The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything Paperback - 2003

From the jacket flap

Ex-cel-lence (n.) 1. The clearly false and destructive theory that a company ought to be great at everything it does. 2. A mistaken goal in which the predictable outcome is that the company ends up world-class at nothing--not well-differentiated and therefore not thought of by consumers at the moment of need.
Based on exhaustive research, The Myth of Excellence provides conclusive evidence of the futility of trying to be excellent in all aspects of a commercial transaction--price, product, access, experience, and service. Instead, the strategy for your products and services should be to dominate on one element, differentiate on a second, and be at industry par (i.e., average) on the rest. Yes, it is okay to be average as long as your customers know specifically where and how you are superior and world-class.

Excerpt

Field Notes from the Commercial Wilderness

This book is really the diary of a journey -- field notes from an expedition into the commercial wilderness, if you will. Our trek began with a survey, fairly modest in conception although broad in scope. After all, we thought we knew how consumers felt. Understanding consumer dynamics, analyzing marketplaces and market spaces, anticipating the impact of technological change on businesses and consumers, and looking into the future are all significant elements of our day-to-day business and personal lives. In retrospect, it is incredible how naive we really were -- naive, but not unlike a lot of other businesspeople. Since we knew what we were looking for, we wanted the data to provide verification of our brilliant insights. Like a company polling its customers and rationalizing any negative comments, we expected the survey results to support our entrenched assumptions.

We assumed, for example, that consumers wanted the absolute lowest prices, the very best products, and lots of value-added services. We also expected them to tell us that they wanted shopping to be fun and entertaining. We were in for a shock.

Our real journey started when the data came back. We were sitting in the conference room of a restored Victorian home in Westport, Connecticut, marveling at how it was possible for 5,000 Americans to be so wrong. Our initial research included more than 4,000 consumer telephone surveys and 1,000 additional Internet polls, covering a wide range of questions about various facets of the consumer/business relationship and the "average" shopping experience, followed up by hundreds of additional one-on-one conversations with consumers.

We had asked consumers some basic questions about relatively simple business transactions, or so we thought, and they'd blown it. They didn't get it. What had gotten into them? Slowly, the grim truth began to dawn on us: They weren't wrong. We were.

The survey results told us that consumers are looking for values, not just value. They wanted recognition as individual human beings, not just a 30 percent discount. While we had started asking questions about retail, we quickly began to see retail as a metaphor for something much broader. Life apparently wasn't too satisfying, and our initial respondents expected somebody or something -- apparently business -- to set things right.

We began to totally reevaluate our work. The survey tool we had developed was an excellent diagnostic, applicable to any business. But what did the results mean? We had thought about the notion of business simply in terms of the successful transfer of goods and services -- basic buying and selling. Yet suddenly we felt more like social workers, wrestling with intangible issues like respect and trust. Like teenagers out for a joyride in a Ferrari Testarossa, we found ourselves behind the wheel of a vehicle whose power was much greater than we had initially anticipated. So we eased the clutch down, gingerly downshifted, and gently applied the brakes. We concentrated on understanding the tool, fine-tuned it and ran limited tests in real companies until we were sure the new insights that kept pouring in were correct. Then we spent a year focusing on in-depth analysis, conferring with our colleagues, conducting thousands of one-on-one consumer interviews and dozens of interviews with business leaders.

Gradually things became clearer. Over and over again, the responses of our pilot 5,000 respondents kept echoing back to us. The critical elements of a transaction, business-to-consumer or business-to-business, weren't capital, goods, and services -- they were the human qualities of the people or companies exchanging those elements. It didn't seem to matter what business we were talking about. The lessons we first learned in the retail sector applied to any and all of the businesses we looked at, whether it was airlines, banks, auto companies, high-tech, insurance, or entertainment. Consumers' expectations had changed and changed radically. Unfortunately, not enough people in business had noticed. Some had, of course-the successful always do.

But even the most successful companies are often overspending and only partially achieving their aims. What led us to that conclusion? Our research caused us to see that every business transaction -- from the simplest sale of goods to the most complex service offering -- can be broken down to five attributes: price, service, access, experience, and product. We found that many companies tried to be "excellent" in all of these areas. This misguided strategy, which we've come to term the myth of excellence, had several failings: First, it's impossible for one company to be great at everything. Even Wal-Mart, arguably the most successful retailer in history, doesn't dominate its competitors on every attribute.

Second, even assuming a company could excel in all five areas, it would have difficulty communicating a clear value proposition to consumers. Imagine the confusion if Tiffany suddenly began advertising deep discount prices on emeralds, or McDonald's began offering free-range chicken and tofu. In selecting the attribute that defines their primary field of competition (the one on which a company seeks to dominate), the most successful consumer businesses hone the one that their target consumers value the most.

This seems simple enough, but it's surprising how often companies try to be the best at something their consumers don't want. Several years ago, for example, Kmart embarked on a campaign to make its line of clothing more upscale. As part of that campaign, the retailer began offering higher-priced Gitano designer jeans. The move, not surprisingly, was a resounding flop-the retailer's customers didn't believe designer clothes could be sold at Kmart prices. At the same time, Gitano hurt itself on the other end of its business, because upscale shoppers didn't believe that any brand sold by Kmart could still carry sufficient high-fashion cachet. On the other hand, the Martha Stewart line has been a great success, apparently because Kmart consumers believe that somebody who can make a candelabra out of wild gourds shares a sense of values with them. High fashion put the shoppers off. High craft seemed a bit more accessible. It wasn't that the Gitano jeans weren't a good value, it's that Kmart shoppers said to themselves that low cost, high fashion must somehow also mean low quality.

Finally, we found that even the most successful companies tended to be right for the wrong reasons -- they weren't paying enough attention to what we came to recognize as a desperate cry for basic human values. It became increasingly clear to us that this was at the heart of the myth of excellence.

But if universal commercial excellence was a myth, what was the reality? We found the answer inside our original consumer data. There was, in fact, a way for businesses to answer consumers' demand for values on terms that the consumers could recognize, a way of speaking to customers in their own language. We call this Consumer Relevancy, a way of appropriately framing an offering that enhances its value to a customer. Again, we stopped. If we were right, how could we explain the longest uninterrupted period of prosperity in human history? What could be wrong? The answer, we found, is, Plenty.

The Eye of the Storm: The Forces Driving Change in Consumer Values

Something is wrong in industrialized societies across the globe -- really, really wrong. Measured in historical terms, these are truly still the best of times. Yet despite all the material prosperity that surrounds us, we are living in some of the worst of personal times. There is a huge difference between economic and psychic well-being, between being able to afford physical comforts and feeling whole, between living in affluent surroundings and having a sense of connectedness. We're living our lives and running our businesses in the shadows of satisfaction. We look around at everything we have accomplished, everything we have built, and everything we own, but they somehow don't mean exactly what we thought they would.

Self-styled culture jammer and "adbuster" Kalle Lasn looks at our problem this way: "Take stock of your life. Look around at what you drive, wear, eat, smoke, read. Are these things you? Would an anthropologist, given a pile of all your material possessions, be able to assemble an accurate portrait of your personality? Would that portrait reflect a true original or a 'type'?" (1) There's something -- some fundamental element -- missing in our lives. We feel it every day, and so do you. Most of the time we blame the food, the schedule, or the stress, but intuitively we feel something is wrong that can't be fixed by a better diet, a few days off, or some hours in the gym. The hows and whys of what we're feeling take some explaining, but start by asking yourself a few simple questions:

* How frequently do you miss key life events (birthdays, anniversaries, even soccer games), and what toll is it taking on your family?

* How did it feel to watch the peace of the suburban American Dream shattered by the gunfire of Columbine, guns in the hands of affluent sixteen-year-olds from good homes?

* Do you ever wonder how we moved so quickly from a time when Gary Hart couldn't run for office to a time when Bill Clinton couldn't be removed?

* How often do you spend a day completely unplugged-no e-mail, voice mail, or pager?

* How do you verify that anything you read, see, or hear is true? Are margarine, red wine, aspirin, and eggs good or bad for you?

It's clear that on a macro level, things are changing, and not for the better. But what about on a micro level? What's going on every day in your life?

* Do you look forward to flying on any commercial airplane, and when was the last time you really enjoyed a flight?

* Is holiday shopping fun or just another duty eating away at your free time?

* Are you tired of standing in line at the supermarket or bank only to deal with someone who can't make eye contact or say hello?

* Do you fully understand how your health insurance works?

So, you're more affluent than your parents ever dreamed of being, but is your life really as good as theirs? The answer to this question is increasingly "no." But why?

Historically, we have looked to our social institutions to reinforce our personal values. Yet, as we have already hinted at and will document more fully in a moment, these institutions are chronically and repeatedly failing us. The search for values, like nature, abhors a vacuum. The fact that our social institutions no longer can be counted on as consistent sources of personal value or fulfillment doesn't mean our individual search for those qualities gets set aside. This creates a unique opportunity for businesses to fill this values gap, assuming they recognize it and move quickly. It's an opportunity that we as consumers do not explicitly request but will both appreciate and pay a premium for. It's an opportunity that provides businesses with a chance to simultaneously build their brand and increase market share and margin, a troika that does not present itself often.

Before we go any further, we'd like you to answer a few basic questions about your customers and your business:

* Do you really know why your customers behave as they do? What makes them buy from you, and what could you do that would lose their business?

* Do you know how a new-or existing-competitor could steal your business?

* What is the one thing you're not providing your customers today that they are secretly begging for?

* What are two things about your business that you cannot-under any circumstances-afford to change?

If you think you've got good answers to all these questions, we suggest you close this book, mix yourself a large martini, and enjoy the fruits of your labor. If, on the other hand, you have at least some niggling little doubts about your answers, we encourage you to keep reading. We suspect you're an expert in your business, but that doesn't offer much protection against becoming a victim of your own assumptions and past experience. In many respects, we are all experts on the nature and impact of commerce -- not just as businesspeople, but because we all buy something every day. Things are changing, however, and if you're honest with yourself, you have to admit it's getting harder and harder just to stay even. We live in a world that is more stressful, less accommodating, moving faster, and, frankly speaking, tough to deal with. At the same time, much of the support infrastructure that has fortified and sustained us is breaking down. So what do we want?


From the Hardcover edition.

Media reviews

“Fred Crawford and Ryan Mathews are exceptional strategic thinkers who have given anyone concerned about customers a practical, innovative, and unique approach to competitive differentiation.”—Frederick W. Smith, Chairman, President, and CEO, Federal Express

“At Procter & Gamble, we believe the consumer is boss. The Consumer Relevancy model described in The Myth of Excellence is the best tool I’ve seen for incorporating consumer wants and needs into your business.”—A. G. Lafley, President and CEO, The Procter & Gamble Company

"Tired of business drivel? If you are ready to step beyond platitudinous mission statements and strategies cooked up in distant boardrooms that have no connection to the trenches where business battles are actually being fought, this is the book for you. It is grounded, readable, and honest -- just like your business should be."
-- Paco Underhill, author of Why We Buy: The Science of Shopping

"The Myth of Excellence stands apart from the deluge of business books on the market with its candor and readability. For the brand-marketing executive, the book provides some especially revealing insights into underlying consumer values. Even more refreshing is the authors' approach to imparting business lessons through real research and first-hand case studies."
-- C. Manly Molpus, president and chief executive officer, The Grocery Manufacturers of America

"Everyone in business thinks they really know their customers and what they want. But, in The Myth of Excellence, Fred Crawford and Ryan Mathews have given me new and useful insights into the startling changes taking place before our very eyes. When they tell us, for example, that 'human values are the contemporary currency of commerce,' they are not just offering another new business platitude but rather a new lens through which to view the consumer -- a lens very few people understand. The Myth of Excellence is both a big idea and a blueprint for action. A true must-read."
-- Michael Burandt, president, North American Consumer Products, Georgia-Pacific Corporation

"Today's customers are leading a revolution against business as usual: They are demanding that companies recognize them as individuals and conduct business on their terms. In The Myth of Excellence, Crawford and Mathews provide proven strategies for meeting the demands of today's empowered customers, who are crying out to be treated with respect, dignity, and courtesy."
-- Thomas M. Siebel, chairman and chief executive officer, Siebel Systems, Inc.