Ecosystems, experiments and experience
Earlier this year, Microsoft briefly joined the likes of Amazon and Apple as a member of a very select group of businesses – ones who have cracked the trillion-dollar milestone. Yes, all 3 are technology businesses, but, aside from valuation, what else have they got in common?
In short, they also operate as ecosystems with at least as much more effort focused on the experience of existing customers as is invested into acquiring new ones. An approach which flies in the face of Byron Sharp’s “How Brands Grow”.
Jeff Bezos summarises Amazon’s successful model by saying: ““In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.”
How do they act like an ecosystem? They’re constantly testing new things, learning from customers, striving to improve and adding to their breadth to their proposition to make it even stickier.
According to Tren Griffin at Microsoft, "The balance of power is shifting toward customers and away from companies. The right way to respond to this is to put the vast majority of your energy, attention and dollars into building a great product or service. The very best businesses acquire customers ‘organically’... word of mouth drives sales at these companies.”
Despite his private equity fund background, Griffin has a simple but risky point of view: “If you double the number of experiments you do per year, you’re going to double your inventiveness. If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table."
Experiments, by definition, can fail. You can reduce your exposure to failure by cutting down on the number of experiments. However, if you are taking inspiration from these trillion-dollar companies, you might consider that a bigger problem might be to fail to experiment, rather than to experiment and experience failure.
To quote Griffin once again, “you must adopt a non-consensus view and be right about that view to beat competitors."
Colin Gray | Head of Marketing Strategy and Behavioural Economics
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