Aim Much Higher, Move Much Faster, with Steve Dennis, bestselling author of Leaders Leap: Transforming Your Company at the Speed of Disruption

Transcript

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Peter Crosby (00:00):

Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.

(00:16):

Hey everyone. Peter Crosby here from The Digital Shelf Institute. Folks, we live in a VUCA world, volatile, uncertain, complex, and ambiguous. To thrive in this environment, transformation by inches will simply not be enough. Leaps are required seven mind leaps. In fact, according to bestselling author Steve Dennis, his new book, Leaders Leap: Transforming Your Company at the Speed of Disruption is a primer of the transformations leaders must make to be able to drive the vision course and speed required to be remarkable. Steve joined the podcast to lay out the core tenets in his clarion call of a book. Steve Dennis, welcome back to the podcast. We're so excited to talk to you about your new book Leaders Leap. Congratulations.

Steve Dennis (01:05):

Thank you. It's great. It's great to be with you guys.

Peter Crosby (01:08):

It really does feel like we are in a watershed moment in this world across a lot of dimensions, but leaving a lot of that aside and narrowing in on commerce, there are a ton of forces at work that I think will lead to either irrelevance or disruption for many companies. And you've been pointing that out for a long time.

Steve Dennis (01:28):

Eventually people will listen.

Peter Crosby (01:31):

I think they listen, they just don't often know what to do even then. And this one really goes right to almost the personal responsibility for being a leader in that kind of environment. Your book is focused on what qualities leaders have, the strategies and mindsets that are at their disposal to be on the side of disruption. And one of the most important qualities that I feel like you have discovered in your work, and it seems like your life that is a difference maker, is vulnerability, which is not often a thing that people often in some organizations can resist that. And am I reading that right? And if so, why is it so central to your overall theme of being remarkable?

Steve Dennis (02:16):

Well, there's a couple paths into that. One question that's been lingering for me for quite a long time has been, if the world has changed so much, why have so many companies and why have so many leaders changed so little? And when I started this exploration, a more specific exploration for this book, mainly what I came to was that most companies and most leaders I believe, know that the world is changing ever faster. Know that the world we're competing in is quite a bit different today than it was even 3, 4, 5 years ago, and probably will be even more different going forward. Oftentimes they have great theories and strategies and transformation offices and all these trappings and processes and whatnot, but often not much changes. And so I wanted to really try to understand in my own personal experience directly working with clients, but also studying some companies, what were the root causes of that?

(03:19):

And that got me to an exploration more of leadership qualities, less about strategy per se. Also, there's plenty of good strategy books, so I didn't necessarily feel that I had a really unique take, try to write a better blue ocean strategy or something like that. And I think we have to take a hard look at ourselves in the mirror if we're really going to change ourselves. And I think as leaders, if we don't change ourselves is really hard to expect other people to change. So vulnerability, breaking through ego, being really honest about what we know, what we don't know, how some of our habits or preconceived notions or biases get in the way. I see that a lot in my own work, very much my own experience, but also in working with others. So yeah,

Peter Crosby (04:14):

You mean you've found out that people are human? Is that

Steve Dennis (04:19):

Many people don't like to admit it, but yes, it turns out there's a few cyborgs that I've run into ones that present as cyborgs. But yeah, and I think it seems like such a cliche to recognize our humanity and realize that we all struggle with all sorts of things all the time. It's just a matter of whether or not we really want to address it and really be present to that.

Peter Crosby (04:47):

One of the citations that stood out to me, partners that you have in your book, Alex Partners Disruption Index study from 20 23, 70 8% of the CEOs surveyed indicated that their companies face serious disruption in the past year up 10%. And they highlighted a lot of concerning findings. 98% say their business model must change in the next three years, but 85% say they find it hard to know where to start. 75% worry their organizations are not adapting fast enough. And it goes on and on with sort of these stunning levels of consensus on identifying the challenge and the fear, but really struggling with identifying the way forward. Is that as meaningful for you, I imagine?

Steve Dennis (05:37):

Yeah, I think those statistics are really compelling. Bain and McKinsey have often, and others I'm sure have done studies that basically point in the same direction, some measure of transformation's not working, but also this general kind of confusion or fear around what do I do? How do I move forward? And getting back to the vulnerability question, I think part of that is being rigorously honest with your board or your leadership team or the rest of the organization about when you don't know. I think at least the way I was brought up, brought up, but also what was modeled I guess in the corporations that I worked for was if you were the leader, you were supposed to have all the answers, kind of never let them see you sweat. I alone can fix it. There's a lot of these things just basically like I am the source of all power and kiss my ring kind of thing. And I just think that's a very, very antiquated style, not so terrific in general, probably for interacting with people. But I think more specific to business results, you have to be willing to admit when you don't know what to do, you have to be able to bring more people in, listen to different voices, open the aperture on things to consider, because the world is just much more complex and volatile these days. And I don't see any sign that it's going to get any easier going forward. It's probably more likely to get even more complicated.

Lauren Livak Gilbert (07:07):

And Steve, I love the focus on the humanity of it because I think when people try to approach digital transformations, they try to check a box. And every brand I talk to, they're like, we checked all the boxes. And I'm like, that's the easy stuff. The hard stuff is the human elements. Why are we changing? How do you get people to change? And I love how you talk about that in your book and how you try to motivate people to think about those things, but that's not necessarily how people are trained to think about it. And I'm wondering from your perspective and your experience too, how can you as a leader, and even as someone who's reporting to that leader or as a part of a change, try to shift that mindset in that way to think about the humanity first and not the check the box?

Steve Dennis (07:55):

I think it's been curious to me that, and I'm very guilty of leaning on left brain more than right brain over my life. And I see this a lot, particularly as we become a more technology driven culture, that, and efficiency is often important, particularly if the results aren't good, there's a tendency to go after the efficiency and the effectiveness and the very precise then this kind of mentality that can be hugely valuable. I'm not saying that that's not valuable, but if you look at the most successful brands, generally, if you look at the most successful cultures, they're generally pretty good on the EQ side, not just the ability to apply left brain thinking. So I think I feel like most people know that it's not that they necessarily have a fight with it, I just think it's easier to default to the luck brain logic way of doing things.

(08:58):

And lots of cultures tend to reinforce that, particularly if business gets tough or we're faced with this world of gen AI and cloud computing, and there's been so many transformative things that are engineering technology driven, it's easy to lean on those. But I think the most powerful applications, generally speaking, take a more human-centered design approach, leveraging the technology for sure. I'm not suggesting we should get away from that fundamentally, but it's usually the blend. Even if you take a look at a lot of retail where we see a tremendous amount of success, it's really easy to always point to Amazon because they're so influential. But we see plenty of other brands like Abercrombie and Fitch for example, which is, I just posted this on LinkedIn this morning that if you ask what stock has gone up the most in the last year, many people would guess Nvidia, but Abercrombie and Fitch has actually had twice the gains that Nvidia has and on a slightly different scale.

(10:02):

But I that's, well, yeah, that's just sort of a fun fact. But when you look at, and that's just one example obviously, but if you look at some brands like Abercrombie and Fitch, their success is not driven by some technical tour de force. They've done some cool things certainly with their e-commerce site and mobile apps and loyalty technology is part of what they're doing, but what's made things work largely takes place in their stores, largely takes place because of fashion and storytelling. And so I think it's that art and science blend that is often the thing that will show us the best results.

Lauren Livak Gilbert (10:39):

It's so funny you say that. I went into an Abercrombie and Fitch the other day because I went to the mall and I was like, this is not how I grew up with Abercrombie and Fitch. And I actually bought a ton of clothes that I could wear for work because it's a totally different type of store now, and I would not have known, and it was a great experience in the app and I got a coupon after purchasing. So I have to say I personally experienced that and it was amazing. So I can see that massive change.

Steve Dennis (11:01):

It's also an example, which is something else I get into in Leader's Leap a bit, which is when do you realize that what got you where you are is not going to get you to where you need to go? And Aber and Fitch had some other issues that they needed to address that were less about strategic, but they very well could have held on to their roots. And a lot of times it's very important to stay true to the origins of the company and values and so forth, but also they really hit a wall as a company and have blown up quite a few things to get to that next level. So I think there's an important lesson there to really be honest with yourself. And I think that gets back to vulnerability to say is what's made us successful in the past likely to serve us well going forward, but also might it get in the way, because that's often what I say is it's not just that what got you here isn't going to get you there. It may actually be that it keeps you from seeing all you have is a hammer. Everything looks like a nail kind of thought process.

Lauren Livak Gilbert (12:09):

So Steve, in your book you talk about transformation and you say one reason meaningful transformation can be so hard is that up to a certain point, change isn't transformation, it's nearly keeping up. That really resonated with me, especially in the e-commerce space because it changes so rapidly. So can you talk a bit about how brands can try to break that cycle and why playing it safe? And to your point, just doing the same exact thing over and over again is not going to get them to where they need to go and they need to take more of a risky strategy?

Steve Dennis (12:43):

Well, some of it I think has been, and Tom Peters has been on this path for a while about talking about how stupid he thinks benchmarking and best practices are, because some of that is you pick a best practice and then you try to adopt it, but by the time you've adopted it, whoever had that best practice has now moved on, right? Because generally can't do that overnight takes some time. So I think a lot of times when we're looking at performance improvement, we're doing it against the competitive set, whoever we aspire to be more alike. But that often just causes you to innovate what I call innovating a parody. It's not giving you a competitive advantage. It may be worth doing sometimes just getting to those kind of table stakes sort of things can be hugely important. But I think the other thing which is more true in the last few years is because of how fast things move, if you're not really thinking about how to leapfrog the competition, you just may get to a place where it really doesn't make that much difference so often, and people say, I complain about this too much, but if you look at the department store industry, which has been in decline for close to 25 years now, and we've just seen results from some of the big department stores and they're going nowhere fast.

(14:04):

If anything, they continue to lose ground. Some of that is they keep trying to incrementally improve what they think the basis of competition is, which at one level makes sense. If we have better products, we have better service, if we have more inviting environments, et cetera, housekeeping, all these kinds of return processes, all these kinds of things that seem like perfectly sound ideas. The problem is the reason they're losing market share is that their competition has a fundamentally better business model. So all these kind of incremental improvements, you could make a lot of progress against them and they may not make any difference. So some of it I would say is forgetting that things are moving quickly and you often need a bigger step to actually have the customer even notice it. Some of it is you're sometimes chasing the wrong thing to improve or you're not doing the thing or addressing the thing that's really causing you struggle in the first place.

Peter Crosby (15:09):

And Steve, do you find that this book, as you've gone around and had these conversations about the themes in your book, and I'm sure you were developing them and workshopping them out maybe long before your book came out, but do you find, what's the thing, because what you've done is very cogently and efficiently brought together a bunch of different leadership principles that already exist in the world. And like you said, you didn't want to start from Blue Field. Let me tell you something, but instead put it in the context of the personal change that might be required to actually tap into these things. What are you finding are the aha things that spark the shift that you're looking for? Does that make sense? The question that I'm asking,

Steve Dennis (16:12):

I dunno if this exactly answers your question. I think there are two things that have struck me. One is, and this is good and bad, one of the central themes in the book is identifying people's fear. Because I think it's mostly fear that keeps companies from taking the changes or making the changes. They must. And I find some people are very, I won't say very comfortable talking about their fear, but are willing to say, yes, I can talk about my fears. And some of them are rational, some of them are irrational, some of the very practical kinds of things. Other people, it makes them so uncomfortable that they will not even look me in the eye, which is really, I mean, I'm not totally surprised by that, but I think it has a lot to do with how we tend to look at what is the model of a successful leader. And that oftentimes is a big egomaniac really, when it comes down to it. And most narcissists and e egomaniacs aren't really good at admitting that. They're afraid they're doing everything to protect, not to be too much of a psychologist here, but I think people, myself included, that have struggled with this. They do everything to keep the fear at bay and not anyone see them so

(17:38):

Much being found out. So because we've idolized that in a lot of cases, it's very hard for people to break away from that. One of my best friends from business school, we've been on a pretty similar journey in a lot of respects in our career, including our personal life. We got divorced around the same time and we've had various things, lost our fathers around the same time, and he's so uncomfortable talking about his emotions. And I reflect on that because that was much more the way I was until 15 years ago or so. And I think that's just very, it is a human experience across the board, but I think it's amplified by most leaders being told they're great. I've got this job because I'm so awesome, and what happens if I admit that I don't know what I'm doing? Or the thing with the AIX partners study that was anonymous, it wasn't like, oh, CEO of Amazon said this.

(18:35):

So I think the fear conversation is really interesting because people either lean into it and say, yes, I see that, but here is the thing that I don't feel like is in my control and others just run away from it, which gives me my second thing, which I actually had more about this in the book, but we took it out for a bunch of reasons, which I don't necessarily regret, but it's really pithy to say, everybody should transform, everybody should take a leap. Safe is risky. All those things are very pithy things to say, and I wouldn't include them unless I thought they were largely true. But at the same time, if you happen to work in a publicly traded company, it's not so easy. Incentives are not aligned for the right, right. I mean, even just to go back to the department store example, this is my very unhelpful advice for most of the department stores, which is you should have started 15 years earlier until we have a time machine.

(19:32):

That's not very good advice. Thanks, Steve. Here's your check. Exactly. Yeah, yeah. No wonder I haven't gotten hired by Macy's or JC Penn, but I'll just use my, rather than pick on them necessarily. I'll just talk about my experience at Sears now a million years ago. But what I've often said is that because people will say, oh, Sears could have been the next Amazon or whatever, and that ignores some facts of history. But what I've said is, okay, let's imagine that I was the head of strategy and let's imagine that we have came up with a plan that was basically to emulate what Amazon ended up doing. Of course, they didn't even know what they ended up doing today, so that's also a little problem of the story. But just as far as being the online everything store, let's imagine that that was what we thought the best strategy was, and that's what we would recommend to the board.

(20:25):

There is zero chance the board would've approved it. And the reason is very simple. The plan would've required us to lose 10 to 15 billion a year for an extended period of time. And even if the board trusted that the management team was capable of implementing it, that was just not something that Wall Street would ever support. So the reality is a lot of times some of the bold strategies that are required as a practical matter can't be funded by a publicly traded company that has investors that you don't buy Macy's because you're looking for a moonshot to be the next Nvidia or something. You're basically buying it like a bond that's going to crank out some cash. And worst case, they get into trouble and they liquidate the real estate. That's not a very aspirational kind of strategy. So I appreciate that is the reality for many companies that the degrees of freedom, they have to do things more boldly or often limited.

(21:24):

But again, part of what I hope is the positive story here as opposed to pointing out the negatives, is if you first of all don't allow yourself to get close to the edge where your options become very limited, secondly, look at the positive opportunities by leaning into all the changes that are happening. They don't all have to be these negative crushing forces. I don't want the motivation in this book to be, you better do this or you're going to be out of business. That's part of the story. But the other part of the story is with all this change, if you really build in agility, if you're willing to take sensible risk, you can really create incredible future for your company.

Peter Crosby (22:04):

And let's focus on a couple of those positive stories because when you think of the brands and therefore the leaders at those brands that have successfully made some leaps, do you have any examples of brands that you think about that sort of embody the principles in your book?

Steve Dennis (22:25):

Sure. Well, outside of retail, one is, and I use this example, is Netflix. And it's a great juxtaposition against Blockbuster because blockbusters most people would know, had this incredible leadership position not all that long ago, and now has one store for reasons I don't understand in Bend, Oregon. But if you look at Netflix, even though they're a relatively new company, they have made two major pivots in their short time. And I think a lot of that has to do with their understanding as much of a cliche as it can be, what business are they in if they didn't define themselves by being a CD through the mail business, they defined themselves as providing entertainment in your home, which allowed them to see the streaming opportunity before many others did. And then they also started to realize that you could capture even more value by getting into the production business.

(23:19):

So I think that's one of the most positive examples of the last decade or so. But I think within retail, even though the home business is kind of tough right now, I think RH or the brand formerly known as Restoration Hardware is a great example. If people remember what Restoration Hardware stores looked like 10, 12 years ago, they were these weird little gift tchotchke stores with some home furnishings. And today their primary format are these gallery stores, which are 10 times as big, three times as expensive, probably on a per square foot basis and has really defined the brand in a bunch of services, restaurants, that kind of thing. Now they're into lodging. So to me, it's kind of a classic lifestyle brand move. But that was a really big step forward for them. And I think to a certain degree it is, if we don't do this, we're out of business. We needed something bold. And it may not be the best example of, because I talk about crushing your ego, Gary Freeman, who I know a little bit is hardly a egoless guy. So he's maybe not the best example of that particular principle, but he's definitely a good example of taking a leap towards thinking more radically about your business, getting very, very focused on the customer, what I call special, not big, but really narrowing your aim and then aiming higher within that set of customers and solutions you're going after.

Lauren Livak Gilbert (24:47):

And speaking of leaps, there are seven essential mind leaps that you talk about in your book in terms of how you have to navigate disruption. So we won't be able to cover all seven, but maybe top three in terms of mind leaps, if we could start with special, not big, would love to hear your thoughts on what are the key elements of that mind leap that brands need to make?

Steve Dennis (25:11):

Sure. So maybe just two pieces of quick context. One is that I call them mind leaps because I really think of them as being pretty, here's one way of acting, thinking, believing, and here's a quite different way. That's the mind leap part of it. It is more of a mindset shift than it is kind of a process change or something like that. And then there really are two categories I would say, of mind leaps. There are more of the strategic kind of principles, and then they're more of the leadership values for lack of a better term. But the idea of special not big is, I would never say never, but I would say going forward, trying to create what I often refer to as a peak of the bell curve kind of model. If you an Amazon, a little bit of everything for everybody, Walmart, a little bit of everything for everybody.

(25:59):

I think it's just so hard today to imagine that you're going to be able to out Amazon, Amazon or out Walmart, Walmart. There's so much scale and scope that any company has to go after. So I think the key, and this has always been true about any good specialty retail or any kind of specialty brand of any kind, whether we're talking about a hotel or a restaurant, is to really figure out who it's for in a much more specific way, really narrow your aim and then kind of boost the signal. So special, not big is really thinking more as my friend Seth Godin often talks about is trying to find that minimally viable audience that you can really serve especially well, and then branch out from there. Because in a world where we have so much choice and so much noise, how do you actually get noticed?

(26:49):

And if you're just kind of casting the widest net with a little tweak, that may get you some views on TikTok or something. But in terms of building a sustainable business model, it's really hard. So narrowing your aim, understanding your customer in a really deep way, meeting their needs and wants and desires in a powerful way, that's kind of fundamentally what special not big's about. The caveat I would say, is just because it's a special not big sort of strategy doesn't mean that you are setting yourself up to always be a small business. So one of the examples I point to in the book, and I love talking about because I think they're a great company, is Tractor Supply. Tractor Supply has a very clear idea of who their brand is for and who it's not. And they assemble the sort of things that what they call their life out here customer wants.

(27:40):

And that allows them to be very competitive despite being in a lot of categories that very big players Home Depots and the pet supply guys are in. But because they have that narrow focus and go deep, they really are solidifying customer base. And it just turns out that that customer is a big enough customer base that they can actually grow to quite a large number of stores, and now they're a multi-billion dollar business. So it's not necessarily that it's a fundamentally small opportunity or a segment niche kind of opportunity. It can be quite big. But the key is that you're not trying to cover too much of the landscape.

Peter Crosby (28:16):

So do you think the future of that thinking for the larger global brands is focusing much more on a bunch of niches and that the whatever multi-billion dollar brands are no longer possible to develop or in this kind of new way that consumers discover and buy? Do you feel like that's really the future, or are we already there and that's what's happening?

Steve Dennis (28:51):

Well, it's a little bit, I guess, of a definitional issue as to how big you can be. So for example, in the athleisure space, I think one of the most interesting brands right now is ri. And you could argue it's a bit of a niche because it's athleisure and it's mostly a men's business, but I think there's always interesting opportunities in very, very large categories. So Alere is big enough, and what Vori is doing is different enough that I think they can build a multi-billion dollar business out of that. But I think for most people, I mean when you really think about how many brands are a billion dollar plus in revenue, it's really a really fairly short list. So part of what I'm trying to do with this business for the part, I work with bigger brands, and so there is an aspect to which of my advice is derived from working with big companies.

(29:48):

But I think for a lot of people reading this, the key is not to chase your tail and not to think, I mean, if you could find a powerful enough intersection between purchase occasions and type of customers basically, and really create not only product differentiation, but that emotional connection, that could be a 10 million business, that could be a multi-billion dollar business. It's just really trying to make sure that you, your aim is narrow enough that you can really differentiate yourself in the market. And I think just going back to the department stores, since I can't go more than five minutes about picking on the department stores, when you look at what they're trying to do, who's the customer? It's a bunch of stuff moderately priced, but who's the Kohl's customer? Who's the Macy's customer? You can't. Whereas when you think about who's the Lululemon customer, who's our H customer, who's the tractor supply customer, you instantly have a pretty good idea of who it is because they're meeting specific people's needs in powerful way. It just turns out there's a lot of 'em out there. So it ends up being a pretty good sized business. But the main thing is just that clarity of focus. And also another part of this is this idea of editing to amplify, it's very hard in a world, an endless aisle type of world where in a matter of seconds, I can be racing around the internet to find a particular product. If you're basically selling the same version of something that a million other people are, well, how is that a business?

Peter Crosby (31:24):

And that really takes us to the next one, the next mind leap, which is you call it start with. Wow. But I feel like those issues of emotion and what can you differentiate on and amplify that differentiation, that emotional connection with the consumer is kind of underlying that sort of pithy start with, wow, did I take that in correctly?

Steve Dennis (31:45):

Well, yeah, no, I think you've got it. So the way special, not big and start with wow work together, one is aim better and the other is really aim higher. And so finding 1, 2, 3 things that you can really differentiate yourself on in a sustainable way, not just a gimmick, something that could easily be copied is super important. And a lot of this is just how do you become the compelling signal amid all the noise when we have so much choice and it's so easy to search if all you're doing is going out on the internet, particularly as AI search really becomes a thing, it's going to be super easy. You just type in, find me the best coat to go on a hike to Patagonia that's less than a hundred, whatever. That's the search world we're going to be living in very quickly. And so if you're just providing against a spec and then the deciding factor is how fast can you get it, which in most cases now is 24 hours or a price, well then you better be the low cost provider.

(32:53):

That's why I say you're not going to out Amazon. Amazon or Walmart like the car, Costco. I mean, some of these companies have got so much scale that if it comes down to basically commodity type product at a great price, where at this point I think delivery time is becoming less of an issue since so many companies can deliver very quickly, what are the set of the differentiating factors? So some of that can be unique product attributes, unique service attributes. It can be the emotional connection of I spent a bunch of time in my first book and in this book saying, let's just be honest, a lot of times we buy for emotion, not for product differentiation, the bottle of water that is a dollar versus $5, most cosmetics, most people can't tell the difference between them, but there's why price differences. Why? Because I'm the sort of person that buys the $5 bottle of water or the $50 bottle of wine, not the cheap stuff.

(33:49):

Or I always buy the cheap stuff because I'm not an idiot. Why would I'm just getting ripped off by marketers. So that's another aspect of that right brain aspect is that emotional connection, people like us do things like this that's also important to build up. So there's really a fork in the road I think, of whether you're going to go down the commodity all about price, all about convenience aspect, or you're going to try to build a wow experience which is based upon both tangible, well, it could be a mix of tangible benefits and these intangible benefits, which is more about the storytelling and the affiliation and belonging kind of attributes.

Peter Crosby (34:30):

And one of the examples you mentioned was Canada Goose. Can you just give us the two minute log line on that Wow experience they've created?

Steve Dennis (34:43):

Well, the specific thing I'm talking about is what they've done with their fitting rooms. I think Canada Goose has done a number of things to build a pretty amazing brand and charge very, very premium prices. But one of the things I really loved for a number of years is they created these cold rooms, which are basically like a walk-in freezer as a dressing room and what it does this sort of the gimmick value of it. And then there's the real useful value, which is because they're trying to convince you to pay more money for a very expensive coat, part of which is fashion. But a lot of it is the functional qualities, or at least the rational. The way you talk yourself into buying it is it keeps me much warmer though. It's got the little logo on it and paying a lot for that $3 patch, but you basically get to experience the product in the environment in which you're going to wear it.

(35:36):

So as opposed to a regular dressing room and throwing on a coat and seeing if it fits, and that's it. You get to experience how warm it keeps you in the environments and temperatures you expect to be in When they've added these stores, they've seen a dramatic increase in conversion, but they've also seen a dramatic increase in average unit retail, but people are paying up for the more, they're trading them up basically to the next level because of the warmth qualities. But of course, people take pictures and it ends up on Instagram and tiktoks and all that kind of stuff too. So it's a little free marketing

Lauren Livak Gilbert (36:12):

A social moment.

Peter Crosby (36:13):

Yeah, you said when you, wow, you don't have to pay for attention, you earn it, which I thought was pretty cool.

Steve Dennis (36:19):

Well, it's not a new idea that word of mouth marketing tends to be the most powerful. But again, I think in this world we're in, and it's not just about, I mean it's important I think to realize the influence that influencers have and how important TikTok and some other social media have become. But I think the underlying thing, other than the gimmicks of try to figure out how to make something go viral is to build that emotional connection and do something so remarkable that it's literally what remarkable means is that people will remark upon it. And that's really the x factor I think with lots of brands. It's one thing to satisfy needs or give somebody a high score on how fast you were approached in the store or how friendly the customer service person is. But at a certain level, we expect friendly salespeople, right? That's not in of itself a wow. It's somebody who goes above and beyond or does something that's so unusual and meaningful and positive that we're willing to spread the story of your brand.

Lauren Livak Gilbert (37:24):

And you talk about finding your 1000 fans, you don't need the 500,000 fans, you just need the loyal group of people and can you identify them? Who are they? And they will spread the word so much more than having a hundred thousand people who just kind of know your brand. So I think that's a good challenge for brands to find those fans and understand what they want.

Steve Dennis (37:46):

Yeah. Sorry to interrupt, just one quick thing on that. I find a lot, I work with a fair number of early stage companies and I think the natural bias because you're thinking about, well, I'm trying to get investors and they want a big exit, and you talk about the total addressable market and you want that to be as big sounding as possible. But I think the problem with that when you get started is you cast too wide a net in your thought process. And particularly when you're early on, what you want to do I think, is find those perfect fit customers, kind of the center of the bullseye. I don't love the bullseye visual, but I think who's really at the heart, the people that really, really love you, that this brand has been built for. Now you may find whether it's a thousand or thousand, whatever the number is, it doesn't necessarily mean because you can find those thousand raving fans that you can build that into a much, much bigger business.

(38:48):

But I think designing something that is really a wow for a set of customers helps you get that momentum. But if you're not quite hitting a mark, it's easier to understand, okay, well what is it that's not quite resonating with them? So when you think about iterating through your proof of concept or whatever it might be, your original pilot, it's a lot easier to understand how to address something with a more narrow audience than to say, well, we want this to be a billion dollar exit, so I've got to be thinking about having a hundred stores or having so many registered users or whatever it might be.

Lauren Livak Gilbert (39:29):

So Steve, last but not least, let's tackle think radically in terms of how brands can kind remove the boundaries from their thinking and try to think more radically. What would your best piece of advice be there?

Steve Dennis (39:42):

Well, a couple things. One is as an exercise, I think, and I talked about this a little bit earlier in the book, opening the aperture and kind doing the work. And what I mean by that is I've seen a lot of companies that either get blindsided by innovation or don't see opportunities early enough because they define their business too narrowly. So if I'm in the, again, I'll pick on the department store, I'm in the department store business, what do that means? I'm in all these categories, I'm in these big stores, I'm in a mall. That is the business I'm in. And that has allowed TJ Maxx and other people to steal a ton of share from the department stores because they really redefine. Somebody just wants to wear an article of clothing and look good. They're not that hung up on where they happen to get it from.

(40:33):

Ulta in the cosmetics business has gone from being a handful of stores 20 years ago to like 1400 stores. And one of my favorite statistics is that Ulta is worth more in market capitalization than the top five department stores in the US combined, despite only being in 10% of the product categories. But that's because I think that Ulta really defined their business in a different way from the beginning, very focused department stores. We've got to be in all these things, and so they just created these opportunities. So some of that is just definitional expanding your view, but I think the biggest way to get there is this idea of focusing on what's the ultimate result that the customer wants. And in some cases that can be very defined by product, but it also can start to bring in services. So if you think about what the customer is trying to achieve, perhaps you can solve in a different way.

(41:39):

So the couple of non-retail examples I use in the book are, if you think about Uber or Airbnb, they didn't create, in Uber's case, a better taxi or an Airbnb or VERBOs case, a better hotel. They provided a different way to get from point A to point B in Uber's case and a different way to experience a city through where you stay. And so therefore, they weren't defined by this kind of incremental thinking of, well, if I want to create an opportunity for Airbnb, it wasn't, well, let me fix what's wrong with hotels. They could have a better bar, they could have bigger rooms or more comfortable mattresses. That wasn't the incremental kind of thinking. It was how do I unleash the power in a fundamentally different way? And in both those cases leveraging technology, it was technology that enabled the ability to deliver what they did because they weren't in the business of building hotels and operating hotels and finding investors for the real estate. It was just a fundamentally different approach to solving the bigger problem or bigger thing that the customer wanted.

Peter Crosby (42:52):

Steve, reading your book was so edifying, and as we close out, I just want to run one thought by you. As I was reading it, I was thinking that commerce like many other things that involve transformation and is a collaborative venture to create brands, to bring them to market, to make them work, to iterate, and certainly to transform requires a shared sense of purpose and at least a way to drive towards these things, these leaps that you're talking about. And in some ways I felt like, but ultimately every one of our listeners are ultimately responsible for their career. And so I really read this book as a way to get a set of principles and perspectives where after reading it, you can sort of sit back and say, am I at the place and among the people that are capable of doing this, because that's within my control, unless you're the CEO or somewhere at that level, the rest you can influence. Does that make sense? And if people read it with that and at least took this to heart for controlling their sort of future, would that be a win for you?

Steve Dennis (44:21):

Yeah, I've said to a couple of people over the last month or so that if you are, I mean unfortunately, I think it is the case when it comes to strategic transformation. For the most part, relatively few people in an organization can really make that happen. Like you say, you can influence it, you can be aligned behind it, you can support it. But for better or worse, the strategy is driven generally by the board, the CEO, and maybe a few people on the senior leadership team. And if this book is helpful to those people, that's fantastic. I think if you happen not to be in that role, I think there are a few things. One is be intensely curious. I think that will serve you well. Open the aperture, be a sponge for new information, because I think more and more, I mean, it's always been a good idea, but I think as other things come into play in leading our careers and being successful, that's important.

(45:19):

Be as courageous as you can, which is, I know easy to say. I appreciate that at my age and with some of the privileges I have, it's a little easier for me to say that than 30 years ago when I was worried about paying my mortgage and having some money to send my kids to college or whatever. And then I think it's really be as bold as you can. And if you're not in the right place, fundamentally, I mean, I wish I had left Sears earlier. I can tell you when I look back at the 12 years I spent there, selfishly, it would've been better for me to have left much earlier, but I was afraid to do it. And I guess I convinced myself I was learning a lot, but deep down I knew that it wasn't a place where I was going to be able to do my best work. And there was a point at which I realized this place is never getting turned around. Now finally I did and I left. So that's easier said than done sometimes. But I think most organizations, if they're not aligned to your values and they don't allow you to do your best work and you're fundamentally frustrated, it's probably good to move on.

Peter Crosby (46:31):

Well, I think all of us in these times of disruption, which we are clearly in, to be able to have some reminders and some personal inspiration that you shared to drive that thinking to where do you want to put your energy and where can you find people like you? I think it's a really important and timely conversation. And so I would encourage anyone that wants to sort of have that journey to look for leaders Leap. And Steve, do you have a favorite place that you like to send folks to do their shopping for your book?

Steve Dennis (47:09):

Well, my publisher wants me to say Amazon because of their influence, but I would actually encourage people to go to book shop.org. They are a platform that supports independent booksellers, and I'm sure that the various small booksellers around the world would be happy to have folks'

Peter Crosby (47:30):

Business fulfill that order. Well, again, the book is Leaders Leap: Transforming Your Company at the Speed of Disruption, aim higher, move faster, make the leap to remarkable. So Steve, thank you so much for just sharing your thoughts, your output, your advice on the podcast. We really appreciate it.

Steve Dennis (47:53):

Well, it was great talking to you. Thanks for having me on.

Peter Crosby (47:55):

Thanks again to Steve for sharing his insights. While you're feeling inspired, swing on over to digitalshelfinstitute.org and become a member. Thanks for being part of our community.