Dave Gray's Connected Company

Business901 Podcast Transcription
Implementing Lean Marketing Systems

Dave Gray’s Connected Company
Guest was Dave Gray

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What happens if we think of the Company not as a Machine…

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Dave Gray works with executives in the worlds leading companies
to spark breakthrough thinking, to find and clarify their greatest
challenges and opportunities, and to design their way into the
future.

Dave has authored two books on
designing change and innovation. His
first book, Gamestorming: A Playbook
for Innovators, Rulebreakers, and
Changemakers, is a practical
handbook for innovators and change
agents. His second book, The
Connected Company, is a strategic
blueprint and roadmap for businesses who want to innovate and
lead in the next century.

Dave is the founder of XPLANE, the visual thinking company,
which was acquired by the Dachis Group in 2010. Dave is also a
founding member of VizThink, an international community of
Visual Thinkers, and serves on several advisory boards.

Transcription of Podcast

Joe Dager: Welcome everyone. This is Joe Dager, the host of
the Business901 podcast. With me today is Dave Gray. He's is a
management consultant focused on innovation and change. He

works with companies to spark breakthrough thinking to find and
clarify their greatest challenges and opportunities. His previous
book, "Gamestorming," has sold more than 50,000 copies and
recently has authored "The Connected Company." Dave, I would
like to thank you for joining me and start out by saying that I've
enjoyed both your books. The lessons that you wrote about
sketching and gamestorming, you must have taken to heart. Your
actual drawing expertise may not have improved much, but in
your new book, the meaning behind your drawing was just
exceptional. The points were well illustrated and just as I was
getting a little fuzzy about a topic one of your sketches would
appear.
What was even better was I could actually understand them in
the Kindle version. I wanted to congratulate you and welcome
you to the podcast.

Dave Gray: Thank you so much, Joe. I'm really, really happy to
be here.
Joe: I want to start right out and get in the meat of things. You
state in your book that everything is a service. You go into a
discussion about service dominant logic right at the very
beginning. Can you explain that logic and what it means to us?
Dave: Manufacturing, in the history of the world, is a relatively
new concept. It's not that people didn't make things before we
invented the assembly line and before the industrial revolution
but most things were made in a custom fashion. Before Henry
Ford, for example, the making of a car was actually a service.
Just like getting a tailor-made suit, you would go to a car
company and they would interview you. You would describe the
kind of car you wanted and they would make a custom car for
you.
The big innovation that happened during the industrial revolution
was this idea of mass production and assembly line. The basic

idea is a division of labor. You take a big task. You divide it
among a number of people. You say, "OK, these people are going
to do these different tasks and by each person focusing on a very
particular task you can actually mass produce a lot of things in
very efficiently."
That presumes that those things are pretty much identical with
each other. You're manufacturing or mass producing something.
That's just basic manufacturing, industrial age thinking.
What I mean when I say, "Everything's a service," or when I start
talking about service dominant logic. What I mean is starting
about 1940 the percentage of the economy that's based on
services as opposed to manufacturing has increased to where
now it's probably about 80 percent of the economy that's based
on services.

Even manufacturing is changing. When you think about
manufacturing the more different kinds of products, you're
putting out of a factory, the more that manufacturing starts to
look more like a service. Does that make sense?
For example, if a factory never puts out the same thing twice it's
actually really a service, isn't it?
Joe: That's a good way to look at it. Yes.
Dave: What's happening in manufacturing? What's happening is
most of the innovation in manufacturing are actually moving it
towards being more of a service. More customization, more ability
to... If you look at where the big innovations are happening in
manufacturing, and you're a lean guy so you know all about
Toyota. What happened in post-war Japan was they had a smaller
market than we did in the U.S. so they couldn't actually just tool
up a factory and make 10,000 white Honda two door sedans.
They had to actually be able to manufacture based on demand.


So really, if you think about pull manufacturing, what pull
manufacturing is all about is the customer makes an order or as
soon as the customer buys something and takes it off the lot that
pulls another similar car to the lot. What's happened in Toyota is
Taiichi Ohno, the engineer who is the father of the Toyota
Production System, his inspiration was a Piggly Wiggly store in
the U.S. where he saw people taking stuff off the shelf and the
people from the backroom stocking the shelves.

That's a service, right? A retail store.
Joe: What you're saying is that every customer wants to be
treated special?
Dave: Every customer wants to be treated special. The more
that we can treat them special, the more that we move toward
treating them special, the more we move towards service, even if
we're providing those services through some kind of a factory at
some point. If you look at manufactured devices, most of them
are platforms that deliver services. For example, if you have an
iPhone and you look at your phone, it certainly is a manufactured
product. Every iPhone coming out of the factory is identical. But
as soon as you get it, you start to customize it. The way that the
whole iPhone ecosystem is every time you're using it; you're
using a service. You're using it to talk to someone. You're using it
to solve a problem. And so, every iPhone coming out of the
factory may be identical but within a week any two iPhones are
going to be very, very different.
Joe: That's where we go into that service dominant logic part
that the value is co-created. You're saying that the value of an
iPhone doesn't, even though you pay for it, isn't really created
until you put it into service.

Dave: That's right. I mean, really, when you're buying an iPhone
what you're really buying is you're buying an Apple Store that
you can carry around in your pocket.

Joe: How does that relate to the connected company? Can you
explain what the connected company is?

Dave: I talked about, for lack of a better word, the industrial
age company, which is a form of a company that most of us are
familiar with today, that still most of us work in. It's a company
that's based on this principle of division of labor. At a very
fundamental level, these are divided companies. A connected
company is, in many ways, the opposite of a divided company, so
it's not based on the principle of division of labor. It's based,
actually, on a principle that's more like the connection of labor.
To put a little meat around that, you think about the way that we
organize work today. We divide up the work, and different people
have different parts of the work.
That works really well in a factory environment when you're
producing a single thing, and you want to produce it at volume,
that people can specialize on their little piece of the puzzle, "I'm
the guy who puts the hubcaps on," or whatever. You can
specialize on that little piece, and the work can be done very
efficiently.
But, the same principles do not apply when you're delivering
services. When you deliver a service, it's very important that you
have a sense of the whole at all times. When you're in a
manufacturing environment, it's OK to own a task, but a service
experience is very different. If you're providing a service, you
have to own the customer. You have to own the customer's
problem, not just a task, and we all know what this feels like.

Those of us who have been through a typical hospital experience
knows what it feels like to be a cog in the wheel. You usually
have to talk to five, six, seven, eight, maybe nine different
specialists when you're in a hospital, and each one of them owns
a little piece of the task. But none of them may you feel like they
own your illness.


Now, that's a bad service. That's a service that's designed as if it
were a factory, and that's why hospital experiences are often so
negative. Hospitals are not designed to deliver services the way
services should be delivered. They're not designed to deliver
excellent service experiences. The service experience that a
hospital delivers that's excellent is for the staff, not for the
patients. Everything about the way most hospitals are designed is
they're designed for the convenience of the staff.

Joe: Well, you bring two thoughts to mind. One of them is that
there seems to be separation between service and a process,
even though it's kind of that factory thing, is that we process a
person through the hospital, but really to be a service, you really
have to maybe not co-create, but you've got to have overlapping
and sharing of responsibilities. You've got to work together.
Dave: Yes, absolutely. Think of, let's take an industry that's
really good at delivering services. The hospitality industry comes
up quite often; retail comes up quite often. A retail environment,
when you walk into a... Do you have a favorite retailer, a favorite
store?
Joe: Oh, sure, a men's clothing store I can think of right away
that...
Dave: OK, so what is it about that clothing store that makes you
like it, that makes you go there?
Joe: Well, first is that the person greets you by name. It's like
they know who you are, they've been there a long time, and all of
a sudden; you're part of the surroundings, there's not a
salesman-purchaser conflict. When I don't know the person, it's
like, "How can I help you?" "No, I don't want help." But this one,
they just greet me.
Dave: There you go, so you have a relationship, and its
iterative, and you're going to come in, and... It's not like when

you go into that men's clothing store, you always have the same
problem. You probably are going to be seeking guidance, or help,
or whatever from the people who will deliver that service, right?

That's another thing about service experiences. They're highly
variable. They're not consistent and predictable the way a factory
is. A customer needs and wants are variable. What might make
you happy today, like, let's say, someone not bothering you in
store, might actually piss you off tomorrow when you want
attention. The same activity could be perceived by you as both
good or bad depending on the context, depending on your mood,
what you're trying to achieve, and so forth, so a good service has
to be able to absorb a huge amount of variability in demand, lots
of people coming in at once, or boom and bust cycles, and so
forth.
As you pointed out, services are highly iterative, so when you go
into that store, it's not just like someone says, "OK, what do
you..." Factory kind of approaches, "Well, we've got either A, B,
or C. What do you want, the A, the B, or the C?"
Joe: Does that mean as an organization that I just have to turn
my people loose, that I just have to take away even all the phone
scripts, and all the greeting scripts that we know "works," leave
them just shoot themselves in the foot and give them that
freedom? How, as a business owner, do I control my destiny?

Dave: Well, that's a good question, and certainly you can't do
that just from one day to the next. You can't on Friday say, "OK,
on Monday, we're going to..."
Joe: Be a connected company.
Dave: Right, but it definitely does mean... I mean, when it
comes to absorbing variety, a variety of demands, making


judgment calls, making decisions, there's no better business tool
than a human being. There's nothing better than a person who is
exercising their creativity and judgment to make that service
experience as good as they could possibly make it. The more that
you add scripts, and rules, and procedures, and so forth, the
more you actually limit the ability of those people to provide
great service experiences. Every procedure, every rule that you
add, is reducing the scope and ability that they have to do those
things.
A connected company is a distributed control system. Within a
connected company, you want to distribute control as close to the
customer as you possibly can get it, because the more control
and autonomy that people have at the point, they meet with a
customer, the more they're going to be able to provide a great
service experience.

Now, of course, they're going to need support to do that. They're
going to need tools. They're going to need infrastructure. They're
going to need all the kinds of things that they need today, but
what you have to give up as a senior leader is the ability to write
the scripts, basically to program them, to operate in a certain
way.
The reason for that being, there's no way you can predict the
variation and variety of the kinds of demands that they will have
to deal with, so the only way you can actually build a company
that can absorb that kind of variety is to scale those people up
and train them. I use an example of American football versus
basketball.

Football is a relatively slow moving game. At the end of every
play, the ball is called dead, and the players go back, and they
line up exactly the way that they were for the last play, so the
beginning of every play is predictable. You know that the players
are going to be lined. You know that you're going to have a


period of about 30 seconds or so to call the play, and then you
call the play, right?

Now, if you're a coach of a football team, you can have a lot of
control in that kind of environment. You can call in the play, and
a lot whom do; you call in the play by radio to the quarterback's
helmet and you'd actually be calling the plays from the sidelines,
and having a lot of control over the game.
Now, if you compare that to basketball, basketball is much more
like a service environment. It moves extremely rapidly. The ball
is not called dead that often, the play is always beginning from a
different configuration. The players are not specialized. They have
a lot of overlap. Any particular decision that needs to be made on
the court has to be made by the player at a split second based on
the context and the immediate situation. So, a basketball coach
has very little control over what happens in the game.
What the basketball coach has to do is focus on the skills and
ability and the teamwork and be constantly drilling and working
with those players when they're not in the game so that when
they are in the game, the players can run the game. What we're
talking about in a connected company is a lot more like basketball
where the actual players are going to have to make the decision
in the field, because the time that it would take for them to get
your permission or to call back to the home office to get a
confirmation or permission to do X, Y, and Z just takes too long.
The time lag destroys the service experience all by itself.
Joe: I'll keep on the basketball and football analogy -- but you're
saying that I need to form my team to know what they
conceptually do. Like, I'm a fast-break offense team. I'll date
myself a bit here, but it's show time; I'm the L.A. Lakers. I'm
going up and down the court, and that's the style of team we are,
so my players know that. We recruit, develop around that. In the


same token, a connected company, that's the type of company I
am, and that's what I have to train people in.

Dave: Yes, that's exactly right, that's what I believe. I believe
that in this highly complex, service-driven world that we're
moving into and have been for decades now, creativity and skills
are more important than ever, and yes, you need to know what is
the job that you're doing for customers, and what are the core
skills and capabilities, and what is your strategy definitely in the
sports sense of strategy? We're going to have a fast running
game; we're going to wear out the other team. And this is what
happens in a service environment, right? As soon as you get
better at something, you start getting more customers; your
competitors are going to notice. The bar is going to continually go
up, and if you'll notice the U.S. in the car rental industry,
Enterprise Rent-a-Car was a pioneer in getting customer feedback
and actually incorporating that feedback to improve their service.
They've been doing that for probably 20, 25 years or so now. I
may be wrong about the amount of time, but it's been a while.
In fact, what's happened is, their competitors are keeping up with
them, and if you look at the last 10, 15 years, customer
satisfaction in the car rental industry as a whole has gone up
quite a bit. So, being better than your competitors today does not
mean you're going to be better than them tomorrow unless
you're improving at an equal or faster rate than them. It's just
like sports, right? Your competitors push you to be better, and
you're pushing each other to be better all the time.
Joe: Well, in the end, it's like you still get to have time outs,
right? We have our daily meetings and our weekly tactical and
then we sit there and say, hey, here's how we adjust and go back
out.

Dave: Yes, in fact, timeouts are really important. There's a great
study in a Bank of America call center where, because the


timeouts and the practice sessions, those are the times when
people actually reflect on what happened in the work, and that's
where a lot of the learning happens when people just have the
conversations about, "Well, what did we do well? How could we
do better?" And what they found in this one study was, simply by
allowing the people who worked on this call center floor together
to take their breaks at the same time...they used to be
staggered. So the experiment of letting them have their breaks at
the same time productivity increased by a dramatic amount.
In fact, the savings that they claimed in that study was millions of
dollars just based on letting people take a break together so they
could talk about...and it wasn't that they had some agenda. It
wasn't that there was some big training program. It was just that
while these people have their breaks together they talk about the
challenges and issues that they were having when they were in
the work environment.
Joe: Well, I have to ask you, because at least once and maybe a
couple of times, you refer to Lean and Dr. Denning in your book.
Is there a relationship between his work and how connected
company works?
Dave: Oh, absolutely. Fr example, take the Toyota production
system. What is the Toyota production system other than a
method for giving the workers on the factory floor, the power and
the autonomy and the ability to continually improve and learn
and improve their work? I mean that's what it is, right? That's
what the system is for.

Joe: Certainly.
Dave: And it's for them to be able to understand it and look at it
as a system. What has not been built into most industrial
organizations is the ability to learn. So what we've done is, and
what industrial manufacturing and division labor is really good at
is doing one thing in a predictable, reliable, consistent way. It's

not good at learning. It's not good at continuous improvement.
That's not really what your typical assembly line process and kind
of manufacturing systems are good at.
That is something that is, in fact, I think we both know, at least
in the U.S., they have struggled with, and continue to struggle
with in many cases, because efficiency and learning are actually
in direct opposition with each other.
I mean, at least in some ways they are. If you're doing the same
thing more and more consistently over and over and over, you're
getting incrementally better, but what are you actually learning?
Joe: Not much, probably, the same thing.
Dave: Right. Yeah. You're learning maybe how to do that
thing...
Joe: Dexterity.

Dave: ...a microsecond faster, or how to conserve a little more
energy as you twist between lever A and knob B. But
what...learning requires inefficiency, because learning requires
experimentation. Think about the Toyota manufacturing system.
We think of it as this paragon of efficiency, which it is, but it's
counterintuitive, because it doesn't seem like it would be efficient
to stop the whole factory because one worker has an issue. In the
short-term- term, it's inefficient to do that, of course. It's
inefficient to stop the whole factory, right? I'm sure I'm preaching
to the choir here. In the short term that's inefficient.
In the long term, it's efficient, because everyone in the factory
starts to understand the factory as a system. When you start
studying that system and when you stop the factory and
everyone says, "Well, why is this problem happening, and how
can we avoid this problem happening in the future?" you start to


create an environment within which not just one individual is
learning, but the whole factory is learning together.

Joe: Those are great points, but you bring up something that
bothers me a little bit?
In Lean, we discuss performance gaps, and I'm thinking more of
service now. W always had like Serve Qual as our measurement
tool for the different performance gaps. In a connected company
we have customer co-creation, and we're working together to
measure it. How has this changed our measurement structure,
because how do we determine gaps now to improve them?
Dave: Well, now here's the thing about services. The only real
judge of service quality that makes any sense is the customer,
right? The customer is actually someone you don't control outside
your system. So you want to have a strong measure of service
quality, and you want to be able to improve. You can ask
customers to rate you, but they're probably not going to spend a
lot of time with you, unless they're invested in a relationship,
unless they really believe they're going to be heard and you're
actually investing in a relationship with them.
There's a tool that I really like called a net promoter score, which
has two components, a quantitative and a qualitative component,
that actually can deliver a lot of results for organizational
learning. In fact, it was a tool that was pioneered by Enterprise
Rent-a-Car, which I mentioned earlier.

The net promoter scores two components. The first one is a
numerical score. So you ask the customer, "On a scale of one to
10, how would you rate us? How likely are you to recommend the
service to a friend or colleague?" It gives you a score.

Based on the score, and there is research behind this, they will
categorize this customer as either a promoter, which is someone
who's likely to...not only likely to be a repeat customer, but likely

to talk you up to other customers and help bring you more
business. A passive, which is someone who can take you or leave
you and they'll be likely to leave you if a competitor comes along
offering, let's say, a better price. Or, a detractor, which is
someone who is going to badmouth you and probably lose your
business. They're a customer you don't want, probably not even
profitable.

So once you put people into this category you can start to
segment your customers into the ones who are going to help you
grow versus the ones that are going to retard your growth. The
second question you ask is, "What is the primary reason for your
score?"
Because just the fact that you got a nine out of 10 from your
customers doesn't tell you anything that you can actually...it's
not actionable. You can't use that to improve. So what you need
to know is why you got that nine out of 10, or if you got a four
out of 10 why you got a four out of 10, and what needs to
change.

And so by asking the second question, the qualitative question,
you actually get the feedback that you can use to improve your
service quality in the organization. The companies that are doing
this really well are putting their net promoter scores front and
center in the organization and giving it the same kind of attention
that they give to the profit and loss statements. So they're giving
the same kind of attention that they're giving the financial
numbers.

Joe: But doesn't the net promoter score have to be pretty
specific? I mean wouldn't my net promoter score if I were
Amazon might be different for different Kindles?

Dave: Why do you say that?


Joe: Oh, I'm just thinking that...or Dell. If I have a net promoter
score for desktop computers versus notebook computers, or
Apple, I mean isn't that going to be maybe different?
Dave: I think from the customer's perspective; it's all Dell,
right? I mean from the perspective of the customer...the classic
example is, oh, what's his name...Jeff Jarvis, who complained
about Dell because he bought the in-home service plan, and they
couldn't get to his home. His laptop blew up and they couldn't get
to his home. Well, it doesn't really matter what kind of computer
he had. If they're unable to service it, and they're unable to
deliver on their promises, it's going to result in a pissed-off
customer. Whether it's a laptop or desktop, the feedback is,
"Well, the thing doesn't work."
The way the customers express their problem is definitely
probably not related to one specific device here and there. People
may express problems or dissatisfaction with the Kindle if you tie
that to a specific device or a specific interaction, certainly you can
learn more from that, of course.

The beauty of the net promoter score is its simplicity. You're not
telling the customer what you want feedback on, which gives
them the freedom to tell you. So it focuses you on the things that
are most important to customers.

So if you say...I've got a rental car, and I give you...you call me
to do my net promoter score, and I say, "I'll give you a four, and
the reason I give you a four is because it was hard to...you didn't
give me a map, and it was hard for me to find my way back when
it was time to turn in the car. Well, that's great. Now it may not
be easy for you to put that into a category, but you now have is,
you now have an issue that's a high priority for a customer, and
you can start to aggregate that with other high-priority issues.
The problem with a lot of this feedback stuff is that you, the
company, go to the customer with your own categories that the


customer maybe doesn't care about, and then the poor
interviewer is trying to take feedback from the customer and put
it into categories that don't make any sense.
You get these numbers at the back of the senior management,
and you're looking at these numbers, and you have this illusion
that, oh, well, so many...this percentage of the complaints were
about X, and this percentage were about Y. Well; the fact is
you've stacked the deck by setting up those categories in
advance. You didn't let the customers define the categories.
Another issue with asking customers too many questions are the
only...when you have a survey that's more extensive or takes
more time, or whatever, what's going to happen is, you're only
going to get the feedback from the customers who are willing to
go through that process with you so your sample size is reduced,
and it's probably reduced in a negative way because customers
who have the most time for you are probably your, in many
cases, your least valuable customers.
Joe: How do you become a connected company?
Dave: The reason I wrote the book was because I had that
question myself, and not only how do I become a connected
company, but what even is a connected company? What does it
look like? And my belief is that I think most people, many people
if not most, have come to the conclusion that the way that we're
doing things in organizations is going to need to change.
Customers are networked. They have supercomputers that they
carry around in their pockets. We know that the way that we
have down things in the past is probably not going to work for
the next 100 years, and so...but the question that I don't think
that a lot of people has answered is, "OK, well, what is that
organization...if the organization of the 21st century is different
than the organization of the 20th century, if it's different than the


industrial age company, what is it...how is it different? What does
it look like?"

What I've tried to do in the connected company book is to lay out
a blueprint and say, "This is what it looks like." There's not a lot
in the book about how to get there. There are maybe a couple of
chapters on that. The primary point of the book is a blueprint of
what it looks like when it's done, when it's done well. I have lots
of examples as you've seen of companies that are doing it,
companies that are doing it well, and what the things are that
they're doing that are working.
The challenge of getting from an industrial age company with
some deeply embedded routines and behaviors that are going to
be very difficult to change to a connected company is absolutely
not an easy one. In fact, it's quite a difficult one, and it's going to
be different for every company. It's like you can imagine, Joe, the
problem of changing a football team into a basketball team.
Joe: But then, on the other hand, it's kind of interesting that the
hurry -up offenses and changing personnel on the fly is how a
football team becomes more like a basketball team, a connected
company, right?
Dave: That's right. The fact that it's not easy is not a reason not
to do it. In fact, it's my belief that every company is going to
need to move in this direction and the sooner that you start that
process the better off you're going to be. The more you delay
that process the more you decrease your chances of long-term
survival.
Joe: And I think you do a good job in the book of using
examples of established companies that are doing it within the
industries. They happen to be many of the leaders. It's kind of
proof in the pudding there.


Dave: I do think, especially for large companies, that without
committed senior leadership or without leaders that are
committed to making it happen it's not going to happen.
Joe: Does it have to be this great leap of faith for it to happen?
Do I have to be saying, "Oh, gee. I'm going to become a
connected company and I'm willing to wait two or three years for
it to evolve to that."
Dave: No, I don't believe so. I believe...Since connected
companies are networks, you can start a network with a single
node. What you can do is...The way that I would suggest that a
company go about this is to say...Sit down with your team and
say...Whether you're the senior team in the company or whether
you have a department within a company or a group or whether
you're a part of one office, branch office, what have you. One
plant, whatever. Sit down and say, "How would we reinvent our
company, division, business unit, what have you? If we were
doing it as a startup today, how would we do it?" Forget all the
legacy. Forget all the history. Forget all the legacy systems,
infrastructure, whatever. If we were going to start from scratch
today, what would we do?
The good news is that...The bad news is somebody out, there is
doing that already. You know that. Somebody's out there
redesigning their business as a startup today. The good news is
it's cheap. It's never been cheaper or easier to start a new
business.
If they can do it, if the kids in the garage can do it in Silicon
Valley so can you. The good news is it doesn't take a lot of
money. It doesn't take a lot of investment. What it does take is a
willingness to rethink and in fact, even cannibalize some aspects
of your current business. You must be able to be brave enough to
compete with yourself.


What you can do...As a large company you have the advantage
of...You can take a lot of swings. You can make a lot of small
bets. So as a large company one advantage you have is you can
actually seed or fund or create five, 10, 15 different ways to
compete with your current business or ways to compete for your
current customers, to reinvent your business as a startup.
That's why we talked a little earlier...Maybe it was before we got
on the podcast when we talked about Alex Osterwalder and the
Business Model Generation book and the Business Model Canvas,
which I think I think is one of the most powerful tools out there
for rethinking your business as a startup.
What you can do is get one, two, three or 10 of these little
startup experiments going. Do them in such a way that you're
not...It's a relatively safe environment. If you're a global
company, you can do them in different countries. You can do it in
a way that you're minimizing your risk.
But then you only have to scale up and invest in the ones that
work. Think like a Silicon Valley venture capitalist instead of a
control freak. You want to have those pilot experiments and you
want to fund them and you don't expect them all to succeed.
Joe: What you're saying is really is to prototype certain parts of
my business, put two or three of them out there and pick the
winners.
Dave: That's right. Let the best business model win. You have
your current business model. You have these people out in the
world that are trying to disrupt your current business model. Put
some of fraction of your strategic investment into trying to
disrupt yourself. Create those little startups. Give them the
autonomy. Don't tie them to the mother ship. Don't tell them
what to do. Give them the goal of taking down your business.


It's kind of like blue team/red team when they have war games.
One of the best ways to train, to think outside the box in terms of
your military strategy is to take half your armed forces and
simulate war games where they try to take you down because
they know you as well as anybody.
Joe: I want to ask one last question here. Bring us back to the
very beginning. If I'm a product dominant company, if I'm a
goods dominant company and think that way and I'm going to
become a connected company, is it all about services? I think
somewhere in your book you say, "Your product is just an
avatar." Do I have just to think about services? Is that the way to
develop my company?
Dave: I'll put it this way. No matter what your product is, no
matter what it is, I guarantee you it is part of a larger service.
What do products do? They do jobs for customers. A car gets you
from point A to point B. A car provides a transportation service. A
lawnmower provides a lawn mowing service. No matter, how
much of a product it is...

Let's take a vacuum cleaner, right? A vacuum cleaner provides a
cleaning service. It cleans your house. Now, what do you do? You
have to...Actually, there's a lot of work involved in a vacuum
cleaner. You've got to take it out. You've got to unwind a long
cord. Plug it in, all this stuff.
Who's disrupted the vacuum cleaner? A company called Roomba.
It's a vacuum cleaner that's a robot. Now, a Roomba is actually a
little vacuum cleaner that looks like a little Frisbee and it goes
around and it does all the vacuuming itself. It plugs itself into the
wall when it needs power. When it doesn't need power, it pops
out and it does your vacuum cleaning for you.

Is that a product or a service? Whatever your product is doing,
whatever the job your product is doing for customers; that's a
service. The more you can think about that as a service the

better, the more innovative you're going to be able to be about
figuring out. What's the next big leap in innovation for your
product?
It's probably going to be around making that service easier.
Name a product that's doing super well and I guarantee you that
product is thinking about itself as a service.

Even if you are making a thing, the more important focus should
be -- -. This is what they mean by service dominant logic. The
focus should be on what is the service that your thing is providing
and how can you make that a better service?
Because if you're just focusing on making a better vacuum
cleaner, you might not come up with the idea of a robot vacuum
cleaner. You're going to try to make the handle more
comfortable. You're going to try to make it easier for people to do
it. But until you start to think of it as a service you're not going to
come up with those really breakthrough ideas.

Joe: Where can someone buy the book and how can someone
get a hold of you?
Dave: Oh, the book's on Amazon. I'm easy to find. I'm
@DaveGray on Twitter. D-A-V-E-G-R-A-Y. I'm DaveGrayInfo on
the web.
Joe: I'm surprised that you got Dave Gray on your Twitter
account. You must have been on Twitter for a long time.
Dave: I think I was one of the first thousand people on Twitter,
yes.
Joe: I would like to thank you very much, Dave. The podcast will
be available on the Business901 iTunes store and the
Business901 blog site. Thanks again, Dave.
Dave: All right. Thank you.


Joseph T. Dager

Business901
Phone: 260-918-0438
Skype: Biz901
Fax: 260-818-2022
Email: jtdager@business901.com
Website: http://www.business901.com
Twitter: @business901

Joe Dager is president of Business901, a firm specializing in bringing the
continuous improvement process to the sales and marketing arena. He
takes his process thinking of over thirty years in marketing within a wide
variety of industries and applies it through Lean Marketing and Lean Service
Design.

Visit the Lean Marketing Lab: Being part of this community will allow you to
interact with like-minded individuals and organizations, purchase related
tools, use some free ones and receive feedback from your peers.

Marketing with Lean Book Series included in membership
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