Netflix is transforming the way we find movies, when and how we watch them. Founded in 1997 as a DVD by mail service, it soon migrated online to offer more than 100,000 movies streamed to your screen for a monthly subscription. Reed Hastings, and colleague Marc Randolph, set up the business after making $700 million selling their Pure Software business, and then being fined $40 for the overdue return of his rented copy of Apollo 13. Outraged he vowed to find a better model.
Within two years of launch it had moved from charging per DVD, to a flat subscription. Within a decade it had 25 million subscribers, had delivered a billion DVDs although most users now preferred online streaming. Netflix found the customer base actually grew faster during the economic downturn that at other times – partly as broadband penetration grew, but mainly because a Netflix subscription had become a household essential.
https://www.youtube.com/watch?v=7Vxv4aVb6k4&t=12s
Whilst the business might appear to be about distribution, the data on subscribers and their viewing behaviours became most significant. Initially this provided a highly accurate way of targeting advertising, but even more profitably in creating original content that specifically matched the preferences of target audiences. Big data started to replace, or enhance, creativity. Netflex invested $100,000 in “House of Cards” based entirely on data algorithms, seeking to create the perfect TV series to match its target audience and advertisers.
Pivot points for Netflix in changing the game of home entertainment were
- Explore: Observing the frustrating limitations of existing approaches
- Design: Creating and evolving a new business model, on demand then streaming
- Resonate: Using big data analytics to match audiences and content.
- Amplify: Harnessing network-based models to exponentially grow
Anyone, anywhere can now study paleobiology with the help of the University of Alberto which has made its “Dino 101″ course available free online, and uses interactive techniques developed for the gaming industry to bring the science of the dinosaurs to life. It is just one of thousands of free study modules available through Coursera which has signed up over 100 of the world’s best universities since its launch in 2012. Within a year it had 4.8 million students in 195 countries, giving anyone – old as well as young – the opportunity to study almost anything, free and from their home.
Coursera, founded by two computer science professors, Andrew Ng and Daphne Koller, at Stanford University is leading the MOOC revolution in education. “Massive open online courses” are transformed who and how the world learns. Inspired by the Khan Academy, Ng started posting his course material on YouTube in 2008. Before long, each video had generated at least 100,000 views compared to his Stanford class, by contrast, had just 400 students a year, paying up to $200k for their degrees. To reach a comparable audience, he would have had to teach at Stanford for 250 years.
The business model is still evolving. Whilst it is not easy to replicate some aspects of a university experience, Coursera with partners as diverse as Duke and Tokyo, and rivals like edX supported by Harvard and MIT, can transform the lives of billions of people looking to start, advance or change careers. Coursera, as a non-profit, plans to charge $100 for certificates, shared with university partners, but free to those who cannot afford it. Many courses count towards degrees. More significant revenues could involve licensing content to community colleges, and recruitment fees to potential employers.
Pivot points for Coursera in changing the game of education were
- Think: Imagining a future of lifelong learning available to everyone
- Disrupt: Bringing together the best academic content, free to access
- Design: Redesigning course material for self learning, eg using gaming
- Mobilise: Engaging new audiences, communities schools, and employers
Renova makes toilet paper. Colourful and sexy, not white and boring. As CEO Paulo Pereira da Silva says “We think that Renova is the living proof that no product is too dull or commoditized to be reinvented and no product is too stigmatized to be loved.
People now create emotional relations with our products whereas before it was all rational.”
The Portugeuse brand, founded in 1818 as a paper maker, first came to attention by adding micro dropleys of smoothing cream to its toilet paper called Fresh & Clean. However its 2002 ad campaign that introduced sex appeal to toilet paper, with Francius Rousseau’s black and white photography, really grabbed attention from Hollywood to Japan. Renova Black Toilet Tissue soon followed, and then other colours. “With this product and the subsequent range we pushed the borders of what toilet paper was all about in order to establish a new design icon that is loved and talked about”
Other colours followed. Red is said to be the favourite of Beyonce. As did extensions into napkins, kitchen rolls, wet wipes and writing paper.
Yet bathrooms remained the priority with ads proclaiming “The Sexiest WC on Earth”. Toilets are one of the most intimate, personal spaces, yet they appear sterile and bland. “We are not afraid of being different and of following what we believe in. We try to be very careful with the aesthetics of everything we produce as we like aesthetics in simple things.
Pivot points for Renova in “changing the game” of toilet paper were:
- Think: Audacious to think differently, to break the rules, and be different
- Disrupt: Reframing their market space, from tissue paper to “sexy bathrooms”
- Design: Embracing functional and aesthetic design, bold and surprising
- Resonate: Connecting with consumers through celebrity endorsement and PR.
“We seek to bring a shining light into a heavily under-glamorized, over-homogenized and even stigmatized category. Every day we work to make people´s day better even if in a very small way. Why not? Why be normal?” says da Silva.
Look at the tag inside a pair of Nike shoes. It says “to bring inspiration and innovation to every athlete* in the world” with a footnote explaining the asterix “* if you have a body, you are an athlete”
Steve Prefontaine believed that there were no limits. America’s top miler of 1970s ran with freedom and courage, inspiring future generations. Despite his tragically short life, he remains the brand’s folk hero, not because of his achievements, but for his attitude. Since founder Bill Bowerman first moulded the waffles onto his Tiger running shoes using a waffle iron, and Phil Knight persuaded his girlfriend to create the swoosh logo for $35, Nike has been pushing the limits of what is possible.
Mark Parker understands the passion of the Oregon-based business too. He was a track athlete himself, who joined Nike as a footwear designer in 1979 and slowly worked his way up to replace Knight as CEO in 2006. Whilst there might seem a limit to how much you can innovate a running shoe, once you see it in the context of a runner, Parker claims the potential innovation is endless. And the same with every other activity, competitive or recreational. “I’m a product geek. I’m obsessed with working with product, with the athletes, and to see the potential that exists just with the technology we talked about today is huge. Let alone the things we haven’t talked about” he told a recent investor meeting.
Some of the highlights in Nike’s running shoe innovation timeline include the early waffle sole design, which provided grip and differentiation. Then there was Nike Air, the patented midsole cushioning approach. Then there was Nike+ which was nothing to do with shoes, but a range of technical gadgets to help measure and enhance the run, in partnership with Philips and then Apple. Nike Considered was more of a business process, ensuring that every aspect of sourcing and production is sustainable. Nike Free is about minimalism, taking away the unnecessary cushioning which built up over years, to replicate natural motion. And most recently Nike Flyknit, an entire shoe upper made from one thread, enabling more comfort and lightness.
Parker is CEO but his desk contains no computers, spreadsheets or files. It’s all objects and oddities, tech gadgets and electric guitars, fashion items and artistic scultures. There is even an Andy Warhol, and props from Batman. This is inspiration, to get Nike thinking beyond what they do, beyond their world. He sees a fusion of digital and physical worlds, as demonstrated by Nike+ watches and monitors. The Nike+ Fuelband, for example, is worn through the day measuring the amount of “fuel” consumed, against target levels. It can even link to online games, social media and community. It is a fitness program, computer game and fashion accessory all in one.
“The last thing we want is to be a big dumb company that feels we can put a swoosh logo on something and people will buy that” Parker says in an interview with Fast Company magazine “Things are accelerating. It’s a high-velocity world, we’re digitally connected, everything is changing.” Nike’s management style doesn’t come from a business school tectbook, its more intuitive and fast moving, like the culture of sports. Fast and competitive, where records are there to be broken. And Parker’s own style is to embrace diversity from Olympic athletes to graffiti artists, taking his designer sketch book with him, always working, sharing and building on ideas.
Nike’s biggest challenge, according is where to focus in a world of infinite choices. “We are an idea-rich organization. Never have I seen more opportunity. You don’t always pick the right things, you have to edit and amplify” he says. He see this as perhaps the most important skill of leaders today. Not so much in making the choices, but in creating the pressure and criteria through which to focus, and then the support and resources to amplify. He also sees his role as searching for new ideas, both inside and outside. The best ideas are often raw, in the lower parts of the organisation, uncontaminated. This is how Parker got ahead, with founder Phil Knight one day saw him working on creating little windows in the shoe’s sole, to make the air cushions visible. A $1billion idea.
Pivot points for Nike in “changing the game” of sportswear were:
- Think: Ideas driven by people and aspirations, not products and capability
- Inspire: Building a brand that has passion brought to life by incredible athletes
- Design: Focusing on concept innovations, like Air and Free, as brand platforms
- Enable: Creating enabling experiences through events and adjacent products.
When Parker arrived in Beaverton, Coe and Ovett were trading world records in their Nike Zoom track spikes. In those days Nike was a niche brand, smaller than Adidas. Today it is 25 times bigger than its rival, and whilst only15% of the company’s $25bn comes from running, it remains the heritage and passion of the brand.
Insight into Nike Kitchen, cooking up new ideas and brand innovation:
https://www.youtube.com/watch?v=YnWWHICvjl4
Nike’s new 3D printing lab will revolutionise design and manufacturing:
Nike’s superfast growth in China. CEO Mark Parker tells more:
Adam Lowry and Eric Ryan were childhood friends, who became (in their own words) “brainparents” of one of America’s fast growing consumer goods brands. Adam trained as a designer and marketer, whilst Eric studied chemical engineering. Method emerged out of their maddening frustration with cleaning products – poorly designed, environmental pollutants and many just didn’t work. They declared war on dirt, and dreamt of a cleaning world which was eco-friendly and non-toxic, stylish and exciting.
They started by mixing soap formulas in beer pitchers labelled “do not drink”. In 2001 they got (slightly more) serious, and launched the Method brand as “people against dirty”, and declared themselves “superheroes” for seeking to rid the world of dirt. Adam’s passion was to produce cleaning products that people would be proud of, displayed like fragrance bottles, and smelt as good. Eric knew how to make them. In their own words, they “set out to save the world and create an entire line of home care products, gentler than a thousand puppy licks, able to detox a home in an afternoon.”
Mollie Stone, a Californian grocery store, was their first customer, stocking a range of cleaning sprays. They were good, but didn’t stand out. Packaging design, was their response, starting with an hourglass-shaped bottle of dish soap, and within a year they were being stocked in Target supermarkets across the nation. By 2003, their designer Karim Rashid started winning awards, particularly for his tear-drop bottle of hand wash.
They articulated their distinctive attitude as “the Humanifesto” which includes “we look at the world through bright-green colored glasses”, “to get out and fight dirty, take deep, satisfyin breaths all day and sleep easy at night”, “We’re entranced by shiny objects like clean dnner plates, floors you could eat off, nobel peace prixes and tasteful public scultures”, and “above all we believe dirty, in all its slimy, smoggy, toxix, disgusting incarnations, is public enemy number one”.
Within four years, the brand was ready to go international – launching in Canada and UK, now also with a concentrated laundry liquid. They focused on their environmental credentials, winning awards from PeTA and ensuring their bottles were 100% biodegradeable. Growth followed rapidly, as did their product range. Inc Magazine named Method one of the fastest growing private companies in the USA.
A year later, Adam and Eric set up B Corporation, a non-profit network of organisations, collectively committed to “solving the big social and environmental challenges through the power of business”. Alongside Method, they attracted brands as diverse as Ben & Jerry’s, Etsy and 750 others to join, sharing best practices and resources, creating a standard certification and a shared platform for promoting a better way to do business.
Pivot points for Method in “changing the game” of cleaning products were:
- Think: Establishing a market for “better” cleaning products, cool and caring
- Design: Innovating better products and packaging, emotional. beautiful for home
- Impact: Balancing doing good for the environment with long-term financial success
- Amplify: Getting together with the largest competitor to take on the world
Revenues grew to over $100 million by 2012, although the great impact on the market has been the imitation and adoption of more caring cleaning products by large competitors.
Later that year, Method was acquired by similarly sized Ecover, the Belgian manufacturer of green cleaning products, although continuing to operate as a separate brand. The two brands seek the economies of scale to improve profitability in a market where there is still little scope to charge a premium, and also to reciprocate each other’s distribution networks across Europe and North America.
Narayana Hrudayalaya is a leading network of hospitals based in the Indian city of Bengalura. Founded in 2000 by a 40 year old Indian heart surgeon, Dr Devi Shetty, it has operated a record-breaking15,000 surgeries on patients from 25 countries, with a relentless pursuit of extending access for more people to more services, at low cost.
Narayana is perhaps most famous for its heart hospital on the outskirts of Bangalore, one of the largest in the world, and with a particular focus on children. where the average open-heart surgery costs less than $2,000, a third or less what it costs elsewhere in India and a fraction of what it costs in western countries.
By thinking differently about its role, scale and partner benefits, the hospital can achieve huge economies of scale. The company (owned by Shetty’s family plus a few investors including JPMorgan) negotiates for better prices and buys directly from manufacturers, cutting out distributors. Starting with cardiac care, an equipment-intensive specialty, made it easier for the hospital group to expand into other areas that require the same infrastructure.
Shetty recognised that most Indian hospitals are exclusively for the wealthy. “My hospital is for poor people, but we also treat some rich people. So we’re mentally geared for people who are shabbily dressed and have trouble paying. We don’t look at them as outsiders. We look at them as customers.”
He has grown the Bangalore hospital into what he calls a “health city,” a series of huge medical centres specialising in eye, accident, and cancer care spread across 35 acres. There are also hospitals in 14 other Indian cities.
The “telemedicine” practice, where each surgeon has Skype on his laptop, reaches across the developing world, including 50 partner locations in Africa, offering support at no charge. His latest initiative, dispersing 5,000 dialysis machines, will make the company the country’s largest kidney-care provider.
Beyond low costs, Narayana Hrudayalaya finds creative ways to make its economics work. The company started a micro-insurance business that enables 3 million farmers to have coverage for as little as 22 cents a month in premiums. Patients who pay discounted rates are effectively subsidised by those who pay full price or chose additional services. These “premium” customers include foreigners for whom a $7,000 heart operation, access to an experienced specialist, and a deluxe private room seems like a bargain.
Every day surgeons receive a profit and loss statement of the previous day that describes their operations and the various levels of reimbursement. The data allows them to manage the mix of payment levels. “When you look at financials at the end of the month, you’re doing a postmortem,” one administrator told The Times of India “When you look at it daily, you can do something.”
Pivot points for Dr Shetty in “changing the game” of low-cost healthcare were:
- Think: Have an inspiring vision as to how you can make the world a better place
- Explore: Build a reputation in one area first, to refine the model and grow reputation
- Design: Explore new business models, including subsidies between segments
- Impact: Embrace new technologies as emerging markets change quickly for commercial edge, and social benefit.
In 2012 Dr Shetty received the Padma Bhushan, one of India’s top three public honours. He was also voted Entreprenuer of the Year by the Economic Times, and The Economist’s innovation award for business processes. The Wall Street Journal called him “the Henry Ford of heart surgery”.
The world of medicine is changing incredibly fast, new diseases and drugs, new services and expectations, it’s not easy to stay updated, to complement experience with the very latest knowledge and techniques.
This is where Epocrates comes in … as simple as an app on the doctor’s phone or tablet.
Epocrates develops mobile solutions for healthcare, giving professionals instant access to the world’s most comprehensive knowledge source of symptoms, diagnostics and responses, as well as managing their own time and business.
Rob Cosinuke is Chief Marketing Officer of AthenaHealth which recently acquired Epocrates described why he believes Epocrates is a “gamechanger” saying “You can’t change the game unless you know your audience. You can create a tool, but if you don’t fundamentally understand the people you are building it for, it will fail despite good intentions”
He goes further describing for Epocrates, this means three things:
- Be invaluable … “We want to help clinicians save time, money and increase patient satisfaction – this means making an intuitive product that helps answer questions, instead of making more. Epocrates has over 300,000 U.S. physicians and over 1 million members worldwide using its products”.
- Think like a doctor … “Our amazing design and development team is complemented by a group of in-house physicians, nurses, pharmacist and other healthcare professionals that work together to deliver our products. By balancing out clinician needs with developer constraints, we ensure our products meet the bottom line: help healthcare professionals be more efficient”.
- Solve a problem … “When Epocrates was first developed, we saw a need for physicians to instantly access information at the point of care. As the market was trying to create a more concise PDR, we ditched the paper and moved to the PDA. To be ahead of the curve, solutions should be developed with long-term goals in mind, not just shot term fixes”.
Cosinuke admits that he is inspired by Apple, and what their innovations have enabled his business to do more for his customers. “Apple has forever changed the way healthcare professionals access information. The iPad Mini, for example comes in at the perfect size for a lab coat pocket. More clinicans are adopting this device due to the lightweight portability, easy readability and medium screen for basic data entry. Plus, applications clinicians need at the point of care, like Epocrates, run beautifully on the platform”
Pivot points for Epocrates in “changing the game” of healthcare information were:
- Think: Focus obsessively on getting the right information to the point of care
- Design: Connect relevant information, ie about patients, treatments, medicine
- Mobilise: Develop partnerships with complementary services to the same audience
- Resonate: Ride on the back of new devices that make your content better and sexier
AthenaHealth acquired Epocrates for $293 in 2013, making it the leading mobile knowledge platform for doctors, partly attracted by the high brand recognition of Epocrates with over 90% of US physicians. Athena previously specialised in processing insurance claims and patient payments, and will now also stretch into prescribing drugs and storing patient records.
Anne Wojcicki wants to change the face of health care. 23andMe, her personal genetics testing company based in Mountain View, California and part funded by her ex-husband, Google’s co-founder Sergey Brin.
By simply taking and mailing a saliva example from your home, and receiving analysis and interpretation within a week, 23andMe enables people to learn about their inherited health traits and genetic links to certain diseases. With around $120m investment, 23andMe can now offer 244 reports on health and personal traits, as well as genealogy and ancestry information that people can share socially all for $99.
For a price equivalent to a new pair of running shoes, the self-testing package is now accessible to millions of consumers, curious to understand the secrets locked in their DNA, and what it might mean for them. Imagine how it can change people’s lifestyles – prompting new diets and fitness regimes – as well as transforming insurance policies and healthcare planning.
It also enables 23andMe to create the world’s largest private database of genetic information, to explore and distribute this rich knowledge bank (around 90% of patients are happy for their aggregated data to be used). The results can be used in research conducted by Wojcicki’s team, plus pharmaceutical and healthcare partners to drive innovation and focus investment.
Pharma companies believe that genetic data could be instrumental in creating better, more targeted treatments for diseases. Genentech is working with 23andMe to learn if genetic factors influence a person’s response to the cancer drug Avastin, whilst Amgen recently bought DeCode, a company that explores the link between genes and diseases, for $415 million.
As 23andMe builds its database of millions of DNA profiles, more accurate analysis and innovation is possible, and better targeted solutions emerge. Indeed there are similarities to how Google became a better search engine, improving usefulness to users, and attractiveness to partners, as volume grew.
At the time of launch, in 2006 the business didn’t seem like a gamechanger of the drug industry, let alone the patient experience. The process was expensive, $999 for much more limited analysis, and was dubbed as “spit parties” by the press as wealthy Silicon Valley types shared saliva with their cocktails. The price has fallen dramatically since, making it affordable to most people. At the same time this has rung alarm bells with regulators, an inevitable challenge if you want to break rules, and all part of the journey.
The biggest challenge of all, was that consumers did not understand genetics, or the consequences of knowing their DNA. Explaining 23andMe’s approach in a relevant and human way was key. Ancestory was a quick win, tapping into an established curiosity of people, and then flipping the analysis forwards to predict what health issues the consumer might encounter in their life.
Wojcicki’s vision goes far beyond analytics, with her eyes particularly focused on personalised advice – helping people to interpret results, understand the consequences, and make shifts to a healthier lifestyle. 23andMe is already working with partners to offer diabetes counselling, whilst exploring AI-enabled apps to encourage people to drink more water, and eat certain foods, based on their genetic profiles.
New drugs are another future development. In 2015, 23andMe’s therapeutics group agreed a $300m investment by GSK to explore new drug concepts, in a 4-year exclusive partnership, sharing costs and profits. The deal enabled GSK to access the aggregated data from 23andMe’s databases, where consumers had given their consent. Most do. However, pharma development is notoriously difficult, 86% of drugs fail clinical trials, and are expensive. Personalisation of drugs is even more difficult, but the dream.
In 2018, 23andMe partnered with pharmaceutical company GSK to use test results from 5 million customers to design new drugs, and based on the success, GSK invested $300 million in Wojcicki’s business. In 2020, they announced their partnership’s first clinical trial: a joint asset being co-developed by the two companies for cancer treatment.
In 2020, the therapeutics team had developed a portfolio of research programs across multiple disease areas. They recognised that whilst maintaining ownership of the IP, they needed partners to develop and test the potential drugs. Wojcicki turned to a smaller Spanish pharma company, Almirall, which specialises in skin therapies as her first development partner. She called it a seminal moment. 23andMe now had a database of over 10 million consumer tests, “a treasure trove” to create the future of healthcare.
In 2021, 23andMe merged with Sir Richard Branson’s special-purpose acquisition company (SPAC), known as VG Acquisition Corp, in a $3.5 billion transaction, to take the business public. Later in the same year, 23andMe aquired Lemonaid Health, a telehealth company, for $400 million. A new business model is rapidly taking shape. Compared to the old world, where drugs were made generically, and pharma companies never connected with patients, 23andMe is now fundamentally disrupting that model.
Zidisha is the world’s first direct peer-to-peer lending service for disadvantaged individuals in developing countries. Founded by Julia Kurnia, it stands out for reducing the cost of microfinance by eliminating local intermediary organizations. Starting initially in Senegal, the business connects web-savvy entrepreneurs in the world’s most impoverished regions with the chance to improve their family’s incomes through fairly priced business growth loans.
Kurnia describes her insight: “Entrepreneurs in low-income countries often face a dilemma: their business activities don’t earn enough to support their families, whilst they also lack the investment capital needed to make the businesses grow. Restrictive political and economic conditions and geographic remoteness make it expensive for local banks to lend to small business owners. Many of these borrowers turn to microfinance institutions, but individual business expansion loans usually require prohibitive collateral and interest requirements due to high administrative costs. So the businesses don’t grow, and the families they support remain impoverished.”
Whilst focused on Africa, and other emerging markets, Zidisha is actually a USA-based non-profit organization where Kurnia previously worked with the US African Development Department. It lets ordinary web users make microloans to individuals in the world’s poorest countries. The loans allow the individuals to start small businesses to help them escape poverty, and once repaid the loan funds are repaid with interest.
“What makes Zidisha unique is that there are no intermediaries. The borrowers themselves post their loan applications and communicate directly with lenders as their business investments grow”.
Linking entrepreneurs directly with the international peer-to-peer lending market gives them the chance to source business growth capital far more easily and affordably than has ever before been feasible in their locations. The global average interest rate for microfinance loans is around 40%. The average rate paid by Zidisha entrepreneurs is around 9% according to Kurnia.
“Africa, Asia and Latin America are home to a growing class of entrepreneurs who, while economically disadvantaged, are computer-savvy and have verifiable credit histories with local microfinance institutions – all of which can be tapped to supply many of the communication and record-keeping services traditionally performed by local banks and microfinance institutions”.
Kurnia was inspired by her admiration of eBay “for revolutionizing the concept of trust in strangers and building a practical system powered by the new concept of trust”, Wikipedia “for showing the world the heights that can be reached by a community of virtual volunteers”, and Amazon “for pioneering the integration of customer reviews and independent sellers to better serve customer needs”.
Zidisha uses every type of technology to connect the world, fast and at low cost – for local credit history verification, low-cost electronic money transfers, independent tracking of borrower performance history, and to build a community of local entrepreneurs. “In Kenya we use M-Pesa to send loans from our PayPal account directly into the mobile phones of a Masai entrepreneur in the photo, instantly and cheaply.”
Unlike the postings on other microlending platforms, the loan applications and comments posted on Zidisha’s loan pages are written by the borrowers themselves. This opens the way for dialogue between lenders and borrowers, so that lenders can receive answers to their inquiries about the loan and business directly from the entrepreneur they are funding. It builds genuine interest too, For example, a lender who is a dairy farmer in Wisconsin may discuss cattle rearing with a dairy farmer in a small village in Kenya’s Rift Valley Mountain
Pivot points for Zidisha in “changing the game” of business loans include
- Explore: Insight from previous African development role, spurred her into action
- Disrupt: Redesigning the market model to eliminate intermediaries, and their costs
- Design: Simplifying process using basic technologies for developing markets
- Mobilise: Building a community of real interest, between entrepreneurs and lenders
From Senegal, Zidisha has spread across the entrepreneurial communities of Africa, and now looking to Asia and South America too.
“Fall in love at Umpqua Bank … We want our customers to be really really happy” is not the proposition you’d expect from a serious bank, particularly in tough economic times. But this bank is different. There’s more. “Spread some good (the world always needs more)”. And “Reinvest in yourself” as a rework of taking out a loan. People really do love Umpqua Bank. Is there any other bank in the world where you would consider buying a branded t-shirt or baseball cap?
The River Umpqua weaves through the deep forests and rugged canyons of Oregon State. This is the land of lumberjacks, and in 1953 the South Umpqua State Bank was founded to serve the people of Canyonville. In 40 years it grew to a mighty six branches and assets of $150m, until the logging industry fell into decline, and the CEO died.
Ray Davis applied for the job, a former management consultant who believed he could do something special with the bank. He told the board of directors “If you want things to stay the same, I am not your man. If you want wholesale change that will create shareholder value, I might be”.
In 1994 he set to work, famously taking all his staff to learn from the likes of Gap and Starbucks what it means to deliver a great retail experience in today’s world. He reinvented the branches as stores, or even meeting places, with relaxing sofas and magazines, coffee and cookies. He replaced cashiers behind bars with a concierge desk, long queues with a “relax, sip, surf” and staff that come to you.
Over the last 16 years, Umpqua has won more admired company and best places to work awards than anyone else, and also managed to stay ahead of competitors, in a time of severe turbulence and an industry generally considered not to work.
Davis believes the challenge is to “find the revolution before it finds you.” The bank now has over 200 stores, stretching from Seattle to San Jose, assets of $11 billion, and a strategy to
build as a lifestyle brand – about people rather than their money.
Umpqua’s 15-year track record of growth has little to do with the products it markets, which are virtually identical to any other bank, although there is a strong focus on ethical finance. It’s much more to do with how they’re marketed. They start with people, human and simple, inspiring and aspirational.
You might notice large colour coded wall displays of the latest financial services – “your green account”, “in your prime”, “the business suite” (themed to the audience, not just standard products promoted on their % APRs). You might be inspired by the successful local restaurant owner, whose story is described this week on the Hero Wall.
Umpqua looks different … bright, colourful, modern (the Gap influence), products are cleverly packaged on shelves, and there are book clubs, movie nights, neighbourhood meetings, “business therapy” gatherings, even “stitch and bitch” sessions.
Umpqua sounds different … the bank signs indie bands to its Discover Local Music project and invites customers to listen to songs on in-branch kiosks, sells compilation CDs of the best songs, and hosts live gigs on a Friday night.
Umpqua smells different … freshly brewed coffee, Umpqua Blend (which it also sells by the pound), and they end every transaction with a piece of gold-wrapped chocolate served on a silver platter (which is the taste bit!)
https://www.youtube.com/watch?v=ZeT9I0K7Dzc
Umpqua’s Innovation Lab goes further. A more experimental store on Portland’s Waterfront, it is packed with new technologies, for banking and beyond. It includes the largest Nintendo Wii bowling alley you have ever seen. People, usually office workers in their lunch break, come along wearing their bowling shirts, ready to play.
Umpqua wants to be different, to create a different relationship between the bank, customers and the community; to be interesting when most banks are boring, to be a brand that shares a passion for improving people’s lives.
Davis argues that banking doesn’t just need a paradigm shift, but the whole industry needs to be rethought, reinvented and rebuilt. Whilst most banks feel they have little to say, or compete on, except who has the cheapest interest rates, Umpqua plays a different game. Back in 1994, Umpqua’s market value was $18 million. Today, Davis has handed over to a new CEO who continues the journey, with a value closer to $5 billion.
https://www.youtube.com/watch?v=ceWiseveBJs&t=47s
https://youtu.be/5th14pSe5_Y?list=PLrq1QRGfqfN91hidWYSlufZTGOP1vv2sm
Pivot points for Umpqua in “changing the game” of retail banking include
- Enable: Reimagining the customer experience, learning from other types of brands
- Inspire: Creating a lifestyle brand, that is human, collaborative, fun and inspiring
- Resonate: Packaging, marketing and selling products around people’s aspirations
- Mobilise: Creating a contagious brand, building community, and a place to hang out
This is a bank that wears its passion with pride. Having sipped and surfed, sorted out your money, listened to the latest music, and snapped up the new t-shirt, your eyes look up. Above the doors it says “Thanks for being part of the world’s greatest bank”.