Matter
The Journey to Becoming the
Obvious Choice
By Peter Sheahan
BenBella Books, Inc.
Dallas, TX
Copyright © 2016 by Peter Sheahan
All rights reserved. No part of this book may be used or reproduced in any manner
whatsoever without written permission except in the case of brief quotations embodied in
critical articles or reviews.
BenBella Books, Inc.
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Contents
INTRODUCTION
SECTION ONE: ELEVATED PERSPECTIVE
DEFINE: discover your edge of disruption
YOUR Edge of Disruption
Challenge Assumptions
Take an Optimistic Stance
Be Curious
LEARN: establish your point of view
Take Intelligent Risks – Market Trials
Ask Provocative Questions, Answer with Research
Co-Create with Customers
Know What You Know
Moving from Ideas to Insights
SHARE: claim your voice and be heard
Abundance: To those who share much, more will be given
Quality: Views and volume do not equal value
Provocation: If it is easily accepted, and universally embraced, it’s probably not
thought leadership
Commitment: Thought Leadership is not a marketing tactic, it’s a way of life
SECTION TWO: ELEVATED RELATIONSHIPS
INFLUENCE: play high
Challenge #1: Getting Access to the Right People / Level
Challenge #2 – Revamp Your Go To Market Team and Processes
Challenge #3 – Learn to Say No to Customers and to Work
Challenge #4 – Set Clear and Consistent Standards
Challenge #5 – Be True to Your Future Self
Playing High: influence
PARTNER: engage like you mean it
Develop Deep Understanding
Convert Insights into Application for Your Brand
Vest: Align Interests and Remove Barriers
Partner Relationships: engage like you mean it
CONNECT: See the whole board
ELEVATE RELATIONSHIPS: influence, partner, connect
See the whole board and connect the dots – De Beers
Connect broadly
Influence the system – Apple
See the Whole Board
SECTION THREE: ELEVATED IMPACT
LEAP: do the hard work and be the disruptor
Orient around Outcomes
Lean into complexity and move confidently towards the disruption
Create Alignment with People, Processes, and Systems
LEAP – Do the hard work and be the disruptor
LIVE: answer the call
How CVS Delivers on Health
How Domtar Builds a Coalition through Common Ground
How CommBank Works to be Worthy of their Position in the Market
StartSmart’s Measurable Impact
StartSmart’s Strategic Alignment
StartSmart’s Organizational Integration
Live: answer the call
MATTER: finishing the journey to the obvious choice
Introduction
“The purpose of life is not to be happy. It is to be useful, to be honorable, to be
compassionate, to have it make some difference that you have lived and lived well.”
― Ralph Waldo Emerson Does your company really matter? Has it moved beyond the commoditized and
substitutable solutions readily available in the market, and created more value for its
customers, communities, and employees? It could!
Is your team focused on doing the work that really matters? Are they investing in
solving the most difficult challenges faced by your internal and external customers, and
going above and beyond to create more value for your organization? They could!
What about you? Does your work matter? Are you just working hard, or are you
focused on the hard work which moves the needle in the areas your team most needs,
generating more value for them and for your organization than if you just stuck to the
basics? You could!
Just ask Doug Woods, Jeff Moore, and Angela Ahrendts. In their own ways, in
their own industries, they each have taken on work that matters. The world is different
because of the value their companies have been able to create for others.
Doug Woods and his team at DPR matter because they build great things. Their
relentless pursuit of powerful and effective ways to collaborate in the construction
process has changed clients and partners forever. The industry is evolving because of
their leadership.
Jeff Moore and his team at Lakeside matter because they had the chutzpah and the
vision to be something no other trucking company had imagined. They decided to move
beyond the dubious practices that historically plagued the logistics industry, and in doing
so became a trusted partner to their clients; capable of reducing costs, freeing up
resources, and lowering carbon emissions. At the same time, through the efficiencies they
have generated, they made staple food and consumer packaged goods more affordable for
Canadians.
Angela Ahrendts and her team at Burberry matter. She matters to the legacy of the
150 year old brand she helped to resurrect by leaning into the digital disruption that
threatened the viability of not just the Burberry brand, but of retail as we know it. Her
team committed to reinventing the brand, the shopping experience, and the customer base
in an ambitious and bold way. The result? Investors are winning, the brand is set up for
the next 150 years, and retail has a new shining light for thriving in an omnichannel,
digital world.
The work you, your team, and your company choose to do on a daily basis
matters. It matters to the people you serve and the problems you solve for customers and
clients, and it matters to your own sense of pride, progress and achievement. People want
to buy from companies that matter. People want to work for companies that matter.
People want our communities to be filled with companies and people that matter.
This book is about building companies that matter – companies that create more
value, that move beyond the competition, and that become the obvious choice in their
markets.
You will meet big companies, small companies, B2B companies, and B2C
companies. You will even meet a spy agency along the way. We will dissect the journeys
the individuals inside these organizations went on as they sought to escape the morale
crushing cycle of commoditization. The result? They became the obvious choice for their
customers and clients, for the best and brightest employees, and for the investors and
communities they serve as well.
We spent more than 15 years obsessed with understanding one thing; what it takes
for a company to move beyond the competition and become the obvious choice. We
observed companies that failed. We observed companies that succeeded. We worked
alongside them as they went on their journeys, guiding them along the way. Five years
ago we had the realization - we wanted to codify what it took to become the obvious
choice. We wanted to map the journey of those who succeeded and offer it to you, here in
this book.
So we embarked on our own research study, designed to help uncover the
practices of successful companies who have become the obvious choice, who are beyond
their competition, and who add more value than anyone else in their industry. More than
15 countries, over 30 companies, hundreds of interviews, thousands of transcribed pages,
years of analyses, tens of thousands of words written to try and describe what we learned
has led us to one strikingly simple, consistent, and powerful insight.
To become the obvious choice, and a company that matters, you need to create
outcomes that are more valued and not easily replicated, and be able to sustain that as
the perception of value evolves in the marketplace over time. Period.
We realized that, of course, the concept of value was not new. The idea that
creating more value would be a competitive differentiator was pretty clear. Given that,
why were some companies able to consistently matter more, providing more value than
others, year after year? We realized the ‘what’, ‘where’, and ‘how’ questions about value
were riddles worth solving. We pushed our analysis to answer these 3 questions,
believing this would be the most valuable to us and to you in understanding how to do
work that matters:
1. What does it take to create more value?
2. Where are the opportunities to create more value found?
3. How do you and your organization build the capability to perpetually identify the
most complex problems and deliver profitable solutions year after year?
These three questions formed the basis of our continued research. The answers form the
premise of this book.
What does it take to create more value?
Jeff Moore set out to transform the way Lakeside did business, moving from a
highly commoditized, super-low margin business into the obvious choice for innovative
consumer goods companies in Canada. He knew the only way to get there was to create
more valued outcomes, which meant solving the most complex and important problems
his clients have – high freight costs –in a way not easily replicated by others in the
market.
That is what we mean by value –if you don’t want to be commoditized and you
want to become the obvious choice, you need to create solutions to more important
problems for your buyer, those which few others are capable of solving. Sounds simple,
right? In theory, yes. In practice, definitely not.
In Jeff’s case, the only real way to do that was through single-source logistics
management models, challenging entrenched industry practice, and creating efficiency
and optimization opportunities along the way. This is complex work. It takes vision,
intellect, processes, systems, and commitment to do it at scale. If you have those things,
the complexity is a good thing; it is where the opportunity to differentiate comes from.
Defining and solving complex problems that have economically significant outcomes
attached is very hard work. It is not easily replicated, and the scarcity of scalable
solutions is why it is valued.
Jeff’s willingness to commit to solving for this complexity is what has made his
company Lakeside the obvious choice for his customers. You’re going to hear a lot more
about how they did that later. For now, we shift our attention to understanding how to
identify the most complex and important problems - those which create more valued
outcomes.
Where are the opportunities to create more value found?
When Angela Ahrendts took the reins at Burberry, the brand was in decline. The
trench coat was no longer cool, their brand was associated with an older, less influential
demographic, and their brick-and-mortar strategy was being undermined by powerful
online channels capable of selling the same products they sold in-store, for some 25%
less.
They were being disrupted. Like most retailers, Burberry had been determined to
hide from the disruption, hold onto legacy business models, and hope that the threat
would pass. Not Angela. Under her leadership, Burberry would move towards the
disruption and stand right at its edge; where the old bricks’n’mortar world met the new
digital world. Her vision was to build an omnichannel brand and business model capable
of serving customers where they were, and not where Burberry had historically wanted
them to be.
We would suggest that she walked right up to what we call the edge of disruption,
and looked out towards a future where retail for Burberry was reimagined. What singlesource freight models were to Lakeside, an omnichannel consumer experience was to
Burberry.
We found in our work and in our research that the opportunities with the most
value are found at the edge of disruption. At the intersection of old and new, where the
profits, reach, and reputation of your past enable you to test the models and offers of the
future. This is where you can contribute the greatest value to your marketplace. Burberry
didn’t abandon bricks and mortar and go digital only (even if this may be a reality in
some distant future). Instead, they embraced an omnichannel model at the intersection of
old and new. They harnessed the emerging digital disruption, merged it with their
existing business model, and moved confidently into the future armed with the solutions
and business models required to thrive in the new world.
The edge of disruption for your organization is that point from which you can see
a future where technology, regulation, customer demand, cost structures, employees,
investors, and other variables are no longer aligned to or compelled by your existing
value proposition, offer, and business model. It’s where you can see the synthesis of
many small things happening at the periphery of your industry, and business starting to
converge into a larger wave of disruption, which threatens your relevance (maybe even
your existence).
From the edge of disruption you can also look back and see the evidence of past
and present disruption. You can see your current business model getting eroded little by
little every day into a commodity business, where you can only compete on price,
volume, and a reduced cost structure – doing more with less.
The opportunity to create more value lives at your edge of disruption. In this
book, we will help you define where it is.
So you now know where you want to go – to the edge of disruption, where you
can perfectly synthesize existing and emerging business models and create more value.
But you want to do more than just go there – you want to solve the problems that emerge
there and exploit the opportunities that arise. You want to use the vantage point of the
edge to challenge assumptions and beliefs effectively. You want to contribute new and
differentiated ways of doing business – unlike anything clients have seen before, with
products and services that shift how business gets done.
To do that means figuring out how to get there and stay there, continuously
learning and moving as the edge moves. Because that’s the sneaky little thing about the
edge of disruption - it doesn’t stay in the same place too long. You have to learn to move
with it. When you can do that, you will be able to stay obvious choice long after your
next bright idea hits it big in the marketplace and becomes replicated by your
competition.
How do you and your organization build the capability to perpetually identify the most
complex problems and deliver profitable solutions year after year?
When Doug Woods, Peter Nosler, and Ron Davidowski (the D, the P and the R of
DPR founded their company in 1990, they knew they wanted it to matter in the
construction industry. They wanted to be a force for good in a market traditionally very
resistant to change – where clients and general contractors have notoriously poor
relationships. In an industry full of missed expectations, litigation, and substandard
outcomes, DPR creates more value for their clients every year. They have continued to do
so as they have grown from a start-up to a $2.5 billion success story, and become the
obvious choice for companies like Apple looking to partner with a General Contractor to
“build great things”. How?
DPR consistently identifies the best opportunities to solve more complex
problems, and then does the hard work required to solve them. They’re not perfect, but
they lean into the complexity of the most technical construction projects and put their
hand up to lead the industry in its understanding of innovative new approaches,
redefining best-practice as they go. We will take a closer look at DPR later. For now,
let’s focus on how they deliver innovation, discipline, and rigor to create more value for
their clients, employees, contractors, and their industry at large. We call this “elevated
impact” – they don’t just deliver buildings, they deliver experiences to their customers
that create a level of impact their competition finds hard to replicate. Elevated impact is
the result of doing hard work on the thorniest problems, and it means delivering the most
valued outcomes.
What we found in our research was that companies that matter do not judge
themselves by their intention, they judge themselves by their impact. They don’t just talk
about opportunities to create more value, they do the hard work required to actually
achieve it. When complex problems emerge at the edge of disruption - where the future
meets the past - they don’t shy away from the challenge, trying to protect a legacy
business model. They are willing to take risks to develop and refine a new way forward.
And they don’t just do it for themselves.
Companies that matter talk incessantly about legacy, and doing the right thing.
They are committed to creating value for their clients and for their industry. They see it
as their role to ensure everyone, even their competitors, are better today than they were
yesterday. It extends to the community as well. Companies that matter believe industry
leaders have a responsibility to their communities and they strive to add value there, too.
When companies are delivering the most valued solutions in all these ways, we believe
they have an Elevated Impact.
Creating the opportunity to have an elevated impact requires support from
employees, investors, clients, suppliers, and sometimes even competitors as you work to
redefine the market. And, you have to be able to connect the dots across divergent and
convergent disruptions, adjacent market activity, and new ideas. You can only do that if
you commit to having Elevated Relationships.
DPR wanted to redefine how their business worked at the most basic level – the
relationship between the buyer of a building and the builder of a building. They had been
in the industry long enough to see all the problems with the existing litigious model, and
they decided to change the game – to have an elevated impact by changing how they did
business. That couldn’t happen in isolation. They had to have great relationships with
great clients who had the vision and ability to build great buildings. They had to vest their
financial interests with the success of the project, pioneering new ways to partner to
deliver. And they had to engage the whole system in continuous improvement – their
suppliers, contractors, customers, financers, universities, industry groups, and employees,
among others. Through those elevated relationships, they were able to connect the dots
and create solutions to the most complex problems in their industry.
Companies that matter elevate relationships not just with their customers, but
throughout their industry and beyond. They are the ‘go-to’ companies when an industry
voice is needed, and they have the ability to pull together industry-wide conversation to
focus on innovation and collaboration. At the same time, companies that Matter can
support intimate and nuanced discussions with their clients about the client’s strategies,
challenges, and future. In other words, through their relationships, they influence, they
partner, and they connect better than anyone else in the industry, and that’s what enables
them to have their elevated impact.
But how can you create elevated relationships?
DPR’s edge of disruption these days is their adoption of Integrated Project
Delivery and risk-sharing models, which are re-drawing the lines between banker, client,
and GC. DPR knows where their edge of disruption is because, like other companies that
matter, they choose to intentionally and methodically explore it, define it, , and then share
what they have learned. DPR creates a point-of-view on emerging disruptions and sees
the value that can be delivered to their clients and partners. Their clients and partners in
turn seek DPR’s point-of-view out whenever possible. This is what we call an Elevated
Perspective.
By developing an Elevated Perspective and having the courage to package and
share it with the people who matter most, DPR’s team has been able to build a reputation
powerful enough to give them access to the most senior decision makers and influencers
in their industry. Their Elevated Perspective creates the access and credibility required to
support their Elevated Relationships, and together their perspective and relationships
show them the path to having an elevated impact.
And therein lies the map for your journey to become the obvious choice. If you
and your company want to truly matter, start with an Elevated Perspective. By defining
your edge of disruption, learning there, and then sharing what you know, you will gain
the access and credibility you need to develop Elevated Relationships. By going deep
with your customers and connecting the dots between disruption and opportunity, you
will have the understanding and influence required to have an Elevated Impact. By
leaning into the complexity required to solve higher value problems and answering the
call to act in a way worthy of your leadership position, you will be able to create more
value for your customers, move beyond your competition, and become the obvious
choice in the process.
Join us and explore how you can develop these capabilities. Whether your clients
are internal or external, large or small, local or global, you and your team can all move to
do work that matters, and you can build a company that matters – and that is the obvious
choice.
SECTION ONE: ELEVATED PERSPECTIVE
It’s not every day the CEO of a multi-billion dollar publicly traded company says
to you ‘I’m DONE negotiating the price of incontinence pads.’ But that’s exactly what
Don Casey, CEO of Cardinal Health said in August 2013 when we asked him to describe
his biggest strategic challenges. The setting was a green room, behind the stage at his
annual sales kick for approximately 1,300 sales representatives in Ohio, and Don
practically pounded the table as he described the current reality he faced.
What Don was really saying was that he and his team were stuck solving
problems at the product and price level, even as an earthquake was shaking the
entire health care healthcare industry. He was sick of his organization working on
problems that weren’t focused on the highest value Cardinal Health could
contribute in helping the hospitals and health systems that are the company’s
customers. He and the Board wanted to position Cardinal Health to tackle the
bigger, tougher challenges, to be seen as the “go-to” company for strategic support
hospitals and Integrated Delivery Networks (IDNs) need as they navigate all of the
disruptions in their industry, the Affordable Care Act in particular. They wanted to
matter, and to have an even more valuable role in the evolving healthcare
ecosystem.
To claim that spot as the obvious choice, Cardinal Health had to figure out
how to crack the complex and highly valuable triple-aim of the healthcare system.
Specifically, how to 1) create better health-care outcomes, 2) for less money, 3) in
a way that enhances the patient experience. At the most basic level, Cardinal
Health’s business was to supply products and services to most of the American
healthcare system at the best possible price-for-quality ratio. For years, the
company had generated much of its revenues by managing the shipping and
distribution of these products and services from original manufacturers to
healthcare providers. On the fringes of Cardinal Health’s business model,
disruption was happening in the purchasing preferences of clients and the shipping
and distribution (S&D) cost model. One competitor in particular, Medline, started
aggressively going after Cardinal Health’s part of the business, essentially giving
the S&D piece of the contracts away for free.
How, you ask? Well, hospitals purchase about 2,000 categories of product
in great quantities. Of those, about half were ‘brand sensitive’ products that the
healthcare providers would fight for, and the other half were largely ‘nonpreference’ products. For example, orthopedic surgeons are likely loyal to a brand
of artificial knee they use for patients needing knee replacement but are less brandloyal to the brand of bandage they use to dress the wound. Medline had started
making its own bandages and hundreds of other non-physician preference products
itself. The company turned a profit on the product and gave hospitals a break on the
shipping and distribution management. Cardinal Health’s signature strength
became an integrated part of a larger sell for Medline.
In addition to increased competition, other pressures were coming to bear
on the industry. The Affordable Care Act was changing the healthcare landscape
like no legislation ever had, pushing hospitals and other care providers to remove
twenty percent or more of the cost out of healthcare. What do you think your
average hospital does in the face of such demands? Does it A) tackle the cultural
challenge of changing the behavior and attitudes of physicians, nurses, and other
care providers throughout their hospital, encouraging them to operate in new and
more efficient ways that create higher value outcomes for patients; B) look at all of
its cost structures, including possibly bloated administrative structures, or C)
impose massive pressure on suppliers to reduce their costs? The correct answer, of
course, is ‘all of the above’ – both internal and external behaviors and costs have
to change. However, the fastest and easiest path to lowering the cost basis for
hospitals (and indeed any organization faced with that kind of choice) is often
believed to be found in putting pressure on suppliers to find the savings.
Here’s the problem with that approach. It isn’t a sustainable strategy for
suppliers or healthcare providers. Cardinal was fighting a price war with an
aggressive competitor for every last incontinence pad it sold, barely eking out a
three percent margin on many products. The margins weren’t stratospheric, so there
wasn’t a lot of room to move and still stay in business. Second, procurement of
supplies generally accounts for 25-35% of a hospital’s overall costs. Driving down
the unit price of any single product wouldn’t cut enough cost out of the system,
even if the price reduction amounted to 20% or more on that particular product.
Pushing Cardinal Health and other suppliers for lower prices per product showed
incremental savings, but it did not enable the healthcare system to meet the Triple
Aim goals.
If healthcare providers really wanted to cut waste out of the system, they
would need to work systemically to remake the entire supply chain. Haggling over
the price of each piece of inventory and playing Cardinal Health off Medline in a
product price war wasn’t going to get the job done.
Executives at Cardinal Health understood this reality. They realized that an
opening existed to work with hospitals and IDNs to create systemic change that
could impact cost, health outcomes, and patient experiences by restructuring the
supply chain. More sophisticated approaches to the supply chain could reduce cost
through optimization and buying volume. Deeper partnership with select suppliers
could lead to innovative packages of products to create better healthcare outcomes
and patient experiences. For example, instead of negotiating for marginal reduction
in the price of a sanitizing product, you could develop an entirely new approach to
sanitization which reduces the amount of product used and time required, while
simultaneously improving hygiene.
Cardinal Health’s leadership knew this level of partnership would require
them to engage in more strategic conversations with senior people at the hospitals.
Cardinal Health would have to collaborate to re-think the entire supply chain,
partnering with customers and others within the industry to make it happen. It was
the senior people at the hospitals who were thinking about these bigger-picture
issues; the procurement officials to whom Cardinal Health usually sold were still
caught up in negotiating down prices of specific products.
How would Cardinal Health’s team break out of the procurement
relationships they had and secure meetings with senior hospital executives? These
executives weren’t banging down the door to talk to Cardinal Health – they weren’t
stopping by for coffee and a chat. They didn’t think of Cardinal Health as a partner
providing big-picture thought leadership in the business. They just knew Cardinal
Health as the company that had the best price on incontinence pads. Somehow,
Cardinal Health’s team needed to elevate its relationships—and fast—and the way
they were able to do it would be to offer customers a unique insights on the new
healthcare environment, particularly around supply chain. In other words, Cardinal
Health needed an Elevated Perspective.
Take a minute and put yourself in the shoes of the IDN or hospital that
Cardinal Health targets, or even your own buyer for a minute. Imagine you need a
critical question answered about a new market you are entering, legislation that is
changing your industry, or a product you are developing. Maybe like the hospital
administrators Don was targeting, you need to solve three apparently conflicting
problems – lowering cost, improving outcomes, and making patients happy.
Perhaps you are evaluating a new technology, or you are trying to figure out what
your business risks are for next year. Where do you go for answers? Who do you
ask? It is likely you are seeking an elevated perspective from someone to answer
those kinds of questions – someone who has a different vantage point than you, and
can ask you good questions that you aren’t thinking to ask yourself. Someone who
knows what’s happening at the edge of the disruptions that are most meaningful to
you.
If you ask for input and the response is ‘gee, I don’t really know much about that’,
how likely are you to continue the conversation? But if the response is ‘you know, we’ve
been studying that exact question for a while now, and here’s what we think about it’,
you very likely might bring that person in to talk to your boss. Or her boss. You would
feel comfortable bringing them right up the chain to the decision makers in your
organization, because they had a definitive point of view that they were willing to share.
Now shift gears and imagine you are the person who getting asked by a client for your
perspective on an issue they are facing. What would you say? How would you respond?
Would you be able to leverage your answer to build your reputation and gain access to
the most senior-level in your client’s organization? If not, you need to develop the
Elevated Perspective required to get access to the people and partners necessary to create
more value and solve more complex problems.
It isn’t uncommon to struggle with answering these types of questions. Over and
over again as we’ve engaged with companies around the world we’ve been struck by the
consistency with which we hear stories just like Cardinal Health’s. Companies of all
shapes and sizes struggle to find their voice and to have the opportunity to contribute a
strong point of view about the issues that are most important to their customers. It
requires intention to stay close to what’s happening around you, and to have a strong
point of view. A strong point of view is one you can easily share with the highest level
people in your client organizations, or with the most significant decision makers in your
customer base. It requires you to have an elevated perspective. That’s what Don and his
team needed and it can change the game for you too.
We believe there are things that matter to buyers, and there are things that matter
more. An elevated perspective that comes from the edge of disruption matters more.
Your ability to have insight at that edge, and to share it in a compelling and applicable
way, will matter in the most influential rooms of your most important clients. Clients can
leverage that perspective to help differentiate their organization and solve their most
complex problems. This is what is truly meant by the phrase “thought leader”.
In this section we’re going to dive into how you can develop the kind of
perspective that matters, the kind that opens doors for you and your company. We’ll
share more about how Cardinal has done that, and introduce you to some other amazing
companies and the way they matter in their industries and markets.
Elevating your perspective means defining your edge of disruption as the place where
you can add the most value to solving the most important problems your clients face,
learning as much as you can about it, and sharing your point of view from a strong
platform. By the end, you should have an idea of how to define your edge of disruption,
how to go forward and learn about what’s going on at the edge, and how to develop a
platform from which to share your perspective. The result? You’ll have the reputation
and access you need ready to develop the next capability, Elevated Relationships, which
in turn will allow you to have an Elevated Impact. When you have all three, you will be
consistently matter more than your competitors and will be creating the capability and
culture to stay that way. And that is what will result in you being the obvious choice, year
after year, for your industry, your employees and your community too. Let’s get started.