
  • If you don’t do everything in your power to align with customers’ shifting needs, and instead allow yourself to be distracted by competitors, you’ll quickly lose them.

Link to all letters to shareholders

  • 1997: Bring on shareholders who align with your values

Jeff Bezos Letter to Shareholders 1997

  • 1998: Stay terrified of your customers

Jeff Bezos Letter to Shareholders 1998

  • 1999: Build on top of infrastructure that’s improving on its own

Jeff Bezos Letter to Shareholders 1999

  • 2000: In lean times, build a cash moat

Jeff Bezos Letter to Shareholders 2000

  • 2001: Measure your company by your free cash flow

Jeff Bezos Letter to Shareholders 2001

  • 2002: Build your business on your fixed costs

Jeff Bezos Letter to Shareholders 2002

  • 2003: Long-term thinking is rooted in ownership

Jeff Bezos Letter to Shareholders 2003

  • 2004: Free cash flow enables more innovation

Jeff Bezos Letter to Shareholders 2004

  • 2005: Don’t get fixated on short-term numbers

Jeff Bezos Letter to Shareholders 2005

  • 2006: Nurture your seedlings to build big lines of business

Jeff Bezos Letter to Shareholders 2006

  • 2007: Missionaries build better products

Jeff Bezos Letter to Shareholders 2007

  • 2008: Work backwards from customer needs to know what to build next

Jeff Bezos Letter to Shareholders 2008

  • 2009: Focus on inputs — the outputs will take care of themselves

Jeff Bezos Letter to Shareholders 2009

  • 2010: R&D should pervade every department

Jeff Bezos Letter to Shareholders 2010

  • 2011: Self-service platforms unlock innovation

Jeff Bezos Letter to Shareholders 2011

  • 2012: Surprise and delight your customers to build long-term trust

Jeff Bezos Letter to Shareholders 2012

  • 2013: Decentralize decision-making to generate innovation

Jeff Bezos Letter to Shareholders 2013

  • 2014: Bet on ideas that have unlimited upside

Jeff Bezos Letter to Shareholders 2014

  • 2015: Don’t deliberate over easily reversible decisions

Jeff Bezos Letter to Shareholders 2015

  • 2016: Move fast and focus on outcomes

Jeff Bezos Letter to Shareholders 2016

  • 2017: Build high standards into company culture

Jeff Bezos Letter to Shareholders 2017

  • 2018: Wandering is an essential counterbalance to efficiency

Jeff Bezos Letter to Shareholders 2018

bring on shareholders who align with your values

Jeff Bezos letter to shareholders 1997: 

Key message 1/22 :

Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs  that gives you a snap shot / key takes outs of each letter, along with links to them all.

“We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise. Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies.”

Takeaway

  • Don’t let short-term success, including going public, distract from the long-term focus. Amazon’s focus is market leadership, customer growth, retention, and brand — even if these come at the expense of near-term profits or the risk of negative “Wall Street reactions.”
  • Key to this growth has been Bezos’ clear, consistent message. Each year, it helps attract investors who share the company’s vision and maintains their financial support even when Amazon is at odds with the norm.

Challenge

  • Building an e-commerce company in the early days of the internet meant building on the precipice of huge growth, in terms of infrastructure and huge changes in consumer behavior. Taking advantage of these opportunities meant investing all available cash into growing and delivering value to customers.
  • Bezos explained Amazon would never focus on profits or shareholder returns directly, but would focus 100% of its energy on building value for its customers.
  • When his first letter to shareholders was composed in 1997, Amazon was already a successful company by some metrics — 838% year-over-year growth had recently brought the online bookstore’s revenues to $148M. But much of Wall Street was skeptical of the still-unprofitable company that had just gone public, didn’t pay dividends, and didn’t seem to care about becoming profitable.
  • In that first letter, Bezos didn’t try to convince investors that Amazon was profitable — instead, he explained why profitability was the wrong metric by which to judge a company like Amazon.

Solution

  • Amazon’s real strength is scale. As a company grows, if it’s smart about its costs, these can be minimized while sales increase. Margin expansion follows, and a team suddenly has a chance to grow at a faster and faster rate. More customers also mean more data, which leads to even greater decision-making power.
  • Shareholders who understand this can reap exponential gains.

 

  • Bezos ended his 1997 letter by reminding Amazon’s shareholders that it was their responsibility to decide whether this was a thesis worth investing in. In the opinions of many analysts of the time, it was not. Many were proved wrong. He still talks about every day being Day 1 and those who invested with a similar goal of inventing each and every day have been rewarded.

Jeff Bezos Letter to Shareholders 1997

links to all letters

  • 1997: Bring on shareholders who align with your values

Jeff Bezos Letter to Shareholders 1997

  • 1998: Stay terrified of your customers

Jeff Bezos Letter to Shareholders 1998

  • 1999: Build on top of infrastructure that’s improving on its own

Jeff Bezos Letter to Shareholders 1999

  • 2000: In lean times, build a cash moat

Jeff Bezos Letter to Shareholders 2000

  • 2001: Measure your company by your free cash flow

Jeff Bezos Letter to Shareholders 2001

  • 2002: Build your business on your fixed costs

Jeff Bezos Letter to Shareholders 2002

  • 2003: Long-term thinking is rooted in ownership

Jeff Bezos Letter to Shareholders 2003

  • 2004: Free cash flow enables more innovation

Jeff Bezos Letter to Shareholders 2004

  • 2005: Don’t get fixated on short-term numbers

Jeff Bezos Letter to Shareholders 2005

  • 2006: Nurture your seedlings to build big lines of business

Jeff Bezos Letter to Shareholders 2006

  • 2007: Missionaries build better products

Jeff Bezos Letter to Shareholders 2007

  • 2008: Work backwards from customer needs to know what to build next

Jeff Bezos Letter to Shareholders 2008

  • 2009: Focus on inputs — the outputs will take care of themselves

Jeff Bezos Letter to Shareholders 2009

  • 2010: R&D should pervade every department

Jeff Bezos Letter to Shareholders 2010

  • 2011: Self-service platforms unlock innovation

Jeff Bezos Letter to Shareholders 2011

  • 2012: Surprise and delight your customers to build long-term trust

Jeff Bezos Letter to Shareholders 2012

  • 2013: Decentralize decision-making to generate innovation

Jeff Bezos Letter to Shareholders 2013

  • 2014: Bet on ideas that have unlimited upside

Jeff Bezos Letter to Shareholders 2014

  • 2015: Don’t deliberate over easily reversible decisions

Jeff Bezos Letter to Shareholders 2015

  • 2016: Move fast and focus on outcomes

Jeff Bezos Letter to Shareholders 2016

  • 2017: Build high standards into company culture

Jeff Bezos Letter to Shareholders 2017

  • 2018: Wandering is an essential counterbalance to efficiency

Jeff Bezos Letter to Shareholders 2018

Zig while amazon zags

or 5  ways to compete with Amazon

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One of the biggest challenges that face retailers at the moment is how to compete with the jugganaut that is amazon. Powered by the profit driver in AWS:amazon web services and more recently AAS: amazon advertising services the retail industry fears their arrival.

First understand them . the best way to get into amazon’s DNA is to read the letters to shareholders that Jeff Bezos has written every year since he started in 1997. Look out for a seperate blog on that subject coming soon .

The second defence is attack 

Strategy #1: Own the pre- and post-transaction experience
Amazon are very focused on making the transaction as easy as possible at low cost, but we still have to assemble solutions on our own. If an organisation offers a ready-made solution that saves us time and effort (at a price we can live with), we’re grateful.

  1. Meal delivery companies, for example, have leveraged this basic insight to create a new category. Cooking a meal is time consuming: go to the supermarket, fight through the crowds order to find a few ingredients, wait in a long line, lug your bags home, put everything away, measure and chop the ingredients, and assemble the meal.Meal delivery companies like Gousto, HelloFresh, and simply cook eliminate all of these chores but the last one by shipping pre-made meals that require very little prep. (Amazon launched their own meal kit delivery service in July in order to catch up after falling behind for five years.)
  2. Furniture  or Clothing : Virtual Reality is allowing you to select and choose furniture or clothing that fits your room or you.Once you’ve selected what you want to buy, sometimes extra effort is needed to actually assemble, install, learn how to use it, customize it, and then repair it once it breaks.
  3. Electrical retailers: DixonsCarphone Warehouse are competing vs amazon in electrical by offered get technical support pre and post purchase. Installing Fridge freezers, Kitchen ranges / recycling fridges.
  4. Garden Retailers offering Garden Services
  5. Mothercare offering to come and assemble the cot or bed for you rather than you have to put things all together.
  6. Laura Ashley assembling beds.

Strategy #2: Turn your services into a platform
The fastest-growing companies in history, such as Google, Facebook, Uber, Airbnb, Amazon, and Netflix, are all platforms. The platform business model captures the most profit, builds a moat that is hard for competitors to cross, and scales quickly once it reaches critical mass. While building up a global workforce of employees to offer support services may take massive amounts of time and capital, a platform can get there in a fraction of the time. And, if you don’t do it in your niche, it’s likely that Amazon will — if it hasn’t already.
Amazon Services uses a platform model to deliver hundreds of services at scale including services with and for the home, automotive, electronics, yard and outdoor, assembly, health and wellness, lessons and classes, and pet services. It even has an Uber-like service, Amazon Flex, which has drivers in 30 cities who deliver Amazon products.

You can build a platform by focusing on your niche , playing to your strengths, particularly your unique understanding of your customer, in order to more effectively recruit, vet, train, and manage a network of service professionals and help them solve the specific problems that customers in your niche face. The most successful platforms in the world aren’t ones that offer every service under the sun. They are ones that are the most focused.

  • Uber is a platform that has focused on logistics and transport
  • Netflix is not trying to meet all entertainment needs, but focused on emotional connection

Netflix founder Reed Hastings: “We’re not trying to meet all needs. So, Amazon’s business strategy is super broad. Meet all needs. I mean, the stuff that will be in Prime in five or ten years will be amazing, right? And so we can’t try to be that — we’ll never be as good as them at what they’re trying to be. What we can be is the emotional connection brand, like HBO. So, think of it as they’re trying to be Walmart, we’re trying to be Starbucks. So, super focused on one thing that people are very passionate about.”

Strategy #3: Reduce every point of friction in your customer’s journey until you hit a ‘wow tipping point’
To reduce the friction at every step of your customer’s user journey, leverage your own customer data to uncover friction points and relentlessly remove them. Start by removing glaring problems. Then keep going until you reach the ‘Wow!’ tipping point
A hallmark of many of today’s most successful companies, is that they don’t stop improving their product once it’s good enough. They identify every interaction their brand has with a customer and aim to make it a ‘Wow!’ experience. It’s not just tech firms; retailers are taking note as well.

Strategy #4: Create a must-have brand and then use it as leverage
One of the biggest threats to Amazon is the power of brand. A truly powerful, must-have brand like Apple or Disney doesn’t need Amazon to succeed. They have built a direct relationship with the consumer. As a result, Amazon has lost tens of billions of dollars in potential revenue because people buy Apple products on Apple.com or in the Apple STore. Furthermore, Amazon’s whole business model is antithetical to people’s innate desire to display their personality and status through what they purchase. There is always going to be a segment of people who value self expression over low prices and convenience. The luxury category is one of Amazon’s Achilles’ heels.
Amazon is confronting the ‘brand’ threat in two ways.

  1.  First, amazon has shown that it’s not afraid to build or acquire its own brands (19 in total). Amazon also leverages its data on which products sell best in each category to launch its own generic brand, Amazon Basics, which now has over 3,000 products. In each category these products appear in, they are featured.
  2. commodifying brands by forced discounting, using its direct relationship with customers and audio purchasing to push competing commodity brands. With Amazon Alexa, customers can say, “Buy toothpaste,” and Amazon will send its recommended toothpaste rather than the toothpaste with the best brand, for example.

Make no mistake, Amazon is trying to destroy the value of branding overall and learn from your customers in order to compete with your most profitable products. Bezos’ famous saying, “your margin is my opportunity,” is particularly relevant here. Branding creates a perception that facilitates charging a higher price. Bezos is attacking that pillar of higher prices.
By having a must-have or a luxury product, you give yourself choices on how to leverage your brand:

  1. using an embargo period Netflix keeps its original content exclusive to Netflix for a certain number of days and then sells it on iTunes and other platforms. The other platforms are not only sources of cash, they are also marketing.
  2. allowing just some products to be sold on Amazon (sell some brands on Amazon and others only on your own site),
  3. not selling on Amazon at all (Birkenstock, for example, prohibits its sellers from selling on Amazon. Sales tripled to $800 million last year),
  4. partnering exclusively with one brand. (Martha Stewart has a multi-year exclusive agreement with Macy’s).

Strategy #5: Defining the problem & Extreme Experimentation

Amazon really understands the problem that they are trying to solve. and works hard to clarity the brief for any new innovation, making it crystal clear what the customer problem is they are trying to solve and then how they will develop a proposition to solve that problem .

This, more than any other strategy, is why Amazon is so successful: Amazon is not a traditional business. If you think it is you have already lost. You are competing against an economy.

Part of what makes the Economy Pyramid Model so successful is the sheer quantity of experimentation. Amazon’s culture of listening to customers , defining the problem & experimentation is so deeply ingrained that Bezos has repeatedly gone on record saying that Amazon’s success is directly correlated with the number of experiments it performs.

Amazon isn’t just experimenting internally with new platforms like Alexa, Kindle, Flex, Marketplaces, and dozens of others. Each of those platforms then empowers an economy of producers to create millions of experiments. In so doing, Amazon passes the cost of experimentation on to producers, receives income for each experiment, and then doubles down on the blockbusters by creating their own competing brand. It’s a brutally effective strategy. Amazon aggregates producer experiment data to launch its own competing products.
In a world that is rapidly changing, the companies that succeed will be those who increase their rate of experimentation faster than the environment changes. And Amazon is a core part of that environment.

If you need help in defining the problem and creating experiments contact me.

5 ways great leader promote innovation

5 ways great leader promote innovation

retail leadersI have known many CEOs and CMOs over my career. The best ones created innovative transformational cultures. Many tried. Some failed to comprehend the definition of the word itself; others lacked the vital leadership traits to inspire creativity and implement great ideas. Those who were adept at driving innovation and sustaining it over the long haul had one thing in common: they were hard-headed.

Their tough-mindedness came from an unshakable belief that innovation is critical to corporate survival, and that without powerful and constant change, innovation would be elusive. These trailblazers were innovative leaders, but surprisingly some of them weren’t creative, themselves. That didn’t matter because they were good a recognizing great ideas and welcoming change. No change, no innovation.

So, how do unshakable leaders create change and how to they sustain the innovation outcome?

  1. They unsettle the organization. There’s a host of companies that get things done, control performance, spot problems and deliver their budgets. But the structures, the processes and the people that keep things ticking along can snuff good ideas and block movement through the system. Innovative leaders appreciate that there is a difference between what’s needed to run a business and what’s needed to foster creativity. This ethic prevents excessive layering from killing ideas before they reach the top.
  2. They’re hardheaded about strategy.  Leaders who embrace innovation have a pretty clear idea of the kind of competitive edge they’re seeking. They’ve thought hard about what’s practical and what’s not. So the approach is not wishy-washy, but focused and driven. When this methodology brings results, employees become disciples of the strategy and the culture that facilitates execution.
  3. They make innovation a priority in the “walk” as well as the “talk.” When executive teams demonstrate innovative thinking and practices, the rest of the organization is clear on direction. This facilitates coherent cross-functional teamwork and an innovative modus operandi that encourages diverse viewpoints.
  4. They take note of what’s already going on with a view to balancing creative thinking with the discipline of assessing solutions and their implementation. The best backdrop for spurring innovation is knowledge – knowing the business cold. Good ideas often flow from the process of looking at customers, competitors, and the business as a whole.
  5. They appreciate that not many ideas work the first time, so they’re prepared to praise failure, move on, or try again until the company gets it right. From there, innovative leaders marshal resources behind a few winners and then execute like the SKY Cycle team

Innovative leaders are a special breed. They aren’t as interested in “minding the store” as they are about “opening new stores.” Nor are they shy to admit to controlling strategic direction, influencing the culture, and monitoring the process and practice that unleashes business’s most elusive success factor.

The Three Kinds of People You Want on your Next Big Project

harley-havidson-dog

The 3 Kinds of People You Want on Your Big New Project

Leadership Tip of the Week #104

adapted from HBR

When you’re building a team for a high-profile project, you want an all-star team.

But it’s not enough to put your high performers on the task.

There are three types of people who should be on the team of any breakthrough initiative.

1. look for people who are comfortable with uncertainty. You need individuals who will remain curious and focused even when the project is far from the end goal.

2. be sure you have people who create structure within chaos and take action. These workers can drive a team forward even when circumstances change.

3. find people who have a combination of three critical traits: divergent thinking (the ability to connect seemingly unrelated information and ideas); convergent action (the ability to execute on ideas and create something tangible); and influential communication (the ability to share knowledge in a coherent, compelling way).

Lots of people have one of these critical traits, but your project team needs employees who have all of them.

Adapted from “If Your Innovation Effort Isn’t Working, Look at Who’s on the Team,” by Nathan Furr et al.

Getting Better at something requires commitment

customer 17

Getting Better at Something Requires Commitment

Leadership Tip of the Week #103

Adapted from HBR

We all want to get better at something.

Maybe you’d like to be a more inspiring leader, be more productive, or take more risks. But ask yourself two questions.

1. Do you really want to do better? Presumably the answer is “yes,” but if you’re looking to improve because, say, your boss wants you to, be honest about that. Change will happen only if you’re committed to it.

2. Are you willing to feel the discomfort of trying things that don’t work right away? Learning anything new is inherently uncomfortable, so be prepared to feel a little awkward. You will make mistakes. You may feel embarrassed or ashamed, especially if you are used to succeeding. But if you remain committed through all of that, you will get better.

Adapted from “If You Want to Get Better at Something, Ask Yourself These Two Questions,” by Peter Bregman

Seven new realities of retail world

data-driven-marketing-4Consumers have fundamentally changed how they shop and how they buy. This shift has forced retailers to adapt to a new paradigm. Here are the seven realities of the new retail world

  1. A proliferation of new technologies has created substantial new opportunities to understand and serve customers, which means organisations must put forth the effort to integrate new technology into regular processes and procedures. Don’t start with technologies but start with people & processes.
  2. Removal of the Silos of  data and departments must be broken down to enable centralized data.
  3. Retailers must build complete, 360-degree portraits of customers to recognize them as individuals and understand their buying behaviors. Consumer personas are key to relevant and personalized experiences for customers who represent high-value potential for pro tability.
  4. Brands must reach across all channels and devices to provide meaningful experiences based on each consumer’s demonstrated preferences.
  5. The Customer Shopping Experiences across physical and digital channels should be seamless for consumers, while digital and physical measurement and attribution should be seamless for retailers.
  6. Consumers now expect personalised and relevant content that retailers can and must deliver, using data-based insights, to drive the best customer experience.
  7. All data must be handled in a transparent and ethical manner, with retailers accountable for ensuring it is used in ways that bene t consumers and protects them from harm.

Become the Future: know your customer

customer 5

BECOME THE FUTURE — KNOW YOUR CUSTOMER

With every new opportunity to engage and serve we are also provided an opportunity to learn. Smart retailers will use all of this to drive singularly and powerfully toward one ultimate goal…

Creating profound, data-informed, connections with your consumer.

We must never lose sight of the big picture to connect with and enrich the lives of each consumer as a unique and recognised individual. In the new world of retail, the future is a seamless and meaningful connection … and the future is here.

As we’ve seen, both from research and in execution, using integrated technology to understand, reach and provide value to your consumer is a strategy that works. But becoming exceptional, when it comes to ethical data gathering and deployment, isn’t just a good idea, it is the fundamental route to survival for modern retailers.

In spite of the state of urgency created by the increasing demands of consumers, many retailers are still behind the curve on both industry adoption and meeting customer expectations.

From seamlessly blended digital and offline worlds to introducing products and ideas that users don’t even know they want yet, today’s leading retailers are those who are setting trends — not merely keeping up with them.

As we look toward the horizon, we will find the brands that embody progress and thrive on the bleeding edge of technology will become the aspirational beacons in their space. The ability to cultivate breakthrough campaigns and captivate both your customers and your competitors’ customers is within your reach.

5 tips for driving (digital) success

5 fingersHere are 5 simple tips will help drive success in your organization and make you a (digital) hero:

1. Identify and understand the problems
This is so trivial but yet incredible important and frequently ignored. Companies, governments and other organizations try to solve problems without understanding them. The first step of solving any challenge, with our without technology, is to identify and understand the problem(s). I use plural because we often jump on the first problem when there are several. There’s a myriad of great tools to identify problems including the 5 Whys, Customer Journey mapping, Customer Research, and more.

2. Be inspired and challenged by great people
The honest truth is that most people are comfortable with what they have and know. The unknown and change is frightening. But to survive in the current competitive, fast-moving world we need to challenge ourselves to consider other points of view, think differently, and to change fundamentals.

These are a few ways you can challenge yourself:

  • Follow people on Twitter and LinkedIn such as Tom Goodwin, Martin Lindstrom and Benedict Evans
  • Meet and hire partners that will challenge you (and don’t always agree)
  • Talk to the competition’s customers

3. Always involve unbiased customers
Another basic mistake too many organizations make is solving problems without involving the people that are intended to use it. For example launching a website without testing the concept, content and final design on the intended target audience or deploying an expense management tool without including employees in the evaluation and implementation process.

Lack of time or cost are common excuses, but how much time and money do you lose when a website or software doesn’t achieve its goals?

Always involve end users at every step of the way. Remember that colleagues or the boss are usually not representative of the end users.

4. Define clear success factors, measure and follow-up
How do we know if we’ve achieved success if we didn’t define it in the first place? Many organizations have too generic or end-goal-centric metrics. The most common measures of success are revenue growth and cost savings. The challenge with these is that it’s usually not possible to measure success until e.g. 3-6 months after the project has been completed.

A better alternative is to include success factors that can be measured throughout the project. For example user task completion rate, satisfaction and sticking to the MVP timeline.

5. Understand why Culture eats Strategy for breakfast
Want to change the business or organization? Think that a new app, knowledge sharing system or HR website will achieve radical change? It won’t unless people want change. Ensure that every initiative to change has a plan to get buy-in from the organization including the grass roots. No. 3 above will help, but is not enough.

Use these 5 tips in whatever you do and I can promise you a greater chance of success. Furthermore there’s a pretty good chance that the organization will consider YOU a digital hero.

7 steps Data-Driven Customer Growth.

seven steps

Accelerating customer growth to drive commercial success through data is challenging and requires commitment and alignment from around all the organisation to be successful, but there are 7 steps that make the journey more successful

  1. Identify the commercial & customer Goals in next 18m-36m
  2. Build a clear vision of a radically different data-driven customer experience, working across digital & bricks & mortar and align across the organisation.
  3. Remove Silos of data use creating a single version of the truth, with a data strategy linked to business goals e.g. Unified View of customer data, GDPR ready and tools developed to meet commercial goals.
  4. Breakdown the institutional fear of data & digital at all levels through training & doing: it’s a tool that anyone can use to do what you have been doing better
  5. Use Data Analytics to Map & Prioritise customer journeys & personalised experiences across human & digital touchpoints and align organisation capability to deliver for customer.
  6. Identify & Build the capabilities (Process, Tools People) that will be required to transform process design from efficiency focused (cheaper) to customer focused (better simpler cheaper) , specifically putting in place an analytics capability to enable data-driven, personalised journeys
  7. Foster stronger bonds between technical and different business people. This is a two-way process to ensure the technical teams understand the commercial imperatives, and customer solutions you would like to build, and the business teams learn to trust the expertise of technical IT teams. It will also allow you to improve data quality through showing the business impact.

Using Data & Advanced Customer Analytics  to put the customer at the heart of an organisation is a transformation that future looking organisations need to start implementing now.

Transformation to ensure data is part of the DNA of an organisation takes time and a holistic approach.

Physical to Digital – Phygital

kroger alibabab

How Kroger is driving Physical into Digital

Kroger is accelerating it’s Data and Digital capability fast , after buying out the JV with dunnhumby a few years ago, it’s announced two new strategic partnerships with Ocado and Alibaba

Two Partnerships

Kroger, which was founded in 1883 in Cincinnati, Ohio, is the United States’s largest supermarket chain, and in fact is one of the largest such chains in the world. With stores in 34 states, Kroger is a household name that for many typifies traditional brick & mortar stores. This week they announced a partnership with Chinese internet giant Alibaba, specifically to open an online storefront on Alibaba’s platform for international brands, Tmall Global. This first move into overseas sales is part of grocer’s online retail push. This sits alongside a recently announced plan with Ocado, to launch Kroger Ship an online food delivery service picked from automated warehouses.

Organic goods, dietary supplements, and other private-label products are expected to be included in the initial product offering.

Competitive Landscape And Why This Is Big

Kroger’s move comes as its traditional competitors aggressively cross into the digital space, while “digital” companies barge into what used to be Kroger’s exclusive territory.

Walmart, for its part, recently acquired a majority stake in Indian e-commerce giant Flipkart Group. It has been pursuing a strategy of leveraging their physical store base to drive them forward in the ecommerce landscape. What’s more, Walmart owns a 12% stake in JD.com Inc., Alibaba’s largest rival in China.

Amazon has been doing the opposite, particularly with their Whole Foods purchase, as they seek to expand their physical footprint while taking advantage of their digital strength.

Alibaba already owns 2 of China’s most popular e-commerce websites and is staving off competition from the aforementioned JD.com. They have also been active in signing on other US brands, such as Macy’s, Costco and Starbucks.

Digital For The Win

Digital is the way forward for even the most traditional brands. While perhaps a bit late to the party, the Kroger-Alibaba deal shows that companies not harnessing the power of ecommerce effectively have to have a smart strategy to catch up – and succeed – in the new era of ecommerce. This could be through acquisitions, mergers, or allying with the right digital partner. the proposed Asda / Sainsbury’s Merger is another example of retailers merging to compete vs digital competitors ( in this case amazon in UK)

When it comes to that right partner, companies both large and small are seeing the need for a holistic picture of their own operations, as well as the industry at large. Today, successful companies are leveraging data to spot future trends and markets, as well as to fine-tune minute details such as ranges, pricing, availability.

5 ways hard-headed leaders promote innovation

retail leaders

I have known many CEOs and CMOs over my career. The best ones created innovative transformational cultures. Many tried. Some failed to comprehend the definition of the word itself; others lacked the vital leadership traits to inspire creativity and implement great ideas. Those who were adept at driving innovation and sustaining it over the long haul had one thing in common: they were hard-headed.

Their tough-mindedness came from an unshakable belief that innovation is critical to corporate survival, and that without powerful and constant change, innovation would be elusive. These trailblazers were innovative leaders, but surprisingly some of them weren’t creative, themselves. That didn’t matter because they were good a recognizing great ideas and welcoming change. No change, no innovation.

So, how do unshakable leaders create change and how to they sustain the innovation outcome?

  1. They unsettle the organization. There’s a host of companies that get things done, control performance, spot problems and deliver their budgets. But the structures, the processes and the people that keep things ticking along can snuff good ideas and block movement through the system. Innovative leaders appreciate that there is a difference between what’s needed to run a business and what’s needed to foster creativity. This ethic prevents excessive layering from killing ideas before they reach the top.
  2. They’re hardheaded about strategy.  Leaders who embrace innovation have a pretty clear idea of the kind of competitive edge they’re seeking. They’ve thought hard about what’s practical and what’s not. So the approach is not wishy-washy, but focused and driven. When this methodology brings results, employees become disciples of the strategy and the culture that facilitates execution.
  3. They make innovation a priority in the “walk” as well as the “talk.” When executive teams demonstrate innovative thinking and practices, the rest of the organization is clear on direction. This facilitates coherent cross-functional teamwork and an innovative modus operandi that encourages diverse viewpoints.
  4. They take note of what’s already going on with a view to balancing creative thinking with the discipline of assessing solutions and their implementation. The best backdrop for spurring innovation is knowledge – knowing the business cold. Good ideas often flow from the process of looking at customers, competitors, and the business as a whole.
  5. They appreciate that not many ideas work the first time, so they’re prepared to praise failure, move on, or try again until the company gets it right. From there, innovative leaders marshal resources behind a few winners and then execute like the SKY Cycle team

Innovative leaders are a special breed. They aren’t as interested in “minding the store” as they are about “opening new stores.” Nor are they shy to admit to controlling strategic direction, influencing the culture, and monitoring the process and practice that unleashes business’s most elusive success factor.

retail leaders 2

5 ways to compete with Amazon

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 5  ways to compete with Amazon

One of the biggest challenges that face retailers at the moment is how to compete with the jugganaut that is amazon. Powered by the profit driver in Amazon Web Services and more recently Amazon Advertising Services the retail industry fears the arrival. But there are ways of defending by attacking

Strategy #1: Own the pre- and post-transaction experience
Amazon are very focused on making the transaction as easy as possible at low cost, but we still have to assemble solutions on our own. If an organisation offers a ready-made solution that saves us time and effort (at a price we can live with), we’re grateful.

  1. Meal delivery companies, for example, have leveraged this basic insight to create a new category. Cooking a meal is time consuming: go to the supermarket, fight through the crowds order to find a few ingredients, wait in a long line, lug your bags home, put everything away, measure and chop the ingredients, and assemble the meal.Meal delivery companies like Gousto, HelloFresh, and simply cook eliminate all of these chores but the last one by shipping pre-made meals that require very little prep. (Amazon launched their own meal kit delivery service in July in order to catch up after falling behind for five years.)
  2. Furniture  or Clothing : Virtual Reality is allowing you to select and choose furniture or clothing that fits your room or you.Once you’ve selected what you want to buy, sometimes extra effort is needed to actually assemble, install, learn how to use it, customize it, and then repair it once it breaks.
  3. Electrical retailers: DixonsCarphone Warehouse are competing vs amazon in electrical by offered get technical support pre and post purchase. Installing Fridge freezers, Kitchen ranges / recycling fridges.
  4. Garden Retailers offering Garden Services
  5. Mothercare offering to come and assemble the cot or bed for you rather than you have to put things all together.
  6. Laura Ashley assembling beds.

Strategy #2: Turn your services into a platform
The fastest-growing companies in history, such as Google, Facebook, Uber, Airbnb, Amazon, and Netflix, are all platforms. The platform business model captures the most profit, builds a moat that is hard for competitors to cross, and scales quickly once it reaches critical mass. While building up a global workforce of employees to offer support services may take massive amounts of time and capital, a platform can get there in a fraction of the time. And, if you don’t do it in your niche, it’s likely that Amazon will — if it hasn’t already.
Amazon Services uses a platform model to deliver hundreds of services at scale including services with and for the home, automotive, electronics, yard and outdoor, assembly, health and wellness, lessons and classes, and pet services. It even has an Uber-like service, Amazon Flex, which has drivers in 30 cities who deliver Amazon products.

You can build a platform by focusing on your niche , playing to your strengths, particularly your unique understanding of your customer, in order to more effectively recruit, vet, train, and manage a network of service professionals and help them solve the specific problems that customers in your niche face. The most successful platforms in the world aren’t ones that offer every service under the sun. They are ones that are the most focused.

  • Uber is a platform that has focused on logistics and transport
  • Netflix is not trying to meet all entertainment needs, but focused on emotional connection

Netflix founder Reed Hastings: “We’re not trying to meet all needs. So, Amazon’s business strategy is super broad. Meet all needs. I mean, the stuff that will be in Prime in five or ten years will be amazing, right? And so we can’t try to be that — we’ll never be as good as them at what they’re trying to be. What we can be is the emotional connection brand, like HBO. So, think of it as they’re trying to be Walmart, we’re trying to be Starbucks. So, super focused on one thing that people are very passionate about.”

Strategy #3: Reduce every point of friction in your customer’s journey until you hit a ‘wow tipping point’
To reduce the friction at every step of your customer’s user journey, leverage your own customer data to uncover friction points and relentlessly remove them. Start by removing glaring problems. Then keep going until you reach the ‘Wow!’ tipping point
A hallmark of many of today’s most successful companies, is that they don’t stop improving their product once it’s good enough. They identify every interaction their brand has with a customer and aim to make it a ‘Wow!’ experience. It’s not just tech firms; retailers are taking note as well.

Strategy #4: Create a must-have brand and then use it as leverage
One of the biggest threats to Amazon is the power of brand. A truly powerful, must-have brand like Apple or Disney doesn’t need Amazon to succeed. They have built a direct relationship with the consumer. As a result, Amazon has lost tens of billions of dollars in potential revenue because people buy Apple products on Apple.com or in the Apple STore. Furthermore, Amazon’s whole business model is antithetical to people’s innate desire to display their personality and status through what they purchase. There is always going to be a segment of people who value self expression over low prices and convenience. The luxury category is one of Amazon’s Achilles’ heels.
Amazon is confronting the ‘brand’ threat in two ways.

  1.  First, amazon has shown that it’s not afraid to build or acquire its own brands (19 in total). Amazon also leverages its data on which products sell best in each category to launch its own generic brand, Amazon Basics, which now has over 3,000 products. In each category these products appear in, they are featured.
  2. commodifying brands by forced discounting, using its direct relationship with customers and audio purchasing to push competing commodity brands. With Amazon Alexa, customers can say, “Buy toothpaste,” and Amazon will send its recommended toothpaste rather than the toothpaste with the best brand, for example.

Make no mistake, Amazon is trying to destroy the value of branding overall and learn from your customers in order to compete with your most profitable products. Bezos’ famous saying, “your margin is my opportunity,” is particularly relevant here. Branding creates a perception that facilitates charging a higher price. Bezos is attacking that pillar of higher prices.
By having a must-have or a luxury product, you give yourself choices on how to leverage your brand:

  1. using an embargo period Netflix keeps its original content exclusive to Netflix for a certain number of days and then sells it on iTunes and other platforms. The other platforms are not only sources of cash, they are also marketing.
  2. allowing just some products to be sold on Amazon (sell some brands on Amazon and others only on your own site),
  3. not selling on Amazon at all (Birkenstock, for example, prohibits its sellers from selling on Amazon. Sales tripled to $800 million last year),
  4. partnering exclusively with one brand. (Martha Stewart has a multi-year exclusive agreement with Macy’s).

Strategy #5: Defining the problem & Extreme Experimentation

Amazon really understands the problem that they are trying to solve. and works hard to clarity the brief for any new innovation, making it crystal clear what the customer problem is they are trying to solve and then how they will develop a proposition to solve that problem .

This, more than any other strategy, is why Amazon is so successful: Amazon is not a traditional business. If you think it is you have already lost. You are competing against an economy.

Part of what makes the Economy Pyramid Model so successful is the sheer quantity of experimentation. Amazon’s culture of listening to customers , defining the problem & experimentation is so deeply ingrained that Bezos has repeatedly gone on record saying that Amazon’s success is directly correlated with the number of experiments it performs.

Amazon isn’t just experimenting internally with new platforms like Alexa, Kindle, Flex, Marketplaces, and dozens of others. Each of those platforms then empowers an economy of producers to create millions of experiments. In so doing, Amazon passes the cost of experimentation on to producers, receives income for each experiment, and then doubles down on the blockbusters by creating their own competing brand. It’s a brutally effective strategy. Amazon aggregates producer experiment data to launch its own competing products.
In a world that is rapidly changing, the companies that succeed will be those who increase their rate of experimentation faster than the environment changes. And Amazon is a core part of that environment.

If you need help in defining the problem and creating experiments contact me.

 

Alexa I’ll have a skinny decaf latte

starbucks-korea (1)

Starbucks have always been leaders in mobile technology to improve the customer experience, with leadership in mobile order & pay technology.

In an initiative designed to simplify ordering even more consumers in Korea can now remotely voice activate a Starbucks order using Samsung’s digital assistant Bixby. They can also pay for it at the same time in advance of picking it up . Starbucks led in South Korea ( a digitally leading culture) to be the first to leverage the technology to improve the customer experience

7 steps to data driven customer obsession

seven steps7 steps to data driven customer obsession

The battle for customers is not BAU, with data being “the New Oil” that can transform the customer experience through advanced customer analytics.  Creating a Customer Obsessed Organisation that puts the customer at the heart of the business and designing the human and digital customer experience are top priorities to win in the age of the Digital Customer.

The road to travel on to build advanced Customer analytics that transform the customer experience is challenging and requires commitment and alignment from around all the organisation to be successful

  1. Identify the commercial & customer Goals in next 18m-36m
  2. Build a clear vision of a radically different data-driven customer experience, working across digital & bricks & mortar and align across the organisation.
  3. Remove Silos of data use creating a single version of the truth, with a data strategy linked to business goals e.g. Unified View of customer data, GDPR ready and tools developed to meet commercial goals.
  4. Breakdown the institutional fear of data & digital at all levels through training & doing: it’s a tool that anyone can use to do what you have been doing better
  5. Use Data Analytics to Map & Prioritise customer journeys & personalised experiences across human & digital touchpoints and align organisation capability to deliver for customer.
  6. Identify & Build the capabilities (Process, Tools People) that will be required to transform process design from efficiency focused (cheaper) to customer focused (better simpler cheaper) , specifically putting in place an analytics capability to enable data-driven, personalised journeys
  7. Foster stronger bonds between technical and different business people. This is a two-way process to ensure the technical teams understand the commercial imperatives, and customer solutions you would like to build, and the business teams learn to trust the expertise of technical IT teams. It will also allow you to improve data quality through showing the business impact.

Using Data & Advanced Customer Analytics  to put the customer at the heart of an organisation is a transformation that future looking organisations need to start implementing now.

 

Queen of Internet Predictions 2018

mary meeker

Mary Meeker:Queen of the Internet Speaks in 2018

Once a year everyone in Tech looks to one woman- Mary Meeker. The internet oracle spent two decades at Morgan Stanley, working on things like Google IPO, before joining the VC fund Kleiner Perkins in 2014. Every year she delivers an Internet trends report to the world and her predictions are scarily often right….. ( check her out on Wiki if you want to know more:  https://en.m.wikipedia.org/wiki/mary_meeker )

She called email as being the internet’s killer application in 1995, predicted browsing through information services to be the next big breakthrough and foresaw Amazon’s rise to the top. This year she had a 294 page presentation in 30 minutes covering everything from smart phones to education and property and tech competition.

Full copy of presentation Link here: http://www.kpcb.com/internet-trends

My key take outs:

  1. Discovery vs Digital : consumers are using social media for discovery more and more, and then going onto shop. Retailers are focusing on Amazon but the Facebook threat is under the radar. Discovery is less in store now. 80% people report Facebook as the platform to see a new product (with 60% Instagram) and 55% people claim to end up buying a product online after discovering on social.
  2. Shopping & Entertainment blending together. entertainment is becoming a big part of the shopping experience.  Owning the pre-&-post transaction  keeps the transaction
  3. Discovery sites developing commerce. Commerce sites developing discovery (Amazon has higher search levels that Google in US now) and discovery sites are developing Commerce ( Facebook & Google shop)
  4. Consumers want location based personalisation:  Google searches that include the phrase near me ( eg restaurants near me ) skyrocketed 900% in last 2 years. This tells us that consumers actually do want location based personalisation so retailers and restaurants have a clear directive to step up.
  5. Personalisation = higher customer satisfaction .  Brand that personalise score higher customer satisfaction levels.  Customers are beginning to expect it.
  6. Subscription drives Sales: users are increasingly willing to pay a monthly fee for easy access to content, using an ad-supported limited access tiers to upsell subscriptions
  7. China is coming: Alibaba + Amazon have similar focus areas, Amazon may have higher revenue but Alibaba has higher volume and is aggressively expanding into countries like India and Indonesia. Both are bundling services with a breadth and price that competitors can’t match. China now hosts 9/20 top global internet companies while US hosts 9/20. all are poised to collide as they all seek to invade developing nations to find growth.
  8. Just Teach yourself: Opportunity and growth of cheaper online learning: YouTube saw 1 billion hours of educational viewing: Opportunity for Open University in UK and global market for UK education after Brexit!
  9. AI is sexy but don’t miss the simple & obvious low hanging fruit. better utilisation of Wifi and Networks can connect consumers’ offline and online shopping and preferences to drive short term growth but AI if developed well will help drive longer growth
  10. Privacy Paradox.  Organisations are caught between using their data to provide a better Customer Experience & violating customer privacy.  GDPR is taking a lead, but consumers in China are more relaxed about how their data is used : 38% China citizens willing to share data for better services , compared to 25% in US and 16% in UK. That means China could gain a data advantage that lets it more rapidly develop technologies & service

 

for a full view of presentation ( all 294 pages )  http://www.kpcb.com/internet-trends

 

Does your Body Language Convey Confidence?

2CAFE003-6197-4A2F-B950-3F20A3462969Leadship Tip of the Week #85

ADAPTED FROM HBR

If you want people at work to trust and respect you, regardless of your title or authority, pay attention to your body language.

How you stand, sit, and speak all affect whether people are open to being influenced by you. For example, standing up straight with your shoulders back helps you come across as confident and commanding, while slouching and looking down at your feet have the opposite effect.

When meeting with someone you don’t know well, keep your arms uncrossed, your hands by your sides, and your torso open and pointed at the other person. This sends the message that you are open and trustworthy.

And try pitching your voice a little lower than you normally would, to connote power. This can counteract the effect of nervousness, which tends to push the tone of your voice higher.

Adapted from “How to Increase Your Influence at Work,” by Rebecca Knight

Uber focused on data

JUMP

Uber use data to deliver against their core purpose: Travel & Logistics.

What’s Uber’s next move? Planes? Rockets? Hovercrafts? Nope, it’s bikes.

Uber has just paid $200m for Jump, a dockless bike share service that charges just $2 for a 30 min ride. The bikes are integrated with GPS, locks & a payment system so you just find one and pedal. Boris Bikes I hear you say ?

The bike-sharing market is only going one way: Up. It’s growing at 20% a year and set to be worth up to £4.6bn in 2020. Jump’s stats mirror this, with customers using their bikes 6-7 times a day and travelling 2.6 miles each trip.

With this, Uber’s bike stock rockets up to 12,000 across 40 cities and 6 countries. Their cash can help grow Jump worldwide, and quickly, but their poor reputation may also bring scrutiny to an industry which has had a few problems in the past…

Less than a decade after launching, Uber is no longer just cars. Recently they’ve launched a shipping service, food delivery, and now bikes. They’re also trialing car rental and the ability to buy public transport tickets. This appears to mark a new strategy: to own every part of the urban transport system.

Why now? 3 reasons:

  1. Uber has changed how people think about sharing
  2. Smartphone GPS services have made it easier than ever to get around
  3. Uber has the cash, brand & user base to make it happen

Uber envision a world where mum bikes to work, dad rents a van to pick up a new TV, the teenager gets her food delivered, and the family books their train tickets to see their cousins. We could even see an Amazon Prime-like model whereby you pay a blanket fee for unlimited usage.

But what if you don’t like cycling:

Don’t you worry, here’s a couple ways startups are reinventing travel:

  1. Citymapper: They’re using years of travel data from their app to create a ‘social hyper-local multi-passenger pooled vehicle’ i.e. a bus. It serves an optimised route, has USB chargers & you even get a ‘Busmoji’ when you get oncitymapper busmoji
  2. Touriocity: Bespoke walking guides given by expertstouriocity
  3. Kompas : using AI recomendations based on who you are and where you are to provide travel recommendationsKompas 2
  4. Bird: Taking it even further, by making dock-less electric Scooters

 

 

 

bird scooters

 

 

4 ways to build an Innovative Team

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Leadership Tip of the Week #84

Adapted from HBR

I have lead and worked in many innovative teams and found there are four pillars to creating and sustaining an innovative team:

  1. Hire for a Mission: The biggest misconception about innovation is that it’s about ideas. It’s not. It’s about solving problems. So the first step to building an innovative team is to hire people interested in the problems you need to solve. If there is a true commitment to a shared mission, the ideas will come.
  2. Promote psychological safety. In 2012 Google embarked on an enormouse research project. Code-named “Project Aristotle,” the aim was to see what made successful teams tick. The company combed through every conceivable aspect of how teams worked together — how they were led, how frequently they met outside of work, the personality types of the team members — and no stone was left unturned.However, despite Google’s nearly unparalleled ability to find patterns in complex data, none of the conventional criteria seemed to predict performance. In fact, what it found that mattered most to team performance was psychological safety, or the ability of each team member to be able to give voice to their ideas without fear of reprisal or rebuke.
  3. Create diversity. Many managers hire with a specific “type” in mind, usually people who seem most like themselves. This may be great for creating camaraderie and comfort, but it is not the best environment for solving problems. In fact, a variety of studies have shown that diverse teams are smarter, more creative, and examine facts more thoroughly.
  4. Value teamwork. superior innovators are friendly, gracious, and showed a genuine interest and desire to help me. Their behavior was so consistent that it couldn’t have been an accident. So I did some further research and found that, when it comes to innovation, generosity can be a competitive advantage. The truth is you don’t need the best people — you need the best teams.

http://www.hbr.org/2018/02/4-ways-t-build-an-innovative-team