Do you know a company that defies comparison and exists in a category all by itself …. a “Category of One” as author Joe Calloway puts it?
Are there common, repeatable features of “category of one” firms?
The answer to this question from Joe Calloway’s book is emphatically yes – here are the top nine things I took away …
Think hard about your culture
Culture is vital for category of one. Culture is “how we do things around here”. Culture is the rules, spoken or unspoken that you play by. Culture is what you do when the boss is out of town.
The one thing … all category of one companies have in common is that they talk about the same things over and over – that’s how culture is created. Say it simply, don’t hide your mission away in corporate language.
Greatness is a decision
Greatness needs to be a decision – to do what it takes to make it happen. It’s not easy and it does require complete commitment to make the changes needed. A commitment to do the heavy lifting of prepration and research. It’s much easier to do something superficial, but ultimately you get what you want most. It’s a moment-of-truth type moment, but you have to get to a gut-level decision (rather than an intellectual decision) to go. Many get the intellectual decision not the “gut level commitment”.
Be ok with change, focus on fast decisions, rather than correct forecasts
Today, major changes don’t happen occasionally, they happen all the time. It’s more difficult to see them coming. You have to be willing to be wrong in your forecasts. It doesn’t mean you shouldn’t forecast, it means that instead of success being based on getting things right it’s based on being able to move from one decision to the next.
How to change effectively? Be ok with not knowing what’s going to happen next. It doesn’t mean you’re frozen into inaction, but it means that you know you can make the necessary adjustments when the time comes.
EVERYBODY says that their people are the differentiator…
But if in fact your people really are the differentiator, and you can say that about ALL of them, then this is indeed a powerful advantage. So the challenge becomes to create that advantage and then to prove it. It’s not an easy thing to achieve. But you must be able to explain the benefit of the benefit.
You brand is not your logo or name – it’s what resides in the mind of your customers
what they think of you, what your promise to them is and whether you’ll keep it. To maintain strength requires focus from everyone in the organisation. Inconsistency is a brand killer. You can advertise 24 hours a day and have some superstars. but if you have some people in the organisation that do not fulfill the promise then that could be a critical weakness to the brand,
Accept that quality product, service and price are all a given. Service and experience are primary competitive factors
A quality product, good service and a competitive price are all at the commodity level. If you have those then you are “a pound of nails”. To transcend commodity you have to go to the next level and the best way into that level is knowledge of the customer.
Price and quality are not the primary competitive factors – these are assumed. Service and experience are the primary competitive factors.
Great service is a very powerful competitive and loyalty factor indeed, but is hard to achieve. So many companies will take the easier route and go for gimmicks rather than do the hard work needed to get service right (which is why we have hotel origami).
“At Les Schwab Tyres they RUN to the car!”
Follow the Customer rules (the single greatest advantage in business)
1. Know more about the customer than anyone else
- Get closer to the customer than anyone else
- Emotionally connect better than anyone else
If you’re successful it means you know what used to work.
the new reality is that you have to meet a whole load of customer experience benchmarks that have nothing to do with the industry that you are in. it has to do with the business someone else is in. customers remember an experience from one domain, and it becomes the baseline for all others.
What’s your tiebreaker
what’s your tiebreaker? what’s the one thing that will close the deal in you favor and your competition can’t match.
eg – Be extremely easy to work with
Return calls and emails immediately
Resolve issue in favor of the client whenever possible
Keep expenses as low as possible
If I’m not the right fit for the job, recommend a competitor
Free shipping on orders and returns (Zappos)
No change fees and a ridiculously easy to use website (Southwest)
Design the experience
The customer’s experience of doing business with you has become the new competitive factor.
Does your customer’s experience emerge bottom up from a disparate and assorted series of transactions, interactions or was it designed to be that way with each interaction set up to deliver the experience?
It’s great to receive some positive feedback about a particular member of staff in a store who went out of their way. What’s better is a letter that says that whichever store a customer goes to the experience is always the same.
The pursuit of happiness is built into the very definition of human desire.
We treat our future selves as if they were our children, spending most of our waking hours seeking out ways to make them happy. So understanding what does seems pretty important for making decisions today …
But do we really know what will make our future selves happy?
Do we make mistakes and incorrect assumptions when we try and predict what will?
The main takeaway from this entertaining and insightful book by Dan Gilbert is emphatically NO and YES to the above questions. The book carefully points out some of the errors we can commonly make when considering the future, including several classic problems:
Problem 1: When we imagine the future there is a whole lot missing. And the things that are missing matter.
Problem 2: When we imagine the future, we are heavily influenced by the present
Problem 3: we have a psychological immune system, which will begin manufacturing positive views of very negative events with astonishing effectiveness. Therefore, we overestimate the negative implications of negative outcomes
If Dan Gilbert’s book is strong on entertaining and insightful descriptions of the problems, you could argue it is light on concrete solutions (other than the implicit “try and avoid the problem).
Problem 1 – the pitfalls of imagination
Humans are the only animal that can attempt to look into the future (“prospection”) using the frontal lobe & studies show we spend 12% of our thoughts doing so. Why?
Prospection is associated with two things: Prospection & emotion / prospection & control
“As scientists now recognize, the frontal lobe ‘empowers healthy human adults with the capacity to consider the self’s extended existence throughout time’. The frontal lobe was the last part of the brain to develop and is what distinguishes us from apes – and it what explains their shallow, sloping foreheads compared to ours.
But the ways it works has some shortcomings. imagination’s first shortcoming is its tendency to fill in and leave out without telling us. No one can imagine every feature and consequence of a future event, hence we must consider some and fail to consider others. The problem is that the features and consequences we fail to consider are often quite important.
Imagination’s second shortcoming is its tendency to project the present onto the future (which we explored in the section on presentism).
Imagination’s third shortcoming is its failure to recognize that things will look different once they happen–in particular, that bad things will look a whole lot better, this is due to our psychological immune system.
The fact is that negative events do affect us, but they generally don’t affect us as much or for as long as we expect them to.”
How memories are constructed & how imagination happens
realism (r•ăliz′ m) The belief that things are in reality as they appear to be in the mind.
The general finding–that information acquired after an event alters memory of the event–has been replicated so many times in so many different laboratory and field settings that it has left most scientists convinced of two things.
First, the act of remembering involves ‘filling in’ details that were not actually stored; and second, we generally cannot tell when we are doing this because filling in happens quickly and unconsciously.
Kant’s new theory of idealism claimed that our perceptions are not the result of a physiological process by which our eyes somehow transmit an image of the world into our brains, but rather, they are the result of a psychological process that combines what our eyes see with what we already think, feel, know, want and believe, and then uses this combination of sensory information and preexisting knowledge to construct our perception of reality.
‘The world as we know it is a construction, a finished product, almost–one might say–a manufactured article, to which the mind contributes as much by its moulding forms as the thing contributes by its stimuli.’
The problem isn’t that our brains fill in and leave out. God help us if they didn’t. No, the problem is that they do this so well that we aren’t aware it is happening.
When we try to overlook, ignore or set aside our current gloomy state and make a forecast about how we will feel tomorrow, we find that it’s a lot like trying to imagine the taste of marshmallow while chewing liver.
Because predictions about the future are made in the present, they are inevitably influenced by the present.
We assume that what we feel as we imagine the future is what we’ll feel when we get there, but in fact, what we feel as we imagine the future is often a response to what’s happening in the present.
The time-share arrangement between perception and imagination is one of the causes of presentism, but it is not the only one.
By imagining an event happening now and then correcting for the fact that it was actually going to happen later, we use a method for making judgments that is quite common but that inevitably leads to error.
Because we naturally use our present feelings as a starting point when we attempt to predict our future feelings, we expect our future to feel a bit more like our present than it actually will.
Presentism occurs because we fail to recognize that our future selves won’t see the world the way we see it now. this fundamental inability to take the perspective of the person to whom the rest of our lives will happen is the most insidious problem that someone trying to imagine the future can face.
Reality distortion alert! Rose tinted glasses and The fulcrum between stark reality & comforting illusion
We may see the world through rose-coloured glasses, but rose-coloured glasses are neither opaque nor clear.
They can’t be opaque because we need to see the world clearly enough to participate in it–to pilot helicopters, harvest corn, feed babies and all the other stuff that smart mammals need to do in order to survive and thrive.
But they can’t be clear because we need their rosy tint to motivate us to design the helicopters (‘I’m sure this thing will fly’), plant the corn (‘This year will be a banner crop’) and tolerate the babies (‘What a bundle of joy!’).
We cannot do without reality and we cannot do without illusion. Each serves a purpose, each imposes a limit on the influence of the other, and our experience of the world is the artful compromise that these tough competitors negotiate.
There are many different techniques for collecting, interpreting and analysing facts, and different techniques often lead to different conclusions, which is why scientists disagree about the dangers of global warming, the benefits of supply-side economics and the wisdom of low-carbohydrate diets.
When facts challenge our favored conclusion, we scrutinize them more carefully and subject them to more rigorous analysis.
When we want to believe that someone is smart, then a single letter of recommendation may suffice; but when we don’t want to believe that person is smart, we may demand a thick manila folder full of transcripts, tests and testimony.
We ask whether facts allow us to believe our favoured conclusions and whether they compel us to believe our disfavoured conclusions.
Distorted views of reality are made possible by the fact that experiences are ambiguous–that is, they can be credibly viewed in many ways, some of which are more positive than others.
To ensure that our views are credible, our brain accepts what our eye sees. To ensure that our views are positive, our eye looks for what our brain wants. The conspiracy between these two servants allows us to live at the fulcrum of stark reality and comforting illusion.
Ignorance of our psychological immune systems causes us to mispredict the circumstances under which we will blame others, but it also causes us to mispredict the circumstances under which we will blame ourselves.
Why do people regret inactions more than actions? One reason is that the psychological immune system has a more difficult time manufacturing positive and credible views of inactions than of actions.
The volunteers in a study valued the club most when its initiation was most painful.
Intense suffering triggers the very processes that eradicate it, while mild suffering does not, and this counterintuitive fact can make it difficult for us to predict our emotional futures.
Apparently, inescapable circumstances trigger the psychological defences that enable us to achieve positive views of those circumstances, but we do not anticipate that this will happen.
Unexplained events seem rare, and rare events naturally have a greater emotional impact than common events do. We are awed by a solar eclipse but merely impressed by a sunset despite the fact that the latter is by far the more spectacular visual treat.
We are more likely to generate a positive and credible view of an action than an inaction, of a painful experience than of an annoying experience, of an unpleasant situation that we cannot escape than of one we can. And yet, we rarely choose action over inaction, pain over annoyance and commitment over freedom.
The processes by which we generate positive views are many: we pay more attention to favourable information, we surround ourselves with those who provide it and we accept it uncritically. These tendencies make it easy for us to explain unpleasant experiences in ways that exonerate us and make us feel better. The price we pay for our irrepressible explanatory urge is that we often spoil our most pleasant experiences by making good sense of them.
We try to make choices that will make us happy: where to live, with whom to work, whom to marry, how to spend our spare time.
Choices often involve comparison between two alternatives.
But comparisons are not as unbiased as we would like –
Studies show that people are much more likely to agree to pay a small cost after having first contemplated a large one, in part because doing so makes the small cost seems so bearable.
Alas, we are all too easily fooled by such side-by-side comparisons, which is why retailers work so hard to ensure that we make them.
One of the most insidious things about side-by-side comparison is that it leads us to pay attention to any attribute that distinguishes the possibilities we are comparing.
In a study a group of students was offered a choice of where to go on a trip. One of the options was “Extremia” which had some good attributes and some bad ones. When students were asked to choose by eliminating places they didn’t want to go they tended to eliminate Extremia. However when they chose by looking at places they did want to go they chose Extremia. Why would people both select and reject Extremia? Because when we are selecting, we consider the positive attributes of our alternatives, and when we are rejecting, we consider the negative attributes.
Los Angeles vs Columbus. It is a commonly-cited fact that in surveys Americans cite “living in California” as something that would make them more happy (however Californians are not more happy than the average American). Why? Climate is an obvious reason why Los Angeles appeals ahead of, say, Columbus Ohio.
While Los Angeles has a better climate than Columbus, climate is just one of many things that determine a person’s happiness–and yet all those other things are missing from the mental image. If we were to add some of these missing details to our mental image of beaches and palm trees–say, traffic, supermarkets, airports, sports teams, cable rates, housing costs, earthquakes, landslides, and so on–
Comparisons through time
When we think of events in the distant past or distant future we tend to think abstractly about why they happened or will happen, but when we think of events in the near past or near future we tend to think concretely about how they happened or will happen.
When volunteers are asked to ‘imagine a good day’, they imagine a greater variety of events if the good day is tomorrow than if the good day is a year later. Because a good day tomorrow is imagined in considerable detail, it turns out to be a lumpy mixture of mostly good stuff (‘I’ll sleep late, read the paper, go to the movies and see my best friend’) with a few unpleasant chunks (‘But I guess I’ll also have to rake the stupid leaves’). On the other hand, a good day next year is imagined as a smooth puree of happy episodes.
The facts are these: (a) value is determined by the comparison of one thing with another; (b) there is more than one kind of comparison we can make in any given instance; and (c) we may value something more highly when we make one kind of comparison than when we make a different kind of comparison.
context, frequency and recency are three of the factors that determine which meaning we will infer when we encounter an ambiguous stimulus.
But surely these problems get better with experience?
Unfortunately for us, the key answer to this question, as presented by Gilbert is – NO!
Because we tend to remember the best of times and the worst of times instead of the most likely of times, the wealth of experience that young people admire does not always pay clear dividends.
We remember feeling as we believe we must have felt. The problem with this error of retrospection is that it can keep us from discovering our errors of prospection.
Our memory for emotional episodes is overly influenced by unusual instances, closing moments and theories about how we must have felt way back then, all of which gravely compromise our ability to learn from our own experience.
A mixture of task & communication checks help manage the problem of proliferating complexity in the modern word – that’s the relatively simple premise of Atul Gawande‘s short, but excellent book on checklists – The Checklist Manifesto.
The book is driven mainly from a medical context, that being the author’s background, and centred around the astounding data from a study supported by the World Health Organisation into the power of checklists. Although the context is broadened to be applicable to many facets of modern life- examples and applications are also cited from construction, aviation and even finance. The humble checklist can dramatically improve baseline performance – perhaps more so than even the best new drugs or surgical technologies.
Gawande draws a key distinction between two types of error: (1) errors of ignorance (where we don’t know enough) and (2) errors of ineptitude (failing to correctly apply what we do know. Most of the failures in the modern world are of the second kind.
What were the key insights?
Well, here’s a checklist –
- Hack your own productivity, figure out what works for you
I was influenced in a lot of this thinking by Charles Duhigg‘s excellent book Smarter, Faster better which I discussed in more detail here. Mitesh Sheth also wrote up this excellent list of productivity hacks, which I contributed to.
2. Approach the world as it is, not as you’d like it to be
2016 was a year of surprises and shocks at a macro political level. Some of the events that took place challenged the world views of people – including myself. The result of the EU referendum left many people – myself included- feeling more than a little frustrated and angry.
3. Understand the Building Blocks of Change
Changing habits at work is hard. Rolling out new systems and processes and changing old ones. It’s so vital to keep operating efficiently, but the extra burden to individuals of change in the short term will also be resisted.
This great blog by Mckinsey helped me greatly in my understanding of the 4 key requirements for workplace change:
- An understand of why change is necessary
- The capability to make the change
- The alignment of incentives and rewards
- Role modelling by senior and influential individuals
Making effective decisions therefore, involves getting beyond stories into data, asking the right questions, and seeking evidence (where it can be found). Testing theories, rejecting hypotheses, trying to assess against a counterfactual and learning as much from the trials that didn’t work as those that did.