From the Blogosphere
A Tale of Three Companies
and the future of business
By: Scott McKain
Jul. 27, 2009 10:00 AM
Amazon sells shoes. So does Zappos. Another company – where I have many friends, as I previously did significant consulting work for them – markets something entirely different. All, however, are particularly instructive about the future of business.
The company I won’t name is involved in financial services. They have decided to terminate their entire marketing effort, and focus on explaining their products to prospective investors. The CEO said, “Our greatest value proposition to investors and financial intermediaries is the institutional approach that’s at the core of (our) global business.”
Therefore, the company – according to its press release – stated that its “distribution network, meanwhile, will be revamped to provide more technical expertise, with traditional wholesalers being replaced by investment-oriented consultants.”
There is a glaring problem with that kind of thinking. There is neither a shortage of funds available for institutions to select from, nor a deficiency of advice provided. Anyone keeping up with what is really happening in this – or just about any other field – would understand that what is being sought is a higher level of something discussed in a previous post – “Relationship Alpha.”
“Alpha” is return on investment, and the managers at the vast majority of institutions are keenly aware of what products provide superior stability and growth. What they seek, more than ever before, is a return on the relationship – the opportunity to realize a return that transcends transaction. No product has a monopoly on performance; therefore, what a company brings in addition to its financial return is the pathway to creating distinction.
Which, unfortunately, is what this company seems to be sprinting away from – determining that a seat at the back on a ship in the sea of sameness will work for them quite adequately. Of course, it never does. This kind of thinking will, inevitably, cause organizational demise.
Because Zappos has an online customer experience second to none. And, brilliantly, Amazon knows that it’s worth almost a billion to get it.
It’s difficult to imagine a company with a closer relationship with its customers than Zappos – and with more visionary leadership. (I’m proud to follow them on Twitter – and prouder they follow me back!) Amazon knows that if they want to move to a higher level in terms of corporate culture and client connectivity, it’s well worth the enormous investment they just made to acquire it.
The best companies will spend their resources – both monetary and organizationally – to acquire and develop it.
The less than stellar ones…from Circuit City and Chrysler to Bear Stearns and Lehman Brothers…all have something in common…the woefully shallow belief that their products are more important than the people who invest their hard-earned money to purchase them.
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