New Rules: Why Values Beat Value

What do your customers really want? In an interview, Ryan Mathews, coauthor of the forthcoming book "The Myth of Excellence," offers some surprising answers. Forget the lowest price or the biggest discount. Show a little respect — and tell the truth.

Ryan Mathews is one of those rare individuals who, if he didn't already exist, we would need to invent him.

Consider his "career" track: He got his undergraduate degree in Mongolian history and did his graduate work in philosophy. As a trained philosopher, Mathews next put his degree to work tending bar for two years at an inner-city bar in Detroit. During that same period, he was also working as a fine artist, developing his eye as a painter. Next, he migrated to writing, tackling "gonzo feature writing" for the Detroit Free Press. From there, it was a short jump to a stint as a medical writer. Then, in pursuit of a more stable salary, Mathews moved on to publishing, working as a production manager and art director for a small publishing company.

In the course of setting type for one of the magazines, Mathews discovered that he could write better than the reporters. So in addition to his design and production responsibilities, he assumed the job of copy editor and rewrite man — without telling anyone. That led to Mathews's next self-reinvention: a series of publishing posts, always moving up in responsibility and performance, which led to a remarkable run as editor of Progressive Grocer magazine, one of the most highly regarded trade magazines in the United States.

Then, three years ago, Mathews adopted his most recent intellectual identity: futurist. Joining Watts Wacker's firm, FirstMatter LLC, Mathews arrived at a job that — for the first time — integrates all of the varied roles he's played for the past 30 years: historian, philosopher, listener, reporter, artist, experience-crafter, speaker, performer, consumer-products and retailing expert.

And now add to that résumé coauthor of a smart, insightful, entertaining, and useful book about companies, customers, and the art of competition. With Fred Crawford, Mathews has written The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything (Crown Business, July 2001). Not unlike Mathews himself, the book is a delightful, winning combination: part strategic-analysis model, part charming storytelling, part philosophical treatise. All together, it is a great read and a focused contribution for business leaders who want to analyze their own approach to customers — and learn how to reconfigure their businesses into much more customer-centric operations.

Fast Company spoke with Ryan Mathews to get a quick fix on The Myth of Excellence. Here's what he had to say.

Your book starts with an essay that's a surprising social commentary — one that puts business into a very different light from simply offering goods and services for people to buy. In a way, you're offering the context for your view of business. What's the background? What's changed?

It used to be that what customers wanted from businesses could be described as "feature and function advocacy." In other words, customers wanted things that worked well — or at least reasonably well — and they wanted things that worked as advertised. Businesses, for their part, made things that worked reasonably well, and they expected customers to give them money. It was a transactional world. You brought your goods or services to market; I paid you for those goods or services; I went away reasonably happy with what I'd purchased; you went away reasonably happy with my money.

Now, that world worked because of some things that are different from today's world. First, there were genuine efficacy differences — that is, there was a time when Tide actually did clean clothes better than its competitors. There were Craftsman tools that came with a lifetime guarantee — and that was a superior offer. The same kinds of difference held true for appliances, cars, clothing, and furniture.

Second, as people lived their lives — not as consumers, but just as people — they had lots of sources of institutional reinforcement. Authority figures were generally regarded as good guys. Schools worked. Leaders were leaders; people played by the rules. People's emotional, psychological, and social values were reinforced by all kinds of supporting institutions.

Fast forward a few years, and what happens? You've got the general dislocation created by rapid technological change. In mature industries, you've got the closing of the efficacy gap. Tide may still get your clothes cleaner than any other laundry powder, but you'd need an electron microscope to detect it — and most people don't have an electron microscope in their laundry room. In general, tools don't break, so the Craftsman guarantee isn't as important. Cars, more or less, have the same degree of quality — or lack of quality, depending on your point of view. And then there's the decline of leadership, a collective failure of the institutions that reinforced people's values.

So what's the punch line? What is the consequence?

All of this had an unexpected and interesting result: People have turned to commerce to reinforce their personal values. And that hasn't happened before.

You were writing a book on customers — defining five attributes of companies' offerings and three levels for each attribute. (See the sidebar: How to Dominate, Differentiate, and Meet the Market.) And, instead, you discovered a totally different kind of relationship between companies and customers. How did you reach such an unexpected insight?

We came to this conclusion in a very roundabout way. Between the two of us, Fred and I have about 40 years of experience studying consumer behavior. We designed a very simple 5,000-person survey, asking people about price, product, access, service, and experience. Before we even sent it out, we knew what the answers were going to be. And then the answers came back, and Fred and I were amazed that 5,000 consumers could get such simple questions wrong! So we did thousands of follow-up interviews to figure out why people couldn't give us the right answers. We found that what we thought were simple questions had impossible answers. No one could get them straight. The whole pattern of answers was the reverse of what we thought they should have been.

Those results made us go back and redrill through our research. When we did that, we got a commercial version of Alice in Wonderland. When we gave people a choice, they said things that we'd never seen before. Words like discount, sale, and price didn't show up at all. But value-proposition words — respect, trust, sincerity — showed up with incredible strength.

Here's the headline that goes at the top of that story: It turns out that it's the values, not the value. It's not just the value that you're offering the customer; it's the values of the store, reflected in the way the store does business. What people told us was, "We want to do business with people who are fair and honest. We want to do business with people who respect us as individuals. Don't give us phony discounts. Don't give us a fake smile. Don't have a greeter at the door who's there like a zombie, pretending to welcome us, but who's really checking for shoplifters."

The message from consumers is this: In a world where people think that the government is corrupt, that the church is corrupt, that the schools are corrupt, show us a business that isn't corrupt, and we'll do business with you for life.

After I read your book, what do I do Monday morning to do a better job of customer relevancy?

Peter Drucker once said that if you were a world-beater, in most businesses you'd probably have about 30% of the market — and 30% of the market would make you a killer success story.

And Peter Drucker's next line, of course, is that 7 out of 10 people aren't doing business with you. You need to go talk to those 7 people — in a way, they're more important than the 3 who are doing business with you. You also need to deal with alignment issues: You need to find out what store, what airline, what business your employees are patronizing, your managers are patronizing, your vendors are working with. And you should analyze your direct competitors — go talk to their customers too. Then you not only know who your customers think you are, you also know what your competitors' customers think they are.

You can see whether your offerings are in alignment with what the market really is responding to. Most companies aren't in alignment. Most companies aren't running businesses for their customers; they're running businesses for themselves.

Alan Webber (awebber@fastcompany.com) is a founding editor of Fast Company. Contact Ryan Mathews (ryan.mathews@firstmatter.com) by email.

Read the sidebar: How to Dominate, Differentiate, and Meet the Market

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