By John Kotter
Like many frequent travelers, I always keep a book on hand for those pesky times when you are forced to unplug. A few weeks ago, this habit allowed me the pleasure of reading Steven Mandis’ What Happened to Goldman Sachs? while traveling cross-country, courtesy of United Airlines.
In his book, Mandis, an adjunct professor of economics at Columbia Business School, draws on his 12-year career with Goldman as well as interviews with current and former employees to discuss the history of the investment banking giant and how he has observed a distinct “organizational drift” at the company. This drift, a series of subtle internal changes and shifts in the external environment, resulted in a drastically changed corporate culture and resulting public perception over the course of a few decades. Mandis maintains it was this drift that led Goldman to become a firm that represents to many the excesses of Wall Street – rather a different picture than the conservative private investment partnership of the century before.
As I sat reading his story at 35,000 feet I couldn’t help but draw parallels between Mandis’ account of Goldman, and what I was experiencing flying cross-country that day. Was it possible that United Airlines had experienced their own form of organizational drift? Was the race to the bottom in the airline industry fundamentally changing the nature of United Airlines and leading to some clouding of vision that the opening of financial markets had created for Goldman?
At one point, air transportation was the height of modern luxury and travel but I think we could all agree that this is no longer the case. Indeed, the fact that I was even reading Professor Mandis’ book was brought on by a lack of wireless internet – the stuff of nightmares for a consultant whose job is only made possible by my ability to communicate with people all over the world instantaneously. To alleviate this stress for the modern commuter, some airlines have begun to respond to the increasing connectivity needs of their passengers by offering Wi-Fi and outlets to charge their devices. Southwest Airlines even created a service so passengers can stream live TV directly to their own devices, saving the airline the expense of installing televisions while still providing value to their customers.
Responding to the needs of the business traveler is a key way to maintain brand loyalty in an increasingly competitive market – just as the inability to meet the needs of customers will drive them away. The difference between these two is often a difference in clarity of strategic vision.
Could it be that turbulence in the market, possibly from the announced merger of American Airlines and US Airways, distracted United from its strategic vision to better serve passengers? An extra row of seats could provide some additional revenue at a low cost to help offset the stiffer market competition. This would also explain why at 5’9” my knees were squashed against the chair in front of me in a way I had never experienced.
So as I sat there squished into my seat wondering how many hundreds of emails awaited me upon touchdown, I noted to myself a few key lessons on maintaining strategic vision applicable to every company – from Goldman Sachs to United Airlines – operating in environments of accelerating change and intense competition:
- You must give the customer what they need, and should strive to provide those things that they want – while a packet of pretzels and a can of soda are certainly appreciated on a cross-country flight, I am more concerned with being able to stay in contact with clients and colleagues as I travel. Always keep your core constituency in mind, and ensure your strategic vision is best on serving your customer.
- Focus is critical, but focus on the right things. Too much focus on the bottom line can ruin it – that extra row or two of seats might help provide for some additional revenue today, but in the long run, your customers will choose the competitor that provides them with more value (and leg room)
- Constant awareness is a must – as described by Professor Mandis, organizational drift is a slow, barely noticeable, evolution over time that can yield drastic outcomes. To stay at the top of the pack, businesses need to be constantly surveying the marketplace and communicating with their customers to make sure they are not falling behind or out of touch. Awareness will help keep the vision clear, compelling and relevant.
It is easy to say “we are customer focused” and overlook subtle changes in consumer demand, or to justify cost cutting as a rational business maneuver in a tough market environment. But if these measures don’t accomplish your strategic vision or sync with the reality of your customer, there is little hope for leading the market. At the end of the day, all the power resides with the buyer. That said, I can happily say that when I travel from Boston to New York next week, I will be riding comfortably aboard an Acela train – not flying the friendly skies.
Cameron Welter works at Kotter International, helping leaders accelerate strategy implementation.