Adopting Generations of Customers

Adopting Generations of Customers

You may or may not be aware of some of the challenges Marks and Spencer are encountering while turning their brand around to a more profitable entity. At Varia, we’ve been talking about why we think they are struggling with their proposition within the marketplace, and how this can be avoided in the future by other well established brands. It’s not a one off problem by any means.

Currently I’m having the pleasure of reading a fascinating book “Black Box Thinking” written by a gentleman called Mathew Syed. In it he explores the fundamental “investigate and share” strategy adopted by the airline industry. By documenting and assessing the simplest or most complex issues and/or disasters that happen within the aviation industry, and then sharing findings to bring continuous improvement, they have made flying incredibly safe as a result.

The book compares this to a “Closed Loop” mind-set that businesses create and adopt as standard, when faced with the pressure of failure or a lack of Shareholder confidence. They almost create a continual vortex of denial and distorted reality, and then cannot easily adopt suggestions of what really needs to be done to avoid disaster or failure in the future.

This is known as “Cognitive Dissonance”; where organisations or people avoid taking on suggestions from outside of their closed loop environment to allow change that could create better or improved business outcomes. The more closely tied to their “ego” the problem is (i.e. was it caused by a decision they had to make at the time?), the more likely they are to not want to admit a mistake was made.

What’s also interesting is that when a situation becomes pressured or very intense, people can lose the ability to gauge time correctly. This can mean that not all options for resolution are explored before a potentially avoidable disaster occurs.

The book examines how, in the medical and legal sectors, the narrowed perception of time and the resulting medical incidents and wrongful convictions, could be avoided as a result of this “black box” thinking. I’d highly recommend it.

What’s all this got to do with M&S?

Let’s revert back to our friends Marks and Spencer; in some way I see that there could very much be (or at least, was) a closed loop strategy in their boardroom, demonstrating that “Cognitive Dissonance”.

We’re only outside observers of course, and it’s always tempting to look at these things simplistically, but (food offering aside) they have been slow to react to trends and changes in consumer behaviour. For example, it’s only the last couple of months that they’ve enabled food purchasing online.

All this made me think about another company, one that could have been one of the biggest failures in global business, but chose instead to stand outside of their closed loop in order to work out exactly where their business could fail within the next 50-100 years,

This business is Disney.

Having built a massive empire of one the largest leisure and film studio businesses in the world, one could have looked at Disney as a global dream of a business. Brands such as Snow White, Dumbo and Pinocchio have allowed Disney to adopt a whole generation of people who absorbed the stories and then took them to their heart, and would then, later, share these delights with their own children through many of the theme parks and rides owned by the Disney Corporation.

But, Disney knew that behind the romance of these brands lay a dark and sinister truth (in the vein of the best of Disney villains!) that would shake the boardroom of any large and major corporation. It was true, their parks were full, people still bought Video’s and DVD’s of their films, however the reality was if they did not act quickly enough to recreate their earlier magic, they could lose the next generation of children.

There was more competition than there had been when Disney first started, and newer, more creative and digitally advanced studios such as Pixar were starting to win audiences hearts.

Now that in itself is not disastrous, as the parents had still the power of the American Dollar to spend, but perhaps more importantly Disney knew that if they did not start to make films or experiences that appealed to their younger fans, that in fact there would be a massive ripple effect that could bring the corporation to its knees within the next two decades.

The solution for Disney came when they stepped outside of their “closed loop” way of thinking. They realised when it came to making engaging animated material for today’s younger market that in fact they were failing, yes, failing.

Imagine how tough that is to accept when you are the board of the Disney Corporation. Disney finally woke up to the fact that Lilo and Stich and Pocahontas, just was not the material that these tech savvy, modern, sophisticated audiences were looking for.

Enter Pixar, the once brain child of George Lucas, sold to Steve Jobs on the cheap after he had been booted out of the Apple, and then by the skin of its teeth became a multi-billion dollar business due to the success of Toy Story.

One of the key animators at Pixar had left Disney because they refused to accommodate his ideas and developments, and in fact, as Pixar became more successful, they tried (unsuccessfully) to hire him back.

To cut a long story short, as we all know, Disney bought Pixar and then, with its connections with Lucas, eventually also bought the Star Wars film rights.

Both these brands would deliver fantastic products that could now be sold under the Disney Corporation flag, but more importantly, Disney had also bought the next three generations of customers who would be loyal and flag waving ambassadors of its characters, films, branded merchandise and also experiences that they would create within their global network of theme parks.

So how does this come back to how we think?

It’s easy and somewhat tempting to fall into the habit of working within your own closed loop thinking. Where your own “cognitive dissonance” in terms of how you engage, acquire and retain customers seems to be fixed, because it’s easier than risking change.

This is fine if you are lucky enough not to have competition, but the reality is nowadays everyone does. If nothing is done to start a process of change then there could be many more brands such as M&S who will equally find that the customer who they once thought should rightfully be theirs in fact have been adopted by another brand right from under their nose and not just for now, but for generations to come.



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