Discover more from The Digital Leader Newsletter -- By John Rossman
Moving Forward to Get Back to Day 1
Change the Culture of the Status Quo
Pain is temporary. Quitting lasts forever. —Lance Armstrong
I am a cycling fan. My wife and I became fans of Lance Armstrong when he donned the rainbow jersey by winning the cycling World Championships in Oslo, Norway, way back in 1993. This was before he battled and beat testicular cancer and before his first Tour de France victory in 1999 as the US Postal cycling team leader.
Lance Armstrong won the Tour de France a record seven consecutive times from 1999 to 2005. As you likely know, in 2012, he was banned from sanctioned Olympic sports for life and stripped of his Tour de France victories because of long-term doping offenses, to which he admitted. As a result, all of his wins dating back to 1998 were voided. How would he move forward?
I enjoy listening to podcasts, and I am always in search of great content and learning. When a friend recommended Lance Armstrong’s podcast The Forward to me, I gave it a listen and loved it. The Forward is about owning your past and deciding to, well, move forward. No matter your history, you decide how to live with it and how you want to write your going-forward history. If you are at risk of having your best days behind you, you decide whether to resign yourself to slow, painful acceptance and erosion, or you figure out a way to reinvent yourself and move forward. That’s the long and short of it, anyway. Obviously, it's a theme with which Armstrong is familiar.
Armstrong is excellent at interviewing his podcast guests and creating a conversation. He delves into the past and examines the stories and how the guest is moving forward. Meanwhile, he is honest and self-effacing about his own complex past. The podcast is clearly therapy for him.
When assessing personal mistakes and the path forward, the first step is honest self-appraisal and figuring out what they are in control of. Successful companies are no different. No matter the past, no matter the level of achievement and success, you make decisions defining how you move forward. These decisions can be either conscious or unconscious, but they are made nonetheless.
Bezos has outlined his perspective that there are basically two types of companies—Day 1 or Day 2 companies. In the 2016 Amazon letter to shareholders, he wrote:
Jeff, what does Day 2 look like? That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.
And that is why it is always Day 1. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.
I’m interested in the question “how do you fend off Day 2?” What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization? Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. Idon’’t knows the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.
Here’s what’s interesting to me about Jeff’s “starter pack” of Day 1 essentials—they are all elements of culture. They define our priorities and how we work together. They are neither financial goals nor market goals. They are fully within the leaders’ control.
While Jeff is focused on fending off Day 2, I’m interested in questions like “What do you do if you are already a Day 2 company?” How do you change course? Do you accept your fate? If so, isn’t this a form of quitting? Or do you accept the risk and pain and figure out how to move forward?”
What’s Your Forward?
Is your company leadership willing to address hard truths? We (the company)are successful, but our growth is slowing or non-existent, our offerings are undifferentiated, and we are optimizing for short-term optics, primarily financial measures. We care too much about what analysts are saying about the company and stock and are really managing the analyst agenda. If you’re ready for honesty and moving forward, here’s how to return to Day 1.
Commit to a Path
Although innovation can and should come from anywhere inside or outside your organization, only the leadership team and board can be purposeful, specific and create a strategic intent for innovation. Commit to a path, take the medicine needed, and then start focusing on the inputs of innovating and other potentially difficult decisions.
Goal setting can be an essential aspect of getting back to a Day 1 mindset and culture. Goals can serve as forcing functions, pressuring the types of actions, decisions, and changes desired. For example, goals on “percent of revenue achieved through products launched within the past two years” serve to force plans and commitment to innovate and launch new products.
Conversely, goals set solely to optimizing the current business create a Day 2 environment. Goals such as target share prices, target earnings for the enterprise, target growth percentages without adding “Day 1” goals serve to further cement “short-termism”into the culture.
Recognize and Feature the Bad News
What are the signs of being a Day 2 company? The bad news does not get better with age. Often it is slowing growth, services, and products becoming commoditized, increasing loss percentages on new opportunities, a static or poor NPS (net promoter score).
You need to not only admit the situation but take accountability. What you are willing to commit to will largely define the options available to you. By featuring the bad news, you are declaring it as the past and opens up options. You are, in essence, saying, “The current situation is no longer acceptable. We have a mission bigger than this year’s financial returns, and we need to do better.”
Amazon’s Leadership Principle 11 is “Earn Trust” explained as being “vocally self-critical even when doing so is awkward and embarrassing. Leaders do not believe their or their team’s body odor smells of perfume. They benchmark themselves and their teams against the best.” Start business or operations reviews with perspectives like “Here’s how my team or business or operation sucked” and then list the metrics and root causes. Discuss how you are going to fix them and what you need from others. If you start “featuring the bad news,” the stigma goes away, but it takes bold leadership.
Change the Questions You Are Asking
Ask questions that impose constraints challenging the status quo. Example: “How would we make our product/service/capability completely ‘self- service’?” Ask questions creating more customer empathy (example: “What is our customer’s worst day?”). Ask questions that pose a different reality (example: “How could our product or service be completely ‘software defined’?” Remember — software is eating the world!).
Be purposeful and deliberate in fleshing out scenarios and potential answers to these questions. Use the Amazon “working backwards” envisioning and writing techniques of a future press release, FAQ, and narratives.
Be on Target with Communication, Always
To your team, your investors, your board, and your customers—everyone in a leadership role needs to commit and be on point in their communications. Change does not happen with a memo or one meeting and declaration. Your priorities, your actions, and your communications need to always line up with your plan. Communications need to be both scheduled and planned, as well as spontaneous.
Equip yourself and your leaders with message points to incorporate in everything you and they do. Repeat. You must be on message.
Putting the customer at the center of everything can be a core strategy to helping to change the culture. Customer centricity focuses on the details and friction of today’s operations, breaks apart our product-focused organization and P&L, and serves as the start of curiosity to creating new value and solutions for customers.
Customer-centricity is a core focus of The Digital Leader Newsletter. Would you mind reading prior newsletters to catch up? (subscription is free)
What are the Odds?
All that said, the history of companies changing the tide and reinventing themselves is typically met with failure. Two examples of companies that have been hugely successful at changing their business fortunes are Apple and, more recently, Microsoft. These have not been just product transitions but cultural transitions. Change is hard, and it’s risky.
Maybe it’s easier to let the next generation of company management deal with the eroding situation. You might be able to ride this out for years. This “kick the can down the road” strategy is more common than you’d like to believe. But can you live with the knowledge you are part of a Day 2 company?
Becoming and staying a Day 1 company is going to be difficult. You’re going to make bad bets. You’re going to lose some people along the way. You are going to have to be obsessed and have grit. But short-term pain is better than the slow death of quitting on your quest of creating an enduring company.
About The Digital Leader Newsletter
This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session focusing on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, better solutions — but most of all, to think and communicate better.
short-termism: concentration on short-term projects or objectives for immediate profit at the expense of long-term security.