ILLUSTRATION BY RUTH MACAPAGAL
Last week, I gave the opening keynote at the largest retail conference in the region hosted by the Philippine Retailers Association at the SMX convention center. I took great pleasure in addressing an audience of the country‘s largest retailers and some of the most famous Filipino entrepreneurs, including Mr. William Belo and Mrs. Tessie Sy-Coson.
In this column, I will share some of the secrets and insights that I shared with the audience last week that are also relevant to the nonretail markets and industries.
Build it, and they will come?
If you want to become or stay a market leader in your industry, you have two options when it comes to innovation. First, you can adopt the Apple model: build it, and they will come. What does that mean? It means that you can build products that customers will want and need ahead of any customer trends. This means, however, that you need the right forward-looking people and need to assemble a team of mini “Steve Jobs” around you who have the same forward-looking attitude, mindset and talent. If you want to embark on this path and you want to leapfrog thinking, then you need to be a master at spotting and nurturing that extraordinary talent, which is rare.
Beware, however, that focus groups do not work here! This is because focus groups will be composed of customers and consumers who will not be able to see ahead of customer trends, but only reflect current consumer behaviors and preferences.Keep your ears close to the ground
The other option you have is that you produce great innovation by keeping your ears close to the ground. This means that you train your teams and your top people to become masters at spotting, identifying and profiting from any changes in consumer behaviors and preferences. You have to obsess about your customers. That is the only obsession you should have as a CEO or business owner.
What does that mean in practice? Keeping your ears close to the ground demands: 1. That you have a system in place that allows you to identify with your customers and understand them better than anyone else. 2. As a business leader, business owner, or CEO, you need to do the most important thing: you need to listen.
Shut up and listen!
Very few CEOs or business owners I’ve ever met know how to do that effectively. Let me give you an example. Among the list of famous failures of companies that were once giants and then faded into oblivion is Nokia. It was at the top of its game and industry in its heyday. They could attract any top talent to work for them. And they were dominating the cell phone space.
Of course, by now we know what happened to Nokia. They missed the smartphone trend completely. But why did they get so wiped out? Answer: because the CEO did not want to listen. I happen to know what happened in the boardroom at that time. It is not that the CEO did not get the right data. He had enough people telling him, including outside consultants, that a wave of change would be coming and that a trend to a new type of phone was imminent.
Guess what his answer was? I was told that he said this would never happen because everyone liked their menu so much. He then went on to say that the company had invested so much money into the new phones that for sure, this would work and no changes were necessary.
What we have here is a classic case of a CEO having a huge blind spot because of our natural human tendency to bend and distort reality to make it look the way we want it to be. But that is not your goal as a CEO or a business owner! Your goal should be to get to the truth of things. Your goal should be to see reality as correctly as you possibly can because only then you will have the right data available to make the right decisions. Your goal is also not to be right! Your goal is to know the truth so you can make the best decisions.
Most middle managers are not your friend
Most organizations do not want to change anything. Why? Because people climbing up the corporate ladder do not want to rock the boat. If you are the business owner or CEO, middle managers are not your friend. They do not want change because that could impact their career path. They will not bring new ideas that will be necessary to ensure the future survival of your company. They will not deliver the type of information that is necessary for the top leadership to make the right decisions and future-proof the business.
This is one of the reasons why McDonald’s lost many millions of dollars in the United States decades ago when they missed the health food trend. The data were there and available but never made their way to the top. As a result, the board was under the false impression that the music would continue to play as usual. Far from it. The same mistakes can be seen when analyzing a lot of the other famous failures from Kodak to Blackberry and Myspace.
CEOs and business owners live in a bubble
In Asia, you have an added challenge if you’re at the top of an organization: the boardroom sugarcoating. I have written about this extensively in the past and it is a recurring problem for most businesses in this region. People are afraid to tell the CEO or owner the truth, especially when it comes to challenges, weaknesses and mistakes. When they have to face the CEO, president, chair, or high net worth owner of a business, their willingness to deliver bad news and openly address challenges is extremely low. This causes one major problem if you are at the top: you don’t see the truth!
This is why most CEOs and business owners live in a bubble. They don’t know what’s going on and need outside help and experts to show them what reality is really like so they can make the best strategic decisions for their business.
Failure to climb
Let me give you an example of one of our clients in the region. The entire board was talking behind the back of the president, who also happens to be the owner of the business. They were complaining to each other that one board member, who had a fundamentally important function in the entire business, was not doing his job correctly. He was putting the entire company at risk because of his inadequacies and lack of competence. How many do you think raised this important fact to the president and owner? None! My team and I had to find this out in our conversations with the top leadership and the middle management.
In our global experience of doing this for decades, the real root causes of challenges are rarely what the owners or boards think they are. This, together with all other factors we listed above, create huge blind spots for the people at the top of an organization. While they trust their people to present them with an accurate picture of reality, this rarely works. So how can you make the right decisions?
Persistence without insight leads to the same results. Do whatever you can to make sure you get an accurate view of reality and what the real root causes of the challenges are that keep your business from reaching its full potential. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email
Tom.Oliver@inquirer.com.ph.