Category Archives: Brand Building

Zappos and the SNAFU Syndrome

First published September 23, 2010 in Mediapost’s Search Insider

Who can say no to MediaPost Publisher Ken Fadner? Certainly not me. And so, next Monday, I’ll be joining all you OMMA-ites (OMMAhanians?) in New York City for the big show. Ken wanted me to set the stage by spending a little more time talking about a subject I raised a few columns back, entitled “SNAFU: the New Normal.” In that column, I mentioned that a lot of companies going through huge transitions ask if there are any examples of other companies that have done it right. I said then the simple answer is no. We’re all figuring this stuff out as we go. But today, I wanted to share a further thought from one of the people that asked that question:

Enough Zappos Already!

“Tell me, are any companies doing this right. And don’t give me examples like Amazon or Zappos. I’m sick of hearing about these dotcom poster children. We’re not them. We can’t do the same things!”

Coincidentally, I’ve just finished reading Tony Hsieh’s book, “Delivering Happiness,” where he gives his perspective of what worked and what didn’t at Zappos.  One passage, in particular, shows that Zappos is not immune to the SNAFU Syndrome:

“It may seem sometimes like we don’t know what we’re doing. And it’s true: we don’t. That’s a bit scary, but you can take comfort in knowing that nobody else knows how to do what we’re doing either. If they did, they’d be the Web’s most popular shoe store. Sure, people have done parts of what we do before, but what we’ve learned over the years at Zapoos is that the devil is in the details. And that’s where we’re breaking new ground.”

It’s More than Foosball

Here’s the thing: Survival in the SNAFU storm is not about pizza lunches, foosball tables or wacky staff parties. It’s not about gourmet cafeterias, Segways or even culture handbooks. Hsieh didn’t do anything with Zappos that hadn’t been documented long before the dot-com era. He (like me) is a big fan of Jim Collins (“Good to Great”) and  Dave Logan  (“Tribal Leadership”). The foundations laid out in both those books have been field-tested across many different types of companies, from hospitals to hotels, grocery stores to banks, manufacturers to consulting firms. In fact, in both books there is a notable lack of high-flying dot-coms, as that wasn’t the flavor du jour when these books were researched.

These books look at the very foundations of organizational effectiveness and found that it wasn’t about cultural perks; it was about believing in something. Success comes from the feeling that you’re part of a bigger whole. It was about rising above profit statements and shareholder reports by creating a mission that makes people want to come to work in the morning.

Zappos isn’t about selling shoes. In the big scheme of what’s truly important, footwear doesn’t factor very highly. Zappos is about spontaneously creating smiles through exceptional experiences.  And that, my friends, is something any company can aspire to.

North Star

Here’s why these organizational foundations are so important in the new world. It’s very easy to lose your bearings in a sea of SNAFU. As I said, there are no maps or blueprints to follow. Strategies and five-year plans can get torn to shreds in a matter of seconds. When that happens, you’re going to need something to set your bearings by. Inspiring mission statements and real, living, breathing core values will always be there. They rise above strategy. They’re a North Star that’s always in sight.

If you do this right, everyone knows why they come to work in the morning. And, when the world goes to hell on you, it will give you a bearing point against which you can correct your course and head in the right direction.

Want to give yourself a chance to survive the SNAFU Syndrome? You don’t have to be Zappos or Amazon (and even they don’t have any guarantees). You just have to make up your mind to do it. Start by reading these two books.

If you’re not inspired, consider a new career. If you don’t now, you’ll probably be forced to later.

SNAFU: The New Normal

First published September 2, 2010 in Mediapost’s Search Insider

Last week I heard this in a meeting:”We’re in the middle of tremendous change. The organization is going through the biggest transition in its history.”

The line is usually delivered with a mix of desperation, a touch of helplessness and an apologetic tone. The admission comes, with the predictability of a carefully timed script, as I’m trying to assess where companies are in terms of their digital marketing maturity.

Just a few years ago there was a lot of brash boasting about how cutting-edge companies were, but it’s been a long time since I’ve heard that confidence. Even former dot-com rock stars are realizing that they have a lot to learn. They know things are messed up and they think it’s their fault. Somehow things have gotten fouled up in the execution machinery of their company. They’re not smart enough, nimble enough or gutsy enough.

Hello, My Name is Gord, and My Company is Struggling to Keep Up…

Here’s the secret that most of these companies don’t know. As gut-wrenching the changes they’re going through — as messed-up as everything seems to be — they’re not alone. I hear that same apologetic admission from almost every company I meet with. I say it myself with a regularity in our internal company meetings that has lead to the formation of a betting pool with our more cynical team members. The next line that follows in the script is a desperate question: “Can you give us an example of a company that’s doing this right?”

The answer, though disappointing, is at least succinct:”No.”

We’re all learning — and we’re all screwing up. Get used to it, because it’s the new normal. This is the environment in which we have to learn to exist. There are no blueprints or case studies of perfect execution, because we’re heading into virgin territory.

If You Don’t Laugh, You Cry

World War II gave birth to my favorite acronym: SNAFU. It stands for “Situation Normal: All F*&%ed Up.” As a born cynic, I love the tang of acrid yet amused resignation in the face of an impossible situation that the term carries. It sums up the one attitude that ensures that we will eventually triumph: Look, we all know the world is a big ball of crap. Suck it up and get the job done. And while you’re at it, stop your whining.

There are two things that have shoved the world into massive disruption. First, we have the tidal wave of change unleashed by digital technology. It was like strapping a rocket pack on the back of our society and lighting it up. The only problem was that we didn’t know where we were going. At first, it didn’t matter, as long as we were moving fast. We were just exhilarated by the speed at which we were moving.

That led to the second factor, the crumbling of the economy. Suddenly, fast wasn’t good enough anymore. We had to be fast and focused. The stuff we did had to make sense. We — and by we I mean everybody — were being held accountable.

There’s Actually a Name for This…

These twin factors are ushering us through a period economists call a Long Wave Transition. Venezuelan economist Carlota Perez, in particular, has spent a lot of time thinking about this.

Here’s a quote from one of her papers:

“The problem is that, in such periods, institutions face a chaotic and unaccustomed situation, which requires much deeper changes than the great majority of their leaders and members had ever experienced. The difficulty is increased by the fact that there are no proven recipes and change has to take place by trial and error experimentation under the pressure of the very high social costs of the techno-economic transformation.”

Or, in other words: SNAFU. Get used to it, because you’re not alone.

Marketing: Leading the Way

First published June 10, 2010 in Mediapost’s Search Insider

At last week’s national Business Marketing Association (BMA) conference in Chicago, three marketing executives from three well-known B2B brands each made an interesting comment:

“In the 3M scheme of things, marketing wasn’t even a second-tier priority. It was fourth or fifth tier at best. But in the future, marketing needs to lead 3M.” — Jeff Lavers,  Vice President of Marketing, Sales and Communications, 3M

“Emerson didn’t even have a CMO before me. They didn’t believe they needed one.”– Kathy Button Bell, CMO, Emerson

“We’re announcing a marriage at GE. We’re not sure how they’ll get along, but IT and marketing are about to become married. We’re combining the two functions.” — Beth Comstock, CMO, GE

Wow! Three iconic B2B brands, each rethinking the role of marketing within their organizations. Is this a wave?

What Marketing Should Be

The reason I love marketing, at its purest, is because it’s the connection between an organization’s business model and their customers. Marketing owns that essential bond. But that’s a responsibility that has been abdicated by many organizations, and never explicitly acknowledged by others. That connection, that reason to do business in the first place, is ignored by a startling number of companies.

Marketing should be the voice of the customer, driving product development, service delivery, operation — indeed, every aspect of the business. That’s what Lavers was hinting at in his challenge to 3M. Companies need to be driven by their customers. Marketing should be accountable for keeping the two firmly in sync. But somehow, in the past several decades, marketing has become cheapened, to the point that the function was essentially abolished in many org charts.  3M relegated it to a seat way at the back of the bus. Emerson never even bothered to put in on the corporate directory until 10 years ago. Marketing needs to be put back on the org chart, right at the top.

The excuse in the B2B world was that there was no need for marketing. The channels owned the relationships with the customers.  But the digital marketplace is re-forging relationships between manufacturers and end customers. Suddenly, brands matter. Customer feedback matters. Conversations matter. Marketing has to be the one constantly reminding everyone inside the corporate walls that those connections are vital in the future.

The Marketing – IT Connection

So that explains the import of the comments from Jeff Lavers and Kathy Button Bell. What of the impending nuptials between marketing and IT at GE? What are we to make of Beth Comstock’s BMA announcement?

This signals a fascinating shift in the practice of marketing. If marketing takes over the wheel and drives the company forward, then IT has to provide the infrastructure to help it win. This will be an uneasy shift of power. IT is used to being the control point within organizations, though marketing folks would use a different label: “bottleneck” or ” black hole” is one I regularly hear. With the shift in importance of marketing, IT dragging their heels will no longer be tolerated. In their drive to be nimble, marketing will be pushing — and pushing hard. I see no signals here that indicate potential wedded bliss. Essential? Yes. Easy? Not on your life!

If America’s iconic B2B brands are now ramping up for a new kind of marketplace, one where they take back accountability for end-to-end relationships, we are definitely dealing with a new normal. But I fear many in the C-suite ponder the prospect with the same reluctance they would have about giving the kids the keys to the Porsche.  Sure, we’ll go fast, but we will be driving off a cliff?

A Brave New World That’s Not So New After All

First published May 20, 2010 in Mediapost’s Search Insider

What the hell is happening? Everything is changing, and it’s changing much too quickly. We keep hearing that the game has changed, that nothing we knew before is still applicable. Ironically, I’m seeing a different trend. I’m seeing a need to return to our roots. But it’s hard to see the truth of that through the technological maze we’re currently stumbling through.

There is a reason companies exist. Somewhere at their core, there is something that sets them apart. There was a reason, back in the misty recesses of their corporate history, why the founders thought they could actually make a buck at this. The older the company, the further it is from the original spark that gave birth to a new entity, but it still lies somewhere.

To Look Forward, Look Back

As companies struggle to adapt to the digital marketplace, they tend to look forward, which is a really scary view of things. Everything is uncharted, unknowable and uncertain. There is a sense that we don’t know what lurks around the next corner. This also makes it seem that it’s imperative to figure out what’s changed. “What,” I hear repeatedly, “is the thing I need to know about how the world is changing?” The answer, I suspect, is not so much what you need to know, but what you may have forgotten because you were distracted by the onslaught of change.

Let me get less cryptic. There is a company that sells technical innovation. It has been doing this for over a century. That original spark, way back when, was to take its understanding of its core technologies and apply them in new ways to solve customer problems. The entire company was built around that core.

Bigger was Better…

Today, the company is struggling with change. The marketplace is shifting. It seems that it must be time to grasp onto something new. At the very least, the company must be open to trying many new things, and trying them quickly. Like many manufacturers, over time those direct ties to the ultimate consumer of their products have had more and more links forcefully jammed into the supply chain, leaving the manufacturer several steps removed. Size and success used to dictate the creation of a distribution network, because physical proximity to the customer was required. Technology is sending that requirement into oblivion, industry by industry. At a minimum, it’s severely altering the importance of the middle links in the chain. Technology is allowing customers to get closer to manufacturers, and vice versa.

This is certainly a change in the way the company has done business over the past few decades, but if we look further back, the company gets back on familiar ground. Technology is bringing it closer to that original founding spark, and I have to believe that’s a good thing. This company became successful by having discussions on the shop floor with the people that were doing the job and struggling with a problem. They identified the need because they could see it. It was right in front of their nose. Innovation came from observation. The spark of success was alive and well and could be found in that small gap between the company and the customer. The 20th century need for infrastructural support stretched the gap, forcing the spark of innovation to become systemic and scalable. And in that, something important was lost.

…But it’s a More Intimate World Now.

But technology is closing the gap once again. And, in the process, as it brings the potential to relight all those sparks, it’s also bringing the opportunity to have those shop-room-floor discussions in millions of locations simultaneously. If the company looks back to the core reason it exists, and understands why that’s important to customers, it will know what to do with technology.  The answer isn’t in the sea of change that’s descending on it – but from remembering why the company’s founders decided this was something worthwhile, something that would make it worth coming to work each day, and turbo-charging that purpose with technology.

Making “Wow” Scalable

bad-customer-serviceAs I said in yesterday’s post…”Wow” is a moving target. As we have more “Wow” experiences, we expect more “Wow” experiences and if we don’t get them, we go away disappointed.

Does “Wow” Increase Share Prices?

Every year for the past 3 years, BusinessWeek does a national survey to find the top Customer Service champs in America. Last year, Amazon topped the list, followed by United Services Automobile Association, Jaguar, Lexus, The Ritz-Carlton, Publix Super Markets and Zappos.com. BusinessWeek poised the very pertinent question:  does increased customer satisfaction lead to greater equity values. Is being nice to people good business?

In a study from 2006, Claes Fornell and his fellow researchers found the answer was a strong yes. While customer satisfaction is a factor seldom watched by Wall Street, Fornell et al found that a portfolio comprised of the top 20% of companies in the American Customer Satisfaction Index would have outperformed the market (based on the DJIA) by 93% in the period 1997 to 2003. It also left the S&P 500 in the dust (201%) and the NASDAQ (335%). Interestingly, the only time the market indexes outperformed the customer satisfaction portfolio was during the irrational exuberance of the Dotcom bubble in 1999 and 2000.

In 2009, Bruce Cooil and a group of researchers from Vanderbilt did a similar study and added an interesting nuance to the Fornell study. They looked at four different portfolios picked on the basis of customer satisfaction scores and found that the portfolios that performed the best were the ones where the score was rising. Picking stocks based on high satisfaction scores alone wasn’t a consistent winning strategy. But picking stocks where the score was rising year over year and where the company’s scores were above the national average outperformed the market by over 100% through a ten year period. The worst performing portfolio? The companies where the satisfaction score was dropping, even if it started from a fairly high level.

So, it’s not necessarily the high score that generates the loyalty, it’s scaling customer satisfaction to keep it on the rise. As I said yesterday, the secret of “Wow” lies in exceeding expectations. This introduces a dilemma for the business owner. How do you scale customer satisfaction?

How Zappos Scales “Wow”

For the answer, let’s look at one of the consistent winners in the BusinessWeek Survey, Zappos.com. CEO Tony Hsieh approaches customer service with the ardour of a religious zealot. But the journey he and Zappos have taken there has gone through some twists and turns. In a recent keynote I had the opportunity to attend, Tony shared that Zappos core philosophy has evolved in the past decade. In the beginning, the core goal for Zappos was selection. They wanted to deliver online shoppers the largest selection of shoes available anywhere. Zappos founder Nick Swinmurn started Zappos because he was looking for a pair of boots. He came up empty handed. Surely, it shouldn’t be so hard to find the right pair of shoes, in the right size and the right color. Swinmurn’s answer? An online shoe megastore.

Soon, however, Zappos realized that selection alone wasn’t enough. In 1999 and 2000, people were wary about shopping online for anything, including shoes. Trust was essential in convincing customers to make a purchase online. Enter Hsieh. Zappos built the trust by focusing on customer service. No questions asked return policies. Free overnight shipping. Zappos switched it’s core corporate philosophy from selection to satisfaction. Happy customers fuelled word of mouth, which drove Zappos to higher and higher sales numbers.

Zappos retooled their operation to deliver a “Wow” experience. They brought shipping in house, creating their own fulfillment centre in Kentucky and later Las Vegas. They created a symbiotic, joined at the hip partnership with UPS. They re-engineered the process from order placement to doorstep delivery, aiming to knock the socks off their customers. Zappos began to systemize “Wow”.

It was at this point that Hsieh and Swinmurn learned their next lesson – “Wow” is best delivered person to person. People are the secret behind the scalability of “Wow”. If you hire great people, and treat them well, they’ll naturally aspire to deliver exceptional customer service, and because each employee is empowered to respond appropriately to each situation, they can scale “Wow” on the fly, reading a customer’s expectations and shooting to exceed it. Hsieh and Zappos switched their core philosophy yet again, from customer service to culture. HR became the primary focus of the company.

“I Just Want a Pizza!”

In his keynote, Hsieh gave us an example of how “Wow” could scale to ridiculous lengths if you let good people do good things.

Hsieh and some friends were celebrating one evening on the West Coast. As they headed back to their hotel, one of the group, an old college friend, mentioned how hungry she was. The group offered to stop for a bite. “No,” the friend said. Her heart was set on the pizza she was going to order from room service when she got back to the hotel. All day long she had been dreaming of this pizza. She went on at length to the group about how much she was going to enjoy this pizza. Very soon, Hsieh and company got very tired of hearing about this damned pizza.

They returned to the hotel at a very late hour and the friend phoned room service:

“I’m sorry ma’am, but room service shuts down at 2 am”

“But I was going to order a pizza…”

“I’m sorry ma’am, the kitchen is closed.”

“But my pizza…”

“Sorry, there’s nothing I can do.”

Crestfallen, the friend put the phone down. The group, who had gone up to the room to continue the celebration, looked up.

“Room service is finished. I can’t order my pizza. What kind of hotel shuts room service down at 2 a.m.? Pizza’s are supposed to be eaten late at night.”

At this point, Hsieh, inspired no doubt by some of refreshments consumed over the course of the evening, made a suggestion:

“Call Zappos!”

“What?”

“Call our call centre. We always say how great our people are…how they can solve anything. Call Zappos and see if they can help you.”

Soon, the group joined in, all gaining inspiration from the liquor consumed over the course of the evening:

“Yeah, phone Zappos. Let’s see how good they are.”

So, she phoned Zappos –

“Hello, Zappos. How can I help you?”

“I need a pizza.”

“Excuse me?”

“I was out with some friends and all I wanted was a pizza when I got back to the hotel. But I got back here and room service is closed. I can’t get a pizza!”

“Ma’am, you know you phoned Zappos, right?”

“Yes…”

“Zappos…the shoe store? Accessories? Clothing…?”

“Yes. But can you help me? I really need a pizza.”

“Just a minute…”

A few minutes later, the call centre operator was back….with a list of pizza delivery restaurants in the area that were open all night.

That’s how you scale “Wow”.

The Trouble with “Wow”

customer-service-cartoon-thumbThere’s been a lot of chatter recently about “Wow” experiences. This has been held up as the holy grail of customer satisfaction, an experience so amazing it makes the consumer stop in their tracks, jaws dropping and heart a flutter. But there’s a nasty little surprise awaiting any company aiming for impossibly high bar of “Wow.”

“Wow” is a moving target. “Wow” never stays in one place for long.

There’s a pretty simple equation that defines “Wow” for us:

Experience – Expectation = Reaction

So, Wow depends on our expectations going in. It’s only a Wow if it exceeds expectations. And our expectations are constantly changing.

Let me give you an example. Zappos.com is one of the poster children for Wow. CEO Tony Hsieh has tried to consistently deliver Wow to his customers. He gives one example. The Zappos Head Office is located a stone’s throw from the UPS distribution centre in Las Vegas. The reason is that Zappos works hard to get orders shipped as quickly as possible. Rather than waiting for a batch of orders to come in and be filled from the warehouse, which is more efficient, Zappos fills the orders immediately. The goal is to get the order into UPS’s hands as quickly as possible. So, theoretically, a person could order from Zappo’s at 10 pm and find the parcel on their door the next morning. One would hope that would elicit a “Wow!”

But once it happens, our expectations get reset. The standard expectation for Wow is now overnight delivery. If Zappos does it again, it’s not a Wow, it’s simply meeting expectations. And, if the planets aren’t perfectly aligned and the parcel isn’t delivered in 8 hours, suddenly the outcome is disappointment. In the equation of “Wow”, the higher the expectation, the more chance you’ll end up with a negative result.

I’m not downplaying the importance of a good customer experience. I’m simply letting you know that always aiming for “Wow” can lead to a never ending escalation of customer expectations. There are, however, some very interesting things at play here that I would like to explore further in the next several posts. I’m fascinated by how customer psychology has shifted now that technology has transformed the marketplace. For example, Tony Hsieh found that for Zappos, the secret of keeping “Wow” scalable lies in something pretty elemental – how you treat people. But that’s a topic for tomorrow.

10 Things I Learned from Disney – #10: How Do You Want to be Remembered?

walt-disney1I started out this series by saying that Walt Disney is one of my heroes. This is not to say that Walt was perfect, or even consistently admirable. There are plentiful rumors and tales of Walt’s anti-semitism, despotic management style, mercurial temperament or politically insensitive transgressions. The Disney Studio was far from the happiest place on earth. Disney animators unionized after promises of profit sharing on the hugely profitable Snow White vaporized and Walt subsequently scooped up all the credit for the amazing artistic and technical achievement of the studio team. Even longtime friend Ub Iwerks had a trial separation from Walt for 4 years after being constantly shoved out of the spotlight (although he subsequently returned and spent most of his remaining career with Disney). Yes, Walt had a monumental ego. Yes, he was a glory-hound. And yes, he could be a tyrant to work for.

But that’s not how we remember Walt.

We remember his as a visionary, an artistic pioneer, a maker of magic and possibly the most powerful entertainment icon of the 20th Century. His presence was so powerful that the company foundered for years after his death, trying to guide themselves with the management mantra: What Would Walt Do?

You see, the way we remember things is substantially different that the way things actually are. The same is true for people. Eulogies never inventory the deceased’s many faults (because we all have many faults). They memorialize their strengths, their gifts and their accomplishments.

Leveling and Sharpening

In order to jam things into our long term memory, we take facts and distill them into an idealized version of reality. It’s called “Leveling” and “Sharpening”. We “level” out the mediocre, the mundane and details we just don’t agree with, basically eliminating them as unnecessary “noise” from our memory. Then, we “sharpen” the extraordinary, whether it be extraordinarily good or extraordinarily bad. Finally, we pick one or the other. We tend not store diametrically opposed opinions of things or people. It creates too much cognitive conflict. We either like things (or people) or dislike them. If we like them, we filter out the negatives and build up the positives. If we dislike them, we do the reverse.

It’s this human tendency that I talked about before in Daniel Kahnemann’s exploration of remembered happiness vs experiential happiness. We level and flatten our lives as well, forever storing an idealized (or demonized) version of what actually happened.

So, for me, although I’m aware of Walt’s faults, that’s not really part of my “image” of the man. I focus on his accomplishments and many gifts. And as I inventory them, I am comfortable in calling him one of my heroes. Walt’s achievements were, by any measure, extraordinary. Perhaps they would be beyond the reach of someone less driven, less egotistical or less tyrannical. Perhaps, perhaps not. But that’s not really for me to judge. What is important to me is that Walt achieved them.

And there is my final lesson from Disney. It’s the extraordinary that will be remembered. It’s when we reach beyond our limits that we determine what we’ll be remembered for. The mundane details of our lives will get lost in the retelling, along with our mistakes and faults, if we strive to achieve something remarkable.

10 Things I Learned from Disney – #4: Details Make the Difference

PartnersstatueThere are a lot of theme parks in Southern California. The competition for Disneyland is tough. Yet, for over 50 years now, the pattern has been the same. People plan their vacation around Disneyland, spending 3 to 5 days at the park, and may add a day at one of the other parks – Universal, Knott’s or Magic Mountain. If you looked at the size of the theme park pie and the slice that Disney carves off, the imbalance would be remarkable. Why does Disney suck up over 80 cents of every theme park dollar spent in the region?

It’s not the rides. Universal’s rides are probably more technically impressive. Magic Mountain and Knott’s certainly has more thrilling rides. Disney’s biggest coaster, California Screamin’, is a rather mild ride for a coaster fanatic (which I am).

I believe there are several reasons, and I’ll try to deal with them in individual posts. Today, I want to talk about attention to detail.

The Hotchkiss Detail Obsessive Guide to Disneyland

My family has been to Disneyland at least 6 times. People hate visiting the park with us because we have routines (others are less kind and call them rituals, or cult-like behavior) that have to be adhered to. It’s important which side of the train station you enter onto Main Street on. And you don’t rush past the circle at the top of the street. You spend a few minutes lingering and drinking in the atmosphere. You either stroll (never rush) down main street or take the horse drawn tram. You may stop at the Blue Ribbon Bakery for a coffee. You make your way to the Partners statue at the center of the park for a few minutes with Walt and Mickey and while you’re there, pay particular attention to the flowers planted around them. Take note, because they may be completely different tomorrow. From the center in front of the Castle, we then veer to the left, usually ambling through Adventureland and head towards New Orleans Square because the first ride has to be (this is non-negotiable) Pirates of the Caribbean.

Pirates is one of our favorite rides, earning it’s place as a Hotchkiss Tradition. And it’s not because it’s thrilling (it’s not) or technically amazing (although it may have been with the ride debuted in 1967). It’s because the attention to detail on this ride is simply amazing. It’s the last ride that Walt himself personally oversaw the design of. Everything has been thought through, down to the smallest scar, gold doubloon or cobweb. And that is the Disney difference. You won’t find that fanatic attention to detail in Universal, Knott’s or Magic Mountain. It’s a Disney hallmark.

It’s What You Do Between the Rides that Counts

Disney knows that in between the momentary jolts of adrenaline, it’s the details that build an experience worthy of a 3 or 4 day investment of your family’s time. Disneyland has this down in spades. Each square foot is jammed with amazing detail, carefully crafted and maintained to add to the experience. And I’m not even talking the obscure Disney-mania touches like Hidden Mickies. I’m talking about carefully planned sight lines, well placed benches, meticulously groomed greenery and the architectural detail on buildings, to say nothing of the imagination fuelling touches found in rides like Splash Mountain, Peter Pan, the Haunted Mansion and Indiana Jones. The competition cut corners. Walt absolutely forbid that in the making of Disneyland.

The post-Walt Disney Parks have struggled with this. We’ve been going to Disneyland for over 20 years now, and the overall look of the park hasn’t changed much. Toontown was added and a few new rides have debuted, but 50 years of planning and development have created an almost perfect entertainment experience. Major overhauls aren’t needed. The same can’t be said for Disney’s California Adventure. Disney is currently overhauling huge sections of the park because the same detailed magic was missing. Visitors treat California Adventure more like a typical theme park, rushing from major attraction to major attraction without lingering to enjoy the experience on the way. Of all the rides in California Adventure, the Twilight Zone Tower of Terror is one of the few engineered to the same standards of detail that you’ll find in the earlier rides. But this legacy of detail isn’t found so much in the rides, but rather the transition zones between the rides. It’s here where the acid test of detail is really found. It’s detail that keeps crowds amused while they’re waiting in line. It’s detail that keeps them from feeling like cattle, shunted from one chute to the next.

Most Skip the Details, Disney Doesn’t

So what’s the takeaway? Disney’s eye for detail came from an absolute certainty about what his visitor’s wanted and an iron-willed determination to deliver that without any compromise. Every last element of the visitor experience was considered and planned for. Every detail you see in Disneyland had a purpose – to make the visitor happy.

I think too many corporations rush past the details when it comes to the experiences of their customers. It’s because details take time. They’re hard work. You can get lost in a forest of detail. And obsessing over detail just doesn’t seem that profitable. In fact, if you get lost in the wrong details, it can be sure death for a corporation. But yet, details make the difference for Disney. Why? How does Disney avoid the trap of paying attention to the wrong details? They know which details are important because they take the time to understand what is important to their visitors. They spend a lot of time thinking about how visitors perceive and interact with those details. This is a legacy from Walt. It comes from a leader that obsesses about details.

Apple and the User Experience: A Lesson Learned

iPad-gallery-books1Another example of attention to detail is Apple. They obsess about the user experience. I recently watched someone demo their new iPad. You know what was one of the first things he showed me? How the iPad mimicked the look of turning an actual physical page in a book. Depending on where you place your finger on the page, the page itself curls up appropriately. It’s a silly little detail, but it was important in creating a Wow experience for this new owner. And it’s something that stood out to me as one reason why, eventually, I have to get an iPad. It’s a feature that probably took an absolutely silly number of hours of programming to implement but it was important to Apple because it was important to users.

Detail can differentiate you from the competition. It adds a premium to the value you provide. It tells the customer that you value them as users (or visitors), not just as another wallet to be emptied.

10 Things I Learned from Disney – #3: Leadership Matters…a Lot!

walt-and-roy-01How many companies today are run by caretakers? How many of the Fortune 500 are run by CEO’s who are really just thinly disguised accountants?

The Leader of a company determines the heart and soul of that company. If you run the company by your profit and loss statements, you’ll end up with a fiscally responsible corporation that will slowly screw itself into the ground. If you have a reckless leader, you’ll flame and burn in spectacular style. Somewhere in between the extremes is where you have to live

Walt Disney was not overly concerned by fiscal responsibility. That was Roy, his brother’s job. Walt drove the company by embracing risk. Roy lost his hair by trying to balance Walt’s enthusiasm.

Risk is the fuel that drives the future. And risk is risk. It can only be calculated up to a certain point. After that, you have to close your eyes and jump. Walt jumped again, and again, and again, each with spectacular style.

1923 – Walt moved to Hollywood from Kansas City with a short film called Alice’s Wonderland that he hoped would net him a distribution contract. The film was pretty much all Walt had. He managed to secure a contract and teetered on the edge of bankruptcy for 4 years. And just when he looked like he had a winner, in a new cartoon character called Oswald the Rabbit, the distributor stole both the rights and the animators, shutting Walt out.

1928 – After losing Oswald, Walt started from scratch with Mickey Mouse. But he only created two cartoons with the new character before deciding to risk it all with the first sound cartoon. The struggling studio dumped everything they had into the cartoon, Steamboat Willie. Luckily, Walt’s gamble paid off. Mickey was a hit.

1937 – Building on the success of Steamboat Willie, Disney turned out a series of profitable Mickey Mouse cartoons, and added the Silly Symphony series, netting himself a number of Academy Awards in the process for pushing the boundaries of animation technology and art. but Walt soon found a new dream worthy of risk – the first full length animated movie. It what was quickly becoming predictable behaviour for Walt, he risked all their profits from the animated shorts on Snow White. And, as before, it was a phenomenal success, becoming the highest grossing movie until Gone with the Wind bumped it from it’s perch.

In it’s following releases, Disney struggled with finding the right balance between budget and profitability. The war restricted access to foreign markets so profits relied on domestic audiences. Walt continued to push the envelope of what was possible with animation in Disney’s next two releases, Pinocchio and Fantasia. This came at a cost – a budget that meant these films didn’t break even until decades after their debut (thanks to eventual release on VHS and DVD). Walt continually tried to find the right balance between artistic accomplishment and profitability, eventually finding a happy middle ground with classics like Bambi, Cinderella and Mary Poppins (another technical and artistic milestone). It’s amazing to consider how quickly animation progressed, from the primitiveness of Steamboat Willie to the polished art of Show White in just 9 short years.

In the interim Walt also explored TV and live action features, finding significant success in both. Finally, it seemed, Disney had found the groove that led to sustained profitability. Almost any other leader would cling to this groove for dear life, building up the bank account and enjoying the rewards that come with success. Not Walt.

1955 – Walt got restless when he stayed in one place too long. he became bored with incremental improvement, no matter how profitable it proved to be. Walt thrived on risk and new, monumental challenges. And so, he looked for a new one. Walt was 54 years old and had been running Disney, in one form or another, for 35 years. By any measure you might want to apply, he was successful. And he risked all this, everything, on a new dream – an entertainment park. Disneyland represented Walt’s biggest roll of the dice yet, because he had everything to lose.

This restlessness and desire to push the limits epitomized the Disney company for the first 45 years of its history. Walt and the company were really one and the same. His leadership determined the soul of the company. When he died of lung cancer at the age of 66, he left a hole in the heart of Disney that took years to mend (and some might say Walt was never successfully replaced). Never let it be said that one person does not determine the direction of a huge corporation. Disney was testament to the fact that a single person’s vision and ideals can shape and guide a company for decades. This is not the job for a caretaker or bean counter. This is a job for someone who can grasp the impossible and shape the future.

The 150 Millisecond Gap: The Timing of Brand Love

A few weeks ago, I was sitting in a meeting room at Simon Fraser University, looking at two squiggly lines on a graph in a Powerpoint slide. In fact, five of us in the room were all looking at it intently. Among the five of us, there was a PhD and a handful of Masters degrees in Neurology and Psychology. I contributed nothing to this impressive collection of academic achievement. Still, there was something on the chart that fascinated me.

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The chart was the result of a neuroscanning experiment we conducted with SFU and Isabel Taake and Dr. Mario Liotti last year.  We were exploring how the brain responded to brands we like, brands we don’t like and brands we could care less about. The study was an ERP (Event Related Brain Potential) study. The idea of the study was to divide up the groups, based on brands they buy and brands they don’t buy and measure their brain waves as they’re presented with pictures of the brands with an EEG scanner. After, these waves were averaged and the averages of each group were compared with each other. What we were looking for were differences between the waves. We were looking for gaps.

It turned out we found two gaps. The brain waves are measured based on time, in millisecond increments. When we initially did the study, we were looking for something called the DM effect. This effect has been shown to represent a difference in how we encode memories and how effective we are in retrieving them later. We wanted to see if well liked brands showed different levels of brain activity when it came to memory encoding than neutral or disliked brands. The answer, as it turned out, was a qualified yes. What was most interesting, however, was the difference in the brain waves we saw when people were presented pictures of  brands they love and brands they either dislike or  feel ambivalent about. There was something going on here, and it was happening in two places. The first was happening very quickly, literally in the blink of an eye. We found our first gap right around 150 milliseconds – in just over 1/10th of a second. The second gap was a little later, at about 450 milliseconds, or about half a second.

Brands = Faces?

Previous ERP work often used faces as the visual stimuli that subjects were presented with. Researchers like working with faces because the human brain is so well attuned to responding to faces. As a stimuli, they provide plenty of signal with little noise. What researchers found is that there were significant differences in how our brains processes well known faces and unknown faces. They also found differences in how we processed smiling faces and scowling faces. And the differences in processing showed up in two places, one in the 150 millisecond range and the second at about 300 – 500 milliseconds. The first gap is what neurologists call the Vertex Positive Potential. The second is called the P300. I’ll explain what each of these means in more depth in a second.

What was interesting with this study is that we were seeing the same  thing play out when we substituted familiar brands for familiar faces. Respondents were responding to brands they liked the same way they would respond to a friendly face they recognized. So, what’s the big deal about that? And why two gaps? What was the significance of the 300 milliseconds that separate the two? Well, it’s the difference between gut instinct and rational thought. What we might have been seeing, as we stared at the projector screen, was two very different parts of the brain processing the same thought, with the first setting up the second.

The Quick Loop and the Slow Loop

Neurologists, including Joseph LeDoux and Antonio Damasio, have found that as we live our lives, our brains can respond to certain people, things and situations in two different ways.

The first is the quick and dirty loop. This expressway in our brain literally rips through the ancient, more primal part of our brain – what has popularly been called the Lizard brain (neurologists and psychologists hate this term, by the way). Why? Because if we hesitate in dangerous situations, we’re dead. So, we have a hair trigger response mechanism that alerts us to danger in a blink of an eye. How quick is this response? Well, coincidentally, it’s usually measured in the 100 to 200 millisecond range. This is the VPP, the Vertex Positive Potential. It’s an emotional processing of a stimulus, an immediate assessment of threat or reward.

Previous research (Jeffreys Takumachi 1992) found that the VPP is common when we see faces but could also be found when we looked at some objects.  Some, but not all objects. What we (and by we, I mean Isabel and Dr. Liotti) did was substitute preferred and non-preferred brands for faces. And we saw the same VPP gap. Typically, this early processing is done by the amygdala (our danger detection module) and other areas of the brain including the orbitofrontal cortex.  If you look at the map of neural activity, you’ll find more frontal activity in the “Buy” group. The brain is responding emotionally to what it is seeing and it’s doing so almost instantaneously, in the blink of an eye.

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But then there’s a slower loop that feeds the signal up to our prefrontal cortex, where there’s a more deliberate processing of the signal. If the signal turns out to be non threatening, the brain damps down the alarms and returns the brain to it’s pre-alert status. Cooler heads prevail, quite literally. The time for this more circuitous path? About half a second, give or take a few milliseconds. This more deliberate evaluation represents the second gap, the P300 gap, we saw in our averaged brain waves. This is a more deliberate evaluation of the stimulus. It’s here where our reasoning brains kick in and either contradict or reinforce the early signals of the VPP gap. If it’s a smiling face, we go beyond instant recognition and start to retrieve (from memory) our concept of the person behind the face. The same is true, I suspect, for our favorite brands. The neural map here shows the difference in scalp potential activity between the “Buy” group and the “Non-Buy” group. The heat we see is the home of brand love.

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Where Brand Love Lives

In neurological research, different methods deliver different insights. The ERP methodology we used provides accurate timing, thus the discovery of the 150 and 450 ms gaps. But fMRI scanning provides accurate tracking of the exact locations of neural activity. Another study, conducted in 2004, starts to give us some clues as to exactly where brand love lives. Dr. Read Montague and a team at Baylor University staged a rather elaborate repeat of the Coke-Pepsi Challenge, but this time, people took the challenge while they were in a fMRI scanner. I’ve written before about the study if you’re interested in more detail about how they pulled it off.  Today, what I want to talk about is where in the brain brand love lives.

Coke is one of the most beloved brands in the world. It elicits strong loyalty amongst its fans, to the point where they swear it tastes much better than it’s rival – Pepsi. Well, as Montague found, if they didn’t know what they’re drinking, this isn’t really true. Even the most fervent Coke fan often choose Pepsi as their preferred drink when they didn’t know what they were drinking. But when they knew the brand they were tasting, something very interesting happened. Suddenly, other parts of the Coke fan’s brain started lighting up.

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The hippocampus, the left parahippocampal cortex, the midbrain and the dorsolateral prefrontal cortex started lighting up. This is significant because it indicates that the brain was actually retrieving concepts and beliefs from memory (the hippocampal activity) and the retrieved concepts were being integrated into feelings of reward (the prefrontal cortical activity). The brain was enhancing the physical sensation of taste with the full strength of brand love.

So?

Perhaps we’re starting to see not only the home of brand love, but also the timing. This was why I fixated on that small gap between the squiggly lines at 150 milliseconds. It’s because this represented our immediate, visceral response to brands. Before the brain really kicks in at all, we are already passing judgement on brands. And this judgement will color everything that comes after it. It sets the stage for our subsequent brand evaluations, happening at the 450 ms gap. This is when the brain structures identified in the Baylor study start to kick in and reinforce that “blink of an eye” first impression. Brands appear to deliver a one-two punch.

We’re currently planning our follow up research for 2010. I’m not exactly sure what it will entail, but you can bet we’ll be looking much closer at those 150 and 450 ms gaps!