Jeff Bezos, Amazon CEO shared a concept we all can agree on, “What's dangerous is not to evolve.” But he then explained a different approach to transformation, “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.” Though counter-intuitive, it rings true for many of our great innovations.
As CEOs look to innovate and lead industries, they often seek both unexpected and fundamental insight. I thought it would be of value to have a discussion with the CEOs who are transforming Manufacturing, Not-For- Profits, and Financial Services, so on November 27, 2017 I had a discussion with these three industry leaders to explore their leadership philosophy, their transformation, and their future plans:
-Jo Ann Jenkins, CEO, AARP, the leading bi-partisan not-for-profit with 62,000 associates, the world’s 2nd largest magazine with 38 million readers, and a new concept to disrupt aging for all over 50 years old.
-David Nelms, Chairman and CEO, Discover Financial Services, the $10 billion leader in direct banking, payments and customer service, with unparalleled J.D. Power and other awards for almost two decades.
-James M. Loree, President & CEO, Stanley Black & Decker, the 175 year old $12 billion company with 54,000 employees representing numerous leading brands including: STANLEY, Blacker & Decker, Craftsman, DEWALT … and innovator of industry changing breakthroughs like FlexVolt.
Robert Reiss: What concept defines your leadership philosophy today?
Jim Loree: I have a saying that I repeat endlessly around here, which I think says a lot about our leadership philosophy here at Stanley Black & Decker. And that is we want people to be bold and agile, while at the same time thoughtful and disciplined.
Jo Ann Jenkins: I've been trying to encourage our staff to take strategic risks. I tell them that it's okay to fail as long as you fail fast and you learn something from it—and you share that learning across the organization so nobody else makes the same mistake. I think that's been a big change for us at AARP. We’ve always been much more risk averse. So now we’re embracing this opportunity to take some strategic risks, but those risks need to be towards big opportunities for us to engage more members and engender more brand loyalty.
David Nelms: One word, collaboration. It is one of our eight values and I think that it has become more important than ever to not just have a good idea but be able to execute it. It increasingly requires all of the disciplines to make sure that you are in sync so that it is legal, it works operationally and that the technology works. I think having teams work together and in parallel, not in silos is increasingly important in this digital world, where you have to move faster and have clear communications because there are now so many opportunities.
Reiss: Describe your organization’s transformation.
Jenkins: Unlike many transformations which often occur at a time of crisis, we started in 2014 when we were at a time of great financial strength. We needed to build a sense of urgency to deliver. Most people thought of AARP as an organization to join when you turn 65, where we have over 80% of the market. So, we changed that to connect with all people 50 and older and refreshed the brand to reflect the AARP, Real Possibilities. And, since today a 10-year-old has a 50% change of living to 104—which means we could have members for 50 years—we needed to change the story of aging, to show people they could have a positive view of aging. We brought the message to America to “Disrupt Aging”. We also needed to change from a national organization in Washington, D.C., to a nationwide organization across the country, so we had to shift our thinking from how we operate inside the beltway to how we impact lives every day at a local level in communities across the country. So we focused on what we affectionately call the 3Gs to grow impact, grow relevance and ultimately grow revenue around our three pillars of health, wealth and self.
Nelms: I’m actually in my 20th year of running Discover. What we try to do is continually innovate and pursue new opportunities all while ensuring we are putting our customers first. And it shows. We have taken the top spot in a customer loyalty award for 21 consecutive years. We’ve introduced a number of industry firsts, including the first no annual fee credit card, first to offer cashback rewards and the first to provide 24-hour customer service. We’ve built on that heritage and have continued to innovate by being the first issuer to provide an on/off switch so you can freeze your card almost instantly by using the Discover mobile app or website. We were the first major credit card to give you your FICO credit score for free on your monthly statement and online. We’ve continued to innovate as we have looked into expanding with other products and have since launched student loans and personal loans. When a lot of other banks were really hunkering down during the crisis, we continued to invest in our customer service and as a result are considered a leader in the industry with our 100% U.S. based customer service. And recently we were recognized as having the number one direct banking app on both the IOS and Android operating systems.
Loree: As Marc Andreessen said in 2011 “software is eating the world.” So we had to change a 170 plus year old company that had been through three industrial revolutions to embrace digital and exponential innovation. We put together the Stanley Fulfillment System 2.0 which had five elements: Digital Excellence, Breakthrough Innovation, Commercial Excellence, Functional Transformation and Industry 4.0 or Core SFS. We hired about 100 experts in all areas of digital like IOT, digital marketing, connected systems and SEO. We put them all together in Atlanta and then had them fan out throughout the company to find ways to affect cultural transformation and create value. We used small teams of people across the company removed from the day-to-day and just focused them on breakthrough innovation. We defined breakthrough as innovations with the potential to generate over $100 million revenue growth within a few years. Within two months they came up with the idea for a radical concept called FlexVolt, a 60-volt battery system that will ultimately eliminate corded power tools in the industry.
Reiss: Talk about the future.
Nelms: We’re doubling down on customer service. We are one of the only companies to have 100% U.S.-based customer service and we reinforce it by answering with something like, “Hi this is Mary from Salt Lake City.” Our service representatives are customers, too, so they can relate to our customers when they call. We are also experimenting with in-app messaging that allows customers to communicate with Discover customer service agents through the Discover mobile app. We have found that we can use the technologies of the future not to replace, but to significantly enhance our customer focus.
Loree: When I became CEO in August 2016, my themes were to continue shareholder value creation and performance, become known as one of the world’s great innovation companies, which is a tall order today when there are so many fantastic innovative companies, and to elevate our commitment to corporate social responsibility. We also have a corporate commitment in the United States and other developed countries to bring manufacturing back to these countries. Today in the United States we manufacture 40% of the tools we sell in the United States, and within five years that will be 80%. And we also are focused on Industry 4.0, which combines MES systems and robotics and connected machines enabling massive labor efficiency benefits. And as we grow we will focus on our growth culture. Since I joined the company in 1999 we have made over 100 acquisitions and revenue has grown from $2 billion to $12 billion. So with all these changes we will continue to drive out-sized growth.
Jenkins: Research has shown that 86% of elderly people want to live in their homes. So one important initiative we are working on is our Innovation Fund, which is a partnership with J.P. Morgan where we invest AARP dollars in companies in the marketplace who are developing new products and services that allow people to live healthier lives in their residences.
… In Summary, as CEOs look for new insights on transformation, John Kadlic, North American Digital Experience Practice Leader, IBM iX, offered a new concept of a word – belonging -- that while often overlooked might actually be the key to enterprise transformation for CEOs, “Belonging is a universal human need. However, cultural shifts are creating a belonging deficit—presenting a opportunity for brands to fill the void with new customer experiences that align to those human interests."
To hear interviews with these and other CEOs go to www.ceoforum.ceo
