The Last Best Experience
The last best experience anyone has anywhere becomes the minimum expectation for the experience they want everywhere.
When it comes to strategy, one way to meet radically new expectations in your industry is to draw from the impressive and surprising strategies that are being used in other industries. Why can’t interacting with an insurance company be as responsive and transparent as interacting with Uber? Why can’t checking into a hospital be as seamless as checking into a hotel? These are the sorts of questions that more and more customers are asking, and the questions that a winning business strategy must answer. You won’t find those answers if you limit your strategic vision to what other companies in your field are doing. Remember, your competitors aren’t always who you think they are.
Most executives think they know who they’re competing against — the major firms in their field or entrepreneurial “ankle biters” with a new technology or business model. But what happens when your competitors aren’t who you think they are? Specifically, how do you devise a winning business strategy when you are competing not just against incumbents or upstarts from your industry, but against the ever-changing expectations of your customers, whose encounters with products and services reach far beyond the established boundaries of your industry?
The answer starts with an insight from Bridget van Kranlingen, a senior executive at IBM. “The last best experience anyone has anywhere,” she noted, “becomes the minimum expectation for the experience they want everywhere.” In other words, if you’re a car dealer, customers aren’t just evaluating how you treated them based on how they’ve been treated by other car dealers, they’re comparing you with how they were treated by an amazing hotel or fashion retailer. If you’re a financial-services firm, customers aren’t sizing up your online banking system against rival systems from two or three other financial companies, they’re comparing it with the ease-of-use of Airbnb, and other consumer apps.
The ultimate test of your strategy is not how well you stack up against what your rivals are already doing, but whether or not you live up to what your customers believe you can and should be doing.
One of the first set of business leaders to understand this shift in mindset (and they understood it long before Bridget van Kranlingen made her declaration) were the Toyota executives behind the launch of Lexus, one of the most successful new luxury brands of the last quarter century. It was an audacious strategic bet: Reliable-but-boring Toyota would launch a new brand and standalone company to go up against BMW, Cadillac, and Mercedes-Benz.
But this brand, they understood, was not just about introducing a new car; it was about inventing a new approach to luxury in the automobile business. “Our customers don’t compare us to other car brands,” David Nordstrom, who is now vice president of Lexus for the Asia-Pacific region “They compare us to other luxury brands. You have a certain experience with Tiffany or the Four Seasons. That’s the experience you expect at Lexus. People don’t say, ‘Well, this is the car business, so our expectations should be different.’”
This is a hugely important strategic insight, one that has guided Lexus’s approach to sales and service ever since. Early on in the brand’s development, the company sent 500 dealers and general managers for training at a Four Seasons resort in Carlsbad, California. They noticed all sorts of little techniques the hotel used to create a distinctive experience, and then put their own spin on them for the dealerships: flowers in the showroom, marble floors in the bathrooms, bottled water and chocolates in the cars when customers retrieved them from the service department. Years later, Lexus was impressed by the positive energy and problem-solving skills in the Genius Bars inside Apple’s retail stores. So it created Answer Bars in its dealerships, modeled directly on Genius Bars, to teach customers about the sophisticated technology in the vehicles, troubleshoot problems, and get them more excited about their cars.
So when it comes to strategy, one way to meet radically new expectations in your industry is to draw from the impressive and surprising strategies that are being used in other industries. Why can’t interacting with an insurance company be as responsive and transparent as interacting with Uber? Why can’t checking into a hospital be as seamless as checking into a hotel? If I can be pre-approved for a home mortgage in less than 30 minutes on the Rocket Mortgage app, why does the real-estate industry still require a small mountain of forms, tax statements, and other documents to be approved for a one-year apartment lease?
These are the sorts of questions that more and more customers are asking, and the questions that a winning business strategy must answer. You won’t find those answers if you limit your strategic vision to what other companies in your field are doing. Remember, your competitors aren’t always who you think they are.