Dave Gray's Connected Company

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Excerpt from the Business901 podcast, What happens if we think of the Company not as a Machine…. This is a transcription of that podcast.

Dave has authored two books on designing change and innovation. His first book, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers, is a practical handbook for innovators and change agents. His second book, The Connected Company, is a strategic blueprint and roadmap for businesses who want to innovate and lead in the next century.

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Dave Gray's Connected Company

  1. 1. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Dave Gray’s Connected Company Guest was Dave Gray Related Podcast: What happens if we think of the Company not as a Machine… Sponsored by What happens if we think of the Company not as a Machine… Copyright Business901
  2. 2. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDave Gray works with executives in the worlds leading companiesto spark breakthrough thinking, to find and clarify their greatestchallenges and opportunities, and to design their way into thefuture. Dave has authored two books on designing change and innovation. His first book, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers, is a practical handbook for innovators and change agents. His second book, The Connected Company, is a strategicblueprint and roadmap for businesses who want to innovate andlead in the next century.Dave is the founder of XPLANE, the visual thinking company,which was acquired by the Dachis Group in 2010. Dave is also afounding member of VizThink, an international community ofVisual Thinkers, and serves on several advisory boards. Transcription of PodcastJoe Dager: Welcome everyone. This is Joe Dager, the host ofthe Business901 podcast. With me today is Dave Gray. Hes is amanagement consultant focused on innovation and change. He What happens if we think of the Company not as a Machine… Copyright Business901
  3. 3. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsworks with companies to spark breakthrough thinking to find andclarify their greatest challenges and opportunities. His previousbook, "Gamestorming," has sold more than 50,000 copies andrecently has authored "The Connected Company." Dave, I wouldlike to thank you for joining me and start out by saying that Iveenjoyed both your books. The lessons that you wrote aboutsketching and gamestorming, you must have taken to heart. Youractual drawing expertise may not have improved much, but inyour new book, the meaning behind your drawing was justexceptional. The points were well illustrated and just as I wasgetting a little fuzzy about a topic one of your sketches wouldappear.What was even better was I could actually understand them inthe Kindle version. I wanted to congratulate you and welcomeyou to the podcast.Dave Gray: Thank you so much, Joe. Im really, really happy tobe here.Joe: I want to start right out and get in the meat of things. Youstate in your book that everything is a service. You go into adiscussion about service dominant logic right at the verybeginning. Can you explain that logic and what it means to us?Dave: Manufacturing, in the history of the world, is a relativelynew concept. Its not that people didnt make things before weinvented the assembly line and before the industrial revolutionbut most things were made in a custom fashion. Before HenryFord, for example, the making of a car was actually a service.Just like getting a tailor-made suit, you would go to a carcompany and they would interview you. You would describe thekind of car you wanted and they would make a custom car foryou.The big innovation that happened during the industrial revolutionwas this idea of mass production and assembly line. The basic What happens if we think of the Company not as a Machine… Copyright Business901
  4. 4. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsidea is a division of labor. You take a big task. You divide itamong a number of people. You say, "OK, these people are goingto do these different tasks and by each person focusing on a veryparticular task you can actually mass produce a lot of things invery efficiently."That presumes that those things are pretty much identical witheach other. Youre manufacturing or mass producing something.Thats just basic manufacturing, industrial age thinking.What I mean when I say, "Everythings a service," or when I starttalking about service dominant logic. What I mean is startingabout 1940 the percentage of the economy thats based onservices as opposed to manufacturing has increased to wherenow its probably about 80 percent of the economy thats basedon services.Even manufacturing is changing. When you think aboutmanufacturing the more different kinds of products, youreputting out of a factory, the more that manufacturing starts tolook more like a service. Does that make sense?For example, if a factory never puts out the same thing twice itsactually really a service, isnt it?Joe: Thats a good way to look at it. Yes.Dave: Whats happening in manufacturing? Whats happening ismost of the innovation in manufacturing are actually moving ittowards being more of a service. More customization, more abilityto... If you look at where the big innovations are happening inmanufacturing, and youre a lean guy so you know all aboutToyota. What happened in post-war Japan was they had a smallermarket than we did in the U.S. so they couldnt actually just toolup a factory and make 10,000 white Honda two door sedans.They had to actually be able to manufacture based on demand. What happens if we think of the Company not as a Machine… Copyright Business901
  5. 5. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsSo really, if you think about pull manufacturing, what pullmanufacturing is all about is the customer makes an order or assoon as the customer buys something and takes it off the lot thatpulls another similar car to the lot. Whats happened in Toyota isTaiichi Ohno, the engineer who is the father of the ToyotaProduction System, his inspiration was a Piggly Wiggly store inthe U.S. where he saw people taking stuff off the shelf and thepeople from the backroom stocking the shelves.Thats a service, right? A retail store.Joe: What youre saying is that every customer wants to betreated special?Dave: Every customer wants to be treated special. The morethat we can treat them special, the more that we move towardtreating them special, the more we move towards service, even ifwere providing those services through some kind of a factory atsome point. If you look at manufactured devices, most of themare platforms that deliver services. For example, if you have aniPhone and you look at your phone, it certainly is a manufacturedproduct. Every iPhone coming out of the factory is identical. Butas soon as you get it, you start to customize it. The way that thewhole iPhone ecosystem is every time youre using it; youreusing a service. Youre using it to talk to someone. Youre using itto solve a problem. And so, every iPhone coming out of thefactory may be identical but within a week any two iPhones aregoing to be very, very different.Joe: Thats where we go into that service dominant logic partthat the value is co-created. Youre saying that the value of aniPhone doesnt, even though you pay for it, isnt really createduntil you put it into service.Dave: Thats right. I mean, really, when youre buying an iPhonewhat youre really buying is youre buying an Apple Store thatyou can carry around in your pocket. What happens if we think of the Company not as a Machine… Copyright Business901
  6. 6. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: How does that relate to the connected company? Can youexplain what the connected company is?Dave: I talked about, for lack of a better word, the industrialage company, which is a form of a company that most of us arefamiliar with today, that still most of us work in. Its a companythats based on this principle of division of labor. At a veryfundamental level, these are divided companies. A connectedcompany is, in many ways, the opposite of a divided company, soits not based on the principle of division of labor. Its based,actually, on a principle thats more like the connection of labor.To put a little meat around that, you think about the way that weorganize work today. We divide up the work, and different peoplehave different parts of the work.That works really well in a factory environment when youreproducing a single thing, and you want to produce it at volume,that people can specialize on their little piece of the puzzle, "Imthe guy who puts the hubcaps on," or whatever. You canspecialize on that little piece, and the work can be done veryefficiently.But, the same principles do not apply when youre deliveringservices. When you deliver a service, its very important that youhave a sense of the whole at all times. When youre in amanufacturing environment, its OK to own a task, but a serviceexperience is very different. If youre providing a service, youhave to own the customer. You have to own the customersproblem, not just a task, and we all know what this feels like.Those of us who have been through a typical hospital experienceknows what it feels like to be a cog in the wheel. You usuallyhave to talk to five, six, seven, eight, maybe nine differentspecialists when youre in a hospital, and each one of them ownsa little piece of the task. But none of them may you feel like theyown your illness. What happens if we think of the Company not as a Machine… Copyright Business901
  7. 7. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsNow, thats a bad service. Thats a service thats designed as if itwere a factory, and thats why hospital experiences are often sonegative. Hospitals are not designed to deliver services the wayservices should be delivered. Theyre not designed to deliverexcellent service experiences. The service experience that ahospital delivers thats excellent is for the staff, not for thepatients. Everything about the way most hospitals are designed istheyre designed for the convenience of the staff.Joe: Well, you bring two thoughts to mind. One of them is thatthere seems to be separation between service and a process,even though its kind of that factory thing, is that we process aperson through the hospital, but really to be a service, you reallyhave to maybe not co-create, but youve got to have overlappingand sharing of responsibilities. Youve got to work together.Dave: Yes, absolutely. Think of, lets take an industry thatsreally good at delivering services. The hospitality industry comesup quite often; retail comes up quite often. A retail environment,when you walk into a... Do you have a favorite retailer, a favoritestore?Joe: Oh, sure, a mens clothing store I can think of right awaythat...Dave: OK, so what is it about that clothing store that makes youlike it, that makes you go there?Joe: Well, first is that the person greets you by name. Its likethey know who you are, theyve been there a long time, and all ofa sudden; youre part of the surroundings, theres not asalesman-purchaser conflict. When I dont know the person, itslike, "How can I help you?" "No, I dont want help." But this one,they just greet me.Dave: There you go, so you have a relationship, and itsiterative, and youre going to come in, and... Its not like when What happens if we think of the Company not as a Machine… Copyright Business901
  8. 8. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsyou go into that mens clothing store, you always have the sameproblem. You probably are going to be seeking guidance, or help,or whatever from the people who will deliver that service, right?Thats another thing about service experiences. Theyre highlyvariable. Theyre not consistent and predictable the way a factoryis. A customer needs and wants are variable. What might makeyou happy today, like, lets say, someone not bothering you instore, might actually piss you off tomorrow when you wantattention. The same activity could be perceived by you as bothgood or bad depending on the context, depending on your mood,what youre trying to achieve, and so forth, so a good service hasto be able to absorb a huge amount of variability in demand, lotsof people coming in at once, or boom and bust cycles, and soforth.As you pointed out, services are highly iterative, so when you gointo that store, its not just like someone says, "OK, what doyou..." Factory kind of approaches, "Well, weve got either A, B,or C. What do you want, the A, the B, or the C?"Joe: Does that mean as an organization that I just have to turnmy people loose, that I just have to take away even all the phonescripts, and all the greeting scripts that we know "works," leavethem just shoot themselves in the foot and give them thatfreedom? How, as a business owner, do I control my destiny?Dave: Well, thats a good question, and certainly you cant dothat just from one day to the next. You cant on Friday say, "OK,on Monday, were going to..."Joe: Be a connected company.Dave: Right, but it definitely does mean... I mean, when itcomes to absorbing variety, a variety of demands, making What happens if we think of the Company not as a Machine… Copyright Business901
  9. 9. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsjudgment calls, making decisions, theres no better business toolthan a human being. Theres nothing better than a person who isexercising their creativity and judgment to make that serviceexperience as good as they could possibly make it. The more thatyou add scripts, and rules, and procedures, and so forth, themore you actually limit the ability of those people to providegreat service experiences. Every procedure, every rule that youadd, is reducing the scope and ability that they have to do thosethings.A connected company is a distributed control system. Within aconnected company, you want to distribute control as close to thecustomer as you possibly can get it, because the more controland autonomy that people have at the point, they meet with acustomer, the more theyre going to be able to provide a greatservice experience.Now, of course, theyre going to need support to do that. Theyregoing to need tools. Theyre going to need infrastructure. Theyregoing to need all the kinds of things that they need today, butwhat you have to give up as a senior leader is the ability to writethe scripts, basically to program them, to operate in a certainway.The reason for that being, theres no way you can predict thevariation and variety of the kinds of demands that they will haveto deal with, so the only way you can actually build a companythat can absorb that kind of variety is to scale those people upand train them. I use an example of American football versusbasketball.Football is a relatively slow moving game. At the end of everyplay, the ball is called dead, and the players go back, and theyline up exactly the way that they were for the last play, so thebeginning of every play is predictable. You know that the playersare going to be lined. You know that youre going to have a What happens if we think of the Company not as a Machine… Copyright Business901
  10. 10. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsperiod of about 30 seconds or so to call the play, and then youcall the play, right?Now, if youre a coach of a football team, you can have a lot ofcontrol in that kind of environment. You can call in the play, anda lot whom do; you call in the play by radio to the quarterbackshelmet and youd actually be calling the plays from the sidelines,and having a lot of control over the game.Now, if you compare that to basketball, basketball is much morelike a service environment. It moves extremely rapidly. The ballis not called dead that often, the play is always beginning from adifferent configuration. The players are not specialized. They havea lot of overlap. Any particular decision that needs to be made onthe court has to be made by the player at a split second based onthe context and the immediate situation. So, a basketball coachhas very little control over what happens in the game.What the basketball coach has to do is focus on the skills andability and the teamwork and be constantly drilling and workingwith those players when theyre not in the game so that whenthey are in the game, the players can run the game. What weretalking about in a connected company is a lot more like basketballwhere the actual players are going to have to make the decisionin the field, because the time that it would take for them to getyour permission or to call back to the home office to get aconfirmation or permission to do X, Y, and Z just takes too long.The time lag destroys the service experience all by itself.Joe: Ill keep on the basketball and football analogy -- but youresaying that I need to form my team to know what theyconceptually do. Like, Im a fast-break offense team. Ill datemyself a bit here, but its show time; Im the L.A. Lakers. Imgoing up and down the court, and thats the style of team we are,so my players know that. We recruit, develop around that. In the What happens if we think of the Company not as a Machine… Copyright Business901
  11. 11. Business901 Podcast TranscriptionImplementing Lean Marketing Systemssame token, a connected company, thats the type of company Iam, and thats what I have to train people in.Dave: Yes, thats exactly right, thats what I believe. I believethat in this highly complex, service-driven world that weremoving into and have been for decades now, creativity and skillsare more important than ever, and yes, you need to know what isthe job that youre doing for customers, and what are the coreskills and capabilities, and what is your strategy definitely in thesports sense of strategy? Were going to have a fast runninggame; were going to wear out the other team. And this is whathappens in a service environment, right? As soon as you getbetter at something, you start getting more customers; yourcompetitors are going to notice. The bar is going to continually goup, and if youll notice the U.S. in the car rental industry,Enterprise Rent-a-Car was a pioneer in getting customer feedbackand actually incorporating that feedback to improve their service.Theyve been doing that for probably 20, 25 years or so now. Imay be wrong about the amount of time, but its been a while.In fact, whats happened is, their competitors are keeping up withthem, and if you look at the last 10, 15 years, customersatisfaction in the car rental industry as a whole has gone upquite a bit. So, being better than your competitors today does notmean youre going to be better than them tomorrow unlessyoure improving at an equal or faster rate than them. Its justlike sports, right? Your competitors push you to be better, andyoure pushing each other to be better all the time.Joe: Well, in the end, its like you still get to have time outs,right? We have our daily meetings and our weekly tactical andthen we sit there and say, hey, heres how we adjust and go backout.Dave: Yes, in fact, timeouts are really important. Theres a greatstudy in a Bank of America call center where, because the What happens if we think of the Company not as a Machine… Copyright Business901
  12. 12. Business901 Podcast TranscriptionImplementing Lean Marketing Systemstimeouts and the practice sessions, those are the times whenpeople actually reflect on what happened in the work, and thatswhere a lot of the learning happens when people just have theconversations about, "Well, what did we do well? How could wedo better?" And what they found in this one study was, simply byallowing the people who worked on this call center floor togetherto take their breaks at the same time...they used to bestaggered. So the experiment of letting them have their breaks atthe same time productivity increased by a dramatic amount.In fact, the savings that they claimed in that study was millions ofdollars just based on letting people take a break together so theycould talk about...and it wasnt that they had some agenda. Itwasnt that there was some big training program. It was just thatwhile these people have their breaks together they talk about thechallenges and issues that they were having when they were inthe work environment.Joe: Well, I have to ask you, because at least once and maybe acouple of times, you refer to Lean and Dr. Denning in your book.Is there a relationship between his work and how connectedcompany works?Dave: Oh, absolutely. Fr example, take the Toyota productionsystem. What is the Toyota production system other than amethod for giving the workers on the factory floor, the power andthe autonomy and the ability to continually improve and learnand improve their work? I mean thats what it is, right? Thatswhat the system is for.Joe: Certainly.Dave: And its for them to be able to understand it and look at itas a system. What has not been built into most industrialorganizations is the ability to learn. So what weve done is, andwhat industrial manufacturing and division labor is really good atis doing one thing in a predictable, reliable, consistent way. Its What happens if we think of the Company not as a Machine… Copyright Business901
  13. 13. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsnot good at learning. Its not good at continuous improvement.Thats not really what your typical assembly line process and kindof manufacturing systems are good at.That is something that is, in fact, I think we both know, at leastin the U.S., they have struggled with, and continue to strugglewith in many cases, because efficiency and learning are actuallyin direct opposition with each other.I mean, at least in some ways they are. If youre doing the samething more and more consistently over and over and over, youregetting incrementally better, but what are you actually learning?Joe: Not much, probably, the same thing.Dave: Right. Yeah. Youre learning maybe how to do thatthing...Joe: Dexterity.Dave: ...a microsecond faster, or how to conserve a little moreenergy as you twist between lever A and knob B. Butwhat...learning requires inefficiency, because learning requiresexperimentation. Think about the Toyota manufacturing system.We think of it as this paragon of efficiency, which it is, but itscounterintuitive, because it doesnt seem like it would be efficientto stop the whole factory because one worker has an issue. In theshort-term- term, its inefficient to do that, of course. Itsinefficient to stop the whole factory, right? Im sure Im preachingto the choir here. In the short term thats inefficient.In the long term, its efficient, because everyone in the factorystarts to understand the factory as a system. When you startstudying that system and when you stop the factory andeveryone says, "Well, why is this problem happening, and howcan we avoid this problem happening in the future?" you start to What happens if we think of the Company not as a Machine… Copyright Business901
  14. 14. Business901 Podcast TranscriptionImplementing Lean Marketing Systemscreate an environment within which not just one individual islearning, but the whole factory is learning together.Joe: Those are great points, but you bring up something thatbothers me a little bit?In Lean, we discuss performance gaps, and Im thinking more ofservice now. W always had like Serve Qual as our measurementtool for the different performance gaps. In a connected companywe have customer co-creation, and were working together tomeasure it. How has this changed our measurement structure,because how do we determine gaps now to improve them?Dave: Well, now heres the thing about services. The only realjudge of service quality that makes any sense is the customer,right? The customer is actually someone you dont control outsideyour system. So you want to have a strong measure of servicequality, and you want to be able to improve. You can askcustomers to rate you, but theyre probably not going to spend alot of time with you, unless theyre invested in a relationship,unless they really believe theyre going to be heard and youreactually investing in a relationship with them.Theres a tool that I really like called a net promoter score, whichhas two components, a quantitative and a qualitative component,that actually can deliver a lot of results for organizationallearning. In fact, it was a tool that was pioneered by EnterpriseRent-a-Car, which I mentioned earlier.The net promoter scores two components. The first one is anumerical score. So you ask the customer, "On a scale of one to10, how would you rate us? How likely are you to recommend theservice to a friend or colleague?" It gives you a score.Based on the score, and there is research behind this, they willcategorize this customer as either a promoter, which is someonewhos likely to...not only likely to be a repeat customer, but likely What happens if we think of the Company not as a Machine… Copyright Business901
  15. 15. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsto talk you up to other customers and help bring you morebusiness. A passive, which is someone who can take you or leaveyou and theyll be likely to leave you if a competitor comes alongoffering, lets say, a better price. Or, a detractor, which issomeone who is going to badmouth you and probably lose yourbusiness. Theyre a customer you dont want, probably not evenprofitable.So once you put people into this category you can start tosegment your customers into the ones who are going to help yougrow versus the ones that are going to retard your growth. Thesecond question you ask is, "What is the primary reason for yourscore?"Because just the fact that you got a nine out of 10 from yourcustomers doesnt tell you anything that you can actually...itsnot actionable. You cant use that to improve. So what you needto know is why you got that nine out of 10, or if you got a fourout of 10 why you got a four out of 10, and what needs tochange.And so by asking the second question, the qualitative question,you actually get the feedback that you can use to improve yourservice quality in the organization. The companies that are doingthis really well are putting their net promoter scores front andcenter in the organization and giving it the same kind of attentionthat they give to the profit and loss statements. So theyre givingthe same kind of attention that theyre giving the financialnumbers.Joe: But doesnt the net promoter score have to be prettyspecific? I mean wouldnt my net promoter score if I wereAmazon might be different for different Kindles?Dave: Why do you say that? What happens if we think of the Company not as a Machine… Copyright Business901
  16. 16. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsJoe: Oh, Im just thinking that...or Dell. If I have a net promoterscore for desktop computers versus notebook computers, orApple, I mean isnt that going to be maybe different?Dave: I think from the customers perspective; its all Dell,right? I mean from the perspective of the customer...the classicexample is, oh, whats his name...Jeff Jarvis, who complainedabout Dell because he bought the in-home service plan, and theycouldnt get to his home. His laptop blew up and they couldnt getto his home. Well, it doesnt really matter what kind of computerhe had. If theyre unable to service it, and theyre unable todeliver on their promises, its going to result in a pissed-offcustomer. Whether its a laptop or desktop, the feedback is,"Well, the thing doesnt work."The way the customers express their problem is definitelyprobably not related to one specific device here and there. Peoplemay express problems or dissatisfaction with the Kindle if you tiethat to a specific device or a specific interaction, certainly you canlearn more from that, of course.The beauty of the net promoter score is its simplicity. Youre nottelling the customer what you want feedback on, which givesthem the freedom to tell you. So it focuses you on the things thatare most important to customers.So if you say...Ive got a rental car, and I give you...you call meto do my net promoter score, and I say, "Ill give you a four, andthe reason I give you a four is because it was hard to...you didntgive me a map, and it was hard for me to find my way back whenit was time to turn in the car. Well, thats great. Now it may notbe easy for you to put that into a category, but you now have is,you now have an issue thats a high priority for a customer, andyou can start to aggregate that with other high-priority issues.The problem with a lot of this feedback stuff is that you, thecompany, go to the customer with your own categories that the What happens if we think of the Company not as a Machine… Copyright Business901
  17. 17. Business901 Podcast TranscriptionImplementing Lean Marketing Systemscustomer maybe doesnt care about, and then the poorinterviewer is trying to take feedback from the customer and putit into categories that dont make any sense.You get these numbers at the back of the senior management,and youre looking at these numbers, and you have this illusionthat, oh, well, so many...this percentage of the complaints wereabout X, and this percentage were about Y. Well; the fact isyouve stacked the deck by setting up those categories inadvance. You didnt let the customers define the categories.Another issue with asking customers too many questions are theonly...when you have a survey thats more extensive or takesmore time, or whatever, whats going to happen is, youre onlygoing to get the feedback from the customers who are willing togo through that process with you so your sample size is reduced,and its probably reduced in a negative way because customerswho have the most time for you are probably your, in manycases, your least valuable customers.Joe: How do you become a connected company?Dave: The reason I wrote the book was because I had thatquestion myself, and not only how do I become a connectedcompany, but what even is a connected company? What does itlook like? And my belief is that I think most people, many peopleif not most, have come to the conclusion that the way that weredoing things in organizations is going to need to change.Customers are networked. They have supercomputers that theycarry around in their pockets. We know that the way that wehave down things in the past is probably not going to work forthe next 100 years, and so...but the question that I dont thinkthat a lot of people has answered is, "OK, well, what is thatorganization...if the organization of the 21st century is differentthan the organization of the 20th century, if its different than the What happens if we think of the Company not as a Machine… Copyright Business901
  18. 18. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsindustrial age company, what is it...how is it different? What doesit look like?"What Ive tried to do in the connected company book is to lay outa blueprint and say, "This is what it looks like." Theres not a lotin the book about how to get there. There are maybe a couple ofchapters on that. The primary point of the book is a blueprint ofwhat it looks like when its done, when its done well. I have lotsof examples as youve seen of companies that are doing it,companies that are doing it well, and what the things are thattheyre doing that are working.The challenge of getting from an industrial age company withsome deeply embedded routines and behaviors that are going tobe very difficult to change to a connected company is absolutelynot an easy one. In fact, its quite a difficult one, and its going tobe different for every company. Its like you can imagine, Joe, theproblem of changing a football team into a basketball team.Joe: But then, on the other hand, its kind of interesting that thehurry -up offenses and changing personnel on the fly is how afootball team becomes more like a basketball team, a connectedcompany, right?Dave: Thats right. The fact that its not easy is not a reason notto do it. In fact, its my belief that every company is going toneed to move in this direction and the sooner that you start thatprocess the better off youre going to be. The more you delaythat process the more you decrease your chances of long-termsurvival.Joe: And I think you do a good job in the book of usingexamples of established companies that are doing it within theindustries. They happen to be many of the leaders. Its kind ofproof in the pudding there. What happens if we think of the Company not as a Machine… Copyright Business901
  19. 19. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsDave: I do think, especially for large companies, that withoutcommitted senior leadership or without leaders that arecommitted to making it happen its not going to happen.Joe: Does it have to be this great leap of faith for it to happen?Do I have to be saying, "Oh, gee. Im going to become aconnected company and Im willing to wait two or three years forit to evolve to that."Dave: No, I dont believe so. I believe...Since connectedcompanies are networks, you can start a network with a singlenode. What you can do is...The way that I would suggest that acompany go about this is to say...Sit down with your team andsay...Whether youre the senior team in the company or whetheryou have a department within a company or a group or whetheryoure a part of one office, branch office, what have you. Oneplant, whatever. Sit down and say, "How would we reinvent ourcompany, division, business unit, what have you? If we weredoing it as a startup today, how would we do it?" Forget all thelegacy. Forget all the history. Forget all the legacy systems,infrastructure, whatever. If we were going to start from scratchtoday, what would we do?The good news is that...The bad news is somebody out, there isdoing that already. You know that. Somebodys out thereredesigning their business as a startup today. The good news isits cheap. Its never been cheaper or easier to start a newbusiness.If they can do it, if the kids in the garage can do it in SiliconValley so can you. The good news is it doesnt take a lot ofmoney. It doesnt take a lot of investment. What it does take is awillingness to rethink and in fact, even cannibalize some aspectsof your current business. You must be able to be brave enough tocompete with yourself. What happens if we think of the Company not as a Machine… Copyright Business901
  20. 20. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsWhat you can do...As a large company you have the advantageof...You can take a lot of swings. You can make a lot of smallbets. So as a large company one advantage you have is you canactually seed or fund or create five, 10, 15 different ways tocompete with your current business or ways to compete for yourcurrent customers, to reinvent your business as a startup.Thats why we talked a little earlier...Maybe it was before we goton the podcast when we talked about Alex Osterwalder and theBusiness Model Generation book and the Business Model Canvas,which I think I think is one of the most powerful tools out therefor rethinking your business as a startup.What you can do is get one, two, three or 10 of these littlestartup experiments going. Do them in such a way that yourenot...Its a relatively safe environment. If youre a globalcompany, you can do them in different countries. You can do it ina way that youre minimizing your risk.But then you only have to scale up and invest in the ones thatwork. Think like a Silicon Valley venture capitalist instead of acontrol freak. You want to have those pilot experiments and youwant to fund them and you dont expect them all to succeed.Joe: What youre saying is really is to prototype certain parts ofmy business, put two or three of them out there and pick thewinners.Dave: Thats right. Let the best business model win. You haveyour current business model. You have these people out in theworld that are trying to disrupt your current business model. Putsome of fraction of your strategic investment into trying todisrupt yourself. Create those little startups. Give them theautonomy. Dont tie them to the mother ship. Dont tell themwhat to do. Give them the goal of taking down your business. What happens if we think of the Company not as a Machine… Copyright Business901
  21. 21. Business901 Podcast TranscriptionImplementing Lean Marketing SystemsIts kind of like blue team/red team when they have war games.One of the best ways to train, to think outside the box in terms ofyour military strategy is to take half your armed forces andsimulate war games where they try to take you down becausethey know you as well as anybody.Joe: I want to ask one last question here. Bring us back to thevery beginning. If Im a product dominant company, if Im agoods dominant company and think that way and Im going tobecome a connected company, is it all about services? I thinksomewhere in your book you say, "Your product is just anavatar." Do I have just to think about services? Is that the way todevelop my company?Dave: Ill put it this way. No matter what your product is, nomatter what it is, I guarantee you it is part of a larger service.What do products do? They do jobs for customers. A car gets youfrom point A to point B. A car provides a transportation service. Alawnmower provides a lawn mowing service. No matter, howmuch of a product it is...Lets take a vacuum cleaner, right? A vacuum cleaner provides acleaning service. It cleans your house. Now, what do you do? Youhave to...Actually, theres a lot of work involved in a vacuumcleaner. Youve got to take it out. Youve got to unwind a longcord. Plug it in, all this stuff.Whos disrupted the vacuum cleaner? A company called Roomba.Its a vacuum cleaner thats a robot. Now, a Roomba is actually alittle vacuum cleaner that looks like a little Frisbee and it goesaround and it does all the vacuuming itself. It plugs itself into thewall when it needs power. When it doesnt need power, it popsout and it does your vacuum cleaning for you.Is that a product or a service? Whatever your product is doing,whatever the job your product is doing for customers; thats aservice. The more you can think about that as a service the What happens if we think of the Company not as a Machine… Copyright Business901
  22. 22. Business901 Podcast TranscriptionImplementing Lean Marketing Systemsbetter, the more innovative youre going to be able to be aboutfiguring out. Whats the next big leap in innovation for yourproduct?Its probably going to be around making that service easier.Name a product thats doing super well and I guarantee you thatproduct is thinking about itself as a service.Even if you are making a thing, the more important focus shouldbe -- -. This is what they mean by service dominant logic. Thefocus should be on what is the service that your thing is providingand how can you make that a better service?Because if youre just focusing on making a better vacuumcleaner, you might not come up with the idea of a robot vacuumcleaner. Youre going to try to make the handle morecomfortable. Youre going to try to make it easier for people to doit. But until you start to think of it as a service youre not going tocome up with those really breakthrough ideas.Joe: Where can someone buy the book and how can someoneget a hold of you?Dave: Oh, the books on Amazon. Im easy to find. Im@DaveGray on Twitter. D-A-V-E-G-R-A-Y. Im DaveGrayInfo onthe web.Joe: Im surprised that you got Dave Gray on your Twitteraccount. You must have been on Twitter for a long time.Dave: I think I was one of the first thousand people on Twitter,yes.Joe: I would like to thank you very much, Dave. The podcast willbe available on the Business901 iTunes store and theBusiness901 blog site. Thanks again, Dave.Dave: All right. Thank you. What happens if we think of the Company not as a Machine… Copyright Business901
  23. 23. Business901 Podcast TranscriptionImplementing Lean Marketing Systems Joseph T. Dager Business901 Phone: 260-918-0438 Skype: Biz901 Fax: 260-818-2022 Email: jtdager@business901.com Website: http://www.business901.com Twitter: @business901Joe Dager is president of Business901, a firm specializing in bringing thecontinuous improvement process to the sales and marketing arena. Hetakes his process thinking of over thirty years in marketing within a widevariety of industries and applies it through Lean Marketing and Lean ServiceDesign.Visit the Lean Marketing Lab: Being part of this community will allow you tointeract with like-minded individuals and organizations, purchase relatedtools, use some free ones and receive feedback from your peers. Marketing with Lean Book Series included in membership Lean Sales and Marketing Workshop Lean Service Design Workshop What happens if we think of the Company not as a Machine… Copyright Business901

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