英文摘要 EXECUTIVE SUMMARIES JANUARY 2017
CUMULATIVE ADVANTAGE page 052
In this issue we look at what reallymotivates customers to choose one product over another: It’s habit—not, as somany assume, allure or loyalty.
Why do companies routinely succumb to thelure of rebranding? The answer, say A.G. Lafley and Roger L. Martin, theauthors of “Customer Loyalty Is Overrated,” is rooted in serious misperceptionsabout the nature of competitive advantage—namely, that companies need tocontinually update their business models, strategies, and communications torespond to the explosion of options that sophisticated consumers face.
Research suggests that what makescompetitive advantage truly sustainable is helping consumers avoid having tomake a choice. They choose the leading product in the market primarily becausethat is the easiest thing to do. And each time they select it, its advantageincreases over that of the products or services they didn’t choose, creatingwhat the authors call cumulative advantage.
Lafley and Martin offer guidance forbuilding cumulative advantage:
Become popular early. Back in 1946, Procter& Gamble gave away a box of Tide with every washing machine sold inAmerica.
Design for habit. When P&G introducedFebreze, consumers liked it but didn’t use it much. The problem, it turned out,was that the product came in what looked like a glass-cleaner bottle, so userskept it under the sink. When the company redesigned the bottle so thatcustomers would keep it in a more visible spot, they ended up using it moreoften.
Innovate inside the brand. Efforts to“relaunch” brands can lead people to break their habits. Changes in productfeatures should be introduced in a way that retains cumulative advantage. Forcustomers, “improved” is much more comfortable than “new.”
Keep communication simple. A clever ad maywin awards, but if its message is too complex, it will backfire.
Rita Gunther McGrath takes issue with someof this thinking. In “Old Habits Die Hard, but They Do Die,” she argues thatalthough the theory of cumulative advantage makes sense in industries that arepredictable, that condition no longer applies for many companies. Habits, likeother elements of the environment, can shift.
Consider how Dollar Shave Club’ssubscription model snatched market share from Gillette. Executives, McGrathsays, must balance the power of cumulative advantage with the need to refreshtheir approach. One tactic
is to leverage an organization’s core skillsor capabilities, but in a new format—as Dayton Hudson did when it becameTarget. The better executives become at understanding the motivations behindunconscious choices, the more likely they are to succeed at building habitualbehavior among their customers—and, just as important, the more likely they areto see how those habits might change.
Two Company Strategies
How does the theory of cumulative advantageplay out for companies other than Procter & Gamble? JØrgen Vig Knudstorp,CEO of the LEGO Group, built his company’s cumulative advantage by mining theemotional connection that so many people have with the colorful blocks. “If youcan make your brand a value—a part of someone’s identity—you have a reallypowerful competitive advantage,” he says. “But it all begins with making yourbrand a habit.”
Intuit chairman Scott Cook attributes muchof his company’s success to an early decision to design Quicken, Intuit’spersonal-finance software, to look and operate like a checkbook. As Cook putsit, Quicken is “a product that lets people hold on to their habits.”
HBR Reprint R1701B
Buying Your Way into Entrepreneurship
Richard S. Ruback and Royce Yudkoff | page 159
An increasingly popular route to success asa small business owner is “acquisition entrepreneurship”—buying and running anexisting operation. If you’re considering such a path, the authors offerpractical advice for each stage of the process.
Think it through. Do you have the rightqualities for the job (managerial skills, confidence, persuasiveness,persistence, a thirst for learning, and tolerance for stress)? Are you willingto trade the benefits of working at a large organization for the chance to bein charge?
Search diligently and efficiently. Plan tospend six months to two years—full time—following leads and systematicallyvetting business prospects. Focus on companies that are consistently profitableand have annual revenues of $5 million to $15 million. During this phase, youcan self-finance or establish a search fund to recruit potential investors.
Strike a deal. When you’ve settled on atarget, do preliminary due diligence to confirm the business’s viability andarrive at a fair offer. If the seller accepts, you’ll have about 90 days towork with your accountant and attorney on confirmatory due diligence.
Transition into leadership. After the salecloses, your priorities should be building relationships (with employees,customers, and suppliers) and setting up processes to ensure steady cash flow.
HBR Reprint R1701M
Curing the addiction to growth
Marshall Fisher, Vishal Gaur, and HerbKleinberger | page 076
In pursuit of double-digit top-line growth,many retailers relentlessly open new stores, even when doing so destroys theprofitability of their businesses. This addiction is fueled by Wall Street anda capitalist culture that’s obsessed with growth. It’s hard to kick, primarilybecause companies don’t know when or how to turn off the growth machine—or whatto replace it with.
To explore the problem, the authors studiedthe financial data of 37 U.S. retailers with recent sales of at least$1 billion whose growth rate had faltered. They found that the less successfulretailers had continued to chase growth by opening new stores far past thepoint of diminishing returns. By contrast, the more successful retailers haddrastically curtailed expansion and instead relied on operational improvementsat their existing stores to drive additional sales. This allowed them toincrease revenues faster than expenses, which had a powerful positive impact onearnings.
This article lays out a framework fordetermining when to switch to a low-growth strategy and how to put it intopractice. If retailers execute well, they can stay in the maturity stage of thelife cycle for a very long time, forestalling decline.
HBR Reprint R1701C
How I Did It
T-Mobile’s CEO on Winning Market Share
John Legere | page 038
When he joined T-Mobile, in September 2012,the author writes, the most important thing he recognized wasn’t specific toT-Mobile; it was true for the wireless industry in general: People hated it. Hesaw that the best way to succeed in this industry was to do things asdifferently as possible from the existing carriers.
T-Mobile got rid of long-term contracts andreplaced them with a transparent pricing model, made it easier to upgrade to anew smartphone, and eliminated charges for global roaming. Legere also begancriticizing rivals Verizon and AT&T Wireless, which he dubbed “dumb anddumber,” at press events and on Twitter.
The result: T-Mobile has grown subscribersfrom 33 million when Legere came on board to nearly 69 million at the end ofthe third quarter in 2016.
HBR Reprint R1701A