How should you grow your business in an ever-changing world?
Oil companies studying coffee shops. Restaurants studying department stores. Rock stars studying professional sports. This is the future of business development, according to Andrea Kates.
The business strategist and founder of the Business Genome Project visualizes a world where businesses aren’t linked by industry but by a desire to achieve common outcomes. It’s a concept she outlines in her book, “Find Your Next,” published by McGraw Hill in 2012.
“It has always baffled me why the traditional approach to becoming a market leader stopped being relevant,” Kates says. “What we were taught in business school, like the SWOT analysis and benchmarking, wasn’t working anymore. So I started researching really smart start-up companies and realized the key was developing the ability to see patterns of emerging trends.”
Kates studied the principles behind the Human Genome Project, a 13-year project started in 1990 with the goal of mapping the entirety of the human gene pool.
“When I started looking at biology, there is this notion that patterns of DNA can give you insight as to why I respond to a drug differently than you might,” Kates says. “It struck me that the same idea could apply in business, if we could teach ourselves to look at patterns differently.”
Form new patterns
Kates began lining up interviews with people who had taken an outside-the-box approach to growing their businesses. She also employed some of the principles outlined in the Business Genome Project in her own research.
One of the first people she interviewed wasn’t an entrepreneur or business executive. It was a musician — Perry Farrell, the frontman for rock band Jane’s Addiction and founder of the Lollapalooza music festival, formed in 1991 as a farewell tour for Jane’s Addiction.
“I asked him what rock groups he studied when he was forming the concept for Lollapalooza,” Kates says. “He said, ‘What are you talking about? I didn’t study rock groups. I studied organizations that were able to bring people together for a large event. I studied organizations that were able to get people to come together and tailgate for a long period of time.’”
Kates says Farrell looked to some of the predominant sports organizations in America, such as NASCAR and the NFL, to develop a plan for Lollapalooza.
She also studied Pennzoil’s path to forming Jiffy Lube, which had more to do with baristas than with mechanics.
“Originally, they were thinking like oil guys,” Kates says. “They were thinking about how they can compete on product, how they could change the packaging. It’s a typical mindset to think about motor oil in a very traditional way. But in the Business Genomics way, they started to look at other factors, such as husbands who didn’t want their wives to sit in a dirty garage while their car was being serviced. Even the guys themselves didn’t want to waste a lot of time away from work if they were getting their car serviced.”
Pennzoil needed to bring a new element into the picture, one that didn’t exist in the automotive service space. So the company’s leaders started studying places where people enjoyed sitting down with a cup of coffee and a magazine.
“They looked at chains like Starbucks and other places where people enjoyed hanging out,” Kates says. “They wanted to learn how those types of places provided a pleasant atmosphere. If Pennzoil had kept searching in its own industry, it never would have gained new insight, and it never would have incorporated the concepts that led to the formation of Jiffy Lube.”
Knowing where to look
To employ the principles of Business Genomics, you have to first know where to look. Then you have to figure out where the needs are in the market and how your business can fill them.
That means you listening to your customers and discovering their wants, needs and pain points. When Kates spoke to executives at Hyatt Hotels and Resorts, she found that Hyatt used customer feedback surveys to uncover unexpected information that it was later able to use to gain a competitive advantage.
“By looking at the survey results, they discovered guests were increasingly concerned with the smell of their rooms,” Kates says. “Customers were checking boxes on their surveys that indicated they wanted their rooms to smell clean and fresh. Rather than discard the information as something of little importance, the people at Hyatt started thinking about how they could provide an over-the-top experience in that area.”
Hyatt’s research led to the implementation of a hypoallergenic technology first utilized in the health care industry. Hyatt now markets their rooms utilizing the hypoallergenic technology as “Respire by Hyatt.” The company has built a whole brand around the concept it came up with it by looking at data in a different way and applying it with innovation. But it always starts with an initial observation, Kates says.
To make the kinds of observations that Pennzoil and Hyatt made, you need to stay in touch with your customers — which increasingly means staying active in social media channels — and you need to construct a system that allows you to make observations across various industries.
“If you are an airline, you’re not just looking at what Southwest does,” Kates says. “You’re not just looking at how much people are paying for airline seats, baggage fees and those sorts of things. You’re also going to look at trends in what people are buying when they purchase suitcases and luggage. You’re going to look at trends with people bringing pets on flights. You create what I call a ‘mind map,’ which links information, giving you a much bigger picture regarding what your customers are really doing and thinking, and why.”
Implementing a strategy that incorporates Business Genomics requires involvement from all levels of leadership, and your leadership team has to develop a mindset of responsiveness. Kates says that leaders have to listen and think differently now. Leaders need to retrain their employees and build teams that are responsive, faster and more observant of the changes and trends in the market.
Kates calls it “customerization” and “trendification.” It’s the ability to understand changing customer needs and the trends that are created by that fluidity, which, in turn, impacts how your company will develop the next product or service that you will take to market.
“Leadership used to be dominated by a manufacturing mindset, which was a very command-and-control mindset. It used to be that if a company mastered Six Sigma or process efficiency, it would perform very well.”
However, the game has changed.
“They’re no longer concerned with how well you can handle, say, rolling a Model T Ford off the assembly line,” Kates says. “Now what is king is your ability to read trends, be faster and keep up with the speed of change. The companies that can thrive are the ones that keep up with the speed of change and emerging trends across industries — not just their own. You have to find where the next innovation is going to come from.”