How to run a business like Amazon: the reputation factor

Advertising and marketing has been around for thousands of years, in some fashion, but it has grown into an impressive industry in the past century, and companies now rely on getting the word out about their company in a variety of different ways. Billions of dollars are spent every year just to make sure that the right people are seeing a company name in a favorable light. A much less expensive approach that some of the more successful companies in the world rely on is quite ancient in itself – word of mouth. A great company that delivers top quality products and services can always count on people telling friends, family, and even strangers on the street about notably extraordinary service and reliability. Logistics, customer service, and a truly outstanding relationship with customers is something that most companies would beg, borrow, and steal for, but by putting those qualities at the forefront of company strategy, certain businesses get that irreplaceably valuable advertising for free. (more…)

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How to run a business like General Electric Company

In the past, when people looked at a company, their impact on daily life was very important. Was the product essential? Could I afford it? Was there a better option on the market, perhaps for a lower price? As times have changed and the world has become hyper-connected and far more informed about the events and people in other parts of the globe, individuals have become far more aware of their impact on the planet and the other people living here. This is evident in the green revolution that has occurred in so many nations around the world, as we seek to protect our environment more and more each year. An inherent social responsibility has also impacted our consumer habits, and we are far more likely to contribute to and support companies that we feel are in line with our own belief systems. Helping people, protecting the environment, and bettering the lives of others less fortunate have become common sentiments that consumers want to represent both in their lives, and in the companies they support.

To build a happy company, this undeniable fact has to be taken into consideration. Businesses that still operate in a greedy, self-serving, or ignorant way are less likely to gain popular favor. They will see their business fall, as other, more socially conscious companies rise to the forefront. GE is one of the largest and most influential companies on the planet, and they have responded to the demands of social pressure and changing attitudes in an exceptional way. They participate in dozens of essential industries, and are constantly trying to innovate and find new solutions for old problems, as a way to improve life on earth, while also protecting it. The employees at GE are invested and dedicated because they believe in what they are doing. They are proud to represent a company that maintains a workforce of more than 300,000 people in a respectful and socially conscious way in certain markets where profit is still king. They attract new talent from up and coming generations of socially conscious youth, because those people have grown up with and trusted the brand. Going to work and feeling good about the job you are doing is an easily overlooked, but vital, component of company happiness.

The contributions that GE has made to the world are innumerable, but they have done it with tact, respect, and a quiet confidence that they will be on the right side of history. Establishing your company as a socially responsible entity that actually gives back and benefits people, rather than simply craving profit and market shares is a fundamental principle of company happiness.

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Improving quality of life and social responsibility

Societal responsibility is another aspect of leadership that is getting a facelift. Traditionally, creating a product or service that benefitted consumers was an extra bonus behind profits from sales. By today’s standards, improving a consumer’s quality of life is an implicit understanding in many product designs, and the broader goal of societal advancement and growth is an assumed byproduct of business innovation.

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Amazon business strategy: focus on company reputation

Amazon was in a unique position; the number of its customers began to increase exponentially, and it had the infrastructure in place to support massive growth and expansion into other industries and product lines. The wisdom to take things initially slow ended up paying major dividends, since the perfected version of Amazon customer service and logistics was already in place after working out the kinks over the past 5 years of large-volume shipping via online shopping. They adopted a new policy as the years went by and their reputation as a reliable, honest, and affordable retailer of books extended to all of their new products, which, as their logo suggests, truly ranges from A to Z

The most interesting part about Amazon’s success is that it has absolutely no face-to-face contact with its customers, yet the digital relationship that they create with their consumers is ranked as the best in the world. Amazon has now been ranked at the top of the list for two consecutive years as the company that provides the highest customer satisfaction; this year they actually achieved the highest score in the history of the ranking system, which began in 2005. So how does a sprawling company that handles more than 150 million webpage hits per day maintain such a personal and memorable relationship with so many of its customers? That is the great secret that Amazon has figured out, and the reason that it is one of the happiest and most profitable companies in history.

A company that is able to maximize consumer happiness, while maintaining a negligible amount of direct contact between employees and consumers is shocking, but Amazon makes it work for them. Despite the focus of this series of essays touching on consumer happiness so often, that is not the only aspect to highlight. Consumer satisfaction and overall happiness is an essential part of a company’s overall success, and when you customer base exceeds 100 million, you need to take care of them. It is common for customer service to decrease as a company grows, due to inadequate customer service representatives compounded with an overwhelming volume of products, but Amazon somehow flips that trend and excels in spite of its dominant portion of the market. Not only does this make it the go-to company for any form of online retail, but it also means that the company enjoys the best reputation out of any company in e-commerce.

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Netflix business strategy: the belief system of Reed Hastings

In 1997, after the technological advancement of DVDs changed both the film and information storage industries, a new company emerged in the movie rental scene. Netflix took advantage of the emergence of DVDs and found a way to make seeing your favorite films even easier than renting it for a few days from a chain store. Netflix spanned the innovations of the Internet and DVDs perfectly, and their appeal was almost immediate.

Not only could you choose hundreds of DVDs on a “To-Watch List” for lack of a better word, you could also keep the movies for as long as you wanted, without the fear of steep late fees and the pressure of watching a film in 24 or 48 hours like many of the other rental companies. Netflix gained popularity almost immediately, because it changed the way that business was done, and offered a modern option for those individuals who saw the writing on the wall in regards to the massive presence that the Internet would soon have on our lives.

Companies like Blockbuster made another mistake: underestimating the dynamism of technology. The way that information was recorded had already been a rather dynamic area of study and design, yet the huge investment in resources and money that Blockbuster put towards its rental service meant that it would be far too large and narrowly focused to ever effectively “switch gears” should the time ever come. In effect, traditional movie rental companies failed to account for the inevitable changes that would occur, hoping that they could find success and manage to maintain it despite the ever-changing world. Fortunately for Netflix, its co-founder recognized how quickly the world was changing, and didn’t want to get caught into a strict infrastructure that would eventually result in them becoming obsolete. Reed Hastings is the visionary CEO of Netflix, and he adopted a belief system at the start that would guarantee the survival of the company for more than 15 years now. Basically, as has been said a number of times, “It foresaw its possible demise at the moment of its own creation.”

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How to run a business like 3M

There is no denying that innovation is one of the most dominant forces in business, and has been for centuries, if not longer. Creativity breeds interest, which subsequently draws profits from consumers. Where many companies fall short in this department is by limiting the access points of innovation and creativity to the research and development teams, and assuming that other job descriptions don’t leave room for interesting thoughts and cutting edge proposals. Who can say that the next world-changing idea won’t come from an intern at an office supply company? That is the beautiful and fascinating component of genius; there is no telling where it might come from.

A certain office supply giant has shaped a company culture and vision around that exact fact over the past century, and 3M has empowered every employee to take a shot at changing the world, because they have seen it happen before. This quiet titan of innovation and design currently holds the patent on more than 20,000 products, many of which came from outside the box thinking from people that aren’t even directly involved in product design. 3M set the bar in terms of innovative time structures in big businesses by instituting 15% Time, which allows every employee to spend 15% of their weekly working hours on their own, independent projects and ideas. They can collaborate, use company resources, and basically veer off in unexpected directions and creative tangents without any supervision. It was this policy that resulted in the Post-It Note, one of the most widely recognized and used office supplies in the world; it wouldn’t have been possible if this company didn’t allow their workers to control their own destiny and time management within the company. Hundreds of other products have stemmed from this same liberating time structure, and not only does this give employees a sense of empowerment and value, but it also results in the overall progress and growth of the company.

There is a time and place for strict regulation of how creative time is spent, but there must also be an allotment of freedom for employees that have ideas and inklings of what the “next big thing” might be. Finding the balance between strict, hierarchical command and a free for all of pure creative license is one that every company must strike, but those that lean towards opening up their workers’ minds to new ideas and free reign over their own imagination tend to succeed in the marketplace.

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Lessons from Lego and FullContact

Last year, the employees at FullContact, a Denver-based software company were told to go on vacation. Their contract already stipulates a certain amount of paid vacation days, but Bart Lorang, the CEO, didn’t want to stop at that standard level of contractual compensation. He gave each of his employees an additional $7,500 to spend on their vacation however they wanted. He also forbade them from working while they were gone. No e-mails, no brainstorming, and no calling into the office.

The workers at Lego Headquarters in Denmark are finishing up work for the day. They retrieve the boxes so they can put away the thousands of miniature blocks for further inspiration tomorrow. They turn off the lights of their workspace, where the floors look like freshly mown grass, and the walls are painted to look like a partly cloudy day. They may have spent their day designing new products for the world-famous toy company, or perhaps playing with Legos in the social spaces, waiting for the next big idea to click into place.

As strange as these scenarios may seem, the tides of the modern world are turning to make working conditions like these the rule, rather than the exception. Not every company is giving away massive vacation bonuses, or allowing their workers to build castles out of children’s toys, but the important point is the underlying principle behind those innovative or unusual business practices.

The world of business is changing, and in order to survive and flourish in the new environment of modern business, old ways of thinking must evolve. We have entered the generation of cool, the era of the alternative, and it is becoming increasingly obvious that the further outside the box a business is willing to think, the more success they are bound to find. The old traditions of three piece suits, business luncheons, time cards and cubicles are going the way of the fax machine. In this age of instantaneous communication and a globalized economy of knowledge where innovation is king, it is only natural that the principles of business and leadership will require a fundamental overhaul to stay relevant and practical.

It is no longer enough to smugly hold the title of CEO while watching your workers scurry around the office like mindless drones in an ant farm. The new generation of leaders who are running the most successful, significant, and profitable businesses on the planet are not simply figureheads or empty suits. They have taken the traditional role of business leadership and turned it on its’ head, blazing trails rather than directing others to do it for them. These are men and women who are not afraid to get their hands dirty, or to swallow their pride when one of their risky ventures flops. They don’t stand on the shoulders of their workers, glorifying their own wisdom and foresight, but rather give credit where credit is due, rewarding and celebrating the brilliant minds that have brought their companies such widespread success.

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Ernst & Young business strategy: the power of individual talent

It makes sense that EY knows how to run a successful and happy workplace; that is one of the services that they provide to corporations in any of the 140 countries where they maintain more than 700 active offices.

They have a trained team of specialists that can survey your employee productivity, corporate spending, investment portfolio, infrastructure, technological synergy, and leadership style. They can then suggest anything from minor renovations or drastic overhauls of your current system in order to streamline productivity, promote efficiency, save money, downsize, or expand, depending on what end goals you are trying to accomplish. It would be quite nonsensical if the company you were trusting for advice was unable to keep its own people happy and well taken care of in a stimulating and innovative environment.

EY is keenly aware of one specific fact that sets them apart from the competitors in their industry and in many other industries as well. Their employees are the most important assets that they have, and they will do almost anything to keep those assets from slipping away. They are primarily a financial institution, so they have a deep respect for value, and an ingrained balance of gain and loss. Therefore, they have created a magnetic culture of transparency, communication, advancement, and opportunity that draws in premium talent from all over the globe and then provides the tools for those same individuals to enhance their skills and move forward or laterally within the company.

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The VOLKSWAGEN way of business

It may sound reductive or simplistic to say that a profitable company is a happy company. It is also no necessarily true, but success and profits do open up a world of possibilities for a company to extend their reach and influence. The majority of modern theory regarding business says that money doesn’t actually buy happiness, and the importance of a happy company can’t be overstated. My entire book, Happy Company, is actually based on this fact, but there is still something to be said for making money in new and interesting ways, and then using those resources to create something very special in a given industry.

Volkswagen is arguably one of the most recognizable and successful brands in the world, and with its recent acquisitions of other top model automobile companies, it will likely remain near the top of that competitive industry for many years to come. However, their total revenue of more than a quarter of a trillion dollars is something that stands out in any industry, and what their approximately 13% profit of that will go towards is even more impressive. They intend to invest $80 billion in new manufacturing plants and distribution centers around the world and want to reach the undisputed top of the auto industry within 5 years. They are also pursuing sustainable manufacturing methods, lowering costs for consumers, and creating economy-specific options for many underdeveloped or underprivileged nations of the world. They wouldn’t be able to pursue any of those extremely ambitious goals without a solid foundation of resources gleaned from excellent products and an efficient infrastructure that nets them considerably more of a profit percentage than their competitors. Yet, their workers are happy, their stockholders are satisfied, and their consumers keep coming back for more.

VW seems to have shaken off the bad press that so many massively successful companies attract by quietly rising in the ranks of the auto industry in their own way. They take responsibility for their products by building almost every piece in-house, and their customer service standards are unprecedentedly good. They make money because they reinvest it back into themselves, rather than stashing it away in the coffers of CEOs and other high-paid executives. They know the value of profits, and the potential that they represent for further growth, additional company rewards, and most importantly, overall happiness of everyone involved in the business. As they say, money can’t buy happiness…but it certainly helps.

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The end of pure profit-machines

If I asked you what the bottom line in any business should be – what represents the cornerstone and standard measure of success in traditional business theory – I’m sure that you would quickly and assuredly answer: “Profit!”

Traditional business models take profit to be the ultimate goal of any business plan. The standard methods purported to be most effective in generating profit are reducing costs, increasing prices, and maximizing productivity. Unfortunately, this model can be extremely damaging to businesses in the modern corporate landscape. (more…)

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