1. Operational and Service Excellence
“It’s the corniest, easiest to articulate strategy, but I think a very difficult strategy to actually execute against,” said Joe Herring, CEO of Covance, who explained that it’s been the execution model for the drug-testing and safety company for 10 years. “If you think about running a four-year clinical trial or drug safety testing for what could be a billion dollar drug for a sophisticated client, the data better be accurate and on time, and you better build a trust-based relationship. To put that strategy in a way that we could execute on it every day, we broke it down into people process and clients. And I can tell you, the effort we put into targeted selection, behavior-based interviewing, how we on-board, train, motivate, career path and terminate employees is fundamental to our strategy, absolutely fundamental. And since 1997, we’ve grown from about roughly $300 million in revenue to about $2.2 billion in revenue and from about 2,500 employees to 11,600 employees in 60 countries.”
2. Broaden Your Base
“As a market leader in HVAC Systems, we were concerned about what would happen if the product commercialized or the market slowed,” recounted Larry Wash, who serves as president of Trane Global Services, a part of Ingersoll Rand’s Climate Solutions business. “So we looked at how to leverage our capability into doing something broader for our customers. In mature markets, we adopted a deliberate strategy of moving from equipment sales to system sales to solutions and then to services. We found that the journey of having a broader dialogue with your customers around systems and solutions inherently involves asking them about their broader business problems. As our understanding of those real problems accelerated, it allowed us to introduce many innovative service offerings so that now, when you fast-forward seven years, 40 percent of our revenue comes from services and solutions as opposed to equipment in mature markets.”
3. Blue Ocean Strategy
“‘Blue Ocean strategy’ is simply changing the rules of the game, eliminating competition through a completely different construct of the way a business or market is attacked,” explained Frank Brown, a former dean of the leading business school INSEAD, who pointed to Cirque du Soleil as an example. “They did away with the competition of traditional circuses like Ringling Brothers by eliminating animals and turning it into performance art, a phenomenal success.”
4. Deliver on Customer Experience
“To dramatically transform JCPenney, we had to build a differentiated experience that people would remember,” noted Mike Ullman, former executive chairman of the $17.8 billion retail chain. “We looked at the best of the best—companies like Wegmans, Southwest Airlines, Starbucks and The Container Store—that deliver the best customer experience in their respective industries. Then we identified our best 25 store managers and our best 25 sales people and looked at the characteristics that make them stand out. We found out there were some pretty simple principles. So we did several things at the same time.
We used a modeling program that actually maps when the customers are in the store by hour and the hours of customer service against that. Using that model we picked up a 16 percent savings in salaries by actually putting people there when the customer is there—a novel concept.
Then we essentially taught people that it was their responsibility to be themselves with a program called GREAT—Greet, Respect, Engage, Assist and Thank—and most of all, be yourself. We also adopted Southwest Airlines’ employee empowerment policy, which is that you only have to ask for permission to say no to a customer. Our customer service scores have soared. They’ve gone from 47 percent to around 66 percent. That’s key because in retail, highly satisfied customers come to your store 20 percent more often and spend 16 percent more.”
5. Leverage Your Core Assets
“Our job for 200 years has been to print articles about medical research, bind them in a magazine, and send it out once a month on behalf of societies like the American Heart Association,” explained Karen Abramson of Lippincott Williams & Wilkins, the division of Wolters Kluwer she runs. “I came on board during a time of contraction in the pharmaceutical market and falling print subscriptions, when the entire industry is under enormous pressure. But at the same time 92 percent of physicians said their medical journal is the No. 1 resource they go to when treating a patient, so the content—the information—was very, very valuable.
“Right around that time the iPad came into the market and we realized we had a disruptive technology that was going to be a real solution for us. This year we turned eight of our largest medical journals into iPad applications. By doing this, we’ve been able to deliver a much more interactive experience for our physicians. There’s video. There are interactive conversations. You can have social media discussions with other physicians. If something changes, we can send out an alert.
“These were all wonderful things, but when we were scenario planning we had to question our revenue model, because our biggest revenue model was print advertising. Once we delivered this wonderful electronic system that everybody loved and wanted to convert to, what happens to the print revenue model? We decided that we would need to take the risk of telling our advertisers, ‘You’re buying an audience, you’re not buying circulation. So effective now, if we have an iPad ad out, we will not break the price between the digital pricing and the print pricing, we will make you buy that audience.’
I’m happy to report that in January, which was our first bundled sale for advertising, we have not had a single advertiser refuse to pay for this new bundle, which in some cases comes at a 30 percent to 50 percent premium.”