In Winning Behavior: What the Smartest, Most Successful Companies Do Differently (AMACOM, 2003), we introduced the concept of behavioral differentiation. In our research on successful companies, we noted that the best-in-class companies had more than great products or services, a unique business model, and a wealth of talented employees; they also outbehaved their rivals and created a behavioral advantage for themselves in the markets they served. By outbehaving their rivals, we mean that their behavior toward customers—and employees—was significantly better than the norm for their industry.
They showed more care, respect, and commitment than their rivals did. They were more responsive to customers’ needs, including their unspoken and unrecognized needs. They devoted more time and attention—including senior executive time and attention—to customers. They established processes for ensuring that their customers were better treated at every touch point, and they created policies and procedures that empowered their employees to resolve problems faster, to think creatively with customers, to share ideas, and to go beyond the standard relationship building to create a level of candor, trust, and connectivity that results in de facto partnerships with customers.
In Winning Behavior, we explored why Southwest Airlines has consistently performed so much better than United Airlines, American Airlines, Continental, U.S. Airways, and the other “majors.” We asked why Kmart is in Chapter 11 while Wal-Mart continues to thrive as a company. The answer wasn’t merely that the superior performers had better business models, although this is nearly always true, or better leadership, or more luck, or lower prices. The answer was that the superior performers had found ways to behaviorally differentiate themselves and gain a strong competitive advantage through their behavior.
Some business writers instinctively understand behavioral differentiation (BD),* although they may not use that term. Jim Collins’s bestseller Good to Great is a case in point. His Level 5 leaders are great examples of business leaders who exemplify behavioral differentiation. He describes them as having “a paradoxical mix of personal humility and professional will”; “ambitious first and foremost for the company, not themselves”; “infected with an incurable need to produce sustained results.” And he says they “display a compelling modesty, are self-effacing and understated,” and “display a work-manlike diligence—more plow horse than show horse.”¹ These are leaders who give others credit, who build strong teams because they enable others to fulfill themselves, and who are caring and respectful toward employees and customers. They also ask consistently and often “What do you need from me to be successful? How can I help? What can I do?” In other words, they behave in ways that distinguish themselves and their organizations from the run-of-the-mill companies, those led by narcissistic self-aggrandizers, and those brought down through dishonesty, greed, and avarice. What Collins describes as Level 5 leadership, we would label behavioral differentiation.
However, some business writers continue to focus on the basics of business management as though getting the basics right is all it takes to prevail. As we were writing this book, an article appeared in Harvard Business Review entitled “What Really Works,” by Nitin Nohria, William Joyce, and Bruce Roberson. The authors conducted a “groundbreaking, five-year study” that revealed the “must-have management practices that truly produce results.”² They argue that businesses must excel at four primary practices: strategy, execution, a performance-oriented culture, and structure (a fast, flexible, flat organization). They add that a business should also excel at two of four secondary management practices: talent, innovation, leadership, and mergers and partnerships.³ It’s hard to argue with the authors’ conclusions. Indeed, companies that have not mastered these management basics are unlikely to succeed and will certainly not rise to the top of their industry. Nonetheless, there are hundreds of sound companies that meet the authors’ criteria—which amount to a graduate business school prescription for success—and still never rise above the norm in performance in their industry. Hundreds of them continue to struggle year after year—and CEO succession after CEO succession—with the bewildering challenge of producing new products and services faster than their rivals can copy them feature for feature and building new business in increasingly tougher markets.
In Winning Behavior, we described how the smartest, most successful companies use behavior to differentiate themselves from their competitors. However, we devoted most of the book to discussing B2C (business-to-consumer) companies, like Ritz-Carlton, Volvo Cars, Southwest Airlines, Men’s Wearhouse, Nordstrom, Marshall Field’s, Enterprise Rent-a-Car, and Wal-Mart. In B2C companies, it’s easier to see how BD might work because these companies sell to consumers and much of their BD would look like great customer service. In Winning Behavior, we did discuss some B2B (business-to-business) companies (EMC, Hall Kinion, Heidrick & Struggles); however, a number of readers said they wanted to know more. In particular, they wanted to know how BD applied throughout the complex business development (or sales) process that B2B companies face—a process that typically involves multiple people representing both the buyer and seller, is much longer (lasting from a few months to several years), and involves significant sums of money (often billions of dollars). So we wrote this book as a sequel to Winning Behavior and as a further discussion of BD in the complicated work of B2B buying and selling.