I watched a recent interview with Jeff Bezos on Charlie Rose the other day. In it, he was questioned as to how he, against the odds, “beat” the various etailers of the day pushing books online. His answer was fantastically elegant and straight forward. He is fanatical about aligning his organization to his customer’s needs. This may mean making short term decisions that do not align with shareholders, and if you are an Amazon customer (and I am for life) you have probably experienced this via their incredible return process. However, he feels that in the long run, there is always alignment between customers and shareholders. Brilliant.
Now you may be thinking, oh I have heard the customer-centric story before. The good news is that Jeff went a bit deeper into their actual approach to a customer driven business. In essence, he focuses his organization on excelling at the things customers want that do not shift over time. To Amazon, that means, wide product selection, low price and fast delivery – those will always be important to his customer. In his words, “I can’t imagine a customer saying, I really like Amazon, but I wish their prices were higher”. I should note that this concept applies to software as well, as conveyed recently by Jason Fried in his talk at the Business of Software Conference, only for him, the unchanging were things like ease of use and performance.
Back to Bezos – The other lesson conveyed subtly was to ignore the competition. You may be sitting there saying, oh yeah, that sounds great, but I can’t ignore my competition. I need to know what they are doing so I can contrast the differences to my customers or so I can talk credibly to the analysts. On that point, I would agree, but it is a matter of intent and degree. The problem arises when you use that competitive gaze to consume all your time or to drive your strategy. Michael Porter may disagree, but strategy, from my perspective, must be driven primarily from your customers needs. Everything else is secondary.
The intersting thing about these notions is that they are in many ways ignored by companies of all shapes and sizes. Far too often I see firms chasing market hype or the latest competitive move in a copycat feature race to oblivion, while customers sit on the sidelines with their popcorn. Competitor A adds AJAX, we need it. Competitor B has a Facebook app, we gotta have it. Competitor C is on demand, let’s get on it. Perhaps it is just easier or more fun to spend time talking to your co-workers about cool new features as opposed to reaching out to customers and potentially hearing about what you can do better. Who wants to hear that right?
As you ponder this you may be tempted to return to your cozy old ways of thinking and acting. The usual line that I hear to counter this approach, is that customers really don’t know what they want anyway, so why ask them. That comment is usually followed up with something pithy like “Would a customer have asked for the ipod?”. To that I say, rubbish. Customers are very bright and if you talked to a few you might have already known that.
Let me leave you with three simple reasons why a strategy driven by competition is a fools errand:
1. Time Is Limited: Every moment you spend on our competition is time you could have spent working with a customer.
2. Competitors Could Be Wrong: The strategy they are implementing, and you are choosing to follow, could be off the mark and a total waste of time and money. Oftentimes we think people at other companies are smarter than us – that could be wrong too.
3. Your Strategy Must Be Yours: Not all companies are created equal. Each has their own assets, skills, resources, relationships and more, that they can, and should, bring to bear on a strategy. If you copy your competitor you just may be ignoring your best assets and playing a game on their home turf. If you have a great running game, do you play a passing offense because that is what the other team is doing? The answer is obvious and no different for business.
In the end, my favorite part of this is the simplicity. As humans, we love complex things. They make us feel smart and special, but more and more, in life and in business simple wins the day.
Now where is my phone, I need to call a customer…