Dave Gray’s Connected Company Interview

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Podcast Transcription Implementing Lean Marketing Systems

Dave Gray’s Connected Company Guest was Dave Gray

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Podcast Transcription Implementing Lean Marketing Systems Dave Gray works with executives in the worlds leading companies to spark breakthrough thinking, to find and clarify their greatest challenges and opportunities, and to design their way into the future.

Dave has authored two books on designing change and innovation. His first book, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers, is a practical handbook for innovators and change agents. His second book, The Connected Company, is a strategic blueprint and roadmap for businesses who want to innovate and lead in the next century.

Dave is the founder of XPLANE, the visual thinking company, which was acquired by the Dachis Group in 2010. Dave is also a founding member of VizThink, an international community of Visual Thinkers, and serves on several advisory boards.

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Podcast Transcription Implementing Lean Marketing Systems Transcription of Podcast Joe Dager: Welcome everyone. This is Joe Dager, the host of the Business901 podcast.

With me today is Dave Gray. He's is a management consultant focused on innovation and change. He works with companies to spark breakthrough thinking to find and clarify their greatest challenges and opportunities. His previous book, "Gamestorming," has sold more than 50,000 copies and recently has authored "The Connected Company." Dave, I would like to thank you for joining me and start out by saying that I've enjoyed both your books.

The lessons that you wrote about sketching and gamestorming, you must have taken to heart. Your actual drawing expertise may not have improved much, but in your new book, the meaning behind your drawing was just exceptional. The points were well illustrated and just as I was getting a little fuzzy about a topic one of your sketches would appear.

What was even better was I could actually understand them in the Kindle version. I wanted to congratulate you and welcome you to the podcast.

Dave Gray: Thank you so much, Joe. I'm really, really happy to be here.

Joe: I want to start right out and get in the meat of things. You state in your book that everything is a service. You go into a discussion about service dominant logic right at the very beginning. Can you explain that logic and what it means to us?

Dave: Manufacturing, in the history of the world, is a relatively new concept. It's not that people didn't make things before we invented the assembly line and before the industrial revolution but most things were made in a custom fashion. Before Henry Ford, for example, the making of a car was actually a service. Just like getting a tailor-made suit, What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems you would go to a car company and they would interview you. You would describe the kind of car you wanted and they would make a custom car for you.

The big innovation that happened during the industrial revolution was this idea of mass production and assembly line. The basic idea is a division of labor. You take a big task. You divide it among a number of people. You say, "OK, these people are going to do these different tasks and by each person focusing on a very particular task you can actually mass produce a lot of things in very efficiently."

That presumes that those things are pretty much identical with each other. You're manufacturing or mass producing something. That's just basic manufacturing, industrial age thinking.

What I mean when I say, "Everything's a service," or when I start talking about service dominant logic. What I mean is starting about 1940 the percentage of the economy that's based on services as opposed to manufacturing has increased to where now it's probably about 80 percent of the economy that's based on services.

Even manufacturing is changing. When you think about manufacturing the more different kinds of products, you're putting out of a factory, the more that manufacturing starts to look more like a service. Does that make sense?

For example, if a factory never puts out the same thing twice it's actually really a service, isn't it?

Joe: That's a good way to look at it. Yes. What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems Dave: What's happening in manufacturing? What's happening is most of the innovation in manufacturing are actually moving it towards being more of a service. More customization, more ability to... If you look at where the big innovations are happening in manufacturing, and you're a lean guy so you know all about Toyota. What happened in post-war Japan was they had a smaller market than we did in the U.S. so they couldn't actually just tool up a factory and make 10,000 white Honda two door sedans. They had to actually be able to manufacture based on demand.

So really, if you think about pull manufacturing, what pull manufacturing is all about is the customer makes an order or as soon as the customer buys something and takes it off the lot that pulls another similar car to the lot. What's happened in Toyota is Taiichi Ohno, the engineer who is the father of the Toyota Production System, his inspiration was a Piggly Wiggly store in the U.S. where he saw people taking stuff off the shelf and the people from the backroom stocking the shelves.

That's a service, right? A retail store.

Joe: What you're saying is that every customer wants to be treated special?

Dave: Every customer wants to be treated special. The more that we can treat them special, the more that we move toward treating them special, the more we move towards service, even if we're providing those services through some kind of a factory at some point. If you look at manufactured devices, most of them are platforms that deliver services. For example, if you have an iPhone and you look at your phone, it certainly is a manufactured product. Every iPhone coming out of the factory is identical. But as soon as you get it, you start to customize it. The way that the whole iPhone ecosystem is every What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems time you're using it; you're using a service. You're using it to talk to someone. You're using it to solve a problem. And so, every iPhone coming out of the factory may be identical but within a week any two iPhones are going to be very, very different.

Joe: That's where we go into that service dominant logic part that the value is co-created.

You're saying that the value of an iPhone doesn't, even though you pay for it, isn't really created until you put it into service.

Dave: That's right. I mean, really, when you're buying an iPhone what you're really buying is you're buying an Apple Store that you can carry around in your pocket.

Joe: How does that relate to the connected company? Can you explain what the connected company is?

Dave: I talked about, for lack of a better word, the industrial age company, which is a form of a company that most of us are familiar with today, that still most of us work in. It's a company that's based on this principle of division of labor. At a very fundamental level, these are divided companies. A connected company is, in many ways, the opposite of a divided company, so it's not based on the principle of division of labor. It's based, actually, on a principle that's more like the connection of labor. To put a little meat around that, you think about the way that we organize work today. We divide up the work, and different people have different parts of the work.

That works really well in a factory environment when you're producing a single thing, and you want to produce it at volume, that people can specialize on their little piece of the What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems puzzle, "I'm the guy who puts the hubcaps on," or whatever. You can specialize on that little piece, and the work can be done very efficiently.

But, the same principles do not apply when you're delivering services. When you deliver a service, it's very important that you have a sense of the whole at all times. When you're in a manufacturing environment, it's OK to own a task, but a service experience is very different. If you're providing a service, you have to own the customer. You have to own the customer's problem, not just a task, and we all know what this feels like.

Those of us who have been through a typical hospital experience knows what it feels like to be a cog in the wheel. You usually have to talk to five, six, seven, eight, maybe nine different specialists when you're in a hospital, and each one of them owns a little piece of the task. But none of them may you feel like they own your illness.

Now, that's a bad service. That's a service that's designed as if it were a factory, and that's why hospital experiences are often so negative. Hospitals are not designed to deliver services the way services should be delivered. They're not designed to deliver excellent service experiences. The service experience that a hospital delivers that's excellent is for the staff, not for the patients. Everything about the way most hospitals are designed is they're designed for the convenience of the staff.

Joe: Well, you bring two thoughts to mind. One of them is that there seems to be separation between service and a process, even though it's kind of that factory thing, is that we process a person through the hospital, but really to be a service, you really have to maybe not co-create, but you've got to have overlapping and sharing of responsibilities.

You've got to work together.

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Podcast Transcription Implementing Lean Marketing Systems Dave: Yes, absolutely. Think of, let's take an industry that's really good at delivering services. The hospitality industry comes up quite often; retail comes up quite often. A retail environment, when you walk into a... Do you have a favorite retailer, a favorite store?

Joe: Oh, sure, a men's clothing store I can think of right away that...

Dave: OK, so what is it about that clothing store that makes you like it, that makes you go there?

Joe: Well, first is that the person greets you by name. It's like they know who you are, they've been there a long time, and all of a sudden; you're part of the surroundings, there's not a salesman-purchaser conflict. When I don't know the person, it's like, "How can I help you?" "No, I don't want help." But this one, they just greet me.

Dave: There you go, so you have a relationship, and its iterative, and you're going to come in, and... It's not like when you go into that men's clothing store, you always have the same problem. You probably are going to be seeking guidance, or help, or whatever from the people who will deliver that service, right?

That's another thing about service experiences. They're highly variable. They're not consistent and predictable the way a factory is. A customer needs and wants are variable.

What might make you happy today, like, let's say, someone not bothering you in store, might actually piss you off tomorrow when you want attention. The same activity could be perceived by you as both good or bad depending on the context, depending on your mood, What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems what you're trying to achieve, and so forth, so a good service has to be able to absorb a huge amount of variability in demand, lots of people coming in at once, or boom and bust cycles, and so forth.

As you pointed out, services are highly iterative, so when you go into that store, it's not just like someone says, "OK, what do you..." Factory kind of approaches, "Well, we've got either A, B, or C. What do you want, the A, the B, or the C?" Joe: Does that mean as an organization that I just have to turn my people loose, that I just have to take away even all the phone scripts, and all the greeting scripts that we know "works," leave them just shoot themselves in the foot and give them that freedom? How, as a business owner, do I control my destiny?

Dave: Well, that's a good question, and certainly you can't do that just from one day to the next. You can't on Friday say, "OK, on Monday, we're going to..."

Joe: Be a connected company.

Dave: Right, but it definitely does mean... I mean, when it comes to absorbing variety, a variety of demands, making judgment calls, making decisions, there's no better business tool than a human being. There's nothing better than a person who is exercising their creativity and judgment to make that service experience as good as they could possibly make it. The more that you add scripts, and rules, and procedures, and so forth, the more you actually limit the ability of those people to provide great service experiences. Every procedure, every rule that you add, is reducing the scope and ability that they have to do those things.

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Podcast Transcription Implementing Lean Marketing Systems A connected company is a distributed control system. Within a connected company, you want to distribute control as close to the customer as you possibly can get it, because the more control and autonomy that people have at the point, they meet with a customer, the more they're going to be able to provide a great service experience.

Now, of course, they're going to need support to do that. They're going to need tools.

They're going to need infrastructure. They're going to need all the kinds of things that they need today, but what you have to give up as a senior leader is the ability to write the scripts, basically to program them, to operate in a certain way.

The reason for that being, there's no way you can predict the variation and variety of the kinds of demands that they will have to deal with, so the only way you can actually build a company that can absorb that kind of variety is to scale those people up and train them. I use an example of American football versus basketball.

Football is a relatively slow moving game. At the end of every play, the ball is called dead, and the players go back, and they line up exactly the way that they were for the last play, so the beginning of every play is predictable. You know that the players are going to be lined. You know that you're going to have a period of about 30 seconds or so to call the play, and then you call the play, right?

Now, if you're a coach of a football team, you can have a lot of control in that kind of environment. You can call in the play, and a lot whom do; you call in the play by radio to the quarterback's helmet and you'd actually be calling the plays from the sidelines, and having a lot of control over the game.

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Podcast Transcription Implementing Lean Marketing Systems Now, if you compare that to basketball, basketball is much more like a service environment. It moves extremely rapidly. The ball is not called dead that often, the play is always beginning from a different configuration. The players are not specialized. They have a lot of overlap. Any particular decision that needs to be made on the court has to be made by the player at a split second based on the context and the immediate situation. So, a basketball coach has very little control over what happens in the game.

What the basketball coach has to do is focus on the skills and ability and the teamwork and be constantly drilling and working with those players when they're not in the game so that when they are in the game, the players can run the game. What we're talking about in a connected company is a lot more like basketball where the actual players are going to have to make the decision in the field, because the time that it would take for them to get your permission or to call back to the home office to get a confirmation or permission to do X, Y, and Z just takes too long. The time lag destroys the service experience all by itself.

Joe: I'll keep on the basketball and football analogy -- but you're saying that I need to form my team to know what they conceptually do. Like, I'm a fast-break offense team. I'll date myself a bit here, but it's show time; I'm the L.A. Lakers. I'm going up and down the court, and that's the style of team we are, so my players know that. We recruit, develop around that. In the same token, a connected company, that's the type of company I am, and that's what I have to train people in.

Dave: Yes, that's exactly right, that's what I believe. I believe that in this highly complex, service-driven world that we're moving into and have been for decades now, creativity and skills are more important than ever, and yes, you need to know what is the job that you're What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems doing for customers, and what are the core skills and capabilities, and what is your strategy definitely in the sports sense of strategy? We're going to have a fast running game; we're going to wear out the other team. And this is what happens in a service environment, right? As soon as you get better at something, you start getting more customers; your competitors are going to notice. The bar is going to continually go up, and if you'll notice the U.S. in the car rental industry, Enterprise Rent-a-Car was a pioneer in getting customer feedback and actually incorporating that feedback to improve their service. They've been doing that for probably 20, 25 years or so now. I may be wrong about the amount of time, but it's been a while.

In fact, what's happened is, their competitors are keeping up with them, and if you look at the last 10, 15 years, customer satisfaction in the car rental industry as a whole has gone up quite a bit. So, being better than your competitors today does not mean you're going to be better than them tomorrow unless you're improving at an equal or faster rate than them. It's just like sports, right? Your competitors push you to be better, and you're pushing each other to be better all the time.

Joe: Well, in the end, it's like you still get to have time outs, right? We have our daily meetings and our weekly tactical and then we sit there and say, hey, here's how we adjust and go back out.

Dave: Yes, in fact, timeouts are really important. There's a great study in a Bank of America call center where, because the timeouts and the practice sessions, those are the times when people actually reflect on what happened in the work, and that's where a lot of the learning happens when people just have the conversations about, "Well, what did we What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems do well? How could we do better?" And what they found in this one study was, simply by allowing the people who worked on this call center floor together to take their breaks at the same time...they used to be staggered. So the experiment of letting them have their breaks at the same time productivity increased by a dramatic amount.

In fact, the savings that they claimed in that study was millions of dollars just based on letting people take a break together so they could talk about...and it wasn't that they had some agenda. It wasn't that there was some big training program. It was just that while these people have their breaks together they talk about the challenges and issues that they were having when they were in the work environment.

Joe: Well, I have to ask you, because at least once and maybe a couple of times, you refer to Lean and Dr. Denning in your book. Is there a relationship between his work and how connected company works?

Dave: Oh, absolutely. Fr example, take the Toyota production system. What is the Toyota production system other than a method for giving the workers on the factory floor, the power and the autonomy and the ability to continually improve and learn and improve their work? I mean that's what it is, right? That's what the system is for.

Joe: Certainly.

Dave: And it's for them to be able to understand it and look at it as a system. What has not been built into most industrial organizations is the ability to learn. So what we've done is, and what industrial manufacturing and division labor is really good at is doing one thing in a predictable, reliable, consistent way. It's not good at learning. It's not good at What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems continuous improvement. That's not really what your typical assembly line process and kind of manufacturing systems are good at.

That is something that is, in fact, I think we both know, at least in the U.S., they have struggled with, and continue to struggle with in many cases, because efficiency and learning are actually in direct opposition with each other.

I mean, at least in some ways they are. If you're doing the same thing more and more consistently over and over and over, you're getting incrementally better, but what are you actually learning?

Joe: Not much, probably, the same thing.

Dave: Right. Yeah. You're learning maybe how to do that thing...

Joe: Dexterity.

Dave: ...a microsecond faster, or how to conserve a little more energy as you twist between lever A and knob B. But what...learning requires inefficiency, because learning requires experimentation. Think about the Toyota manufacturing system. We think of it as this paragon of efficiency, which it is, but it's counterintuitive, because it doesn't seem like it would be efficient to stop the whole factory because one worker has an issue. In the short-term- term, it's inefficient to do that, of course. It's inefficient to stop the whole factory, right? I'm sure I'm preaching to the choir here. In the short term that's inefficient.

In the long term, it's efficient, because everyone in the factory starts to understand the factory as a system. When you start studying that system and when you stop the factory What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems and everyone says, "Well, why is this problem happening, and how can we avoid this problem happening in the future?" you start to create an environment within which not just one individual is learning, but the whole factory is learning together.

Joe: Those are great points, but you bring up something that bothers me a little bit?

In Lean, we discuss performance gaps, and I'm thinking more of service now. W always had like Serve Qual as our measurement tool for the different performance gaps. In a connected company we have customer co-creation, and we're working together to measure it. How has this changed our measurement structure, because how do we determine gaps now to improve them?

Dave: Well, now here's the thing about services. The only real judge of service quality that makes any sense is the customer, right? The customer is actually someone you don't control outside your system. So you want to have a strong measure of service quality, and you want to be able to improve. You can ask customers to rate you, but they're probably not going to spend a lot of time with you, unless they're invested in a relationship, unless they really believe they're going to be heard and you're actually investing in a relationship with them.

There's a tool that I really like called a net promoter score, which has two components, a quantitative and a qualitative component, that actually can deliver a lot of results for organizational learning. In fact, it was a tool that was pioneered by Enterprise Rent-a-Car, which I mentioned earlier.

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Podcast Transcription Implementing Lean Marketing Systems The net promoter scores two components. The first one is a numerical score. So you ask the customer, "On a scale of one to 10, how would you rate us? How likely are you to recommend the service to a friend or colleague?" It gives you a score.

Based on the score, and there is research behind this, they will categorize this customer as either a promoter, which is someone who's likely to...not only likely to be a repeat customer, but likely to talk you up to other customers and help bring you more business. A passive, which is someone who can take you or leave you and they'll be likely to leave you if a competitor comes along offering, let's say, a better price. Or, a detractor, which is someone who is going to badmouth you and probably lose your business. They're a customer you don't want, probably not even profitable.

So once you put people into this category you can start to segment your customers into the ones who are going to help you grow versus the ones that are going to retard your growth. The second question you ask is, "What is the primary reason for your score?"

Because just the fact that you got a nine out of 10 from your customers doesn't tell you anything that you can actually...it's not actionable. You can't use that to improve. So what you need to know is why you got that nine out of 10, or if you got a four out of 10 why you got a four out of 10, and what needs to change.

And so by asking the second question, the qualitative question, you actually get the feedback that you can use to improve your service quality in the organization. The companies that are doing this really well are putting their net promoter scores front and center in the organization and giving it the same kind of attention that they give to the What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems profit and loss statements. So they're giving the same kind of attention that they're giving the financial numbers.

Joe: But doesn't the net promoter score have to be pretty specific? I mean wouldn't my net promoter score if I were Amazon might be different for different Kindles?

Dave: Why do you say that?

Joe: Oh, I'm just thinking that...or Dell. If I have a net promoter score for desktop computers versus notebook computers, or Apple, I mean isn't that going to be maybe different?

Dave: I think from the customer's perspective; it's all Dell, right? I mean from the perspective of the customer...the classic example is, oh, what's his name...Jeff Jarvis, who complained about Dell because he bought the in-home service plan, and they couldn't get to his home. His laptop blew up and they couldn't get to his home. Well, it doesn't really matter what kind of computer he had. If they're unable to service it, and they're unable to deliver on their promises, it's going to result in a pissed-off customer. Whether it's a laptop or desktop, the feedback is, "Well, the thing doesn't work."

The way the customers express their problem is definitely probably not related to one specific device here and there. People may express problems or dissatisfaction with the Kindle if you tie that to a specific device or a specific interaction, certainly you can learn more from that, of course.

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Podcast Transcription Implementing Lean Marketing Systems The beauty of the net promoter score is its simplicity. You're not telling the customer what you want feedback on, which gives them the freedom to tell you. So it focuses you on the things that are most important to customers.

So if you say...I've got a rental car, and I give you...you call me to do my net promoter score, and I say, "I'll give you a four, and the reason I give you a four is because it was hard to...you didn't give me a map, and it was hard for me to find my way back when it was time to turn in the car. Well, that's great. Now it may not be easy for you to put that into a category, but you now have is, you now have an issue that's a high priority for a customer, and you can start to aggregate that with other high-priority issues. The problem with a lot of this feedback stuff is that you, the company, go to the customer with your own categories that the customer maybe doesn't care about, and then the poor interviewer is trying to take feedback from the customer and put it into categories that don't make any sense.

You get these numbers at the back of the senior management, and you're looking at these numbers, and you have this illusion that, oh, well, so many...this percentage of the complaints were about X, and this percentage were about Y. Well; the fact is you've stacked the deck by setting up those categories in advance. You didn't let the customers define the categories.

Another issue with asking customers too many questions are the only...when you have a survey that's more extensive or takes more time, or whatever, what's going to happen is, you're only going to get the feedback from the customers who are willing to go through that process with you so your sample size is reduced, and it's probably reduced in a What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems negative way because customers who have the most time for you are probably your, in many cases, your least valuable customers.

Joe: How do you become a connected company?

Dave: The reason I wrote the book was because I had that question myself, and not only how do I become a connected company, but what even is a connected company? What does it look like? And my belief is that I think most people, many people if not most, have come to the conclusion that the way that we're doing things in organizations is going to need to change. Customers are networked. They have supercomputers that they carry around in their pockets. We know that the way that we have down things in the past is probably not going to work for the next 100 years, and so...but the question that I don't think that a lot of people has answered is, "OK, well, what is that organization...if the organization of the 21st century is different than the organization of the 20th century, if it's different than the industrial age company, what is it...how is it different? What does it look like?"

What I've tried to do in the connected company book is to lay out a blueprint and say, "This is what it looks like." There's not a lot in the book about how to get there. There are maybe a couple of chapters on that. The primary point of the book is a blueprint of what it looks like when it's done, when it's done well. I have lots of examples as you've seen of companies that are doing it, companies that are doing it well, and what the things are that they're doing that are working.

The challenge of getting from an industrial age company with some deeply embedded routines and behaviors that are going to be very difficult to change to a connected What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems company is absolutely not an easy one. In fact, it's quite a difficult one, and it's going to be different for every company. It's like you can imagine, Joe, the problem of changing a football team into a basketball team.

Joe: But then, on the other hand, it's kind of interesting that the hurry -up offenses and changing personnel on the fly is how a football team becomes more like a basketball team, a connected company, right?

Dave: That's right. The fact that it's not easy is not a reason not to do it. In fact, it's my belief that every company is going to need to move in this direction and the sooner that you start that process the better off you're going to be. The more you delay that process the more you decrease your chances of long-term survival.

Joe: And I think you do a good job in the book of using examples of established companies that are doing it within the industries. They happen to be many of the leaders.

It's kind of proof in the pudding there.

Dave: I do think, especially for large companies, that without committed senior leadership or without leaders that are committed to making it happen it's not going to happen.

Joe: Does it have to be this great leap of faith for it to happen? Do I have to be saying, "Oh, gee. I'm going to become a connected company and I'm willing to wait two or three years for it to evolve to that."

Dave: No, I don't believe so. I believe...Since connected companies are networks, you can start a network with a single node. What you can do is...The way that I would suggest What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems that a company go about this is to say...Sit down with your team and say...Whether you're the senior team in the company or whether you have a department within a company or a group or whether you're a part of one office, branch office, what have you. One plant, whatever. Sit down and say, "How would we reinvent our company, division, business unit, what have you? If we were doing it as a startup today, how would we do it?" Forget all the legacy. Forget all the history. Forget all the legacy systems, infrastructure, whatever. If we were going to start from scratch today, what would we do?

The good news is that...The bad news is somebody out, there is doing that already. You know that. Somebody's out there redesigning their business as a startup today. The good news is it's cheap. It's never been cheaper or easier to start a new business.

If they can do it, if the kids in the garage can do it in Silicon Valley so can you. The good news is it doesn't take a lot of money. It doesn't take a lot of investment. What it does take is a willingness to rethink and in fact, even cannibalize some aspects of your current business. You must be able to be brave enough to compete with yourself.

What you can do...As a large company you have the advantage of...You can take a lot of swings. You can make a lot of small bets. So as a large company one advantage you have is you can actually seed or fund or create five, 10, 15 different ways to compete with your current business or ways to compete for your current customers, to reinvent your business as a startup.

That's why we talked a little earlier...Maybe it was before we got on the podcast when we talked about Alex Osterwalder and the Business Model Generation book and the Business What happens if we think of the Company not as a Machine‌ Copyright Business901

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Podcast Transcription Implementing Lean Marketing Systems Model Canvas, which I think I think is one of the most powerful tools out there for rethinking your business as a startup.

What you can do is get one, two, three or 10 of these little startup experiments going. Do them in such a way that you're not...It's a relatively safe environment. If you're a global company, you can do them in different countries. You can do it in a way that you're minimizing your risk.

But then you only have to scale up and invest in the ones that work. Think like a Silicon Valley venture capitalist instead of a control freak. You want to have those pilot experiments and you want to fund them and you don't expect them all to succeed.

Joe: What you're saying is really is to prototype certain parts of my business, put two or three of them out there and pick the winners.

Dave: That's right. Let the best business model win. You have your current business model. You have these people out in the world that are trying to disrupt your current business model. Put some of fraction of your strategic investment into trying to disrupt yourself. Create those little startups. Give them the autonomy. Don't tie them to the mother ship. Don't tell them what to do. Give them the goal of taking down your business.

It's kind of like blue team/red team when they have war games. One of the best ways to train, to think outside the box in terms of your military strategy is to take half your armed forces and simulate war games where they try to take you down because they know you as well as anybody.

What happens if we think of the Company not as a Machine‌ Copyright Business901

Business901

Podcast Transcription Implementing Lean Marketing Systems Joe: I want to ask one last question here. Bring us back to the very beginning. If I'm a product dominant company, if I'm a goods dominant company and think that way and I'm going to become a connected company, is it all about services? I think somewhere in your book you say, "Your product is just an avatar." Do I have just to think about services? Is that the way to develop my company?

Dave: I'll put it this way. No matter what your product is, no matter what it is, I guarantee you it is part of a larger service. What do products do? They do jobs for customers. A car gets you from point A to point B. A car provides a transportation service.

A lawnmower provides a lawn mowing service. No matter, how much of a product it is...

Let's take a vacuum cleaner, right? A vacuum cleaner provides a cleaning service. It cleans your house. Now, what do you do? You have to...Actually, there's a lot of work involved in a vacuum cleaner. You've got to take it out. You've got to unwind a long cord. Plug it in, all this stuff.

Who's disrupted the vacuum cleaner? A company called Roomba. It's a vacuum cleaner that's a robot. Now, a Roomba is actually a little vacuum cleaner that looks like a little Frisbee and it goes around and it does all the vacuuming itself. It plugs itself into the wall when it needs power. When it doesn't need power, it pops out and it does your vacuum cleaning for you.

Is that a product or a service? Whatever your product is doing, whatever the job your product is doing for customers; that's a service. The more you can think about that as a service the better, the more innovative you're going to be able to be about figuring out.

What's the next big leap in innovation for your product?

What happens if we think of the Company not as a Machine‌ Copyright Business901

Business901

Podcast Transcription Implementing Lean Marketing Systems It's probably going to be around making that service easier. Name a product that's doing super well and I guarantee you that product is thinking about itself as a service.

Even if you are making a thing, the more important focus should be -- -. This is what they mean by service dominant logic. The focus should be on what is the service that your thing is providing and how can you make that a better service?

Because if you're just focusing on making a better vacuum cleaner, you might not come up with the idea of a robot vacuum cleaner. You're going to try to make the handle more comfortable. You're going to try to make it easier for people to do it. But until you start to think of it as a service you're not going to come up with those really breakthrough ideas.

Joe: Where can someone buy the book and how can someone get a hold of you?

Dave: Oh, the book's on Amazon. I'm easy to find. I'm @DaveGray on Twitter.

D-A-V-E-G-R-A-Y. I'm DaveGrayInfo on the web.

Joe: I'm surprised that you got Dave Gray on your Twitter account. You must have been on Twitter for a long time.

Dave: I think I was one of the first thousand people on Twitter, yes.

Joe: I would like to thank you very much, Dave. The podcast will be available on the Business901 iTunes store and the Business901 blog site. Thanks again, Dave.

Dave: All right. Thank you.

What happens if we think of the Company not as a Machine‌ Copyright Business901

Business901

Podcast Transcription Implementing Lean Marketing Systems

Joseph T. Dager Business901 Phone: 260-918-0438 Skype: Biz901 Fax: 260-818-2022 Email: jtdager@business901.com Website: http://www.business901.com Twitter: @business901 Joe Dager is president of Business901, a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He takes his process thinking of over thirty years in marketing within a wide variety of industries and applies it through Lean Marketing and Lean Service Design.

Visit the Lean Marketing Lab: Being part of this community will allow you to interact with like-minded individuals and organizations, purchase related tools, use some free ones and receive feedback from your peers.

Marketing with Lean Book Series included in membership Lean Sales and Marketing Workshop Lean Service Design Workshop What happens if we think of the Company not as a Machine‌ Copyright Business901