Ever wondered why airlines struggle with your baggage, but FedEx can ship your package across the world in a day? Michael Treacy and Fred Wiersema wanted to answer that. They talked to 40 executives over 3 years. And found out that top CEOs obsess about 3 disciplines.
Leading within an industry happens by pushing boundaries in one of: Customer Intimacy - and caring about customers. Operational Excellence - and getting things done efficiently. Product Leadership - and creating innovative products. Let's look at a few examples:
Jeff Bezos & Amazon. Jeff Bezos knew he was taking a big risk when starting Amazon. So he started with getting customer experience right. As he got traction Bezos wanted to grow Amazon. But scaling with low margins means obsessing over efficiency.
Amazon is trying to get an 80-pack of Kit-Kats to your door in 6 hours for $20. They know selling cars is an awful idea for them. Larger items take a level of customization that is not a priority. Focusing on efficiency means giving up on what many customers want.
Steve Jobs & Apple. In his prime, to call Steve Jobs an innovator would be an understatement. Even in failure, he was setting the pace for new technology. Ever heard of Macintosh TV? Probably not, because in 1993 it failed miserably. But that same idea built Apple TV.
Few can match the breakthroughs that Apple achieves. But failures are bound to happen in such a fast-paced environment. The first iPhone took 5 years and dozens of iterations to develop. Focusing on that innovation comes with high research costs and lots of failures.
Elon Musk & Tesla. Elon's product announcements and Twitter presence are insane. He listens to customers' wildest dreams and figures out how to implement them. Pushing boundaries of what's available in a vehicle.
Customers have had some wild requests for Tesla. From safe ways to keep dogs in the car to full video games right in the console. This specificity means they have a hard time meeting demand. Innovating for customers' dreams means high costs and difficult manufacturing.
Bonus: Reed Hastings & Netflix. You likely know the story, but may not know the name. From pay-per-rental to monthly subscription to online streaming. Reed, the CEO of Netflix, saw the company change multiple times. Solely because it's what customers wanted.
Netflix cares about listening and catering to customers over everything. Their technology allows them to predict preferences. They even had a $1M prize for anyone who could improve it. The downside is that implementing deep customer wants into a product takes time.
Word of warning: Doing a good job with these ideas is hard. But the key to success is picking one of them and excelling with it. Pick and choose your battles. If you really really want to push yourself - remember that absolute mavericks struggle to do 2 well.
So, you want to build the next Amazon or Netflix? This is what you need to do: 1> Think about where you can excel. 2> What is the competition lacking that you can put 120% into? 3> What tiny detail do you obsess over for seemingly no reason?
But be careful not to fool yourself. 4> You need to figure out what your customers expect from you. 5> Who are they comparing you against? Amazon has your local supermarket, and Netflix has Cable TV. 6> Make sure you're delivering on that baseline.
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