See, Feel, Think, Do: The Power of Instinct in Business

The greatest businessmen throughout history understood – almost instinctively – what people would value and why, and then delivered it as simply and as easily as possible. But over the years, as markets have evolved and people's have become more sophisticated and more emotional, we have begun to see business not as a simple process, but a complex one.

Business has become so important that we have sought to eliminate its risk by schooling ourselves in its best practices, developing rigorous analytical tools that will give us 'models for success'. Executives do not even have to bother talking to customers any more. That activity is outsourced to specialist research firms and management consultancies, each with their own tools and processes for extracting the same information from the same customers, leading to the same strategies and, therefore, mediocrity.

Marketing as a function has become ever more compartmentalised and the term is now used to describe (often derisively) the processes that are adopted rather than the outcomes achieved. Yet we know that the best businesses are those that are instinctively in touch with their customers, take a holistic view of the brand and regard everything they do as marketing. As Jeff Bezos says, 'It has always seemed to me that your brand is formed primarily, not by what your company says about itself, but by what the company does.'

Over the last two years we have observed the behaviour of many different companies and researched the stories behind many of the ideas that we are now excited by and familiar with. We have also had the opportunity to talk to many leaders and idea creators in business – from restauranteurs, retailers, product designers to public transport workers and many more – to learn from them what has inspired them to do what they have done.

From this emerged a simple idea and an even simpler model: 'See, feel, think, do'.

SEE: EXPERIENCE IT FOR YOURSELF

It is late; the store shut its doors to customers many hours ago. Footsteps ring out as a solitary figure walks the aisles between silent racks of clothing and waiting displays. That figure is Philip Green, chairman of Arcadia Group, one of the United Kingdom's most successful retailers.

Green learnt his trade many years ago running under-performing clothing stores and turning them into cashgenerating machines, before selling them on again. But he is no venture capitalist, merely concerned with juggling numbers and generating profit regardless of how it is achieved. Philip Green is first and foremost a retailer; and he understands the dynamics of the business intimately.

That is why he sometimes visits his stores late at night. Without distractions, his senses tuned, he can truly experience the store as only a seasoned retailer can. That display is too confusing; that sign is hidden; customers would find it difficult to find that product; why is that litter not cleared? Obviously, he visits stores during the day as well, to meet customers and staff and see what they are experiencing. It is this hands-on approach that has led Philip Green to become the fourth richest man in the United Kingdom and the Arcadia Group to be the most successful private retailing group in Britain. In the 22 months since Green bought the group, operating profits have nearly tripled to £326 million.

Most chairmen or CEOs rely on hard data like market research and profit-and-loss accounts to run their business. Green understands that these are vital yet insufficient. They are merely lagging indicators, and therefore fail to give him the insight and early warning that seeing a store firsthand provides. Only direct observation reveals the difference between a store that is well run and one that is not, long before this shows up on the bottom line. That is why Green is famous for being engaged with every aspect of the business, from buying to store locations to merchandising. Experiencing reality yourself is very different from seeing the world through the insulating screen of data.

As Gordon Ramsay, the Michelin award-winning chef and successful entrepreneur, said in a recent speech at the European Customer Management Conference, 'Customers don't tell you that you are no longer their favourite restaurant. So it is vital to be hands-on and engaged because if you are not you'll find out five or six months down the line when the numbers fall.'

Ramsay's approach, like Philip Green's, is about seeing for yourself. It is the antidote to two-inch-thick research reports, two-by-two grids and too-smart young MBAs.

FEEL: EMPATHISING WITH YOUR CUSTOMERS

'It was just awful,' said Tim Waterstone, the founder of Waterstones bookstore chain. He was talking about the state of book retailing in the mid-1980s, when stores would stock only best sellers and closed at midday on Saturdays. Tim has loved books all his life. He took great pleasure in browsing in bookshops, but quickly realised that their limited stock, restricted opening hours and unhelpful staff marred his enjoyment. He also realised that this presented an opportunity. 'I reckoned that if I felt that way there must be several million out there like me.'

The answer was the first Waterstone's bookshop, which opened in Old Brompton Road in London in 1982. By 2003 the company had grown to become the United Kingdom's leading specialist bookseller, with 200 highstreet locations across the UK, Ireland and Europe. Waterstone's flagship store in Piccadilly is now the biggest bookshop in Europe, comprising five floors of books, coffee bars and even a restaurant.

Later, when recalling how he came to create the very successful Daisy and Tom department stores, Tim said, 'I became cross with Mothercare [the children's retailer]. They had lost their vision.' In fact, when shopping with his own small children and finding that he was forced to drag them from one store to another to obtain what they needed, he became so angry that he decided to create his own brand of children's department stores specialising in clothing, toys and accessories. Daisy and Tom was started in 1997, and today there are five stores turning over £15 million. Tim has just acquired the Early Learning Centre chain, which will add 200 stores and £170 million turnover to his business.

Tim Waterstone is not alone. Many of the leading entrepreneurs today started their businesses because they were fed up with what was on offer. Sinclair Beecham and Julian Metcalfe started Pret A Manger when they despaired of the poor quality of sandwiches on offer near their offices in the City of London. Peter Boizot founded Pizza Express in 1965 because he was 'fed up that [he] couldn't get a decent pizza in London'.

THE GEEK SQUAD: THE MODEL IN ACTION

The Geek Squad is a US-based company that provides technical support for customers with computer or technology problems. It employs 10,000 'Special Agents' working out of 50 Geek Squad locations and in 700- plus Best Buy stores across the United States and Canada. (see Figure 1)

See

It was while Robert Stephens was studying computer science at the University of Minnesota in the early 1990s that he landed a job fixing computers. He began to notice the mergers and consolidations taking place between computer companies; he saw that the products were getting more powerful and more complex with email, internet connections and new software all conspiring to make it more difficult for average users to configure them themselves. He observed that there was little technical support for these customers, and what support was available was often inconsistent and unreliable with generally poor levels of service. Robert saw an opportunity: to create a firm that would provide technical support and be differentiated through the service it offered.

Feel

When a computer crashes the customer is anxious, angry but, most of all, concerned to get it back up again quickly. Stephens soon realised that the keys to success were rapid response and adaptability. Customers did not expect technical support firms to be either of these, and so by building a business around these factors he could be successful. He also realised that customers took it for granted that their computer was going to be fixed eventually, but it was the overall experience that left them fuming. So he needed to create a new kind of experience to win in the market. The big idea came when he was waiting for a computer to boot up one day. What could he do to fill that awkward time and reduce the level of customer anxiety? And in a flash the answer came: why not get the customer laughing? And so the idea of the Geek Squad was born, and their motto, 'We'll save your ass.'

Think

The idea came in part from the 1960s television show Dragnet. Why not have a mobile squad of support people who could fix customers' technical problems quickly but with style and humour? Stephens didn't do any research other than observing and listening to customers, but he just knew that the idea would be successful. So in April 1994 the Geek Squad was born with US$200. (see Figure 2)

Four or five months after starting, Stephens hired his first employee – closely followed by his first 'Special Agent'. When a customer calls they will get a rapid and totally reliable response from a Special Agent who arrives driving a 'Geekmobile' emblazoned with the Geek Squad insignia. The Special Agent will be wearing a uniform straight out of Mission Control and NASA in the 1960s: white short-sleeve shirt, black clip-on tie, black trousers with white socks and, of course, heavy black-framed spectacles. How else would a geek dress?

Do

Stephens was starting on a shoestring but was determined not to bring in investors who would try to dilute his concept. So he started slow and found innovative ways to save costs, buying up vintage cars, for example, because of their unique look. He didn't need to market because 'If you provide great service your competitors become your biggest source of business because they are so bad'.' Advertising? Easy, just make it company policy that Special Agents must drive their cars exactly two miles slower than the speed limit. That way most cars will pass them and see the Geek Squad branding but not get irritated by being held up. Stephens reckons that ten times more drivers will see his cars than if he simply keeps up with the traffic flow.

Now the firm has grown Stephens does invest in some marketing, and has a 'Minister of Propaganda'. We asked him how he has managed to preserve the culture. He told us his job is to 'influence and inspire – I am not motivated by position or power, I just care about what we do and how we do it.'(see Figure 3)

Ho Kwon Ping founded the Banyan Tree Hotels and Resorts because as a developer he reckoned he could make a better job of managing the hotel himself.

THINK: THERE'S NO SUCH THING AS A STUPID IDEA

Vodafone is the world's largest cellular phone network operator and the dominant player in many of the markets in which it operates. The Vodafone brand is recognised around the world, and yet Vodafone, along with most of its competitors, does not evoke much public affection. The network operators are generally thought to be expensive, bureaucratic in their dealings with customers, and lacking any kind of empathy. That may be about to change.

Vodafone has been under pressure from aggressive price cutting in the market. Each operator seeks to offer better discounts and a lower tariff than the others, and new entrants like the easyGroup are coming into the market with heavily price-driven promotions. But as Tim Yates, chief marketing officer at Vodafone UK, told us:

'The focus in the industry has been on the rational elements of pricing. The belief has been that if you reduce your prices you change people's behaviour in your favour. In fact we believe that mobile phone usage is much more of an emotional event, and that to change customer behaviour you first have to change the customers' attitude.'

Vodafone's premium position and core expertise in 'understanding mobility' led it to engage with customers to really understand their attitudes to using their mobile phone.

What Vodafone found was that customers didn't understand the tariff they were on, considered calls to be expensive, and thought that they were speaking on their phone for longer than they actually were. In fact Julian Bessey (senior product manager) and his team found that the average call length was only two minutes.

As a result of these perceptions, customers make two-thirds of their calls over land lines and only one-third on their mobiles, reserving their longer conversations with friends and family for the evenings and weekends, when they can call from their home phone. The Vodafone team realised that in order to change customer behaviour while staying true to the vision of enabling mobility, a new approach was required. Simple price cutting would not be sufficient.

The breakthrough came when the team really tried to empathise with customers and decided actually to observe how they were using the phones. How were they feeling? What would it take for them to use their mobile phone for longer calls? What constrained them? They observed customers making calls, and as they listened to customer conversations, they realised that customers were constantly thinking, 'How much is this call costing me?' As a result customers would say, 'I'll make this brief because I'm speaking from my mobile.'

The team decided to try a test promotion whereby customers would be offered free calls at weekends to encourage them to use their phone for all their calls. The results were astounding. Not only did customers take up the offer, but their value increased by over 10% per month due to higher usage during the week as well.

In May 2005 Vodafone launched its 'Stop the Clock' initiative. This allows customers to speak for up to 60 minutes but pay for only three, at evenings and weekends when longer calls were generally made on a fixedline phone. The idea was to liberate customers from the pressure of needing to minimise their mobile phone usage, and encourage them to use their phone to achieve more from life. As the advert says, 'Sometimes life's more than a three-minute conversation.' In an industry noted for its small print and exclusions, Stop the Clock aimed to present a big idea uncluttered with conditions.

When the idea was trialled with customers they asked, 'What's the catch?' The answer was, 'There isn't one', and so that is what Vodafone also put into its advertisements.

The Stop the Clock story illustrates the importance of being able to see, feel and then think. The initiative required a very complex business case to be made, that was estimated to have been likely to have an impact on revenues of millions of pounds if Tim and his team had done their sums wrong. Now those are the sort of figures that would make anyone stop to think.

Amazon thinks. Apple thinks different. When IBM was founded more than 100 years ago, its corporate mantra was: think. Perhaps that is why IBM tops the league table for new patents issued and has done for many years.

DO: MAKE IT SO

According to Sahar Hashemi, co-founder of Coffee Republic, the high-street coffee chain: 'The thing that separates entrepreneurs is really very simple. While others dream, entrepreneurs see a good idea through to fruition. Whereas for most people an idea is cast aside after a couple of investigatory phone calls and perhaps a few discouraging comments from the so-called experts, entrepreneurs don't quit, even when all they have to go on is gut instinct. They keep working hard to realise their dreams. The entrepreneurial mind thinks like this: “I don't have any experience, or special skills, I don't have the money. I have no idea how I'm going to do it. But I'm still going to do it.”'

One organisation that has proved itself brilliant at execution is Tesco. It has moved from fourth place in the UK market to becoming market leader and achieving a £2 billion profit for the financial year ending April 2005. Tim Mason, Tesco's director of corporate marketing, puts this down to 'doing'. He says, 'We're quite good at strategic planning but what we're actually really good at is doing things – doing things for customers. We don't talk about it, we do it. Most businesses have plans. Some business plans are better than ours. Where most businesses fall down is that they don't implement their plans.'

Like the property market's mantra 'location, location, location', the entrepreneurial individual, company or corporation's mantra is: 'execution, execution, execution'. And for large, bureaucratic companies this is the hardest part of all. But that's another story.

IS IT ONLY ENTREPRENEURS WHO CAN DO THIS?

Too many people assume that it is only the high-profile businessman or the maverick entrepreneur, free of the shackles of corporate policies and procedures, who can truly follow their instinct in business. This is a myth, and a lazy one that lets those of us who work in a big corporation off the hook. We have heard stories from all kinds of businesses: from people who lead companies, to people who lead departments within companies, to people who are employed at the coalface. The stories show how anyone, be it a stewardess on an airline, a product manager in a large global telco firm or the CEO of a multimillion business can use their instinct to change their customers' experience for the better.

CHANGE IS NEEDED AT THE TOP

The average tenure for chief executive officers in the United Kingdom has fallen to a mere four and a half years and for large corporations it is just 18 months. The fact is that there is now a revolving door at the top of most large firms where CEOs come and go, usually with a big payoff despite their poor performance. It's no surprise that employees have become ever more cynical. Short-term thinking, analysis and research have replaced vision, leadership and passion in many large businesses today. In short, we believe that in their attempt to minimise risk companies have swung the pendulum too far towards hard data, analysis and hiring smart young MBAs. We think the time is right to swing it back towards, instinct, passion and hiring people who fit the brand DNA. See, feel, think, do is not a new idea but it is a powerful one.

This article featured in Market Leader, Spring 2006.

NOTES & EXHIBITS

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