Even in a recession, some companies still find ways to experience tremendous growth. Jim Champy, chairman of Perot Systems and author of several best-selling books—most notable Reengineering the Corporation: A Manifesto for Business Revolution—set out to tell their stories. The result was a series about new business models and how companies are beginning to operate in new ways. The first book in the series—Outsmart!—was released last year. This year, Champy's back with his second installment, Inspire! Champy sat down with Joe Kornik, editor-in-chief of Consulting to discuss how business can attract and keep customers in this economy. The third book Deliver!, is due out sometime next year.
Consulting: Why this book and why now?
Champy: The idea for the book is from a series of books that focus on looking at new and different business models. I actually think this series is all the more important in an economy like this because companies cannot go back to doing business as usual. In fact, they won't go back to doing business as usual. I think this economy will accelerate the changes that companies and businesses were already going through. The idea behind the series of books was to look at business and see what was new and different, and this book looks at how business models and how companies operate inspire customers to come back. In a way, it's a marketing book.
And I'd argue that it's more relevant in recessionary times because keeping your customers—and inspiring them—is absolutely critical. The only way you grow, frankly, is by stealing someone else's customers. In good times, customers always seem to be there, but in these times, you've really got to keep your customers and inspire them to come back.
Consulting: Isn't that more difficult in bad times?
Champy: Sure, but I don't think the answer in a recession is lower price, and I don't think simple discounting works today; you can discount yourself out of business. But being an efficient producer is one answer. Another answer is simply having an attractive value proposition. There's an Apple store across the street from my office and it's always crowded. It's an amazing phenomenon. Why are people in there? Because there is a real and certainly a perceived sense that the Apple technology is delivering a lot of value and responding to a set of needs. I see people buying high-value products, not necessarily high-priced products.
Consulting: What are you hoping readers take away?
Champy: I think there are two main take aways. One is that companies are no longer in control of—or at least the way it used to think it was in control of—its image in the marketplace. The consumer, enabled by the Internet, is now controlling it and is much more expressive about your company, your products, your services than ever before. The notion that a company could have an advertising campaign to change the public's perceptions of its product, company or service is now a naive and outdated notion. The second takeaway is that your company has to be authentic. It must be true to what it says in all respects because the way information is shared about a company, its products and services, you can really be caught in a lie or in non-performance. If you want to buy a product or service today, what you do is you go onto the Internet and you find out what other people are saying about it. If you're labeling yourself as something you're not, you're going to have a big problem.
Consulting: The tagline on the book is 'why customers come back.' So, why do they come back?
Champy: If I have to give you a single answer to that one, it's because the company has been successful in aligning its values with the values of its customers—either by luck or design. Usually, it's by design. If you look at the examples in the book, you have a Stoneyfield Farm, and boy is it authentic about the environment and so it's engaging a set of contemporary values. You've got Honest Tea, and it's very driven around its values of health and is honest in its labeling. These companies have done a great job in conveying a set of values in their products and services that have a great deal of appeal and alignment with the values of its customers. And their products and services are true to their expressed values.
And, the business proposition has to have value in it to enough people so that it will scale. People bring me bright ideas all the time that are not scalable—they simply don't have enough broad appeal. One interesting case is Zipcar. It has a very specific target market but it has enough broad appeal in urban communities. The Zipcar business model will not work in a rural town in the Midwest. But for right now there's enough growth opportunity for the near term.
Consulting: Speaking of growth, tell me about MemberHealth and its 20,000 percent growth?
Champy: MemberHealth is one of my favorite examples of a company that solved a problem for its customers by being authentic and finding its higher calling. This was a business that was built entirely upon going out to mom-and-pop pharmacies mostly in the Midwest to provide seniors with lower cost prescriptions, counseling and assurance that their medicines don't interact in dangerous ways. In many cases, these pharmacies are where people go first for their medical advice. It was a very brilliant example of using a trusted channel to help build a business.
Consulting: And many companies use another channel, the Internet…
Champy: There's no question that the Internet is key to a lot of the success of the companies in this book. It accelerates the process of becoming known and of having your value proposition out there in the marketplace. The Big Green Egg case is an interesting example. There's a guy who struggled for a long time; he's been around for 35 years and he was growing his business very slowly and then the Internet comes long and it just accelerates everything. It's a company that still spends very little on traditional advertising and still depends on the Internet and its community to leverage what it is.
Consulting: You talk a lot about smaller and upstart companies taking on the giants of industry. Would that have even been possible a decade ago?
Champy: It happened, but it was much more rare and it was much more difficult. I think it is much harder for the behemoths to move. It's possible, but it takes much longer. One of the things that happens in large companies is that the executives really lose touch with the consumer and, as a result, the impact of their products and services starts to diminish. Executives become far too distant from the everyday consumer. I actually admire companies like IBM for requiring their executives to maintain some level of account relationships with real customers.
Consulting: What's next? Where do you see the trend lines pointing?
Champy: I think what we'll see is more high touch in customer relationships. The trend over the last ten years has been more high tech. The successful companies I've seen have a lot of high touch and Zappos is a great example of this. They sell shoes over the Internet and people just love them, and I write about Zappos in the next book—learned to do it with scale. Not everyone is going to be able to do that because the current assumption is that you want to maximize the number of calls each service representative handles in each day. The Zappos model says they want their service reps to do just ten calls a day.
So, I think we'll see more of an appreciation of what good service really demands. The big challenge will be how to pay for it. If there will be a broad trend from my perspective it will be for companies to continue to become more efficient in how they operate and take those cost savings and apply them to more high touch customer service and product innovation.
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