Why JC Penney's 'Fair and square' pricing doesn't work. We like being shafted!: Bob Sullivan

Photo courtesy Business Insider

You might have seen recently that iconic retailer JC Penney is slumping badly. You almost certainly have seen the reason why: A massive, creative and aggressive new advertising and pricing campaign that promises simplified prices.

No more coupons or confusing multiple markdowns. No more 600 sales a year. No more deceptive circulars full of sneaky fine print. Heck, the store even did away with the 99 cents on the end of most price tags.  Just honest, clear prices.

Sounds like a sales pitch aimed at consumer advocates and collectors of fine print frustration, like me. As it turned out, it was a sales pitch that only a consumer advocate could love.

Shoppers hated it.

The campaign, which launched on Feb. 1, appears to be a disaster. Revenue dropped 20 percent for the first quarter compared to last year. Customer traffic fell 10 percent. Last year, the company made $64 million in the first quarter; this year, it lost $163 million.

Could we have a moment of silence please for what might be the last heartbeat of honest price tags?

Not only did Penney’s plain pricing structure fail to attract fair-minded shoppers –   business reporters wrote with seeming glee during the past few days that it “repelled” them.

Don't blame Ellen DeGeneres, the spokeswoman for the Penney’s plain pricing campaign. If only executives at the firm were familiar with the work of behavioral economist Xavier Gabaix and the concept of "shrouding," all of this could have been avoided.

Seven years ago, Gabaix and co-author David Laibson wrote a brilliant (if depressing) paper on shrouding and "information suppression" that should be required reading for all consumers and executives considering a harebrained new pricing strategy. The principle is simple, and shows why cheating is rampant in our markets and why honesty is rarely the best policy.

First, a definition of shrouding:

In days gone by, price tags were simple. An apple cost 10 cents.  A cup of coffee cost $1. But today, the consumer marketplace is far more complicated, giving sellers the opportunity to create confusion. Many items have follow-up costs that make the original price tag meaningless. 

Computer printers are the classic example. You might get a great deal on a printer, but if the ink is expensive, you lose in the end. In fact, Gabaix argues that it's impossible for consumers to intelligently shop for printers. No consumer knows how much ink costs -- the cartridges don't come in standard sizes, the amount of ink used to print varies and ink costs are unpredictable. That makes the true price of a printer "shrouded," in Gabaix's terminology. Not quite hidden, but not quite clear, either.  Advantage seller. It's easy for printer companies to lowball printer price tags and overcharge for ink, enabling them to print money.

If you think about it, shrouded price tags are everywhere. The hotel website might say "$99 a night" but you know the bill will be more like $120 or $130. Pay TV companies promise $30-a-month service, which ends up costing more like $50. And what happens when you buy a TV with a store credit card that offers an upfront discount but a complex interest charge? And so it goes.

Consumers complain about this constantly. That's the basis of the Red Tape Chronicles in fact. At its best, the maddening mixture of coupons, rebates, sales and fine print fees can feel like a game. At worst, it's being cheated. You'd think shoppers would love a chance to buy from a store that doesn't play these games, the way car buyers (allegedly) like shopping at no-haggle auto dealerships.

They don’t, says Gabaix, and Penney should have known better.

“I think it was an ill-advised move,” he said. 

All this price manipulation is really an information war, he says. Shoppers hunt for the tricks that let them save money. Stores hide booby traps that let them take money. It's a bad system, one I've labeled "Gotcha Capitalism." But it is the system we have now.

And it's simply impossible, Gabaix argues, to be the one company that attempts to bridge this information gap.  If a firm tries to educate consumers on tricks and traps, and tries to offer an honest product, a funny thing happens: Consumers say, "Thank you for the tips," and go back to the tricky companies, where they exploit the new knowledge to get cheaper prices, leaving the "honest" firm in the dust.

“Once you educate consumers on the right way to shop, they will seek out the lowest cost store, and that will be the one with the shrouded prices,” he said. “Once they are savvier consumers, you make less money from them.”

Gabaix calls this the "curse of debiasing." And it leads to this depressing conclusion: "Shrouding is the more profitable strategy."

To oversimplify for a moment, here's Penney's problem. They told the world that retailers only offer their best prices during crazy sales, and Penney stores would no longer host them. Sensible consumers apparently took that information to heart and decided to simply wait for such sales at other stores. As an added benefit, Penney lowered consumers' search costs, because they now knew they didn't need to bother driving to a Penney’s store anymore.

That's probably not what new Penney CEO Ron Johnson had in mind when he decided to spend his marketing budget on those witty DeGeneres ads. A former Apple Inc. executive who took the Penney’s job in November, he thought he was lifting the store out of the brutal commodity clothing market. He may ultimately succeed at that. But he won't do it by telling customers the firm's pricing is fairer than at other stores, Gabaix believes.

"It will be a very, very uphill battle," Gabaix said. "So, sorry for them."

There have been a few other celebrated efforts by companies to educate consumers that their higher prices are really lower prices after hidden fees. During the last decade, Intercontinental Hotels experimented with up-front pricing that included all fees on its website. Executives at the firm told the New York Times that customers left in droves, choosing competitors with lowball prices. 

More recently, Southwest Airlines has undertaken the most aggressive anti-shrouding campaign to date, picking on other airlines' baggage fees. The profitable carrier is holding its own with its "Bags Fly Free" campaign, but there are indications that the firm won't be able to resist all that free money forever. In what may be a sign of things to come, Southwest elected to leave AirTran's baggage fee structure in place after it acquired the competitor last year. 

Shrouding isn't the only reason Penney's pricing plan is flawed. The firm is also leaving a lot of money on the table by rejecting a phenomenon known as "price discrimination." Some people have more money than time, and some have more time than money.  Some shoppers don't mind spending hours to save $20; others would gladly give a store $20 to escape quickly. Smart retailers get money from both. By killing couponing, Penney has eliminated its ability to satisfy price discriminators.

And as others have pointed out, markdowns serve the age-old retailing trick of "anchoring." For some reason, even very smart consumers feel better paying $60 for something if you initially tell them it costs $100, and then reduce the price.

But the real problem is Penney's ill-fated attempt to cast itself as the only fair poker player in a game of cheats. Shoppers just aren't buying it. However unsophisticated consumers are, very few of them believe a pair of shoes bought at Penney's everyday low price will be cheaper than a pair of shoes bought at Macy's on clearance with a 25 percent off coupon.

Like it or not, hidden fees – and secret discounts – are here to stay. via redtape.msnbc.msn.com 

 

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Innovation is all about the customer?

Is it ever OK to lie in business? Standing on stage at a central London hotel last week to launch the FT Innovate conference, Martha Lane Fox, co-founder of Lastminute.com, used her own experience to suggest that, sometimes, it was.

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The doyenne of the UK’s dotcom industry made what seemed a startling public admission. “The first customer testimonials on the site were made up by me,” she said. “I can say that now with aplomb but I took my friends and I wrote stories about them and the incredible experience they had buying products and services from Lastminute.com.”

The comments elicited barely a murmur among the audience but they matter for two reasons. First, because of Ms Lane Fox’s status as a dotcom trailblazer and, since she sold the company in 2005, her high-profile roles as the UK government’s Digital Champion and as a non-executive director at Marks and Spencer and Channel 4.

Second, and more important, because they hint at the big question underlying all the presentations, the chatter in the hall and on Twitter: how being innovative today means finding how to engage with your customers as early in the process and as deeply as possible.

Context matters. Ms Lane Fox wouldn’t get away with concocting customer feedback today. Why? Because, as she pointed out, in the wild west days of the early dotcom era, customer testimonials were only a small part of the business model. Now, the smartest businesses, from retailers to fashion brands to credit card businesses and manufacturers, are trying to engage their customers to drive innovation in their offerings.

Tasti D-Lite, a US low-calorie frozen dessert chain, says its edge in engaging has been the intelligent use of social networking technologies to do this. So, it uses the location-based app Foursquare to push offers directly to customers that are part of its loyalty programme when they pass within a block or two of its branches. The company is also very active on Twitter, intervening when potential customers are still weighing their options. If a consumer is considering Tasti D-Lite or a rival and tweets about it, the company will start following that individual or send them a message. This, it says, increases its chances of making a sale.

The company also makes sure its employees follow its social networking sites on their monitors, enabling them to understand how powerful a tool they are for the business. B.J. Emerson, head of technology, says a failure to engage with customers who are already using these technologies is a form of “social negligence”.

Using customers to inform your decisions directly is not just about the clever use of technology. Good designers such as Michael Bierut, a partner at Pentagram and co-founder of the Design Observer weblog, understand this better than most. One of his rules for being innovative, he told the conference, is to “shut up and listen”.

When he was hired by conductor Michael Tilson Thomas to come up with a logo for his Frank Gehry-designed concert hall in Miami, Mr Bierut presented him with a series of options. The client’s response to one of them, Mr Bierut said, was to ask if “this is supposed to make us feel nauseous?” and to put forward his own designs. Rather than seeing this as a professional slap in the face, Mr Bierut used the designs to come up with a better one himself.

For big organisations, the big challenge is how to create a culture that encourages customer-led innovation. The best answer I have heard was from R. Gopalakrishnan, a senior executive at Tata. He said that companies need to be willing to look beyond market research and focus groups to understand the context of what their customers’ needs are. When the company, for example, was designing a water filtration system, he personally spent time in the homes of poor Indian families, sitting round the fire to understand how they used water.

Customers have always engaged with those companies with which they have a special affinity. Ms Lane Fox explained that she was once accosted in an M&S shop and asked why the company had changed the packaging of its figs.

The difference now is that this is more of a business obligation than ever if only because if you aren’t engaging, your competitors will be. And that is a very uninnovative way to lose business. ravi.mattu@ft.com via ft.com

New Solutions to Attract and Retain More Customers

Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.

 

 

Using Innovation To Engage Customers On How To Sit: Brian Kane

Photos courtesy of Winni Wintermeyer for The Wall Street Journal

Brian Kane in his San Francisco studio with some of his model chairs. These toylike creations tend to engage his customers far better than computer renderings, he said.

While teaching a design class at California College of the Arts several years ago, Brian Kane noticed that his students often didn't sit. They instead draped themselves across their chairs or lounges, completely absorbed by their various electronic devices. Sealed off from the world by earphones and entranced by glowing screens, they were as likely to sprawl sideways as to sit up straight. Even in public places, many of them liked to rearrange the furniture and transform those spaces into their own customized zones for working, meeting or socializing.

Mr. Kane is an authority on public furniture design—the chairs, lounges, benches and sofas scattered around dorms, airports, hospitals and other public spaces. He's won over 80 design awards during his career, including several from the Industrial Designers Society of America. Two of the biggest office furniture makers, Herman Miller and Steelcase, have used his services.

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Winni Wintermeyer for The Wall Street Journal

KEEP ON DOODLING | Brian Kane says that furniture-design ideas come to him as he plays around with pencil sketches. He starts small then proceeds to a full-scale drawing. Early development sketches for a new design, left.

One of Mr. Kane's biggest hits was a park bench dubbed Hyde Park, created in the early 1990s. Though made of steel, the bench has curved arms and back rests that make it look like an elegant sofa. Mr. Kane said he used a "living-room approach" to defy park-bench conventions. "I believe that if a chair or a bench looks comfortable, it will be sat on," he said. More than 7,000 of the benches have been sold so far.

As our habits evolve for sitting and sprawling in public, design needs have changed, too. That's been good for Mr. Kane, 64, who runs a three-person design firm in San Francisco.

One of his recent projects is the Swoop line designed for Herman Miller. Having noted the sprawling behavior of young device users, he created upholstered chairs with arms only on one side. They can be shoved together to form a love seat, or pulled apart for solo perching. The arm rests are curved to enhance the swooping design while discouraging students from setting their Coke cans on the upholstery. There are few seams, reducing the risks of crumbs collecting in crevices. Though the Swoop furniture is designed to let people flop however they like, Mr. Kane deliberately excluded long flat surfaces that would encourage napping.

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Winni Wintermeyer for The Wall Street Journal

MAKE IT SOLID | An early prototype of a new outdoor chair Mr. Kane is designing, left. Like all of his designs, he had to tweak it—wrapping a rod frame around the seat—so it could withstand the growing girth of the public.

Herman Miller introduced the Swoop line in late 2010 and said that more than 50 universities have bought it so far. The list prices of Swoop chairs range from $1,050 to $1,800.

In addition to observing chair users in their habitats, Mr. Kane said that he gets ideas from doodling. "For me, it's just pushing a pencil till something good comes out."

He prefers Koh-I-Noor 2H lead pencils, with knurled metal grips, which cost about $10 each. Designers can use computers to draw, but Mr. Kane prefers to start with pencil and paper. "That is my favorite part of the process—having a good concept come alive on my drawing board!"

Before presenting a new idea to a manufacturer, Mr. Kane has one of his colleagues create a small model out of alder wood. These toylike creations tend to engage his customers far better than computer renderings, he said.

When he gets stuck during a design, Mr. Kane sometimes clears his head by going for a run. In his studio, a converted laundry-truck garage in San Francisco's Outer Mission district, he plays edgy, newish rock music, such as the Black Keys and Band of Skulls.

“Having noted the sprawling behavior of device users, he created upholstered chairs with arms only on one side.”

"I like contemporary, exciting music—it energizes me," Mr. Kane said. Unlike many members of the baby-boom generation, he doesn't like oldies. "I liked them when they were new," he said. He likes modern furniture and modern music. He prefers novelty to nostalgia.

As a teenager in Summit, N.J., Mr. Kane got his start by drawing portraits of famous people like Robert Kennedy and John Glenn. Then he mailed the portraits to their subjects, asking them to add their signatures and return the pictures to him. Most complied.

A high school counselor saw the portraits and encouraged Mr. Kane to pursue a creative career. His first choice was architecture, but the counselor didn't think Mr. Kane was strong enough in science and math and steered him instead toward industrial design. After getting a degree in that field at the University of Bridgeport in Connecticut, Mr. Kane went to work for a design studio in New York. He found himself working on such items as cheap clock radios, which gave him little scope for creativity.

He quit that job and moved to Italy, where, despite his inability to speak the language, he landed a job at a furniture studio. He had found his calling: "For me, furniture is sculpture. It just happens to be sculpture you sit on."

In addition to thinking about the public's unceasing appetite for digital devices, Mr. Kane now must design chairs that won't crumple under the weight of an increasingly heavy population. "As we have to design for bigger and bigger people, things are going to look like they're made of two-by-fours," Mr. Kane said. For legs and other structural elements, steel is often a better bet. The best he can do is to "try to hide a lot of that stuff."

A version of this article appeared April 28, 2012, on page C11 in some U.S. editions of The Wall Street Journal, with the headline: Crafting Chairs For How We Sit Now. via James Hagerty and online.wsj.com

Searching for a speaker or a confidential business advisor? Hire Jim Woods!

Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.

How The Missing Link in Innovative Research Cultivate New Scientific Insights

Despite continuous growth in R&D spending, many senior leaders remain deeply concerned about their organization’s ability to innovate. For example, the pharmaceutical industry has more than doubled its spending on research and development during the last 10 years, but its success rate in finding new drugs has been disappointing. Yet new research by Booz & Company points to an unexpected and unheralded source of potential productivity: midlevel managers in the R&D function. Companies can significantly raise their R&D productivity by recognizing and activating the unique impact of leaders in the middle of the organization’s hierarchy.

Our research with pharmaceutical companies reveals that leaders in the middle of the hierarchy have a singular ability to identify the company’s most creative bench scientists — and to help them cultivate new scientific insights and connect with the most promising external sources of innovation. These midlevel managers are an underused asset. They can nurture and navigate promising ideas through complex organizational decision making, reinforce an environment of top-quality science, and keep the brightest minds engaged day in and day out. Better use of the midlevel cohort can be a critical factor leading to breakthroughs in innovation effectiveness — not just in the pharma industry, but in sectors such as chemicals, energy, and aerospace and defense.

Bigger Companies, Less Success

By nearly all measures, new drug discovery and development has been declining for more than a decade — even as R&D spending by the largest companies has more than doubled. Why?

A wave of consolidation in the pharmaceutical industry over the past two decades has created larger companies with bigger product portfolios. But almost across the board, that wave has saddled R&D units with diseconomies of scale and too much bureaucracy to be effective. As a result, the capacity to generate new insights and make shrewd investment decisions has not grown proportionally, and has even declined. The rate of new drug discovery over the past 10 years has been so poor that the head of one big pharmaceutical company has dubbed it the “lost decade.”

In an attempt to reverse this trend and increase productivity, innovative R&D organizations have deployed a range of different management, technology, process, and structural solutions:

• Earlier commercial involvement in project decision making, in an effort to enhance focus on commercially relevant compounds

• More rigorous procedures for portfolio management and more stringent criteria for the adoption of new projects

• Clearer guidelines for the handover from discovery to development, and for the integration of basic laboratory research with clinical trials and other applied research

• More sophisticated and comprehensive incentive and reward structures

• New structures that enable more external partnerships for discovery and the outsourcing of “non-core” activities

Some large R&D organizations have begun to create smaller, more accountable units, but that alone has proven insufficient. In 2008, GlaxoSmithKline PLC, as reported by the Wall Street Journal on July 1, 2010, divided its research and development function into small groups of up to 80 scientists in an attempt to create the innovative atmosphere and close working relationships of a biotech startup.

Although these approaches have contributed to more efficient research and thus deserve attention, they have not been able to promote and nurture the new insights that can lead to more effective drug discovery. In most R&D efforts, breakthrough insights come from the work of individual scientists who connect their own deep expertise in one domain with ideas from another discipline. Most notably, in a speech delivered in 1922, “How I Created the Theory of Relativity,” Albert Einstein credited his insight to his discussions with Swiss/Italian engineer Michele Besso, with whom he did “battle against that problem.” The most creative scientists will propose new ideas based on their expertise and input from other disciplines, recombining facts and ideas into new insights. (See “How Aha! Really Happens,” by William Duggan, s+b, Winter 2010.) via strategy-business.com

New Solutions to Attract and Retain More Customers

Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.

How to Create Customer Led Innovation Strategies

Is it ever OK to lie in business? Standing on stage at a central London hotel last week to launch the FT Innovate conference, Martha Lane Fox, co-founder of Lastminute.com, used her own experience to suggest that, sometimes, it was.
The doyenne of the UK’s dotcom industry made what seemed a startling public admission. “The first customer testimonials on the site were made up by me,” she said. “I can say that now with aplomb but I took my friends and I wrote stories about them and the incredible experience they had buying products and services from Lastminute.com.”

The comments elicited barely a murmur among the audience but they matter for two reasons. First, because of Ms Lane Fox’s status as a dotcom trailblazer and, since she sold the company in 2005, her high-profile roles as the UK government’s Digital Champion and as a non-executive director at Marks and Spencer and Channel 4.

Second, and more important, because they hint at the big question underlying all the presentations, the chatter in the hall and on Twitter: how being innovative today means finding how to engage with your customers as early in the process and as deeply as possible.
Context matters. Ms Lane Fox wouldn’t get away with concocting customer feedback today. Why? Because, as she pointed out, in the wild west days of the early dotcom era, customer testimonials were only a small part of the business model. Now, the smartest businesses, from retailers to fashion brands to credit card businesses and manufacturers, are trying to engage their customers to drive innovation in their offerings.
Tasti D-Lite, a US low-calorie frozen dessert chain, says its edge in engaging has been the intelligent use of social networking technologies to do this. So, it uses the location-based app Foursquare to push offers directly to customers that are part of its loyalty programme when they pass within a block or two of its branches. The company is also very active on Twitter, intervening when potential customers are still weighing their options. If a consumer is considering Tasti D-Lite or a rival and tweets about it, the company will start following that individual or send them a message. This, it says, increases its chances of making a sale.
The company also makes sure its employees follow its social networking sites on their monitors, enabling them to understand how powerful a tool they are for the business. B.J. Emerson, head of technology, says a failure to engage with customers who are already using these technologies is a form of “social negligence”.
Using customers to inform your decisions directly is not just about the clever use of technology. Good designers such as Michael Bierut, a partner at Pentagram and co-founder of the Design Observer weblog, understand this better than most. One of his rules for being innovative, he told the conference, is to “shut up and listen”.
When he was hired by conductor Michael Tilson Thomas to come up with a logo for his Frank Gehry-designed concert hall in Miami, Mr Bierut presented him with a series of options. The client’s response to one of them, Mr Bierut said, was to ask if “this is supposed to make us feel nauseous?” and to put forward his own designs. Rather than seeing this as a professional slap in the face, Mr Bierut used the designs to come up with a better one himself.
For big organisations, the big challenge is how to create a culture that encourages customer-led innovation. The best answer I have heard was from R. Gopalakrishnan, a senior executive at Tata. He said that companies need to be willing to look beyond market research and focus groups to understand the context of what their customers’ needs are. When the company, for example, was designing a water filtration system, he personally spent time in the homes of poor Indian families, sitting round the fire to understand how they used water.
Customers have always engaged with those companies with which they have a special affinity. Ms Lane Fox explained that she was once accosted in an M&S shop and asked why the company had changed the packaging of its figs.
The difference now is that this is more of a business obligation than ever if only because if you aren’t engaging, your competitors will be. And that is a very uninnovative way to lose business. ravi.mattu@ft.com via ft.com
New Solutions to Attract and Retain More Customers

Jim Woods is president and founder of InnoThink Group; a leading Strategic Management and Innovation Consulting Firm in Denver, Colorado. He is an author, speaker, and a strategic innovation and hypercompetition expert to profit, non-profit organizations and municipalities. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. Build a capability for ongoing competitive innovation across your company. Call 719-649-4118 or complete our form: contact us for more information on hiring Jim to advise or speak for your next event.

Stephen R. Covey Book Review: The Soft Stuff Is the Hard Stuff

In my 35-year corporate journey and my 60-year life journey, I have consistently found that the thorniest problems I face each day are soft stuff — problems of intention, understanding, communication, and interpersonal effectiveness — not hard stuff such as return on investment and other quantitative challenges. Inevitably, I have found myself needing to step back from the problem, listen more carefully, and frame the conflict more thoughtfully, while still finding a way to advance the corporate agenda empathetically. Most of the time, interestingly, this has led to a more promising path forward and a better relationship, which in turn has made the next conflict easier to deal with.
Stephen Covey provides a more direct approach to successful problem solving in the excerpt below from his new book. From the outset, his “3rd Alternative” approach engages everyone involved in an issue to advance the agenda in a winning way. The soft stuff will forever be the hard stuff, but leveraging 3rd Alternative thinking can make the soft stuff significantly easier to resolve productively.

— Douglas R. Conant

An excerpt from Chapter 3 of The 3rd Alternative: Solving Life’s Most Difficult Problems

If you’re a 3rd Alternative supervisor, you’ll neither flee nor fight. You’ll look for something better [when conflict arises], a solution that will provide your employee with a huge emotional payoff and create for the firm new and significant value.
A friend of mine explained how a 3rd Alternative leader dealt with exactly this situation in his life:

I was new at the job and had come in hoping for a better salary. I settled for something a lot less than I’d hoped for just to get in the door. But after a couple of months, it was clear that my family was struggling. We couldn’t get by because of some medical expenses. Besides that, I felt more and more that I was getting paid too little for the work I was doing. So I took a real risk and went to talk to the big boss about a raise. I didn’t know her very well and she didn’t know me. I had no real track record yet with that company.

But she invited me into her office and I explained why I was there. I was kind of surprised when she said, “Tell me more.” I told her about my family situation. She just listened, and I talked quite a lot about what I’d been doing for the firm. She asked me what I thought about the company, its customers, its products. It was odd. We had this long conversation that I thought was going to be about my pay, but instead was about me — how I was doing, what I thought, what I’d learned in my few months at the company.

Then she asked me about a certain customer I’d been working with. She wanted to know my ideas for expanding our business with that client, and I actually did have some thoughts that I shared.

A couple days later, she invited me back into her office. Three or four other people joined us, and she had put up on a whiteboard my ideas for this client. We had quite the discussion, and a lot more discussions after that. I was excited. Finally, they offered me an expanded job with higher pay and responsibility for a new level of service to this important client.

For my friend, these discussions were just the beginning of a swift rise in that company; he eventually became a partner to the “big boss.”
I’ve rarely heard of a wiser leader than this woman. She had a fine capacity for 3rd Alternative thinking. How easy it would have been for her either to fight my friend or just to give in to his request. Instead, she sensed the possibility of a dramatic win-win. Rather than haggling over the existing pie, she could envision the prospect of a much bigger pie. She suspected that combining my friend’s needs and energies with the client’s needs might well produce growth for everyone. The eventual result was a whole new line of business and a partner who increased his worth to the company every year. From what I know of this young man’s contribution to his firm, he was ultimately responsible for doubling its size. via strategy-business.com

Strategic Management and Innovation Solutions 
Traditionally, when facing low-cost competition companies try to cut costs or innovate. This trap leads them in never-ending cycles of competitive disadvantage. Survival requires smarter and subtler responses. Contact InnoThink Group to discuss your options or call 719-649-4118. We are a leading Strategic Management and Innovation Consulting Firm.