Change: Thrive On It Or Put It In The Tip Jar (Part 2) - Reality Check

1. Fearing The Unknown:

Do you know any organization that doesn’t say they welcome new ideas? I doubt it. Yet, why is it most only say it and never adopt these new ideas they want so badly? Every business development executive knows the mantras, “Test & Learn”, “Test, Tune, Scale” etc. Having an innovation strategy and an innovation department has become a critical part of all consultants’ pitches to companies. So, I ask again, how come new ideas don’t get implemented as quickly or as frequently as they should in most organizations?

“Jessie had that idea 2 years ago, how come we didn’t do it?” Sound familiar? Well for new ideas to get adopted people have to do things differently and most often do different things. That means change and change is scary; change is hard work, harder than what you are doing right now. Why? Because change requires you to give up some of the things you are doing now, to refocus what you are doing. Doing new things is “nervous-making” merely because you have never done them before. And because it does involve doing different things it has major implications for human and financial capital .

Most people grow up believing they should work hardest at the beginning, figure out the rhythm and then the more you do the easier it will get. The better you get at it the more efficient you become and the less time you spend at it and the more profit you make. This is the factory model created in the 19th century during the western world’s industrial era but it is still very much in play today. The mere idea of doing things differently or doing different things goes against that grain. Traditional business mantras revolve around “predictability” and reliability” – well by definition these constructs are based on what you have done in the past not the future. Now, lest you think I don’t care about the past, not true. We need to learn from history but not be mired in it.

And the origins of this approach to business actually stem from how we learn and are rewarded in grammar school where learning is about memorizing things through rote repetition. Even in high school, most schools still leave learning about change to the sciences (action, reaction, interaction). Shouldn’t we be teaching all high school students about change – discussing peoples’ reactions to external change, creating change and the impact your actions have on others?

To make matters worse, fear of change is inherently human. Since the beginning of time, man and woman have liked routine. Our internal predispositions (heredity and ) teach us to resist change so that we might always feel in control. This normal fear of change can actually become a full-blown phobia when it is irrational, persistent and very intense, so much so that it can manifest itself with serious debilitating consequences -- Metathesiophobia as it is known (from the Greek; Metathesio = change; phobia = fear). This specific phobia can reduce one’s will to live; Metathesiophobes often feel that they have no control over their lives owing to constant changes. S/he tends to live in the past and may also be . Their phobia makes them unwilling to move, to progress or to change anything from routine. This can severely impact one’s professional and personal lives.

 Fortunately most of us do not have this intense a reaction. But because of the training we get starting in grammar school, new ideas make many people very uncomfortable and some downright angry because we are not taught to deal with them let alone look forward to them. Change should be exhilarating but for most it is far from it.

As a result, when people share their new ideas in organizations they often evoke responses like “We’ve always done business this way and it works.” Or “Later, right now we have too many other priorities.” Again sound familiar? How then do you affect change in an organization?

I’ll somebody at Sony in the late 1980s or early 1990s had an idea about making portable music digital but Sony was so heavily vested in the success of Walkman and Discman that management didn’t take heed or worse the person who had the idea was afraid to voice his thinking. So, for starters, to affect change, to always be ready to evolve, you can’t allow yourself to be defined by what you make or the services you provide now. You need to recognize and act on the premise that your success is based on the you provide your customers, the experiences they have using your product or service – what they get out of it --not the product or service itself. In Sony’s case that would have meant recognizing they were in the business of providing people with personal portable music -- to music anytime anywhere. And so their focus should have been on how to leverage the continuing explosion of new technology to do that.

Change doesn’t just happen; it takes vision, planning and patience to get new ideas adopted by an organization. And, honestly, it is easier to get companies to adopt new ideas if they aren’t doing well because they can’t fall back on their past success as reasons not to change. Even harder is creating a culture that sustains an environment where change is embraced.

2. Embracing Change

How do you develop a culture where everyone in the organization is focused on how to provide better customer experiences using the products and services you offer? How do you create a culture in which new ideas move from just being ideas or projects to being part of the way your organization does business? How does innovation become part of your organization’s culture? How does evolution just become what you do? How do you move from having a strategy focused on “Test & Learn” to having a company that is forever changing to better meet the needs and desires of its customers? How do you create an enterprise culture that embraces change that thrives on it rather than fears it?

• It’s not the physical environment – The Mars Candy Company had an open plan decades before it became popular but I that didn’t make it a company that embraced change. Yet, the right physical environment can be an accelerator.
• It’s not the compensation structure. The Mars Company paid very well but that didn’t make them an enlightened company. Yet, the right compensation plan can be an accelerator.
• It’s not the right technology platform. But, the right platform can be an accelerator. IBM was the leading technology company in the mid 20th century (“Big Blue”) but that didn’t make them a company that had a culture that sustained embracing change.

Because culture is a human construct, we create it and we sustain it. The type of culture we create and sustain is based on the beliefs we hold and the actions we take. So it really is up to you and the people you work with to create the culture you want. If you are shaking your head and saying something to yourself like “ That will never happen where I work.” then you are not ready because you need to get involved. You need to be a catalyst. You need to make it happen.

Oh and yes, championing change can and will be very frustrating much of the time. Sometimes you succeed and sometimes you don’t. People who know me can still hear me muttering to myself under my breath; about some leaders, “Why won’t they listen?” and about some team members; “Why aren’t they trying to think outside the box?” ‘The culture of this company will never be open to change.” Well, I can tell you that just saying, “This culture isn’t open to change.” doesn’t help. It actually makes you part of the problem. If you don’t get beyond this you will get into a real funk that can result in what I call “Jobapause” (More on that in a later installment).

When I say I have had successes and failures it is only fair for you to ask, so what was/is your biggest failure and your biggest success?

3. Learning From My Greatest Failure

My biggest failure was not getting Macy’s to understand that we had entered the Experience Economy and that brand experience was the only sustainable competitive advantage we had. Strategic investments in that experience, especially in-store but also digital, should take priority over other things.

When you recognize that even in 2017 most analysts would say that 90% of all retail transactions were still happening in a store, you quickly come to the conclusion that people want to shop in stores they just don’t like (often hate) the experiences. So, to create WOW branded in-store experiences, those “surprise and delight experiences people so glibly talk about but rarely deliver, would seem to be an opportunity a retailer would want to seize – especially when it is something there biggest enemy, Amazon, can’t do. Sound like “woo-woo” to you? At the time (between 2008-2015 when I was at Macy’s) it did to most people at Macy’s but it wasn’t woo-woo then and it certainly isn’t now.

As Jim Gilmore and Joseph Pine clearly demonstrate in their pioneering work defining The Experience Economy*, (originally published in HBR in 1998!) much of the world has moved through the product and the service economy. Today for the most part products and services have become commodities. We now live in a world in which consumers – people and businesses – will pay the biggest price premiums for meaningfully different brand experiences.

You can get most designer sportswear many places across many price points and through many channels (in-store, on your computer, on your phone, etc.). Similarly, you can have the same meal out (or have one brought in) from a myriad of places. So why pick one place to buy your designer sportswear or have that meal over another? It’s the experience you want. Embracing this notion in the case of a company like Macy’s means looking really hard at the current experience you give your customers vs. the ones they want. In their heyday department stores were a place people looked forward to going to see, feel smell and yes buy things they couldn’t easily get anyplace else. Overtime the store experience has become commoditized such that if I blind folded you and took you to a department store in the mall of most major cities and then let you open our eyes, you would be hard pressed to tell mw what store you were in. Department stores are supposed to be fun places to shop people look forward to going to because they are different and yet when you drive up to a store in a typical mall you would think you were driving up o a fortress that was trying to defend itself from consumers by creating a big concrete bunker – no windows, no fun adornments on the outside, no visual excitement to spark a “I wonder what’s going on inside” reaction. And then when you enter the store you are presented with a sea of sameness that is chaotic, hard to navigate, uninteresting and totally devoid of stimulation – a far cry from what made department stores great in their heyday.

And yet with the advent of augmented reality, artificial intelligence and 3D printing the creation of “surprise and delight should be easier and cheaper to implement than ever before. As Darrell Rigby from Bain noted as early as 2011, “This is hardly beyond the realm of possibility. Jordan’s Furniture, a New England chain, achieves some of the highest furniture sales productivity in the country by using themed “streets” within its stores, a Mardi Gras show, an IMAX 3-D theater, a laser light show, food courts, a city constructed of jellybeans, a motion-simulation ride, a water show, a trapeze school, and special charity events. Cabela’s and Bass Pro Shops not only have some of the highest--rated websites; they also have some of the most engaging physical stores. These kinds of store experiences are expensive to create. Might digital technology improve the customer experience in stores more cost-effectively?”

Now some of you might say sure but no one pays (more) for a great experience and so investments in creating them aren’t justified. CFOs are quick to say where’s the ROI on experience? And yet, consider the county fair. In most instances you pay an entrance fee that merely gives you the privilege of getting in so you can spend more money on rides and food. Now, that means those of you who have been to a county fair have actually paid for an experience – no goods and services were exchanged, --you merely paid for the ability to experience a fair.

I wish I could say people will want to pay just for the experience of going to a web site or a retail store. BUT, I do believe that they would be willing to pay more at that store than someplace else if the experience was that much greater than the ones they could get anywhere else. Food and grooming services are of course a natural (something department stores did very well in their heyday and some specialty stores like Alta are doing today), but what about community events, concerts and other forms of entertainment and education. How about flea markets or farmers markets in those empty parking lots? Even more bold, rather than selling off landmark real estate in major cities around the countries, create hotels where people can have a chance to see, feel, smell and taste the totality of the Macy’s brand. The Head Of Selling Effectiveness at Macy’s) looked at me when I said this and said, “Now how are you going to get folks to see this? They are retailers.” I guess that was the crux of the problem – they saw themselves defined by and confined to the products and services they sold, not the experiences they afforded.

Over my 8+ year stint at Macy’s I constantly tried to convince people that this was the new reality; that this required us to refocus priorities, to create fun exciting Macy’s brand experiences that people looked forward to because they could only get them by engaging with Macy’s; and that providing an amazing and unique experiences was central to the truth of the Macy’s brand and “The Magic Of Macy’s” as our advertising tagline went. I tried to excite senior management, I tried to get my colleagues and my team to join me in this crusade but somehow I could never get this notion and its implications to take root. Well I learned a lot from interrogating my actions and the reactions I got, many of which are reflected here in the pages to come. The good news is that recently I think senior management at Macy’s has begun to recognize and act on what I was talking about a decade ago. I can see it in some of the initiatives that they have recently begun to explore such as using augmented reality in the furniture department, their recent acquisition of Story and creation of a Chief Brand Experience Officer. I just hope they have a clear and comprehensive vision for the totality of the kinds of experiences they want to provide and that then they stay the course.

 4. Learning From My Greatest Success (es)

Fortunately I can say I have had a few. One I will tell you about in a follow up installment when I talk about ways of engaging the organization and galvanizing support for new ideas that move companies forward.

I am most proud of the teams I have built. They taught me more about leadership that inspires people to embrace change than anything or anyone else. While no longer in tact in the same organizations’ I once worked, I see clusters of them around the world building their own teams of change agents. The most important thing they taught me was the importance of encouraging collaboration based on mutual trust and respect – real teamwork. Sounds obvious to some and simple to others. But it is neither. More about my perspective on how to build them in subsequent installment

One of my greatest business successes was at Citi. Shortly after 9/11 we were trying to figure out how to get consumers to spend more on our credit cards than competitors. My boss, Citi’s CMO, organized a brainstorming session for her global marketing team and Citi’s Credit Card Business team. I had an idea but wanted to be sure that when it was unveiled it became OUR idea so as to coopt the credit card team as well as the rest of global marketing. We started the meeting by talking about consumer trends and the American state of mind after 9/11. I lead the discussion talking about the shock and fear people were feeling – a “New Vulnerability” as I described it then. In particular I highlighted Americans’ hunger to feel safe and secure in this new world where outside forces can suddenly and tragically turn your world upside down. I then moved us into a discussion about what benefits our cards offered asking the room in particular what security benefits they offered. Well knowing what they were I waited until someone said ”identity theft protection”. To which I said “And its free right?” The light bulbs in the room went on and all at once everyone started talking about the opportunity to leverage our identity theft protection in marketing. You could feel the excitement in the room. With that Citi’s Consumer Advertising Chief, set about working with our fabulous team we had at our agency, Fallon Worldwide, to develop what became an EMMY award winning “Identity Theft Protection” advertising campaign. More important than winning awards it drove our business mightily capturing the hearts, minds and wallets of millions of Americans.

• The idea was right (people were looking to government and companies they trusted to help protect them),
• The campaign was right (it raised consciousness to the potential of identity theft and what one company was doing to try and protect you from it) and
• The timing was right – frankly it still is today.

OK, So What?

My failures and my successes have taught me a few things about how to increase the odds of creating and sustaining a culture that thrives on change. They revolve around the two roles we all must play in business and in life if we are to forever strive to evolve our businesses and ourselves.

1. Leaders who champion new ideas and embrace change – who champion new ideas in business, community and personal relationships.
2. Team members who are change agents, people who galvanize their leaders, colleagues, subordinates and business partners to make new things happen and have the ability to evolve themselves.

Even the head of a very large enterprise must be a team member as well as a leader -- Member of the board as well as CEO. It’s being a leader and team member that thrives on change that’s the hard part. You don’t need to have all the right answers but you do need to ask the right questions and open to the answers you get.

But, not to worry, as I said at the beginning, the good news is that what it takes to be a great leader and a great change agent are learned behaviors and personality traits most people can develop.

Depending upon the feedback I receive I will publish additional installments.