THE FOUNDATION FORUM
SUNDAY 24TH FEBRUARY 2016. WRITTEN UP WITH THE HELP OF SIMON CAULKIN.
Bigger = better. We all know that. Make more things, at greater scale, in fewer places, lower the cost per unit, reduce the price per item, sell more to customers who appreciate the savings, make affordable to new customers who like new access, make more money. Everyone’s happy, right?
This is how Henry Ford did his best work – don’t speed up the horse, reduce the price of the car, and put up with only having it in black. We’ve been doing it ever since and we seem to have more and better things than previous generations dreamt possible. Scale has a lot to do with it. Laundry detergent, nappies, sweets, beer, toothpaste and more – made centrally, sold globally. Shops with vast offers and footprints on retail parks with massive catchments, fewer bigger car companies so we can get there in luxurious comfort, sprawling fast food chains we can drive thru without leaving the driving seat, iPhones and Amazon, Google and Alibaba in China so we don’t even need to go to the shops…
But every silver lining has a cloud. As Joni Mitchell pointed out, you don’t know what you’ve got ‘til it’s gone. What’s gone? What’s local.
People like people, and where we live and work operates most successfully when it’s on a human scale
There’s a restless muttering, a gently rising tide of dissatisfaction with this world of plenty. It’s not coming from the economist’s rational customer. But it’s not irrational either. We’re increasingly aware that quality of life isn’t measured in quantity of things, or by their combined capability. People like people, and where we live and work operates most successfully when it’s on a human scale. We like stories behind things we use, a sense of knowing where they came from. We love a well-run local store, pub or café, selling products made nearby from a high street with life and character, enjoyed by the people who live nearby. If these businesses really ARE well run, then the value we give to this version of our world is rising. Not just round here, but all over the world. This presents a tricky problem for most of the people reading this piece. Most of us, in one way or another, work for large organisations. What we need to do, and what we’d like to do, is create some great value global cake with ways to eat it locally and enjoyably too. We’d like a genuine solution. It’s too easy to end up with well-meaning mass produced, local-looking wool being pulled over confused customers’ eyes.
Tough. So we asked for help. More than usual in fact. Four views from around the issue, two from big businesses that care, two from the smaller end of the telescope, all realistic about what being local and yet also widely appealing really means. We had…
Will Smith, the head of property and market development for one of the UK’s, and indeed the world’s, largest supermarkets, Asda, part of the WalMart empire. He also happens to be a member of the Court of the University of West Scotland, a very different organisation with the aim of keeping remote communities healthy.
Anthony Thompson, who was a senior team member from the launch of one of the UK’s new challenger banks, TSB, an organisation that has set out to be the best bank for local communities and with the scale to make a difference (or to make it more difficult perhaps).
Juliet Davenport, founder of one of the UK’s leading alternative energy providers, a market where smaller, more distributed and local ways of generating are crucial to the future, and where trust in suppliers can be restored when they operate on a more human scale too.
And Clare Richmond, the innovator at the heart of a growing movement to create more vibrant, attractive and successful High Streets, having started with one, Crouch End and its eponymous Project, now advising many in the hitherto unrecognised field of town centre community marketing and regeneration.
We were set a contrast in views and we heard two sides of a tricky argument. This is a reflection of how it sounded.
Making an impact locally
The discussion that followed, summed up by Simon Caulkin
Think global, act local has long been the mantra of big business trying to combine the advantages of scale with the personal touch. In one sense that’s obvious: German McDonald’s serves beer, Anglo-Saxon consumers buy front-loading washing machines and continentals toploaders; Japanese clothes sizes are smaller than American; and countries drive on different sides of the road.
Yet it has always seemed like a bit of a compromise, and at a time when advertisers (or at least social media and internet companies) know more about customers’ likes and dislikes than they might want, a compromise no longer seems enough. Despite what advertisers like to think, few people ‘love’ brands – but they do want to respect what they stand for (and themselves for buying them), otherwise they’d rather not have any tiresome relationship at all (see the rise in ad-blocking). So is the idea that corporate giants can make a genuine local difference just marketing fluff?
With mighty changes disrupting traditional relationships in almost every industry, this is altered and not very well charted territory. But some part of the map was absorbingly explored at The Foundation Forum on 24 February, with the cases for, and for something different, eloquently set out by the participants. The classic big-company view was forcefully put by Will Smith, in charge of property and market development for Asda, part of WalMart, and Anthony Thompson, a central member of the team that launched the reborn TSB as a challenger bank separated out from Lloyds.
‘Retail is easy. Find out what the customer wants, but give it to him better than anybody else’
Thus for Smith, the rules are simple – big or small, Asda, Walmart or a single retail shop in Crouch End, a business has to meet customers’ expectations to thrive. If it doesn’t it won’t. As Walmart founder Sam Walton put it, ‘Retail is easy. Find out what the customer wants, but give it to him better than anybody else’. That’s how big companies get big. As they do, they lose some of the personal touch – big‑company metrics see to that – but that doesn’t mean you can’t deal with local suppliers, which Asda does ‘not out of charity but because people ask for it’ and it allows stores to flex.
Nor does it prevent a company from remaining human: ‘We work on a human scale, we are humans within our business’. And in that frame, scale brings advantages as well as responsibilities, in particular the power to make a difference, whether for good or ill. One notable case of human difference-making was Walmart’s response to Hurricane Katrina, where within hours the company marshalled all its logistics scale to ferry truckload after truckload of emergency supplies into hard-hit New Orleans, with colleagues on the ground empowered to make the decisions. There was cost attached, but it was global and local in perfect sync – the right thing to do. ‘At Walmart we absolutely believe in thinking global but acting local. We believe we have to do that to build a sustainable and profitable business.’
In a different sphere, TSB has built local into its charter. As Thompson fascinatingly explains it, when TSB was separated from Lloyds after the financial crash, it used its rebirth to ask customers what they actually wanted from a bank. It discovered that they simply couldn’t comprehend how the cash they thought they were committing to a place of safety could be subsequently turned into a weapon of mass financial destruction.
That made the new bank’s purpose paramount: TSB had to demonstrate not only ‘that we were obviously good guardians of people’s money, but that we would use that money in a productive and positive way’ – and specifically, to benefit the local economy and community. So ‘local banking for Britain’ – ‘supporting our customers… and their families and friends in the communities where they live – is the absolute purpose of TSB, right from the top of the organisation to the bottom’.
If local isn’t to be marketing fluff – ‘which people see through in less time than it takes me to run to the door’ – it can’t be retro-fitted or bolted on to an existing business model: ‘you have to care fundamentally about what your impact is.’
Important practical consequences flow from that purpose. If you call your staff ‘local bankers’, you have to allow them to behave as such, making them partners in the purpose, empowering them to reach out to the local community and consider their impact on it at every step. But these measures then play back in sharply increased levels of both staff and customer (as they see evidence that the purpose is being met) satisfaction. Thompson, for one, queries whether it is enough for big companies to claim positive local impact simply by virtue of creating jobs and paying tax. If local isn’t to be marketing fluff – ‘which people see through in less time than it takes me to run to the door’ – it can’t be retrofitted or bolted on to an existing business model: ‘you have to care fundamentally about what your impact is.’
A startlingly different angle on the global/local polarity was supplied by Juliet Davenport. Davenport had the temerity to launch her own electricity supply start-up, Good Energy, as one person’s direct-action challenge to climate change and energy insecurity. Fifteen years on, Good Energy wins awards and market share with a unique business model which demonstrates both that energy can be a consumer product and that, rather like TSB, even in a sector labelled ‘utility’, a strong local purpose triggers levels of engagement and satisfaction that put the scale incumbents to shame.
Good Energy’s market break came when it found itself being approached not by customers but by smallscale generators whose output the big firms were too uninterested in (and too market-unaware) to bother with. Small met small on an even footing: ‘I didn’t ask them for a credit rating, they didn’t ask me for a credit rating, and off we went’.
The next lightbulb was the realisation that if local renewable generation were matched by local consumption – encouraged by a discount and, in a really windy year, a windfall (groan) bonus – a kind of import substitution would be set in motion, with lasting benefit to the community both financially and otherwise. Based on this success, Davenport is considering a further step, namely – you might have guessed – a peer-to-peer model in which Good Energy becomes a platform and the contracting occurs directly between generator and electricity user.
The benefits stack up on all sides: generators approve because it gets them out of the clutches of ‘grasping’ suppliers, while for buyers the new awareness around energy use and generation has come as a revelation. For Davenport, the future of the energy market lies in just such a localised, peer-to-peer model, facilitated by modern technology – and led by Good Energy rather than the giant providers which mostly ‘have not been customer-centric, at all.’
People will go out of their way for you if they think you’ve done something good for them.
By contrast, the theatre for Clare Richmond’s direct action was very specific: Crouch End High Street. The Crouch End Project kicked off in 2007 when, depressed at the down‑at‑heel state of the local shops and the dispiriting shopping experience they provided, Richmond decided that she didn’t want to live in a ghost town – and if she didn’t, others probably felt likewise. What’s more, with the community willing the effort on – ‘shopping on the High Street was a pain in the a***’ – she thought it wouldn’t take much to shake things up. She was right. The businesses came together to launch joint initiatives like late-night shopping to whip up engagement. Schools and children got involved, which brought in parents too. A lot of it, says Richmond, was basic – ‘doing good things for people who said, “oh, thank you, that’s really nice”. People will go out of their way for you if they think you’ve done something good for them. It’s fairly straightforward human stuff.’
Just how well the project was working came unexpectedly to light when Richmond applied for council funding for a website and online loyalty scheme. The latter was a failure – but the impact of the Project began to dawn on her as she received a flood of emails on waste collection, nursery schools and a stack of other things she knew little about. ‘People could find the answers on Haringey Council website – but they don’t want to have that relationship with the council. They do want to feel a sense of place where they live, though. They want a sense of belonging, and there’s real magic when you start connecting people up, something I couldn’t have anticipated at the time’.
The Project is 10 next year, and Richmond is about to host a meeting with a whole new group of businesses with fresh ideas for taking things forward around well-being – ‘music to my ears’.
As all this suggests, momentous changes in business models are under way as digital messes with traditional measures of time and space. But some things are becoming clearer. One is that the global/local combo is getting harder to pull off. Scale is a creation of the industrial age which lives on, but in the era of the digital platform it may be a wasting asset. As in the energy example (but also in retail, banking, hotels, cars – who knows what else when 3-D printing becomes mainstream?) it provides a welcoming umbrella for ambitious local, sharing, and peer-to-peer enterprise to shelter under.
The day of the monolith is over. Local, on the other hand, is where the energy, engagement and pent-up passion is – hands up who isn’t sick of dreary High Streets full of identical chains? – if, that is, it can be accessed. The key to it is good, human service, which doesn’t have to be a size issue although it is often used as an excuse. ‘It’s utter rubbish [that customer service is easier if you’re small],’ protests Davenport. ‘What it’s actually about is putting the customer at the centre of what you do and your purpose, so that people can believe in and respond to it’.
This is surely an opportunity par excellence for local councils and public services, which are notoriously poor at exploiting the potential energy that a sense of place can generate (ironically, outsourcing to giant global providers of commodity-style services in the name of efficiency is partly to blame).
As Richmond quickly discovered in Crouch End, local discontents are mostly not solvable by money, which unlike self-help does not generate engagement, while focus on pre-planned outcomes blocks learning and the ability to exploit the unexpected and emergent. The dilemma for the giants was poignantly summed up by Smith in a story about an Asda delivery driver in the wilds of Scotland, who for a crofter or homesteader might be the only outside caller for days on end. ‘I said, as a business do we give you any time to stand and chat to that customer? No, because we’ve got our metrics, we’re not thinking about the human aspect, which is immeasurable in its fullest sense. But if we give that colleague two or three minutes, we really have engaged – we have that customer for life’.
Being global and local, though hard, isn’t inevitably marketing fluff. Crucially, says TSB’s Thompson, it’s all about starting from the right purpose. ‘If you’re having conversations within your company about trade-offs [between scale and efficiency against local or customer impact] then your purpose isn’t right. You’ve got to have the entire business model focused on what you’re trying to achieve. That takes the trade-offs out of the equation, because if you look at the impact at the very beginning then you get to the right end result’.
The Foundations view
The conversation was intriguing with, even by our standards, a wide and eclectic set of perspectives revealing some common threads alongside the more obvious differences in approach.
Here are three of the big points that emerged, from our point of view:
1. When we talk about ‘local’ what springs first to mind is physical proximity – a place that’s close to where you live or work.
But what became clear was a more useful definition, that local means operating on a human scale, connecting individuals who are able to get a sense of each other as people in their own right, not just working as functionaries carrying out orders. This could relate to colleagues in a large call centre or a food delivery job being given time to chat alongside the transaction or task. It could also, interestingly, apply to an independent shop on a High Street where the owner sits, uninterested, having lost sight of the need to create a service and an environment good enough to tempt customers away from the branded alternatives. And it also has a digital expression too but digital with humanity, like showing on Google maps where the energy generators you’re buying from are located with a windfarm here, an anaerobic digester there. Or a social media conversation with the business people involved acting with genuine character not in a corporate straitjacket.
2. Localness can add meaning to areas of life that usually feel distant and that as a result get only cursory engagement from customers.
This affects markets (energy comes to mind). Either customers pay too much because they can’t summon the attention to recognise and alleviate the situation, or customers pay as little as possible because they’ve decided it’s a commodity, the suppliers are untrustworthy, and working hard to continually switch is worth the aggro. Juliet Davenport showed how with Good Energy, she took electricity from being in ‘another world’ to being in ‘my world’, with surprising consequences. First people recognised it as something made in a way they could see – a windfarm, and not just any windfarm, that one over there – and on top of that she wonderfully described that if the year was windy customers got a windfall, a share in the benefits with a rebate on their bill. Then, more surprisingly, they started treating the energy they used as a precious commodity. They thought about it because it was worth thinking about, and having become more top of mind it was easier to actively manage. This could equally be true of money, food shopping and many other areas of life that otherwise drift by in the distance (the opposite of local).
3. Once localness is recognised as connecting people on a human scale, the framework that different groups are given to interact within becomes crucial.
If it’s genuinely peer-to-peer, in other words a group of equals working together to solve a common problem like the decline of Crouch End High Street, in search of a broad-based result like a thriving area and a nice place to live and work, then huge energy is released. Goodwill flows, people try things and don’t mind what works, progress is made rapidly and in ways that last. Yet the same issues tackled in a more top-down, authoritative way, even if well-meant such as a local council providing money to fuel a regeneration, has unintended and unhelpful consequences. The money has to be justified so gets attached to some very specific measurable results, the activities to achieve the results are funded, not voluntarily created and the community changes from collaborators to recipients, criticising failures, distancing themselves from ideas that don’t work, and reverting to a ‘them and us’ mode of interaction. So local also means togetherness, being in it alongside each other on a level playing field, and the role of a facilitator, be it a national bank helping branches get into action on the ground or a consultant breathing life into three streets of shops, is to get the framework right – stimulating people with a useful view of where they’re going, keeping sight of why and providing a good dose of belief.
About the Foundation
The Foundation is a management consultancy that helps organisations succeed by being customer-led. Often customers and the commercial agenda are managed separately – we bring them together so they are viewed as one.
We help with medium to long term growth or cost challenges. These are tricky to answer in ways that stand the test of time. To do so, growth needs to come by creating more value for customers than alternatives, costs reduced by protecting customer value while wasteful activity is removed.
We work towards results, like an organisation having successfully grown, not to specific outputs like a set of recommendations in a document or the delivery of a training programme. To achieve a strong customerled result you need a blend of skills and experience, usually provided separately, to be brought together. Most fundamentally this means understanding of the world of business in a broad and rounded way – strategy, business model, change, culture – and the world of the customer – insight, innovation, marketing, engagement.
We love working collaboratively with leaders who are committed to making growth happen in ways that will last. Our work is diverse, typically in one of the following areas:
Customer centric transformation (eg Jaguar Land Rover, Welsh Water)Business-wide customer strategies (e.g. Save the Children, Harvey Nichols, HSBC)Customer experience (e.g. Eurostar, Camelot)Customer value propositions (e.g. Just Giving, Tesco)
The belief behind our work is that managers in all organisations look at their world from the inside out, with colleagues close and customers far away, with the market being defined by what’s measured, and lots of assumptions about what’s possible.
We help them look from the outside in, getting personally close to customers not just using market research, and going outside their sector, again in person, by speaking to senior managers from other organisations to learn what happened there in similar situations.
This means the team explores fresh new relevant ways around their issues and then works together to see what’s plausible, often finding that together they can change things by combining across a number of functions, getting around roadblocks that had previously been constraints.
Charlie Dawson (Founding Partner): firstname.lastname@example.org / +44 7785 268 859
Charlie Sim (Director) email@example.com / +44 7958 574 917
Anna Miley (Director) firstname.lastname@example.org / +44 7816 261 987
John Sills (Director) email@example.com / +44 7990 943 402