Innovation is the lifeblood of an organization, and a critical component of any organization’s strategy. Remember, strategy is anchored in the future—what your future organization will look like. For your organization to grow, your organization’s future vision must involve a different set of products and services—but what about relationships? This is something I often see overlooked in a strategy, and it can make all the difference.
To be sure, let’s define relationship in the context of your strategy. Relationships are basically free services. They belong on the same dimension as products and services—they are part of your basic offering which is matrixed with markets to determine and develop your offer/market mix. If you’re like most companies, the relationship area of your strategy is either non-existent or too implicit; if so, it needs to be exposed.
When building the vision of your strategy, ask yourself what kind of relationships (i.e. free services) will be offered to your customers, then intentionally innovate in that direction. The relationships you build should stand alone against any of the products or services you build into your strategy, but should be aimed at some of the same markets. This is more obvious if you’re a market-driven company as opposed to a product-driven company, but with a little focus you can come up with some great ideas.
BMW is a good example of a product-driven company, as it’s clear they compete on the basis of building superior cars. That said, BMWs are not for everyone, and they have a very specific, loyal market. When you buy a new BMW, the service on the vehicle is free for the first five years—something that certainly contributes to their loyal customer base. Unfortunately, they package it as a warranty which removes some of the shine in the relationship strategy for me. If they would provide free service on all their vehicles no matter what age or condition, this would be an example of a solid relationship strategy.
By definition, your relationship strategy will operate at a loss—sometimes a huge loss. For this reason, you must be very intentional about where this line of operation fits within your strategy, and commit that you will never reclassify it or cannibalize it for more profitable lines of business. Although it’s tempting to flip a relationship strategy into a service strategy, it is very dangerous to start charging for something that has always been offered to your customers for free. I consulted at Silicon Graphics for a number of years in the mid-nineties, and once they took away the free parties, their top engineering talent flew the coop.
Information services is an area that’s attractive for relationships, as operational costs should be relatively low. What would otherwise be strategic information services—in the literal sense of the phrase—can be easily recast as strategic information relationships. For instance, when I was at Visa, one of the questions we asked was, “what kind of information and analysis can we provide to our partners (gratis), that will build and fortify our relationship with them.”
Breakthrough relationships create loyal customers. So, if your customers mean anything to you, develop relationships with the same focus and diligence used to develop the products and services that support your business today.
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