When it comes to growth, many firms in 2017 fell into a potentially fatal trap: they overcomplicated.
These firms sent project teams off on multiple different initiatives, a sort of mass attack, hoping it would pay off handsomely in terms of dynamic innovation and sustainable revenue growth. Unfortunately, pursuing too many major initiatives at once didn’t create robust growth. Instead, it caused confusion, wheel-spinning, and ultimately loss of focus.
One team might spearhead a drive to ramp up the firm’s Big Data analytics—a highly complex undertaking that often fails or falls short. Another team is dispatched to develop elaborate customer journey maps with overly detailed personas and “touch points.” Meanwhile, another team is enlisted to help drive a confusing reorg that roils the organization. These initiatives often bogged down and wound up stunting innovation and growth, not unleashing it. No wonder that many C-Suites lost focus on such initiatives and that innovation suffered. In a recent McKinsey survey, an incredible 94% of global executives are dissatisfied with their firms’ ability to innovate.
1. In 2018, firms need to dramatically uncomplicate their growth process. How? Rather surprisingly, the answer is a concept that’s been familiar to all of us since childhood. It’s something our parents told us (though we may have ignored them). In a phrase: Who you hang out with matters.
2. To accelerate growth, the most important thing you can do is to change the people you hang out with. That’s true for individuals as well as organizations. Every parent knows that if their teenagers hang out with sketchy people, it stunts their growth. If they hang out with exceptional people, it propels their growth. Same for aspiring athletes. And for ambitious professionals. Hang out with eagles and you’ll soar. Hang out with turkeys and at some point, you’ll start to gobble! And that’s equally true for the growth of a business (which is, after all, an organization of individuals).
3. The most important people your business can hang out with are your customers. Not your employees. Not your board. Not your investors. Not your advisers. Not analysts. Not the media. All of these are important—but none are as important to hang out (i.e., spend quality time) with as your customers. Especially the right customers. Hanging out with the eagles in your market will make all of those other groups look 5x to 10x smarter. Apple, for example, has always targeted the most imaginative and innovative customers in its markets—designers, artists and other creatives—who helped shape the firm’s legendary innovations, and who continue to pay premium prices for Apple’s products.
4. Pursue your market’s “best-of-the-best customers,” also known as “Marquee Customers.” In 2005, a team led by former McKinsey consultant David G. Thompson,analyzed those companies with the most impressive growth: those that had an IPO between 1980 and 2005 (more than 7500 firms) and achieved revenues of at least $1B (only 387 of the firms). The major factor the billion-dollar firms had in common was that they targeted and built relationships with the best companies in their markets—Thompson called them “marquee customers.” That is, the billion-dollar firms hung out with the eagles in their markets. For example, its relationship with marquee customer IBM transformed little Microsoft into an operating system provider, launching Microsoft on its rapid ascent to a multi-billion-dollar firm. Marquee customer Solomon Brothers accelerated Cisco’s successful entry into the financial services market. EBay’s “power sellers” were key to that firm’s hypergrowth.
5. Get crystal clear on who “Marquee Customers” are and how you’ll “hang out” with them. Your biggest revenue provider isn’t necessarily a marquee customer; it might be an also-ran, uninnovative firm. Neither is a famous brand necessarily a marquee; it might be regarded as irrelevant or a dinosaur by buyers in your market. A true marquee customer is: 1) Influential in your target market; 2) Innovative, and thus able to energize your innovation; and 3) Visionary—that is, able to clearly describe the future state it’s working toward. “Hanging out” with a customer like this means you’re spending enough time with them to co-create a vision–what the field of social constructionism calls a “shared understanding” of the world. You’ll want to hang out with your marquees through familiar engagement tools like advisory boards, branded industry groups, customer communities, user groups and the like.
So, what can marquee customers do to achieve better results for you along the three drivers of growth mentioned above? Look again at their three traits in the paragraph above. We’ll flesh them out, below:
6. Marquee customers are your best resource for robust innovation. The best way to make your designers or developers look like geniuses is to engage them with innovative marquee customers. When data storage provider Rackspace found its business model seriously threatened by giants like Amazon Web Services and Google, it had to make dramatic changes. So it reinvented itself from a commodity storage service to a well differentiated total cloud management service by expanding its engineering support; expanding its platform support beyond Linux to include Windows; expanding its applications support to include network security, email, Sharepoint, website hosting, etc.; and offering client support on other leading public and private platforms—including Amazon! What drove those changes? Hiring brilliant product developers and strategists? No. It was innovative marquee customers like Southwest Airlines and Fidelity—regularly requesting such service and support enhancements—that pulled Rackspace into its future.
7. Marquee customers are your best marketing and sales people. In today’s world, your sales and marketing units don’t market and sell. They’re conduits and enablers for getting customers—especially marquee customers—to market and sell to other customers. Techniques for persuasion are no longer the most important talents marketing and sales need—the ability to extract and tell customers’ stories is. When Adobe mapped out its strategy for offering cloud-based services, it asked two critical questions: Who are the marquee customers we need to win? And what stories do we want them to tell?
8. Marquee customers can dramatically improve customer experience (CX). In addition to improving innovation, marketing and sales, marquee customers are also dramatically improving customer experience. For example, when Microsoft’s business model was seriously threatened by “freeware” from open-sourced Linux—“How are we supposed to compete with free?” was an often-asked question at Microsoft—the firm’s customer community, led by “MVPs” (Microsoft’s version of marquee customers), stepped in. They provided free support, dramatically improving customer support and eventually saving the firm hundreds of millions of dollars. That’s how Microsoft competed with free.
Expecting employees by themselves to deliver a winning customer experience is obsolete—a relic of the 20th century. In the 21st century, employees will get increasingly skilled at engaging customers to drive major improvements in customer experience—in much less costly ways, and throughout the customer journey. For example, Amazon Sales Navigator is using selected customer advocates to prevent nervous customers from defecting when they get discouraged or lost using a new solution. This includes creating customer success stories—usually directed to pre-saleprospects—for post-sale new customers
The continuing theme for simplifying growth in 2018 is this: Among all the resources you have at your disposal, your customers—and especially your marquee customers—are the ones that other customers and prospects want to hang out with at any stage of the customer journey. And therefore, so should you.