Compete Outside the Box:
The Unconventional Way to Beat the Competition
Eric J. Romero, PhD
Speaker
Leadership, Culture & Strategy Consultant
www.CompeteOutsideTheBox.com
Compete Outside the Box:
The Unconventional Way to Beat the Competition
by Eric J. Romero, PhD
Copyright © 2011 by Eric J. Romero, PhD
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www.CompeteOutsideTheBox.com
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Dedicated to all the people who believed in me and
my unconventional ways!
Contents
2. Strategy and Competitive Advantage
3. It All Starts with Unconventional Leadership
4. Learner, Teacher and Communicator
5. Creating an Unconventional Culture 6. Kick the Hooked on Experience Habit
6. Kick the Hooked on Experience Habit
7. Hire Self-Motivating Workers
11. Humor, the Social Catalyst
Introduction
“It’s kind of fun to do the impossible.” Walt Disney
This book is a product of my years of experience around the world as a manager, leader, professor, speaker and consultant. It is the result of reflection on much of what I have seen, lived and learned. One of the most prominent observations I have made is that there is a high degree of conformity and conventional thinking in most societies, including my own, the United States. Conformity and conventional thinking impede innovation in both the public and private sectors. They prevent the creation of new ventures that could make the world a better place. One can see this in politics, business, non-profits, government, education, entertainment, etc.
Most people probably think the United States is a free country, where individuals can freely speak their minds and be valued for doing so. However, this is mostly a myth, especially in business. Political correctness permeates American business culture and innovation suffers because of this. It stifles open communication and the free exchange of ideas, which leads to conservative firms that are resistant to change. Additionally, far too many companies are bureaucratic and thereby fail to realize the full potential of their workers by limiting far too much of what they can do.
All of this makes companies conformists, conventional and therefore less competitive. They hire the same type of people into companies with the same type of cultures, which focus on bureaucratic rules and political correctness rather than beating the competition. Many are so alike that it is impossible to realize any competitive advantage. Without competitive advantage, you cannot beat the competition; particularly in dynamic fast-changing industries.
Fortunately, it doesn’t have to be this way. Well-known unconventional firms are setting the example of how unconventional thinking can unleash creativity and flexibility in their workers (Apple, Google, Southwest Airlines, etc.), and as a result, they beat the competition repeatedly. This book is about what you can do to achieve similar results and win. It can be done, but you must be willing to modify your own thinking and your organizational culture. You have to take the risks associated with change. In fact, you have to learn to love change, for no improvement is possible without it.
Unconventional thinking is the key. If it is applied to an organization by way of unconventional leadership and culture, key personnel will constantly think of new ideas to solve problems, try these new ideas, save money, provide more value to clients, adapt, innovate, etc. As the leader of an unconventional firm, you must always be in search of improvements and innovation.
For these reasons and more, the main theme of this book is that unconventional leadership leads to innovation, flexibility and risk-taking. These three components are essential to securing long-term competitive advantages and beating the competition in today’s global and hyper-competitive environment.
Unconventional leadership is essential to creating an unconventional and progressive company. Of all the things that leaders can do, creating an unconventional culture will contribute the most to building and defending long-term competitive advantage. These two factors, leadership and culture, are the strongest sources of competitive advantage, and they produce additional competitive advantages that customers can perceive and purchase in products and services. The chapters that follow provide ideas about how to lead and build an unconventional company that beats the competition.
1. The Unconventional Company
“When you do the common things in life in an uncommon way,
you will command the attention of the world.”
George Washington Carver
In this chapter:
The difference between conventional and unconventional companies
Why unconventional companies win
What basic elements are needed to be considered an unconventional company
What is an unconventional (progressive) company? Perhaps the best way to answer this question is to start with a few examples of unconventional firms: Facebook, Google, Apple and Twitter. However, progressive firms are not limited to Internet/computer-technology firms. Companies like Cirque du Soleil, Whole Foods, Nike and Best Buy are also excellent examples of unconventional firms. What makes these firms unconventional is that they are unique in a valuable way. They are trend-setters in their industries and recognized as far more successful than their competition.
Going deeper, these companies’ cultures are open to new ideas and allow personnel to think freely and express their thoughts. They are flexible in the face of change and creative in their actions. They try new ideas, even if they’re not sure these ideas will work. Unconventional companies do not try to copy other firms in terms of culture, products, etc. They do what they think is best, even if everyone else disagrees. The following comparison of conventional and unconventional firm characteristics will help you understand further.
Conventional Organizations
Staff are segregated into departments, and there is little if any interaction between people in these groups.
When new ideas are tried, and they don’t work, they are called mistakes or failures, and these are discouraged.
Workers tend to dress and think alike and even use similar language.
Rules and policies guide much of employee behavior.
Management is totally in charge, and there are many layers of it.
The organization is very slow to change, if adaptations are possible at all.
Unconventional Organizations
Personnel are integrated to work together, and they share ideas.
When new ideas are tried, and they don’t work, it’s called learning, and this is encouraged.
Differences among people are sought and encouraged.
Innovation, flexibility and risk-taking are the basis of behavior.
Leadership guides the company to achieve its vision.
The organization can change quickly.
For example, Google has no dress code. Most of its workers set their own schedules, form their own teams, and are free to work on new ideas. When Google’s employees try new ideas that don’t work out, they share the lessons learned without fear of being punished. The company’s culture is known for its openness to new ideas and unconventionality. It has changed in response to the increase in mobile Internet, competitors like Facebook, and other changes in the market. Rather than stick to what it knows best (Internet search), as conventional management wisdom would dictate, it has expanded what it knows and introduced Chrome (a Web browser), Android (a smartphone operating system), Google Earth (map software), etc. The result is a company that has transformed its industry and how people use the Internet. That is unconventional! A conventional and conservative company is unlikely to do that, nor do so in such a short span of time.
Contrast Google with a stuffy conservative firm, like a typical bank. Everyone has set schedules that management has created for them, and all employees have to wear a suit or “business attire.” Decisions are made at the top, so change is slow if possible at all. There is far less flexibility to respond to market conditions and internal needs. The result is that typical banks are having trouble changing in response to the new environment after the Economic Crisis of 2008.
Conventional firms are stuck in a time warp, using management practices that were common decades ago but are obsolete today. Employees work best at different times and places, yet conventional firms often insist on having staff work from 9 am to 5 pm in an office. They insist on a rigid dress code that is uncomfortable, expensive and restricts freedom of expression. If you doubt this, observe how workers look forward to Causal Fridays. Conventional firms still use the ineffective annual performance review as their main evaluation of worker performance, ignoring the fact that much can be improved in-between reviews if additional evaluations are conducted. Some conventional firms even still hang on to the outdated idea that seniority should play a major role in who gets promoted, ignoring the proven fact that performance should be the primary criterion. All of these conventional practices reflect and reinforce conventional thinking. Combine this with the other types of conformity that typically exist at conventional firms, and the result is a lack of creativity, flexibility and openness to new ideas, all of which are needed to thrive in the high-change market conditions of today. Conventional companies are usually destined to follow industry trends, rather than set them; particularly in new and fast-growing industries or sectors. They are destined to exist with no competitive advantage.
There’s nothing wrong with leading a conventional firm. There are millions of them providing value and earning a profit. However, the more dynamic the competition and external changes, the greater the risk they will not survive. They are built to do what they have always done, which is a severe problem when they confront the need to change. Unconventional firms thrive on change and often turn it into a competitive advantage. Some even transform their industries. If you would prefer to lead an unconventional company, here are some ideas to get you started.
First Steps to Creating an Unconventional Company
Resist the temptation to copy other companies, although one can get some ideas from them.
Encourage employee freedom of expression in as many forms as possible.
Try new things, particularly if no other companies are doing them.
Don’t rely on rules, policies and bureaucracy to run your company.
Conclusion
Unconventional firms are much more likely to respond to change faster and therefore survive. They are also more enjoyable places to work. What follows are chapters on the major factors that contribute to unconventional and progressive organizations: strategy, leadership and the elements that contribute to an unconventional culture. Once an unconventional culture is created and maintained by leadership, it acts as an autopilot for workforce behavior. In other words, much like a national culture leads to predictable thinking and behaviors, so will an unconventional culture lead to unconventional thinking and behaviors. The result is competitive advantage based on innovation, flexibility and risk-taking.
2. Strategy and Competitive Advantage
“You got to be careful if you don’t know where you’re going, because you might not get there.” Yogi Berra
In this chapter:
What strategy really is and how powerful it can be
What competitive advantage is and why you need it
Why leadership is essential when implementing strategy and making it produce competitive advantage
Before talking about leadership, it is necessary to talk about the main outcomes for which leaders are responsible: strategy and competitive advantage. Most people have heard of the term strategy and they assume that they know what it means. However, this word is often misused, and as a result, people never realize the full potential of the concept.
Strategy is simply a long-term path and set of activities that gets one from the present, to achieving major goals in the future (vision), while building or defending competitive advantage(s). Strategy is used to transform a domestic firm into a global powerhouse, a bankrupt company into an industry leader, a commodity producer into the only manufacturer of a highly sought product, etc. Sounds pretty good, right? It sounds so good and simple that the term strategy is used for everything. However, it’s important to keep in mind that strategy is not every positive action you or your company takes. Strategy is long-term and aimed at building competitive advantage. Consequently, you cannot have a strategy for a week; that is just a plan. If there is a major snow storm, you don’t change your strategy, but you might need to adjust your activities for some time. If a work team is losing members on a regular basis, you don’t need a new strategy, but you might need a new approach to hiring. Calling all these things strategy will prevent you from using strategy to achieve competitive advantage. If everything is strategy, you will not be able to distinguish the factors that really produce competitive advantage, and it’s pretty hard to produce it if you don’t know what creates it. Therefore, understanding and using the term strategy correctly is the first step to realizing the potential of this powerful concept.
Competitive advantage
Wait, what is competitive advantage? Competitive advantage is something that you have, which others don’t, and it allows you to either differentiate or have lower costs when compared to the competition. I have a basic phone, and when it was introduced in stores, no one noticed. Compare that to when the iPhone was introduced; people were waiting overnight at stores so they could buy the first one, and they were talking about it for months afterwards. In fact, they are still talking about it. The same has happened for other Apple products. Apple is able to differentiate its products in ways that its customers value (style, functions, etc.), and they are willing to pay more for Apple’s products. Its valuable differentiation is one of its advantages over the competition, and Apple earns higher profits as a result. Another example is Walmart, which has a low-cost competitive advantage. It can purchase and distribute the products it sells at a lower cost than its main competitors; as a result, Walmart earns a higher profit compared to its competition (e.g., Kmart).
What’s so great about competitive advantage? It allows companies to beat the competition on a regular basis. It also allows them to survive, particularly when external events impact them. It allows companies to earn more profit over the long-term as well. Both Apple and Walmart have remained competitive and profitable during the current economic contraction (2008-12). Therefore, common sense might tell you that all leaders would want to have competitive advantages to secure the benefits described above. However, most are not willing to pay the price for it―changing their thinking and behavior. They cannot change their ways and/or those of their personnel. They are stuck following the industry leaders, copying each other’s ideas, or just using the same old ideas that they have always used. They can not lead unconventionally, so they’re just like their conventional competitors―existing without competitive advantage. They never win, lead the industry, transform society, make the news, etc.
Some companies have a competitive advantage but don’t exploit it, so their performance isn’t above average. Additionally, just because a firm is making money, is efficient, or has been in business for a long time doesn’t necessarily mean it has a competitive advantage. Companies can survive in certain industries or regions with no competitive advantage. These are typically either monopolies or very stable industries, with little change and/or competitive pressure, etc. However, the more competitive and global an industry, the more important competitive advantage is to a company’s survival.
Examples of Strategy and Competitive Advantage
Strategy and competitive advantage work for individuals as well as companies. Think of two MBA students in the same program who both want to become CEOs; that is their vision or long-term future goal. Simon has decided that his strategy will be to become the smartest and most knowledgeable person in his field. That will be his competitive advantage over other candidates. Every day at school, he studies hard and earns top grades. When he gets a job, Simon builds on his reputation. He reads industry journals and books to enhance his knowledge. Simon attends industry conferences where he makes presentations. He writes articles in industry journals and blogs. After years of doing this and being promoted several times, he finally is selected for a CEO position, primarily for his competitive advantage―superior intelligence and knowledge. Fred, on the other hand, decided on an entirely different strategy to achieve his long-term goal (vision) of becoming CEO. He believes that who you know is more important than what you know. Therefore, his strategy is to network and become friends with key people. He started to do this at school and continued to do it in all of his jobs. Like Simon, Fred attended industry conferences, not to learn more, but to network and maintain relationships. After years of building his social-network competitive advantage, he is selected for a CEO position because of his many relationships.