It’s the Relationship, Stupid!
Now more than ever, we need to both reevaluate the value of relationships and better understand how to build and support them. People have enough challenges doing this in their lives, with friends, family, and peers, but businesses are usually the worst. We are too often blind to others’ cares and too quick to jump at solutions that keep us blind.
For some reason, businesspeople have convinced themselves that everything they know about people must be left in the lobby when they go to work each day, hopefully, waiting to be picked-up when they leave. Many MBAs have ruined their companies, and the world, spouting myths about business that dehumanizes their customers into price-and-feature automatons and their employees into interchangeable cogs just in it for the paycheck. Politicians, as we see every fricken year, do the same with voters — err, citizens.
When we see our constituents only through the lens of our own issues and needs, we flatten them into two or even fewer dimensions from a failed lens. The real people then fade from view and all that is left is a “market demographic” with seemingly invisible drivers of decisions that defy understanding or prediction. Many are saying this is exactly what just happend in the election last week but it’s something businesses, governments, and NGOs do every single day.
For way too long, businesses—even “innovative” ones—have been focused solely on features and price — especially in the tech industry. Unsurprisingly, even online and social media services still build strategies around “price and performance” in those dreaded 2x2 matrixes! Premium value, relationships, and even the importance of experiences are too often lost in a sea of poorly-executed SWOT and positioning templates (which is the vast majority of them). In addition, there are more types of Value than merely the financial and the functional. In fact, Emotional, Identity, and Meaningful Value usually trump Financial and Functional Value for most companies — at least those trying to create a premium brand (or a brand at all).
It’s no wonder that developers get frustrated when their efforts to build great products (that build great relationships) get halted by the typical MBA “insight” that “people won’t pay more for things” when — clearly — they do. Ever hear of Apple, BMW, Chanel, Nike, Disney, Marvel, or any other recognizable brand? Unless you want to compete only on price (and that’s a harsh business), you need to learn about what builds and drives relationships and you need new tools that help you design relationships (and put them at the center or your product and business strategies). We call ours the waveline and it comes from music composition. We’ve been using it for 8 years, improving it constantly, and my codevelopers and co-authors and I have just written a book about it. But, we’ve also been teaching every student in the Design MBA program at CCA how to use it (and they’ve helped improve it). You don’t have to buy the book, by the way, you can start down the path with the free trailer.
But you can use any tool you want—as long as it focuses your attention, constantly, on the relationships you seek to create and support (and on the emotional, identity, and meaningful value at the heart of those relationships).
There is no place on the balance sheet or income statement for “relationships” and this is a big problem! There should be, because it would make it a whole lot easier to keep focused on them. But, their causes and effects are spread all over financial documents, obscuring them, and helping them to be the first casualty of business decisions. So, businesspeople graduate from business programs every Spring thinking they know about business but having never had a single lesson on what creates a meaningful relationship. Nor are they ever made to calculate the value to a company (startup or not) of healthy relationships. Hint: it’s ususally called “good will” and it’s the key component to a company’s multiple on EBITA as well as the thing that drives “customer loyalty,” “sustainable value proposition, “defensible market position,” “repeat customer performance,” and “longterm customer value.”
If you don’t know how to build great customer, employee, and partner, relationships or you didn’t know it was the most important part of strategy, go ask for a refund from your business school. It’s not the only thing thats important but it’s the first thing.
To make it really simple, here’s the formula:
If you don’t create great experiences (and the right kind), you don’t create great relationships.
If you don’t create great relationships, you cannot derive premium value. You’ll be relegated to fighting Walmart over price, being a generic brand, or on OEM.
This is the most important thing you need to know about business and, sadly, most developers (front-end and back-end) know this better than their finance, operations, and management leadership.
That makes every organization (business, NGO, and government agency alike) an “experience business” and a “relationship business.” Don’t think you’re in the experience economy? Trust me, you are — you just make crappy experiences. Never heard about a relationship business? Maybe that’s why it’s so difficult for you to find and keep customers.
Of course, there’s more to describe about how to research, udnerstand, create, and support great relationships—enough to fill a book even. That’s why we actually wrote a book on it.
And, this is the basis for the best kind of corporate strategy (for NGOs, too). Putting meaning at the center of business strategy makes it much easier to align everyone in your organization to deliver it, from front line to back office.
None of this is easy. It’s a lot of work. And, it keeps changing—constantly. But, if you scoff at qualitative research, take a fill-in-the-template (also known as madlibs) approach to strategy, or think emotions have no place in business, you’re not even on the playing board, yet. Just ask your sales people: they know if they’re competing solely on price, they’ve likely already lost the deal.
And, you can’t complain when “people” don’t “get” your value proposition. You don’t get to call them stupid or “deplorable” or out-of-touch because it’s actually you who missed the opportunity to communicate in their terms about the things they connect with and create a relationship that they see as mutually beneficial and mutually understanding.