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I was discussing the importance of “core purpose” with a client when their newest team member (a newly minted marketing MBA) piped up and argued that “The core purpose of a business is to make money.” I was gobsmacked. (Really? That’s what they’re teaching? What do you call an observation that is simultaneously obvious and useless?)

In September 1996, Built To Last authors Collins and Porras observed in the Harvard Business Review, “Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.” They go on to say that companies that do “have historically outperformed the general stock market by a factor of 12.” By contrast, those that don’t often find themselves scurrying after minor market opportunities and living off the crumbs left by more successful competitors.

The article, Building Your Company’s Vision, is part of the collection HBR’s 10 Must Reads On Strategy.  The Kitchen highly recommends reading it cover to cover. Until you find the time, here’s the gist reduced to a single illustration.

Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies endlessly adapt to a changing world.

This picture says you need to have a goal. Not just hitting this year’s revenue numbers, but a Big Hairy Audacious Goal — something like “displacing Microsoft” or “a store in every town in America.”  That goal should be a byproduct of your adding value to the world in ways that no other company can — your envisioned future. (Henry Ford envisioned a world where the streets were free of horse dung because every man owned a car. Seriously.) You get there by leveraging your core technology into a unique and compelling value proposition delivered by a business model designed to capture the market. When things get ambiguous, you and everyone in the company can make good decisions focusing on the company’s core purpose and not straying from its core values.

Sound like too much “peace and love?” Anyone who is invested in your company for the long term will love it. And it will bring you peace of mind.

If customers can’t tell you what they want, how can they help you develop a differentiating strategy?  By walking you through gemba.

Gemba is a Japanese word for “the place where things happen.”  The term comes to American companies by way of the Quality Function Deployment (QFD) movement where gemba refers to the place where the product is used by the customer. Here, a gemba walk is the act of observing the product’s use so that product developers can close the gap between what is being delivered and what the customer actually needs.

The concept of a gemba walk can be just as valuable to business strategists looking to redesign a business model — with two adaptations:

First, it’s critical to expand the concept of “product use” to include all stages of the Customer Lifecycle — from how it is specified, selected and purchased, through how it is received, deployed, used, supported and ultimately replaced.

Second, it can be quite impractical if not impossible to directly observe the customer’s actions — and more importantly, the thinking behind them — at each Customer Lifecycle stage. So we augment direct observation with a simple but structured interview technique, described below.

You’re trying to create a narrative of the truth, told in the context of the big picture, and the big picture is this: your product provides value to your customers in ways that impact (positively or negatively) the ability of each person in the Customer Lifecycle to add value. So it’s important to interview everyone in your Customer Lifecycle — not just the people in purchasing — and understand how their value stories interrelate.

For each person you interview, you want to understand four things: 1) how does their role add value to their company, 2) what is their process for delivering value, 3) what challenges do they face in delivering it, and 4) how does your brand of product help or hinder them in delivering it.

Like running the bases in baseball, the questions can take many forms to fit the situation and your style, but they should generally follow the above order.

The goal of walking the gemba is understanding the value stories of everyone in your Customer Lifecycle.

You’ll probably need to run the bases several times with each person to cover all of their responsibilities.

When interviewing, keep in mind it’s a gemba walk. The goal is simply to understand, “What is going on?”  It’s not a dialogue or an exchange of ideas. You’re not trying to reach an agreement. And it’s certainly not a sales call.

CEOs of established companies often yearn for that “start-up spirit.” And why not? They imagine an infusion of innovation carrying them into new uncontested markets where they can name their own margins and growth is inevitable.

Here’s why not. Start-ups are not innovative. Think about it. Most start-ups are one-hit wonders. It goes like this: someone has an innovative idea; they start a company; then they struggle — just like big companies — to come up with another idea. The innovation almost always precedes the start-up.

It’s ironic. Entrepreneurs are trumpeted as wellsprings of innovation. But they are successful because of their unwavering, almost myopic stubbornness — a kind of tunnel vision where all they see is their one product’s success.

Some say Larry Page is taking over at Google to get back that start-up edge. He may recapture the culture, but that won’t make another AdWords.

Two lessons here: CEOs of established companies need a systematic process for innovation, and so do start-ups.

Competition is the creation of buyers. It is The Truman Show of the marketplace. The buyers are the show’s producers; your company is Jim Carey’s Truman.

Truman’s fans adore him. His producers and sponsors need him. Everything depends on Truman believing that his fabricated world is real.

It’s easy for Truman to comply because in his TV world actions seem to have real consequences. Same for sellers. Effective prospecting leads to presentations. Thoughtful presentations lead to full-scale proposal pitches. Nailing the pitch often leads to a win.

As with Truman’s daily travails, the euphoria of success and the anguish of failure effectively mask the truth: Your company’s real potential has been subordinated to someone else’s plotline — a handful of functional criteria that were written long before you and the other actors showed up.

If you’re tired of their fabricated reality, you can break out. You just have to be willing to walk off the set. Life outside the show’s construct is risky, as Truman’s self-serving producer warned. But it’s also more rewarding.

Good brands last by evolving with the times. That means a good brand strategy doesn’t just position a brand at a moment in time, but establishes a direction for the brand to evolve and innovate as new competitors emerge and categories evolve. Your brand direction should be aspirational and extensible. It is not a thing to be achieved, but a direction in which to strive.

Brands that are defined by a position rather than a direction eventually become irrelevant. Take FedEx, the first overnight delivery company. Its position was clear: “When you absolutely positively have to get there overnight.” Then competitors moved in. And the category became too small. With no clear brand direction pointing where to go, FedEx now struggles to say what it stands for.

There are five potential directions from which you should choose the best single direction for your company:

1. Category: it’s about perpetual product leadership
2. Core technology: it’s about forever leveraging the essence that powers what you deliver into more products and services
3. Market: it’s about fulfilling more of the unmet needs of a particular market segment
4. Core belief: it’s about a principal that drives everything the company does
5. Vision: it’s about how your company is helping make the world a better place

Start by defining each direction, like we’ve done for Dangerous Kitchen below. When you’re done, each direction will feel like a piece of a harmonious whole, and you won’t want to choose. But you must. For example, we’ve chosen to continually push the limits of our category.

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Realize that over time, the pieces will drift apart. Knowing your direction now will let you know what to let go of and what to drive toward as your world changes.

The Oprah Winfrey Network is nearing its second month anniversary. The Huffington Post reports OWN’s rapidly growing viewership has already surpassed that of the network it’s replacing.

I’m not about to guess whether OWN will be successful or not, but here is why it should be: According to Christina Norman, the network’s CEO, “It is not a network built around a person. It’s a network built around a person’s world view.”

A “world view” establishes the beliefs, the values, and the appropriate behaviors of its people. In other words, it defines their culture.

Norman is telling us that OWN is not just a network; it is a culture in and of itself. It doesn’t serve a demographic audience; it leads people who feel in some way leaderless. It’s viewers don’t simply tune in to watch; they tune in to learn what they ought to watch.

So how can you stop serving your customers and start leading them? Figure that out, and your brand will have not just loyal fans, but a long-term competitive advantage that is impossible to copy.

If you’re not doing a Voice Of The Customer (VOC) project, you should. Just be careful how you use what you learn.

Don Draper said it back in 1964, "A new idea is something they don’t know yet. So of course it’s not going to come up as an option." — Mad Men, Season 4, Episode 4

Using VOC to benchmark how well you are meeting expectations is a fine practice — for operations. However, using VOC as input for designing new products or services is the beginning of the end.

Why? In VOC, customer wants and needs are defined in terms of satisfaction with current alternatives. When customers tell you what’s good, what’s bad, or even what’s missing from your product or service, their answers are bounded by their alternatives. You can ask “blue sky” or “magic wand” questions all day long, but if it doesn’t exist, customers can’t want it.

It’s natural to want to listen to what customers ask for and give it to them. It seems predictable. And because of its origins in QFD, it’s defensible. Just don’t expect it to produce anything innovative.

Instead, recognize VOC as a potentially commoditizing force. By the time your new product or service is launched, it will look even more like your competitor’s. After all, they are listening to the voice of the customer too.

We talk to people all day long about marketing. Sometimes these conversations start off a little confusing or disconnected — like we’re talking about completely different things.

So I looked it up. Wikipedia defines marketing as “the process of selling or promoting products to customers to further enhance sales.” No, that’s sales promotion.

If you take away just one thing from this site, let it be this definition: “Marketing is the deliberate and systematic attempt to own a market.” Boom. That’s it. Now we can have a productive conversation.

Well, almost. We’ve put a few more important definitions together in our
How To Go To Market primer.

Positioning your product or service is probably a waste of time.

First of all, it’s hard. Saying specifically and succinctly what you are means saying very generally what you are not —  a difficult thing for those who talk to shareholders. That’s why taglines like The ultimate driving machine are so rare, while taglines like Quality in everything we do are so commonplace. (Yes, that’s a real tagline).

The solution: don’t even try. Instead, recognize that people don’t care what you say about your products. They care what your products say about them.

The ultimate driving machine says, “Hello, I’m the ultimate driver.” By contrast, Quality in everything we do says, “Hello, I’m satisfied by good-enough.” Amping up the enthusiasm doesn’t help:  The relentless pursuit of perfection simply says, “Hello, I’m an uptight, overly controlling, type A who is constantly disappointed by those around me.” (This is not how I want to be introduced at a party.)

So break out the “Hello, I’m _______” stickers and pass them around. When your team comes up with a statement your customers would be proud to wear, you may have something worth building a brand on.

Assuming this is truly the end of the recession, we can all look forward to a spate of product innovations unlike any since World War II. These products will solve previously unknown problems in brilliant new ways and make their manufacturers millions. If you’re in the business of designing, making or delivering products, the anticipation can be thrilling . . . or daunting.

After all, how exactly do you innovate? Tons have been written on the subject, and yet innovation still comes off as requiring either genius or black magic. If your company lacks a systematic framework for doing innovation, it’s not prepared for this new global economy.

Here’s ours. It’s not really magic: it just works that way.

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Buyers are complex, goal-driven analyzers and organizers of the world around them who are uncompromising when assessing their own experience. Our machine lets you design or adjust that experience by turning a few metaphoric dials.

Here’s how it works. People buy products to achieve outcomes. But rarely can they achieve those outcomes with a product alone. Products often need other products or services to form more complete systems, which in turn may need some kind of infrastructure (e.g., electricity, a road, etc.) to make the product go. Even then the user may need other requisites to use the product — anything from additional people to specialized skills. And of course, not all users are the same. They may use the product in very different contexts — for different purposes, in different environments, in different time frames.

When people evaluate a product, they weigh the outcomes achieved against the requisites required. Whether you’re a product manager, CEO, engineer or whatever, your job as an innovator is to maximize the outcomes while minimizing the required requisites. You do this by modifying the product, the system or the context in which it’s used.

Let’s take an easy one, Coca-Cola. Coke didn’t come in bottles until someone imagined users consuming it in a context other than the soda shop. That idea led to eliminating the requisites of a soda fountain (infrastructure) and the skills to use it — dramatically changing the outcome-requisite equation. Questioning the system comprising grocery stores led to vending machines. Rethinking the purpose led to Diet Coke.

Innovation can be hard to come by if you try to ideate too much at once. Instead focus on very discrete aspects of the user experience as defined in our innovation machine. It works, like magic.