[MUSIC] The digital age presents every leader with a challenge. The culture of your firm and every firm has developed through experience. Some of the beliefs and values developed as a result will serve you well in the future. Other values and beliefs will fade in their usefulness. The question is, which values will you preserve, which should fade, and which new values should you develop? For the past ten years, I have been engaged in research that offers insight into that question. Through that research we have discovered that firms with a true customer focus share six values and beliefs, even though they may be from very different industries with very different histories. The first value these successful firms share is putting customers first. As we discussed earlier, this value reflects a shared belief that the success of the firm ultimately depends on the success of its chosen customers. The value of putting customers first is a dramatic change from the belief that the goal of the business is to maximize profits. Amazon offers an excellent example of this change. Amazon's CEO, Jeff Bezos, hopes to create the most customer-centric company on the planet. Amazon surprised investors this summer by making an unexpected profit. Stop the video and have a look at one recent financial report about Amazon. Since going public, Amazon has earned just under $2 billion in profit. But the value of Amazon has reached nearly $250 billion, growing over 30% each year since 1997. For Amazon, putting customers first has generated stunning wealth. The second value that successful firms share is empathy. Empathy is the ability to understand what customers think and feel, what they're able to articulate, and what they're unable to articulate. Developing empathetic organization takes time. A maker of industrial doors sought to be more empathetic. So they created cross functional teams that spent the better part of a year talking to customers, architects, distributors, and a few general contractors. Based on those interviews, the teams spent another seven months developing a value proposition, creating greater empathy across the organization. As this example suggests, developing empathy often requires personal experience. Data, numbers, and reports can all be enormously important, but they lack a human element necessary for an individual or an organization to understand the essential human dimension of customers. The third value is openness, a willingness to consider new information, ideas, a sense of curiosity, and shared appreciation for imagination. It may not seem obvious, but culture is the enemy of openness. We are overwhelmed with information. Culture makes an organization incredibly efficient. Based on past experience, we know what information is essential for our survival. As a result, we can ignore everything else. But of course, culture has a fundamental flaw. We may ignore very important information because in the past it has been irrelevant. As a result, we may miss the next big idea. After pioneering the mobile phone, Motorola dominated with 80% market share. Digital technology emerged, enabling phones to send text messages. Convinced of the superiority of analog technology, Motorola discounted digital technology, losing its lead to Nokia. Despite its lead, Nokia failed to grasp the potential of touch screen technology, and Apple launched the iPhone, eclipsing Nokia. Success makes being open minded even more challenging. The fourth value is trust, the shared belief in the confidence, honesty, and fairness of your colleagues. The hierarchical functional organizations of the past did little to build trust, instead most were based on fear and suspicion. As organizations have become more lean, eliminating layers, expanding globally, and the pace of change has increased, a hierarchical functional organization with its lack of trust can simply no longer survive. Instead, success requires that colleagues develop a sense of mutual trust. Later in this module, my colleague, Sanjay Cosola will describe his experiences and perspectives as a leading advocate for an innovative approach to trusting people and unleashing their potential. In the digital age, we need to foster trust to empower people to do what they do best, whatever way works best for them. Giving up control for leaders is difficult, but essential for success. The fifth value is collaboration, the belief that colleagues, customers, and suppliers working together is essential to succeed. And the sixth value is respect, admiration for the abilities and achievements of colleagues, customers, and competitors. In the past, many firms were organized by creating functional silos, including marketing, finance, and operations. For instance, in distinct organizations, separate silos reinforced by functional incentives limited cooperation, and created rivalry rather than respect. At Alberto Culver, they have bridged traditional silos fostering greater collaboration and mutual respect increasing the firm's agility and the speed at which decisions are made. As one executive said, basically if there's a problem everybody hears about it every day. So it's almost instantaneous feedback that keeps the whole organization connected to where the issues are so that we can react together. So what have we learned? Putting costumers first, being empathetic, trusting your colleagues, being open to new ideas, promoting collaboration, and respect are increasingly important for success today. These values help organization build relationship with costumers, adapted disruptions, and expand globally, as you think about your organization I would like to challenge you to consider this question. What can I do to lead in my organization to create values suitable for the Digital Age? We will examine that question next. [MUSIC]
