One of the great joys of writing a column is folks recommend to me new sources of content. I quickly learn messages, beliefs and perspectives that can be of great benefit to you, my valued and loyal reader.
That's how Bill Burnett and I found each other. He's the author of:
• "Advantage: Business Competition in the New Normal";
• "Behave! How to Get 100% of Your Workers Fully Engaged"; and
• "The Peak Interview: New Insights into Winning the Interview and Getting the Job."
What I think you'll especially enjoy are Bill's insights and opinions. They will force you to think. You may agree with him. Yet you may also vehemently disagree.
You may consider some of Bill's declarations disruptive or controversial. They may even make you squirm. That's OK. Because one of the goals of this column is to help you imagine "other ways" or "what if" possibilities. Heck, to delight in disruption!
Here are excerpts from our conversation.
Jeff Blackman: How does a company become a competitive powerhouse?
Bill Burnett: Create a monopoly! As bad as that sounds, it works. It's perhaps the best way to become a competitive powerhouse and a strategy lots of companies have pursued.
You can do it by carving out a market presence others will be unable to challenge. In some respects, that's what Microsoft has done. It's locked us into its solutions by being the gatekeeper to products running on your PC.
You can also create a monopoly with unique intellectual property. Polaroid cameras, at one time, enjoyed that kind of a monopoly. Or you can become iconic. The Barbie doll carved out a monopoly in, well, Barbie dolls!
You can also be better than your competition. That's what Google did to Yahoo and other search engines. It's what Pixar did with animation and great story telling. What W. L. Gore has done to guitar strings by coating them with microscopically thin, advanced polymer tube coatings. Now they own the biggest share (35 percent) of the guitar string market.
Alternatively, companies become competitive powerhouses by providing higher quality at a lower cost. We often think of Henry Ford inventing the assembly line to drive down the cost of the automobile to make them affordable.
However, all that automation was done earlier by Colt. They turned the pistol industry upside down by dominating manufacturing through an assembly line of interchangeable parts. Prior to that, every gun was uniquely constructed with unique hand-crafted parts.
You can also become a competitive powerhouse by changing the sales model. Zappos did it for shoes. Amazon for books. eBay for garage sales.
Historically, and unfortunately, some take the "monopoly" idea too far. You can strong-arm your way into a monopoly. Grease the right palms in the government, and suddenly you're the winner of a no-bid government contract supporting a war. Or "take out" the competition as some drug lords have done. Or buy up all competitors.
Innovation also plays a big role in sustaining a competitive advantage. And another big factor is how you interact with customers. Both innovation and how you treat customers depend upon your people. Every individual in your company plays a role.
JB: How does an individual become a competitive powerhouse?
BB: Ironically, for most people, you become a competitive powerhouse by not being an individual. For companies, teams provide more value. The lone inventor model is mostly a myth.
The best way to sustain competitive advantage is through innovation. In the end, every idea comes out of a single brain. However, innovation improves by having lots of brains in the room exchanging knowledge.
That gives you lots more dots from which connections can be made. Those connections may pop out of any one of the brains in the room. Useful insights can come from unlikely places. We hold up certain people as great inventors — guys like Thomas Edison. But he wasn't alone. He used teams of people who could think and build. He leveraged their brainpower.
JB: What role does innovation then play in success? How is it attained? Communicated? Leveraged?
BB: We often think about innovation as some BIG idea, like Scotch Tape, or iTunes + iPod, or the Internet. However, the real source of competitive advantage is lots of little innovations.
In mature industries, the companies that have vastly superior operating margins get there through innovation. At the famous Toyota/GM joint venture NUMMI assembly plant, the line workers implemented about 10,000 little innovations every year. Their operating margin surpassed other assembly plants in the U.S. by a large margin.
What often happens in companies that get very innovative, is the first round of ideas usually focus on "faster, cheaper, better." They're all about becoming better at what we do for current customers.
The next round of ideas expands into other problems our current customers face, and we create new products and services to meet those needs.
Finally, the third round of ideas creates new products for new customer and segments. And of course, innovation thrives when all three rounds happen all the time.
Diners Club in Australia went through these three rounds of innovation. And they did this in a very competitive market in a mature industry. The team of colleagues there elevated their business from the brink of failure.
First, they tweaked how they delivered existing products to existing customers. It turned out, as it always does, employees were sitting on lots of little ideas that would improve their delivery. For these ideas to come out, the environment or culture had to change, to make it safe to be the bearer of a new idea.
Next, their ideas expanded their offerings to existing customers.
And finally, they created new products for a new group of customers.
In about five years, they grew sales in a saturated market from $400 million AUD to $6.4 billion AUD. Average customer spending jumped sevenfold, and new customers outnumbered old customers by more than 2 to 1. And they did it at a significant profit.
To grow your business, in any currency, take a peek at www.behavioral advantage.com
Next time, Bill helps us discover how to find new ideas, create synthesis, identify success factors and drive accountability.
Jeff Blackman is an Illinois-based speaker, author, success coach, broadcaster and lawyer. Email him at email@example.com.