Thursday, October 23, 2008

Analogy #216: Stop the Labeling!

When I was a young boy, my parents would occasionally send me off for a week of summer camp.

In order to keep track of things, the camps would ask parents to label everything with their child’s name. Clothes were to have labels sewn onto them. Property was to have sticky labels. That way the camp could make sure that all the boys went home with the same stuff they brought.

Of course, all of the boys would ridicule the other boys when they saw one of those labels. They would call them a “mama’s boy.” Having those labels with your name on it became a badge of shame.

Therefore, one of the first things the boys would do when they got to camp would be to rip off all those labels with their names on them. All that careful work by the parents to label things was for naught.

There’s a certain comfort level in labeling things. The camps and the parents felt assured that such labeling would make it easier to track all of those possessions. Unfortunately, the children did not like the stigma of being labeled.

Businesses also tend to like labeling people…and each person seems to only be allowed one label. For example, some people are labeled good customers and others bad customers, and the label sticks regardless of the situation. And if you are labeled a customer, then you cannot be labeled a vendor, and vice versa.

What if businesses acted more like those boys at summer camp and ripped off those labels?

The principle here is that once something gets labeled, the label tends to dictate how the item is treated. For example, if you label someone as “aggressive,” you will approach them differently than if they had been labeled “passive.” The less labeling one does, the more flexible and adaptable one can be towards that object.

Businesses interact with a lot of different people/companies. Those people/companies tend to get labeled and put into a category: customer, supplier, partner, competitor, employee, and so on. Once placed in a category, the tendency is to limit interactions to just what is implied by that label. However, new strategic opportunities open up if we rip out those labels we have mentally sewn onto them.

For a recent example of this, we can look at an article in the October 2008 Harvard Business Review. The article, entitled “The Contribution Revolution: Letting Volunteers Build Your Business,” was written by Scott Cook, founder-chairman of Intuit.

The basic idea of the article is that if a company provides the right kinds of Web 2.0-type tools, all sorts of people will voluntarily make contributions that will have a significant profitability impact on your business. Cook then lists all sorts of examples.

At his own company, Intuit, they do not have a Spanish language manual, but Spanish speaking volunteers have offered all sorts of Spanish language mini-manuals and podcasts. Unilever has the “In the Motherhood” user forum and Proctor & Gamble has the BeingGirl online community for teens. Cook likes the way both provide all sorts of relevant user-generated content.

Some companies use “free volunteers” to help design and critique products. Others ask their customers to help create their advertising. Key bloggers can be used as “free advertising” as well.

My point is that if you label someone as a customer, then you will think of them in terms of how to get them to buy from you—after all, that’s what customers are supposed to do. However, if you rip off the label, you can see how they are connected to your brand in many ways and can help in many ways—often for free.

The same thing goes for suppliers. If you think of them only in terms of that label, then the tendency is to just try to use “hardball” negotiations to get the lowest price for what they supply. But if you think of them as a strategic partner in your supply chain, you may see that you can help each other create a more efficient supply chain, which could be far more profitable than what you can get only through hardball price negotiations. Toyota’s relationships with its suppliers is an example of this.

In the grocery industry, it is not uncommon for supermarket companies to outsource a lot of their shelf space management to a variety of their vendors/suppliers. The logic is that the supplier is a specialist expert who understands that particular product class better than anyone else. In other words, the supplier becomes a “free” merchandising consultant to the supermarket.

Even those labeled as “competition” may be seen as free helpers if you rip off that label. For example, maybe you can work together to lobby the government on various causes of mutual interest. Or maybe you can jointly support an effort to create a more favorable image for your industry which could expand the total industry demand.

Employees could be seen as free “brand advocates” or free “guinea pigs” for various experiments. Really loyal and engaged employees may want to freely volunteer ideas to help the company in areas that have no direct bearing to their job label.

Although these ideas work well in the digital web 2.0 world, it can go well beyond that. Face to face meetings, joint committees, call centers, and the ol’ suggestion box can be a part of the mix as well.

To get all of this free help requires several things. First, as mentioned, get out of the mode of narrowly labeling people and companies. Look as everyone as a potential partner, willing to help you for free (or at least at below market prices).

Second, create lots of ways to make it easy for people to help you. That requires both creating lots of ways for them to communicate with you as well as people on your end to willingly and graciously receive the free help.

Third, don’t be bashful. Ask a lot of questions to a lot of people. You’re more likely to get the help you want if you let them know what you’re looking for.

Finally, get out of the habit of describing some customers as always “good” or always “bad.” Even people labeled as “bad” customers can be “good” customers if you look at them differently. Perhaps they can become good customers if you design a new business model. For example, much work has been done recently to find economic ways to sell to low income third world areas, people who had traditionally been seen as too poor to be a good customer.

Or perhaps a so-called “bad” customer is merely a “future-good” customer. It may just be too early in their life-stage for them to hit their prime opportunity years. However, if you appeal a bit to them today, they may be more loyal to you once they hit their prime opportunity years. Get a young girl hooked on your luxury handbag today, and you may create a strong brand supporter for your entire luxury portfolio once they get older and wealthier.

Labeling can have the unintended negative consequence of narrowing our expectations of people. We only expect of them what is implied by the label. For example, a customer is only expected to consume, a supplier is only expected to supply. However, if we take the labels off, we can see broader potential. Everyone can become a potential strategic partner, offering all sorts of assistance. And best of all, it is often nearly free.

One time when I was at camp, they did a spot inspection of the cabins and happened to luck into coming at a rare moment when my cabin was clean. This was the exception rather than the rule. But needless to say, that rare inspection paid off and I was given a badge for “cleanliness.” Later, I was running through the woods with the badge, tripped and took a terrible tumble into the dirt. The cleanliness badge got all mangled and blackened with dirt smudges.

When camp was over, I proudly gave my dirty, mangled “cleanliness” badge to my parents. They weren’t fooled by the cleanliness label. They knew better. You should know better than to be fooled by labels, too.

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