As we travel through untrodden territories of our digital new world, the old platitude “The only constant is change” has become our new compass. New competitors – in fact new industries – surface seemingly overnight as old business models flash into obsolescence; creating predictable quarterly growth is becoming harder to navigate. So, in an effort to find solutions, on November 20,2013 I facilitated a conversation with leaders from several industries including healthcare, financial services, travel, and technology. Below are the two solutions that emerged where participant quotes provide perspective. The participants were:
- Keith Banks, President, US Trust
- Adam Goldstein, CEO, Royal Caribbean International
- Bob Lord, CEO, AOL Networks
- Alan Miller, Founder, CEO & Chairman, Universal Health Services
- Vasant Prabhu Vice Chairman & CFO, Starwood Hotels & Resorts Worldwide
- Brad Stewart, CEO, XOJET
Keith Banks from US Trust talked about how clients have become part of the strategy process, “We recently created Client Advisory Councils, where clients share insights on how to best deliver service. We found the number one thing on the minds of our clients was inter-generational wealth transfer. We also found out our younger clients preferred younger advisors who talk like them, communicate in the way they do, use social media instead of meeting a lot.”
Alan Miller of Universal Health Services highlighted how the healthcare model is fundamentally changing, “Consumers are becoming more educated and engaged in making healthcare decisions for themselves and their families. As a result, we are reshaping the way we operate so that we can better meet their demands and become their provider of choice. We are constantly looking to offer new services to meet patients’ needs, and we are making investments in new technology so that we can continue to provide the quality care our customers want and deserve.”
Bob Lord, Global CEO of AOL Networks shared a personal example of how the customer experience is changing, “My daughter has a smartphone and there’s all this contextual information on Instagram that she’s doing when she’s shopping at UNIQLO. UNIQLO is creating a pool of assets that they can collect to learn more about her. That was never there before. But then they’re delivering her a service on the back end, saying for girls who bought this, they also like these kinds of things.”
And customers change in different settings. As Vasant Prabhu from Starwood discussed, “There is something we call a trip persona. You’re a very different person when you’re with family vs. a business conference. You can make big mistakes if you don’t know the context.” He continues, “Customers really drive our business decisions. For example there are now as many Chinese travelling out of China as Americans travelling out of the US. In the US, most people use their Starwood Preferred Guest points for hotel rooms. Well, in China, they want to use it for weddings or at our restaurants. Also, the Chinese guest has different preferences, for example, they like tea, not coffee. And, there is a revolution in how our guests interact with us, mobile has gone from 15% to almost 50% of our digital interactions. We must understand how customers are changing and deliver what they want real time.”
Brad Stewart talked about how the private jet industry is in the early phases of a potential industry transformation, “What shocks me is that CEOs and private equity executives tell me they’re spending $250k to $1.5 million a year on private aviation and they always say it’s a top 2 or 3 spend, and yet while they are flying their family, kids and pets in this little cocoon, 9, 10 miles in the sky, they often don’t really know what they are spending money on. And so what we’re trying to do at XOJET is fundamentally change the conversation. So the trend needs to be about education and renting experiences.”
Companies also need to be seamless throughout the customer experience regardless of platforms. Adam Goldstein of Royal Caribbean shared, “The Royal Caribbean service standard that our guests expect on board our ships should be evident in all of their interactions with us whether they are onboard or not.” He continued talking about how he personally connects with the customers and the media in a digital world, “I guess I was one of the first CEOs to blog on a regular basis and to take the risks and seek the benefits of doing that. When I would ask journalists, why do you read my blog– and I really meant that question seriously– and they would say because it’s not marketing speak.”
Solution # 2: As the nature of competition intensifies, it is essential to continually innovate and act like entrepreneurs. As customers now control more information, competition intensifies. The winners innovate. And like the Intel slogan, in many cases ‘corporate entrepreneurship inside’ enables agile rollouts of new business models to drive success. As one CEO mentioned, consider the idea that you plugged in your television set and it worked for 10 years. That doesn’t exist anymore; now it’s getting software upgrades, it’s getting rebooted, and it’s changing what it does on any given day. The winners innovate and act like entrepreneurs.
Bob Lord of AOL Networks shared, “Silos are the enemy of business progress, and the way to break down silos is to have customers at the center. You test and you learn, test and learn. And you have to get the whole company including the board comfortable with that structure, so that they’re expecting every quarter that you have a new innovation that you’re testing. When you start acting like a startup, you can create cross-functional teams that have full ownership, work on a particular problem and create excitement, energy, fun and great solutions throughout your organization. You have to try to create that entrepreneurial culture within the bigger organization.”
Adam Goldstein of Royal Caribbean explained how cruise customers have completely changed with the times, “A radical change in our business over 20 years is that in the 90s a mainstay of our communication program was the ability to disconnect from the hassles of daily life and the importance of getting away from it all. Today, it’s unimaginable that you would go anywhere disconnected. In fact we have recently invested heavily to deliver a new technology enabling land line speed connectivity and pervasive Wi-Fi on several of our ships.”
Sometimes the innovations were actually about coming full circle to solutions of long ago. Brad Stewart stated, “It’s almost of going back to the late 1800s and early 1900s in terms of walking into that store. Customers are expecting you as a company to treat them as if you’re their one of five or 10 customers.”
Vasant Prabhu of Starwood provided more historical perspective, “The hotel business is centuries old and it started out with the innkeeper, and he knew everybody. He was always there greeting his guests, and he knew what they wanted. He knew which room they liked. He knew why they were there. He knew how they liked their food. And then we evolved to the era of the chains. They were important, because it was safe, clean and efficient, and very predictable. Now it’s coming full circle. People expect you to know who they are at all times. You’re not supposed to be a stranger. But the technology is getting to the point where you can do it, and frankly, you have to.”
Alan Miller of Universal Health Services shared how the CEO should view this environment, “The biggest thing for the CEO is adaptability. The CEO has to have a lot of different people who have totally differing ideas. And he has to have young people who see the world very differently. If you all wind up growing up together, that’s not going to be a good thing anymore. The way the world is seen by 20 year olds, 40 year olds, 60 year olds are three different worlds totally. Getting everyone to work together is exciting and the feeling of a start-up is great which is good because I’m a pure entrepreneur at heart.”
Keith Banks of U.S. Trust sums up the business climate, “I think it’s going to be a lot more intense competitively. So you’ve got to have the wherewithal to fight that fight. We’re seeing the degree of difficulty from a regulatory standpoint is growing at a rapid pace. And that’s making it more costly to do business, more risky to do business if you get it wrong. What companies need to do is evolve with the client, and sometimes evolve faster than the client. With so many data points, technology can help uncover new directions.”
… As we look at new business models that can help us lead in this new digital world frontier, CEOs need to involve their customers in driving strategy and have the agility and innovative spirit of an entrepreneur. As Len Green, professor of entrepreneurship at Babson College once explained to me, successful entrepreneurs continually exhibit several of the same characteristics. A. They are calculated risk takers; B. They do not overanalyze problems or spend too much time in meetings discussion solutions.
Instead they:
1. ACT
2. Learn from the actions
3. Build on what they
have learned
4. Repeat the process to solve challenges
