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11-20-19

HOW LEGO UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Lego

LEGO® (www.lego.com) was founded in 1932 by Ole Kirk Kristiansen. The privately held, family-owned company with headquarters in Billund, Denmark, has over 19,000 employees and operates 132 LEGO brand stores.

They have built an amazing business, One Brick at a time.

My mom recently spent time cleaning and sorting the LEGO bricks my brothers and I played with as kids so she could donate them to a local church. These bricks are almost 60 years old and they are still viable. In fact, all LEGO bricks produced since 1958 are fully compatible with the bricks produced today.

Every year, LEGO sells over 75 billion bricks and other components that they call “elements.” There are more than 3,700 different types of pieces, including bricks, wheels, motors, swords, figures, and more.

These are manufactured with incredible precision—the molds used to produce LEGO elements are accurate to within 0.004 mm—less than the width of a single hair. This accuracy ensures that the bricks will have what LEGO calls “clutch power.”

Since LEGO’s mission is to “inspire and develop the builders of tomorrow,” they often take on special projects to demonstrate the amazing things that can be built with LEGOs.

In 2018, they built a full-scale copy of the $3M Bugatti Chiron sports car out of LEGO bricks! It took over 13,000 man-hours to build and used over 1 million LEGO elements. It has 2,304 LEGO motors and a top speed of 12 MPH (versus 261 MPH for the real one!) The Bugatti factory test driver and multiple Le Mans champion Andy Wallace had the honor of the first drive.

The LEGO Chiron is truly amazing. But let’s just say you only have six two-by-four bricks. There are 915,103,765 ways to combine them! I spent hours as a kid building things, breaking them down, and then using my imagination to build something else.

LEGO is an amazing example of how a standardized product architecture can create alignment. There are a number of key insights that companies should consider applying.

First is backward compatibility. LEGO bricks that were built sixty years ago still interoperate with the current ones.

The second key insight is the power of modularity. People can mix and match LEGO elements to build virtually anything. Many companies struggle to create cross-divisional product portfolios. Creating a common architecture can ensure that products from division 1 interoperate with products from division 2.

It worked for LEGO. The company is worth over $7 billion, making it the world’s most valuable toy brand by far, according to consultancy Brand Finance.

Does your company have One unifying product architecture that keeps everything aligned?

11-19-19

HOW BMW UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_BMW

In 1933, a fledgling company known as Bayerische Motoren Werke GmbH (DE: BMW) introduced the BMW 303.

It was the first BMW to use the now iconic kidney grille.

For eighty-five years, the kidney grille has been used on all BMW cars with just four exceptions (the 937–1940 BMW 325, the 1955–1962 BMW Isetta, the 1957–1959 BMW 600, and the 1959–1962 BMW 700).

Although the function of the kidney grille was to help cool down the engine, BMW even used it on the electric i3 and the hybrid i8.

The kidney grille is BMW’s signature design element. It provides a unifying—and immediately recognizable—visual identity for all their products. It unifies their dozens of models into One Portfolio.

Having the management discipline to stay with this One Style for eighty-five years is an impressive feat. I’m sure that many BMW designers have complained that having to use the kidney grille on every car was hindering their creativity.

In fact, the original design for the first e21 3-series BMW (produced from 1975–1983) ditched the kidney design in favor of a more GM-like grille with horizontal bars. Thankfully, Bob Lutz, who was executive vice president of sales at BMW North America, convinced the company to redesign the car with the kidney grille.

I believe the decision to stay with the design standard has been an important component of BMW’s success and growth. In 1974, BMW was the 11th largest European brand in the U.S., selling just over 15,000 cars. Now, they sell over 300,000 cars per year.

In my book, Decide One Thing, I also profiled BMW.

In 1975, BMW unveiled “The Ultimate Driving Machine” tagline. (Interestingly, the tagline was also created by Bob Lutz.)

They had the discipline to stay with One Tagline for thirty-five years! But in 2010, they abandoned The Ultimate Driving Machine for the much maligned “Joy” campaign.

In 2012, they brought back The Ultimate Driving Machine. In fact, the ad copy was, “We don’t make sports cars. We don’t make SUVs. We don’t make hybrids. We don’t make luxury sedans. We only make One Thing: The Ultimate Driving Machine.” (That’s why this story was a perfect fit for my Decide One Thing book!)

Then, they switched again and started using “Sheer Driving Pleasure.” In 2013, they started using another new slogan, “Designed for Driving Pleasure.” A review of their websites for various countries around the world revealed that multiple taglines are used, including “The Ultimate Driving Machine.”

Having a single, unifying product design element can be a powerful way to create alignment. For 85 years, BMW has had the discipline to stay with it. I just wish they had the same discipline with their tagline.

Do your products and/or services have One single, unifying design element?

11-18-19

SPEED READING -- ONE PORTFOLIO

LinkedIn-Post_OnePortfolioMost companies sell multiple products and services.

But they often struggle to align them.

One way to create alignment is to literally sell just One Product. As we just learned, Basecamp chose this strategy.

However, most companies offer multiple products and services. Often, these are developed in different divisions. And divisions—by definition—divide.

In the 1970s, Bruce Henderson from the Boston Consulting Group introduced the concept of product portfolio management. His now famous “growth-share matrix” categorized a company’s products as cash cows, stars, question marks, or dogs.

Perhaps your company still uses this management tool to manage your product portfolio.

Once you decide to develop multiple products, your business becomes more complex, and alignment becomes exponentially harder.

In some cases, customers may not have any expectations of product alignment. For example, people do not expect seamless interoperability between Proctor and Gamble’s Tide, Pampers, and Crest products.

However, in most cases, customers will indeed expect some level of alignment. For example:

  • They may expect your products to have a similar look and feel.
  • They may expect your products to work together.
  • They may expect your products to share common components.

This means you will have to develop corporate standards for product alignment and interoperability. These standards are an important component of your corporate core.

In this chapter, we will explore how BMW, LEGO, RYOBI and HubSpot aligned their product portfolio to create both synergies and differentiation.

NOTE: These stories are excerpted from my book, Drive One Direction.

11-16-19

HOW TOMS UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Toms

TOMS® (www.toms.com) started as a simple shoe company, but has diversified into eyewear, coffee, and childbirth services.

They changed the world with their One for One® Business Model.

While vacationing in Argentina in 2006, TOMS founder Blake Mycoskie witnessed the hardships faced by children growing up without shoes. Wanting to help, he created TOMS Shoes, a company that would match every pair of shoes purchased with a new pair of shoes for a child in need.

TOMS calls their unique business model “One for One®.”

Since its inception, TOMS has provided over 60 million pairs of shoes.

TOMS Eyewear launched in 2011 and has helped restore sight to over 400,000 people.

In 2014, TOMS expanded into coffee roasting and uses the proceeds to provide a one-week supply of water to a person in need.

At first glance, the business strategy would seem to violate the basic corporate strategy principle of focus.

After all, what do shoes, glasses, and coffee have in common?

All of TOMS’ businesses operate with the same One for One business model. It is their inspiring raison d'être that keeps them aligned.

In 2014, TOMS sold a 50 percent equity stake in the company to Bain Capital. Private equity firms are generally not known for their social consciousness, but here is how Mycoskie described the deal:

“We need a strategic partner who shares our bold vision for the future and can help us realize it. We’re thrilled that Bain Capital is fully aligned with our commitment to One for One, and clearly they have the expertise to help us improve our business and further expand the scale of our mission.”

In fact, the terms of the deal specified that the One for One approach would always be part of the TOMS business model.

Like TOMS, your company has a business model. For TOMS, their unique business model is 100 percent aligned with their unique purpose.

What is your company’s business model?

NOTE: One for One® is a trademark of TOMS shoes.

11-15-19

HOW DOLLAR TREE UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_DollarTree

Dollar Tree (NASDAQ: DLTR) has 14,300 stores, employs 180,000 people, and generates over $20 billion in revenue.

Dollar Tree unleashed the accelerating power of alignment by focusing on One Price Point.

This is an amazing story. Dollar Tree has built a $20+ billion-dollar company selling products for One Dollar!

Headquartered in Chesapeake, Virginia, Dollar Tree is the largest single-price-point retailer in North America. (Their late founder and CEO, Macon F. Brock Jr., wrote an autobiography about his experience. The title? One Buck at a Time.)

In 2015, the company acquired Family Dollar, solidifying their leadership in the single-price-point category. Of course, integrating—aka aligning—the two companies is a key priority. Some of their key initiatives include:

  • Implementing a shared services model across corporate support functions, including Finance, Human Resources, Information Technology, and Supply Chain
  • Introducing common technology platforms and processes across both brands
  • Improving logistic and supply chain efficiencies

In November 2018, Gary Philbin, Dollar Tree’s President and Chief Executive Officer, described their results, “Dollar Tree delivered its 43rd consecutive quarter of same-store sales growth, with increases in both customer transactions and average ticket. We are pleased with the performance of our newly renovated Family Dollar stores. Additionally, we have begun the important phase of consolidating our store support centers into our Chesapeake campus, which will improve our ability to support Family Dollar stores through enhanced collaboration, communication and teamwork.”

Choosing a price point is an important component of your corporate strategy. Dollar Tree chose a very specific and easily understood One.

Of course, there are many different price points in every market.

On the low end, there is free. On the high end, there is IYHTAYCAI, which stands for “if you have to ask, you can’t afford it.”

The question for you to consider is whether your company should create strategic alignment by choosing One of them.

Your company can be Dollar Tree, or you can be Neiman Marcus. But not both.

Choosing One Price Point worked for Dollar Tree. In the last decade, their revenue has grown fivefold!

Where on the price point continuum does your company compete?

11-14-19

HOW IRIDIUM UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Iridium

Iridium® Communications Inc. (NASDAQ: IRDM) is the only satellite communications company that offers truly global voice and data communications coverage.

Iridium creates strategic alignment by focusing on just One Planet.

I was surprised to learn that more than 80 percent of the Earth does not have cellular coverage. Iridium’s strategy is to address that opportunity.

Iridium reinforces their global positioning with a One Word Tagline: Everywhere. And when your tagline is Everywhere, you must back it up.

In January 2019, the company completed their $3B Iridium NEXT project. Iridium NEXT is a network of 66 cross-linked Low-Earth Orbit (LEO) satellites, providing coverage over 100 percent of the earth’s surface. Since these LEO satellites are “only” 476 miles from the Earth, Iridium’s network has a shorter transmission path, stronger signals, and lower latency.

Iridium solutions are ideally suited for applications that demand global coverage. These include the maritime, aviation, government, military, emergency services, and more.

Matt Desch, Iridium’s CEO, said, “Alignment is critical. Our customers know we differentiate by not making compromises on coverage. Even though we serve the whole planet, we only do what we do best. We don’t try to be all things to all people but focus on the unique markets and customers where we have a distinct network advantage.”

Deciding where to compete is one of the most important strategic decisions a company must make.

One way to create alignment is to compete in just One Geography. For your company, that might be one ZIP code or one city. This is an exceptional way to create alignment, since all your energy is intensely focused.

While Iridium was global from day one, most companies follow a more predictable pattern. They expand from local to regional to national to multinational and ultimately become truly global companies.

Clearly, the “One Planet” strategy has worked for Iridium. While their geographic footprint is global, they are intensely focused on their unique customer niche. Over the last decade, their revenues have more than doubled to over $500 million—and profitability has soared.

How do you define your geographic footprint?

11-13-19

HOW BASECAMP UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post-BasecampBasecamp (www.basecamp.com) is a software company that developed a very successful project management application called Basecamp. After Basecamp, they developed a number of additional products including Backpack (an online information management tool), Campfire (an online chat service), and Highrise (a CRM application).

To improve strategic alignment, they pruned their portfolio to focus exclusively on just One Product.

In 2014, Basecamp became a “One Product” company solely focused on Basecamp. They even changed the name of the company from 37signals to Basecamp.

Instead of following the conventional wisdom about growth through diversification, they doubled down on Basecamp. This allowed the company to align their resources—human and financial—on becoming truly world-class at project management.

Here is how Jason Fried, co-founder of Basecamp, described the process, "We keep talking about doing more things, but we haven't entertained the other option: Do fewer. So, I want to pitch something radical. I want us to put all of our efforts into a single product—our main product, Basecamp."

Some might argue with the wisdom of putting “all of your eggs in One Basket,” but the strategy has worked.

Since 2014, the user base of Basecamp has more than doubled.

The privately held company is highly regarded and was recognized by Forbes magazine as one of their “Small Giants 2017: America's Best Small Companies.”

The more products and services your company offers, the harder it is to maintain alignment. When you have multiple product and service lines, resources can get diluted.

Having multiple products and services means multiple development teams. Multiple marketing teams. Multiple sales teams. Multiple pricing models. Multiple customer service and support teams.

In addition, customers naturally expect your multiple products and services to integrate. They want to get volume discounts. They want a consolidated contract.

All of these things create complexity. And the more complex your business becomes, the harder it is to align.

Focusing on One Product unleashed the accelerating power of alignment for Basecamp. This strategy worked for them and perhaps it is right for you.

After all, it is better to have One (Great) Product than dozens of mediocre ones.

Should you consider pruning your portfolio to focus on just One Product?

11-12-19

HOW USAA UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_USAA

In 1922, 25 Army officers met in San Antonio, Texas, and decided to insure each other's vehicles. Today, the United Services Automobile Association—commonly known as USAA (www.usaa.com)—is a Fortune 500 financial services conglomerate offering banking, investing, and insurance to over 12 million people.

USAA unleashed the accelerating power of alignment with an intense focus on One Market.

Most companies want to sell their products and services to everyone. In contrast, USAA is focused on the unique needs of military families. In fact, membership is tightly restricted to four categories of people:

  1. Currently Serving: Individuals who are currently serving in the U.S. Air Force, Army, Coast Guard, Marines, Navy, National Guard, and Reserves.
  2. Former Military: Those who have retired or separated from the U.S. military with a discharge type of Honorable.
  3. Family: Children, current spouses, widows, widowers, and unremarried former spouses of USAA members who had USAA auto or property insurance while married and individuals whose parents have or had USAA auto or property insurance.
  4. Cadets or Midshipmen: Cadets and midshipmen at U.S. service academies, in advanced ROTC or on ROTC scholarship, plus officer candidates within 24 months of commissioning.

This narrow scope allows USAA to understand their customers better than their unfocused competitors. It also allows them to tailor their services to the unique needs of the military. In addition, a significant percentage of USAA’s employees are former military members themselves.

“At USAA, we are passionate advocates for military members and their families. The same core values that guide our military inspire USAA employees to go above and beyond for our members each and every day.”

This tight alignment has produced phenomenal results.

In October 2017, the Temkin Group released a research report ("Net Promoter Score Benchmark Study, 2017") based on a study of 10,000 U.S. consumers.

With a Net Promoter Score (NPS) of 66, USAA's insurance business earned the highest score in the study for the fifth year in a row.

In addition, USAA has long been widely recognized for being a great place to work including FORTUNE 100 Best Companies to Work For® and the Gallup Great Workplace Award.

Focusing on One Market unleashed the accelerating power of alignment for USAA. This strategy worked for them, and perhaps it is right for you.

After all, it is better to dominate One Market than dabble in dozens of them.

Is your company intensely focused on dominating One Market?

11-11-19

SPEED READING -- ONE STRATEGY

LinkedIn-Post_StrategyEvery company has a corporate strategy.

But most people don’t understand what it is.

In a Strategy& survey of more than 1,900 executives, an astounding 80 percent said their strategy was not well understood within their own company.

Obviously, people can’t align with—or execute—a strategy they don’t understand.

Strategy is “one of those words.” Every company needs One, but even the strategy consulting firms don’t have a common definition for what a strategy is.

Rather than create a new definition of strategy or propose yet another framework, this chapter focuses on five critical strategy questions every company must answer in order to provide clarity to the organization:

  • Which market segment(s) should you target?
  • What product(s) and/or service(s) should you sell?
  • Where should you compete?
  • How much should you charge?
  • What is your business model?

To unleash the accelerating power of alignment, your company must answer them clearly and precisely.

Unfortunately, many companies struggle to do this. If they even have a strategy, it could be summarized as “more.” More markets, more proposals, more products, more cities, etc.

The problem is that sometimes, more is less.

In contrast, fast-lane companies are much more disciplined about their strategy. In this chapter, we will look at how USAA, Basecamp, Iridium, Dollar Tree, and TOMS answered the five strategy questions.

Obviously, there are many other strategy questions that must be answered. Many of these are functional strategies. The Chief Financial Officer must develop a strategy to finance the company’s operations. The Chief Marketing Officer must develop a strategy to build awareness and demand. The Chief People Officer must develop a strategy to recruit, retain, and develop the very best people. This week, we will focus on the five corporate strategy questions.

NOTE: These stories are excerpted from my book, Drive One Direction.

11-09-19

HOW DE BEERS UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_DeBeers

GEICO has been using their slogan since 1999. Chick-fil-A has been using theirs since 1995.

But these pale in comparison to De Beers.

The De Beers Group (www.debeers.com), founded in 1888 by British businessman Cecil Rhodes, is a global powerhouse involved in multiple components of the diamond industry, including exploration, mining, retail, trading, and industrial diamond manufacturing.

In 1947, Frances Gerety, a young copywriter at the N. W. Ayer advertising agency in Philadelphia, created the slogan “A diamond is forever.”

De Beers has been using it ever since. That’s over seventy years!

Engagement rings have been around since Medieval times. However, prior to this campaign, less than ten percent of engagement rings contained diamonds. The campaign was designed to create a situation where every person getting engaged felt compelled to give a ring with a diamond in it.

Their “A diamond is forever” campaign also set the benchmark for how much to spend—establishing the “two months’ salary” rule that is still widely used today.

The campaign worked. Today, over 80 percent of women receive a diamond ring on their engagement.

From 1943 through 1970, Ms. Gerety wrote all the company’s ads and was even featured in a novel called The Engagements, written by J. Courtney Sullivan.

“A diamond is forever” was recognized by Advertising Age as the greatest advertising slogan of the 20th century.

In 2008, De Beers leveraged their brand position to launch a new product line called Forevermark. Experts at the Forevermark Diamond Institute hand-pick the very best diamonds. (Of all the world’s diamonds, less than one percent are eligible to become Forevermark.) Every Forevermark diamond is then inscribed with the Forevermark icon and a numerical code—invisible to the naked eye—that can forever identify the diamond and its authenticity.

At this point, I can hear the skeptics and contrarians questioning this strategy. After all, times change. Markets change. Consumers change. Products change.

Everything changes!

Yes, but a well-crafted message can indeed stand the test of time. Perhaps De Beers should say that “A tagline is forever.”

If your advertising agency asked you to commit to One Tagline for seventy years, how would you respond?