The hi-tech industry is littered with companies that come and go, unable to sustain their initial success. On the face of it the reasons for this can be many, ranging from bad management and shifts in the market to cash flow and poor execution. It’s therefore difficult to learn the real reasons by analysing these companies rather we should look at what characterises companies that do grow and succeed. What is it they have that others don’t?
These companies understand that long term success is not based on a product or technology alone. They have a belief, a cause; they know what they stand for is equally as important to their customers. It’s how well these companies harmonise all the elements that determine long term success. The problem for too many companies is they focus on product to the exclusion of everything else. This is a big mistake and why they can ultimately stall or fail completely.
How do Humans Make Decisions?
To understand why the company’s belief is so important we first need to look at how humans make decisions. To do that we first need to consider the biology of the human brain. There are two parts of the brain of interest in decision making, the limbic and the neo-cortex. The limbic is the emotional centre of the brain, it’s where the “flight or flight” instinct resides, and so by necessity process things very quickly. By contrast the neo-cortex is the logical or rational centre but, compared to the limbic brain, it processes things slowly. It’s important then to understand that decision making is a two stage process; emotional first and rational second and the rational phase is about justifying a decision already made emotionally.
Therefore, if we don’t make an emotional connection with customers first we are totally reliant on the rational part of decision making i.e. what the product actually does. That can work as long as we have the best offer but, as soon as we don’t customers switch, there’s no loyalty. That leads to the other consequence of product focus; once a company has shown demand for something someone will copy it, which creates in turn a never ending cycle to stay ahead.
Companies that grow and succeed make an emotional connection with their customers and therefore benefit from enduring customer loyalty. They don’t always need to have the best product, just good enough, as customers are emotionally involved with them. The company and its products stand for something, they say something about their customers. They are no longer just customers but advocates who promote your products.
Of course the classic example of this is Apple. Apple is about individuals, people that think they’re different, the rebels, the square pegs in the round holes. That’s who Apple’s after as they see themselves reflected in Apple; Apple says something about them. That’s why people queue for days in advance to be the first to get a new product and why you’ll never persuade a Mac user to buy a PC. They have an emotional attachment to Apple.
Creating an emotional connection is then vital for any company to grow and succeed so they should work hard to understand their belief, their cause and what they stand for. Then make sure it’s evident in everything they do: product, service, marketing and most of all their people. In this way they’ll make it clear what they want customers to know about them and create that all important emotional connection.