“The first inkling that a force such as momentum might explain some firms’ exceptional growth occurred during my business studies at Stanford University. There, in the heart of Silicon Valley, I became fascinated by the way that some businesses suddenly took off, experiencing almost unimaginable growth, while others, with what appeared to be technologically superior offerings, sank without a trace.”
TME p.xxi
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Where did the idea for the momentum effect come from?
JC
There wasn’t a single “eureka” moment. To repeat a paraphrase of Isaac Asimov that I use the book: the most exciting moment of discovery is not when someone shouts “eureka”, but when they mutter “now that’s interesting.”
My first “now that’s interesting” moment occurred way back when I was a student at Stanford. Out there, in the heart of Silicon Valley, I could see some high-tech companies suddenly taking off and delivering really extravagant growth, while others, with what looked like technologically superior offers withered and died. Why does that happen?
After that I spent many years trying to help business to improve their performance in three crucial capabilities: marketing excellence, customer excellence, and innovation excellence. I did this in consulting, executive workshops, business school courses, and at the board level, including as a director of Reckitt & Colman / Reckitt Benckiser for eighteen years.
My second “now that’s interesting” moment occurred when I realized that the different facets of my work had one central common point. This was to answer the question: “how can a business sustain exceptional profitable growth?” This book is the outcome. [Back to top]
Who did you have in mind when you wrote this book and how might it help them?
JC
This book was first a way to formalize what I have been doing in my consulting and teaching so that I could share its contents with a larger audience than just my direct clients.
As a result, I first had in mind people like my direct clients in long term consulting assignments, the leaders, CEOs and heads of business that are given the mission to create shareholder value and have increasing difficulties in doing so when markets slow down and competition intensifies.
I then had in mind the multitude of dedicated hard working managers who I encounter every day in the course of my consultancy and teaching. People who want to make a difference but feel like they are wading through treacle trying to get their business to move ahead. I wanted to show them that there is a better, more effective and smarter way to deliver growth and I wanted to offer them systematic frame work for doing so.
It is only in a latter stage that I realized that the contents of this book should also be valuable to “the other side”: the financial community, the private equity bankers, the rating agencies, the business media and others who try to project the evolution of firms, but have great difficulties in understanding the real business drivers of shareholder value creation.
In my grander moments I also had in mind all of us. Everyone who lives in a world that is less colorful than it could be, a world were we are forced to accept average products and mediocre service, where employees work in organizations that are less exciting and rewarding than they should be, were scarce resources are frittered away when they could be applied more profitably to create as yet undreamed of products and services that will make life better for all of us – the sort of world that exploits the unlimited potential we have to make it better. The sort of world we would all like our children to live in. [Back to top]
What’s going on in the business world today that TME speaks to?
JC
The insatiable desire of financial markets for profitable growth. Management’s traditional response, which is to push sales with marketing investments and claw back profit by cutting costs elsewhere, just won’t work anymore. In some cases there isn’t much left to cut anyway. Besides consumers are becoming ever more powerful and savvy – they aren’t as easy to con as they used to be. Firms that want to move ahead of the pack are already exploiting the momentum effect.
There is also a growing realization in the business world that organic growth is essential to motivate and develop talent.
Besides, momentum offers a way of doing business that is not only more profitable but is also more fun and more aligned to our basic human decency. These are important issues for the coming generation of consumers, employees and leaders. [Back to top]
What is your favorite story in the book?
JC
There are many but one that I’ve used a lot in seminars and consultancy work involves the international development manager of a leading pest control company. For years whenever he was traveling to a country that the firm thought might be a suitable target for expansion, he would carry a large cockroach in a match box.
After he’d checked in to his hotel he’d go out and find a nice but ordinary restaurant in a nice but ordinary part of town. At some point in the evening he’d release the cockroach, leap up from his chair and shout “A cockroach! A cockroach!” while pointing wildly at the insect as it made a break for freedom.
If diners reacted with horror he knew that the country was ready for the firm’s services. If they just looked at him with an expression that said “so what” he knew the firm would not succeed in that market.
The point of the story is that it demonstrates the importance of emotion in driving customers’ decisions. Because business and management is built on rational analysis, it tends to think that customers base their decisions on things like price and functionality. They play a part, but the really fundamental drivers of customer behavior – and hence the most profitable ones for firms to exploit – are emotional. All of the most successful products and services of our time tap into this emotional level of customer value and yet it is this level that is the most difficult for managers, accustomed to rational and analytical processes, to connect with. All of that, from a cockroach!
In B2B, a new story that is particularly interesting is the new Falcon 7X aircraft that generated record orders after having been co-designed with customers and suppliers. Also, Dell, IBM, SKF and Tetra-Pak are among the classic stories that have been re-evaluated in the light of momentum in a way that reveals new insights.
In B2C, the recent examples include Nintendo’s Wii, Apple’s iPod and iTunes, Swatch and Harry Potter.
In services key examples are First Direct, the British bank that has been named the most recommended bank in the world, Skype, Virgin Atlantic.
In pharmaceuticals, the development and introduction of the anti-cancer drug Gleevec is used as an illustration of great internal and external momentum. [Back to top]
What is the meaning behind the title?
JC
I was looking for a metaphor for the way that some firms seem to power ahead of the competition with what looks like effortless ease. Sports teams talk about “having momentum” when they string a few victories together – their success makes it easier for them to keep being successful. It’s the same with momentum-powered firms.
The framework presented in the book is composed of two momentum engines: the first one is about building the power of momentum in the design phase, and the second one is about unleashing the power of momentum in the execution phase. For instance, to unleash momentum, one has to engineer a virtuous circle in the execution phase: once a firm has developed a great offer the quality of this offer generates extremely high levels of customer satisfaction, properly nurtured and maintained this will lead to extremely high levels of customer retention and engagement. This engagement improves the quality and power of the offer itself because committed customers recommend it to friends and suggest improvements to the company. As the offer improves it generates yet higher levels of satisfaction and so on. It has developed a momentum of its own.
Of course, to start gathering momentum you need to have some traction – that’s the first engine of momentum, but that’s another story… [Back to top]
How does your book differ from or build on ideas presented in other books on this topic?
JC
The Momentum Effect builds on several past works, but especially on the recent Blue Ocean Strategy. In terms of what sets it apart from other strategy books on growth, I would obviously argue that there are many differences, but here are three of the most important ones. First, it recognizes that great successes in business happen in a messy, exploratory and iterative fashion rather than the neat linear processes described in popular business books. Too many big ideas in management and business offer neat and tidy linear solutions that promise “seven steps to success” as if all leaders have to do is press the right buttons in the right order and the screen will light up “Game Over! You Have Won!” Real life isn’t like that. Things change. Something that looked perfect on the drawing board almost certainly won’t work as perfectly when it gets into the stores.
The Momentum Effect shows how smart firms take this challenge and turn it to their own advantage by learning from their changing environment and feeding what they have learned back into the development of their offers. The process of maximizing the value that is transferred by the product requires constant, never-ending, iterations. In business you can never really “win” – all you can do is ensure that you are always “winning”.
This is related to the second key difference in this book: The Momentum Effect realizes that strategy is nothing without successful implementation. Too many strategy books make beautifully clear and lofty pronouncements from on high without troubling themselves too much with the practicalities of actually implementing the plan in the real world. My book deals with this in two ways. First, by making explicit the symbiosis between design and execution. In the momentum model these two are inextricably linked. If this connection is not fully appreciated a weakness in one can have a fatal impact on the other. But were firms understand the connection between the two, this symbiosis becomes a source of strength. Success in design feeds into execution, making it stronger and more successful. That success is then fed back into the design stage, making the offer stronger and more successful, and so on in a wonderfully efficient, self-fueling, perpetual motion. Secondly, because I’ve been lucky enough to work with such a large and wide-ranging group of leaders and managers, and I’ve worked with them in the business environments they encounter on a daily basis, I’ve been able to fine tune a number of very practical tools that help users make sure that their strategy is implemented in a way that ensures its success. As a result, the book not only makes you think differently, it gives you the tools to turn those new ideas into successful action.
Finally, The Momentum Effect does not make wild unsubstantiated claims. It is not a clever sounding theory cobbled together from a few selectively chosen case studies, a bit of lightweight “research” and some entertaining stories. It has plenty of entertaining stories but it is also grounded on serious research and rigorous testing. It is not just what I think – it is what I can show to be true.
The book is based on detailed empirical research (including a twenty year study of Fortune 1000 firms) sophisticated computer modeling and years of practical experience. It offers a systematic process that can be implemented in any firm or business unit. Most importantly it offers process that can deliver growth in any situation and which is based on real world observations and feedback from thousands of managers and leaders. [Back to top]
How can a leader or executive go about putting your ideas into action tomorrow?
JC
To give an accurate answer to that I’d have to say that it depends on what leaders or executives we are talking about and what situation they find themselves in. Some will be lucky enough to be working in an organization that instinctively “gets” the message of the book and just needs a bit of guidance on how to put them into action. Others, sadly will be operating in a much less conducive environment and will have much more work to do – of course it is precisely the greatest challenges that offer the greatest potential so even these people should not be discouraged.
That said, and based on personal experience, I can identify three types of actions at three different levels:
Individual level: any leader should walk into their office the day after reading the book with fresh eyes – a new way of looking at their business and a much richer and deeper understanding of the drivers of growth. One of the simplest things they will hopefully start doing is relying less on reports and more on spending actual quality time with real customers – in the flesh. It is amazing how little time most executives spend with customers, and amazing the things they can discover when they do. There are also several tools in the book that, I know from consulting experience, executives will start using as soon as they have discovered them.
Team level: a leader or executive can decide to buy a copy of the book for each member of his/ her team and organize a specific workshop, or series of workshops on the subject. This would probably involve a first meeting where each person would provide reactions to the book and the team would identify priorities for growth in terms of the 10 components of TME. A workshop should then focus on the component that has been identified as the highest priority to create growth.
Business or firm level: a leader can decide to build a business-wide initiative around the issue of Momentum with the stated purpose of generating higher growth. This would involve a series of workshops as described above but built into a systematic framework based around a specific investigation of each of the ten components of TME. [Back to top]
