Two articles about e-bay’s recent growth surge, by Marcus Wohlson in Wired magazine, confirmed for me our research insights: organizations that succeeded and grew in this fluid environment had a number of shared characteristics that were deeply embedded in the way they thought, framed challenges, perceived value, approached challenges, engaged people and defined priorities.
The “guide” for knowledge age product and business development age below is extracted from these articles as well as our research. In reviewing it, it suddenly struck me. This guide also reads like a list of the major gaps and misalignments in most associations; what it is they do not do and should do in their pursuit of retention, growth, profitability and relevance and the reasons for attrition or stagnation and eroding value.
What do associations do to grow? In my research and experience the formula goes something like this: more programs, products, new gadgets, marketing hype etc.; big strategic planning exercises that produce unrealistic wish lists that are often irrelevant to customer real needs; the latest theories and “best practices;” new stuff, which translates into extrapolations of present products and organizational structures.
In Wohlson’s articles, e-bay utilized a different logic and set of capabilities to achieve new levels growth; capabilities that are not highly valued or developed in most associations:
- They actually spoke the same language as their customers…When in Rome… e-bay’s model of online shoppers’ community and its competitive advantage is based on leveraging the unique capabilities and new options that social technologies provide. Because e-bay’s leadership is attuned to technology’s changing role and value in customers’ lives, they are able to continuously identify and leverage new developments into new levels of value creation and growth. In 2013 Could Be the Year eBay Takes on Amazon for Real, Wohlson traces eBay’s amazing recent rise, in part, to the increased use of mobile applications. This is not a matter of plugging new gadgets into an existing architecture but of embedding technology-enabled innovation at the core of their thinking and operations. This is why, instead of simply catching up with the Jones, e-bay became an “early leader” in mobile commerce.”
- They re-conceptualized their value proposition and the “business they were in:” In spite of e-bay’s technological savvy, it wasn’t the tactical bells and whistles that caused the turnaround but a strategic re-thinking of the foundational components of their business, leading to the decision to shift their market positioning and source of value “from auction house to a hub for comprehensive, one-stop shopping…the place to get anything, anywhere, anytime — the holy trinity of m-commerce.” Re-thinking the nature of the business you are in is very different from re-thinking your mix of products. It means that you put customers above your organization’s legacy programs and entrenched interests in practice and not just in words; that you are constantly re-assessing whether your organization and the way you do business are still poised to deliver maximum value to your customers and, if they are not, you are ready to jettison or re-configure them. It also means that you invest in capabilities for systems innovation and adaptability rather than new products or ready answers.
- They used a completely new framework for determining how to differentiate themselves from competition: For most conventional, product-centric organizations, competing translates into things like escalating communication and marketing efforts in attempts to persuade; controlling content and other access; one on one competition with peer associations for the same member pool; preventing member innovation, such as member-directed LinkedIn communities; etc.
E-bay’s strategy was two-fold:
- Differentiating itself on the basis of distinctive value and outcomes: “Unlike Walmart’s new same-day service, which delivers from its stores, or Amazon’s, which delivers from its warehouses, eBay Now offers a simple-seeming variation on what it’s always done: act as a go-between connecting someone wanting to buy with someone wanting to sell… This “experimental service in San Francisco and New York …lets shoppers order just about anything in stock from nearby chain stores such as Target, Best Buy, Macy’s, and Home Depot for delivery in about an hour.”
- Leveraging and providing access to competitors’ assets—rather than competing with them—and making access into competitive advantage.
- They replaced conventional product and business development with a customer-centric approach for identifying problems in shopping experiences and providing solutions. Such outside-in product development increases the relevance of your products and value but it also requires a truly customer-oriented mindset in which outcomes determine the nature and format of products, experiences and services. Unlike off-the shelf, single products, delivering measurable outcomes entails specificity. No generic, one-size fits all benefits will do. To deliver a differentiating, practical and preferred one-stop shopping experience, e-bay had to define what exactly this meant in practice beyond the promise and hype.
- They sought a deeper level of understanding of and engagement with customers, through immersion in their lives rather than knowledge of isolated purchase preferences. Monitoring quantifiable patterns of behavior provided some basis for e-Bay’s strategy, for example, learning that “one in every three eBay purchases “is touched by mobile.” However, their innovations depended on a much deeper and detailed level of understanding than most conventional associations have or value. In Revealed: eBay’s Scheme to Get You Anything You Want in an Hour, the author builds the profile of an e-Bay customer, Tuvshin Batsuren, and reconstructs portions of a normal “day in her life” – from her “wait in the parking lot in her silver Toyota Camry” to habits, educational background, shopping habits and actual thinking process involved in her shopping experience. Such holistic and contextual understanding of customers as whole persons helped e-bay uncover nuanced gaps and problems in their shopping experience that, in turn, became the foundations for new products and business strategies.
Associations sell knowledge service and strategic solutions rather than products. Hence there is a need for even deeper and more expansive levels of understanding of the whole person in all its dimensions and contexts. Immersion allows for constantly uncovering the nuances of a member’s/customer’s experiences as they naturally unfold in time (vs. snapshots in time and disconnected survey answers); and reveal unexpected, hidden, often small hurdles and inefficiencies that few others may have noticed. These are the cues for determining how to achieve relevance, differentiation and growth.
- They identified new sources of value, mostly among their assets, thus greatly expanding options for value and growth: The quest for customer solutions, rather than new products, is the key driver of innovation and sustainable growth. It uncovers and develops constantly new sources of value outside the narrow confines of products, services and rigid definitions of “education” and “benefits.” These include aggregation and integration of content; ease of use; speed of delivery; broader access; consultative advice; facilitation of solutions, etc.
For e-bay, this track of discovery gave rise to a stream of innovations –“everything from an experiment like its eBay Now local one-hour delivery service to its global shipping platform, which the company says makes sending a package abroad from the U.S. no more complex for sellers than making a domestic shipment.” This approach allows customer-centric, organic growth that looks for constantly new ways to increase value rather than products.
“This foray into same-day delivery,” the author says, “is part of eBay’s re-imagining of itself as the company that can get you anything, anytime, anywhere.” Associations’ path to relevance depends on their willingness and ability to:
- “Re-imagine”; think and act strategically
- Conceptualize and design from the perspective of their customers
- Inhabit in the same universe as their customers and use the dominance “currency” of their environment, particularly technology, for all aspects of their business
- Construct solutions that deliver outcomes rather than products that fit established boundaries
- Make sense to their markets and customers rather than in-house committees, policies and peers