renewing your zag. to understand the zag design process. you need to apply the 10-step process

RENEWINGYOUR ZAG

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

EACH STEP ADDRESSES ONE OF FOUR KEY ELEMENTS—

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

EACH STEP ADDRESSES ONE OF FOUR KEY ELEMENTS—

Differentiation,

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

EACH STEP ADDRESSES ONE OF FOUR KEY ELEMENTS—

Differentiation,Focus,

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

EACH STEP ADDRESSES ONE OF FOUR KEY ELEMENTS—

Differentiation,Focus,Trend,

TO UNDERSTAND THE ZAG DESIGN PROCESS. YOU NEED TO APPLY THE 10-STEP PROCESS

EACH STEP ADDRESSES ONE OF FOUR KEY ELEMENTS—

Differentiation,Focus,Trend,Communications

Differentiation,Focus,Trend,Communications

Differentiation,Focus,Trend,Communications

Differentiation,Focus,Trend,Communications

DifferentiationFocusTrendCommunications

If you’re looking to position your brand, or if you’re curious about where to take your brand after you launch it, this lecture will help you understand how and when to renew your ZAG as it moves through the three stages of the “Competition Cycle.”

FIRST

FIRST

LET’S START WITH A QUESTION

QUESTION:

IF FOCUS IS SO IMPORTANT TO SUCCESS, HOW CAN SO MANY UNFOCUSED COMPANIES GROW SO LARGE?

QUESTION:

IF FOCUS IS SO IMPORTANT TO SUCCESS, HOW CAN SO MANY UNFOCUSED COMPANIES GROW SO LARGE?

In other words, how can we explain the success of a company like General Electric, which markets everything from power plants to plastics, insurance to entertainment, and light bulbs to light rail systems?

QUESTION:

IF FOCUS IS SO IMPORTANT TO SUCCESS, HOW CAN SO MANY UNFOCUSED COMPANIES GROW SO LARGE?

In other words, how can we explain the success of a company like General Electric, which markets everything from power plants to plastics, insurance to entertainment, and light bulbs to light rail systems?

Or Mitsubishi, which puts its name on

Or Mitsubishi, which puts its name on

23,720offerings from automobiles to aerospace, textiles to tobacco, and banks to broccoli?

The fact is, as powerful as the principle of focus is, companies with different degrees of focus can coexist in the marketplace.

TO UNDERSTAND HOW THIS CAN HAPPEN IS THROUGH THE CHILDREN’S GAME OF

SCISSORS

SCISSORS PAPER

SCISSORS PAPER ROCK

Remember how it goes?

Remember how it goes?

Scissors cuts paper,

Remember how it goes?

Scissors cuts paper, paper covers rock,

Remember how it goes?

Scissors cuts paper, paper covers rock, rock breaks scissors.

EACH POSITION HAS ITS

STRENGTHS

EACH POSITION HAS ITS

STRENGTHSAND EACH HAS ITS

WEAKNESSES

CREATING A BALANCED CYCLE OF COMPETITION.

Attractors

companies thrive best when they settle into “stable states,”—these stable states are called “attractors.”

As a company grows, it’s attracted toward one of three main states, which we can call

scissors, paper, and rock.

A “scissors” company is a startup or small business, often having only one brand. Distinguished by its extremely sharp focus.

A “rock” company, is a medium-sized organisation that typically has more brands and less focus. It thrives by crushing “scissors” companies, who don’t have the resources to compete head to head with them.

A “paper” company is distinguished by its sheer size. With even more brands and even less focus, it survives by using its network and resources to smother “rock” companies.

AND ROUND AND ROUND THEY GO

THERE ARE THREE OBSERVATIONS YOU CAN MAKE ABOUT THE COMPETITION CYCLE

COMPANIES TEND TO GROW CLOCKWISE, FROM SCISSORS TO ROCK TO PAPER; 1

THEY TEND TO COMPETE COUNTER-CLOCKWISE—PAPER COVERS ROCK, ROCK BREAKS SCISSORS, SCISSORS CUTS PAPER;

2

THE SPACES BETWEEN THE STABLE STATES ARE “UNSTABLE STATES”—PERIODS OF TIME WHEN CHANGE IS NOT ONLY POSSIBLE BUT NECESSARY. IT’S DURING THESE UNSTABLE PERIODS THAT COMPANIES OFTEN NEED TO REPOSITION THEIR BRANDS.

3

HOW CAN EACH TYPE OF COMPETITOR MAXIMIZE ITS PARTICULAR ADVANTAGE?

THE FOCUS OF SCISSORS

Innovation can be divided into two types—“sustaining” innovation, which calls for incremental improvements to existing offerings,

“disruptive” innovation, which finds new market space, often with products or services that are less expensive and initially perceived as “not good enough.”

IT’S THEIR FOCUS ON A DISRUPTIVE INNOVATION THAT ALLOWS SCISSORS COMPANIES TO OUTMANEUVER PAPER COMPANIES.

AN EXAMPLE OF DISRUPTIVE INNOVATION.

AN EXAMPLE OF DISRUPTIVE INNOVATION.

AN EXAMPLE OF DISRUPTIVE INNOVATION

A COMPANY THAT BECAME “THE WORLD’S ONLINE MARKET- PLACE” BEFORE THE WORLD THOUGHT IT NEEDED ONE.

THE MOMENTUM OF ROCK

As growth opportunities become clear, scissors companies move through the first unstable state on their road to rock.

As growth opportunities become clear, scissors companies move through the first unstable state on their road to rock.

They may think about adding brands or sub-brands, or acquiring other companies.

PROCESS BEGINS TO REPLACE PASSION

The paper companies are now motivated to smother the rock companies by matching any new offerings—offerings that may be less disruptive and more like what the paper companies can profit from.

YET

ROCK COMPANIES HAVE A TREMENDOUS NATURAL ADVANTAGE:YET

“big mo”

The “big mo” allows them to enter new markets, attract world-class talent, and buy up the scissors companies they used to compete with.

“big mo”

EXAMPLE OF A BIG MO.

CONCERNS ABOUT TERRORISM ARE BOLSTERING COMPANIES THAT MAKE SECURITY-RELATED PRODUCTS

It's no wonder Cogent's sales have grown 89.4% per year on average for the past three years and profits are up 332.3% annually.

THE SIZE OF PAPER

Eventually, a rock company’s momentum slows, and it passes through a second unstable state on its way to becoming paper.

BUT NOW FACES IT’S

BIGGEST CHALLENGE

Just as scissors companies achieve the quickest success with disruptive innovation, paper companies tend to achieve it with

Just as scissors companies achieve the quickest success with disruptive innovation, paper companies tend to achieve it with

“sustaining innovation”

Just as scissors companies achieve the quickest success with disruptive innovation, paper companies tend to achieve it with

“sustaining innovation”

They win by making incrementally better products that can be sold for higher prices to attracted customers.

AN EXAMPLE OF SUSTAINING INNOVATION

AN EXAMPLE OF SUSTAINING INNOVATION

Appliances, Dehumidifiers Dishwashers GE® GE Café™ GE Monogram® Refrigerators Service & Support Washers & Dryers Water Systems AVIATION Asset Management Aviation Services Business & General Aviation Commercial Engines Corporate Aircraft Financing GE Capital Aviation Services (GECAS) GE Honda Aero Engines Maintenance Marine Engines Military Engines OnPoint(sm) Systems Unison Industries Walter Engines CONSUMER PRODUCTS Consumer Electronic Accessories Computer Accessories Digital Cameras Home Electric Products SmartHome Products Telephones ELECTRICAL DISTRIBUTION Electrical Distribution Products Distribution Services Digital Energy Products and Services ENERGY All Products All Services Centrifugal Pumps Energy Financial Services Gas Turbines – Aeroderivative Gas Turbines - Heavy Duty & Combined Cycle Gasification Hydropower & Water Control Investment Focus Lifecycle Services Nuclear Energy Solar Power Steam Turbines Wind Turbines FINANCE – BUSINESS Commercial Lending & Leasing – Healthcare Financial Services – Media, Communications & Entertainment Energy Financial Services GE Capital Aviation Services Real Estate Financing Worldwide GE Capital Locations FINANCE – CONSUMER Consumer Financing - Global Banking Worldwide GE Capital Locations HEALTHCARE All Products All Services Diagnostic ECG Healthcare Financial Services Healthcare Information Technologies Interoperability Interoperability Web Site Life Sciences Medical Diagnostics Patient Monitoring Solutions LIGHTING All Commercial Lighting Products & Services All Consumer Lighting Products & Services GE's Commercial Lighting Commercial, Automotive Commercial, Ballasts Commercial, Compact Fluorescent Commercial, Halogen Commercial, High Intensity Discharge Commercial, Incandescent Commercial, LEDs Commercial, Linear Fluorescent Commercial, Miniature Commercial, Sealed Beam Commercial, Specialty Consumer, General Purpose Consumer, Automotive Consumer, Fluorescent Consumer, Holiday Lighting Consumer, Outdoor Consumer, Specialty Consumer, Track & Recessed Lighting by Industry MEDIA & ENTERTAINMENT Entertainment TV & Production Media Communications & Entertainment Finance Movies NBC Universal News, Sports & Info Parks & Resorts Peacock Equity Fund OIL & GAS Air-Cooled Heat Exchangers All Products All Services Centrifugal Pumps Compressors Drilling & Production Systems Energy Financial Services Gas Turbines Pipeline Inspection & Integrity Services Reactors & Steam Condensers Reducing & Metering Systems Steam Turbines Turboexpanders Valves - Control & Safety RAIL All Services Locomotive Products Rail Services US Rail Services Europe Traffic Control & Dispatch Systems VeriWise RAIL WATER All Products All Services Energy Financial Services Equipment Membrane Elements, Cartridge Filters and Lab Products Process Chemicals Water & Process Technologies Water Treatment Chemicals

Appliances, Dehumidifiers Dishwashers GE® GE Café™ GE Monogram® Refrigerators Service & Support Washers & Dryers Water Systems AVIATION Asset Management Aviation Services Business & General Aviation Commercial Engines Corporate Aircraft Financing GE Capital Aviation Services (GECAS) GE Honda Aero Engines Maintenance Marine Engines Military Engines OnPoint(sm) Systems Unison Industries Walter Engines CONSUMER PRODUCTS Consumer Electronic Accessories Computer Accessories Digital Cameras Home Electric Products SmartHome Products Telephones ELECTRICAL DISTRIBUTION Electrical Distribution Products Distribution Services Digital Energy Products and Services ENERGY All Products All Services Centrifugal Pumps Energy Financial Services Gas Turbines – Aeroderivative Gas Turbines - Heavy Duty & Combined Cycle Gasification Hydropower & Water Control Investment Focus Lifecycle Services Nuclear Energy Solar Power Steam Turbines Wind Turbines FINANCE – BUSINESS Commercial Lending & Leasing – Healthcare Financial Services – Media, Communications & Entertainment Energy Financial Services GE Capital Aviation Services Real Estate Financing Worldwide GE Capital Locations FINANCE – CONSUMER Consumer Financing - Global Banking Worldwide GE Capital Locations HEALTHCARE All Products All Services Diagnostic ECG Healthcare Financial Services Healthcare Information Technologies Interoperability Interoperability Web Site Life Sciences Medical Diagnostics Patient Monitoring Solutions LIGHTING All Commercial Lighting Products & Services All Consumer Lighting Products & Services GE's Commercial Lighting Commercial, Automotive Commercial, Ballasts Commercial, Compact Fluorescent Commercial, Halogen Commercial, High Intensity Discharge Commercial, Incandescent Commercial, LEDs Commercial, Linear Fluorescent Commercial, Miniature Commercial, Sealed Beam Commercial, Specialty Consumer, General Purpose Consumer, Automotive Consumer, Fluorescent Consumer, Holiday Lighting Consumer, Outdoor Consumer, Specialty Consumer, Track & Recessed Lighting by Industry MEDIA & ENTERTAINMENT Entertainment TV & Production Media Communications & Entertainment Finance Movies NBC Universal News, Sports & Info Parks & Resorts Peacock Equity Fund OIL & GAS Air-Cooled Heat Exchangers All Products All Services Centrifugal Pumps Compressors Drilling & Production Systems Energy Financial Services Gas Turbines Pipeline Inspection & Integrity Services Reactors & Steam Condensers Reducing & Metering Systems Steam Turbines Turboexpanders Valves - Control & Safety RAIL All Services Locomotive Products Rail Services US Rail Services Europe Traffic Control & Dispatch Systems VeriWise RAIL WATER All Products All Services Energy Financial Services Equipment Membrane Elements, Cartridge Filters and Lab Products Process Chemicals Water & Process Technologies Water Treatment Chemicals

13 Industries

Appliances, Dehumidifiers Dishwashers GE® GE Café™ GE Monogram® Refrigerators Service & Support Washers & Dryers Water Systems AVIATION Asset Management Aviation Services Business & General Aviation Commercial Engines Corporate Aircraft Financing GE Capital Aviation Services (GECAS) GE Honda Aero Engines Maintenance Marine Engines Military Engines OnPoint(sm) Systems Unison Industries Walter Engines CONSUMER PRODUCTS Consumer Electronic Accessories Computer Accessories Digital Cameras Home Electric Products SmartHome Products Telephones ELECTRICAL DISTRIBUTION Electrical Distribution Products Distribution Services Digital Energy Products and Services ENERGY All Products All Services Centrifugal Pumps Energy Financial Services Gas Turbines – Aeroderivative Gas Turbines - Heavy Duty & Combined Cycle Gasification Hydropower & Water Control Investment Focus Lifecycle Services Nuclear Energy Solar Power Steam Turbines Wind Turbines FINANCE – BUSINESS Commercial Lending & Leasing – Healthcare Financial Services – Media, Communications & Entertainment Energy Financial Services GE Capital Aviation Services Real Estate Financing Worldwide GE Capital Locations FINANCE – CONSUMER Consumer Financing - Global Banking Worldwide GE Capital Locations HEALTHCARE All Products All Services Diagnostic ECG Healthcare Financial Services Healthcare Information Technologies Interoperability Interoperability Web Site Life Sciences Medical Diagnostics Patient Monitoring Solutions LIGHTING All Commercial Lighting Products & Services All Consumer Lighting Products & Services GE's Commercial Lighting Commercial, Automotive Commercial, Ballasts Commercial, Compact Fluorescent Commercial, Halogen Commercial, High Intensity Discharge Commercial, Incandescent Commercial, LEDs Commercial, Linear Fluorescent Commercial, Miniature Commercial, Sealed Beam Commercial, Specialty Consumer, General Purpose Consumer, Automotive Consumer, Fluorescent Consumer, Holiday Lighting Consumer, Outdoor Consumer, Specialty Consumer, Track & Recessed Lighting by Industry MEDIA & ENTERTAINMENT Entertainment TV & Production Media Communications & Entertainment Finance Movies NBC Universal News, Sports & Info Parks & Resorts Peacock Equity Fund OIL & GAS Air-Cooled Heat Exchangers All Products All Services Centrifugal Pumps Compressors Drilling & Production Systems Energy Financial Services Gas Turbines Pipeline Inspection & Integrity Services Reactors & Steam Condensers Reducing & Metering Systems Steam Turbines Turboexpanders Valves - Control & Safety RAIL All Services Locomotive Products Rail Services US Rail Services Europe Traffic Control & Dispatch Systems VeriWise RAIL WATER All Products All Services Energy Financial Services Equipment Membrane Elements, Cartridge Filters and Lab Products Process Chemicals Water & Process Technologies Water Treatment Chemicals

13 Industries 125 Brands, still growing

WHAT CAN YOU DO WITH PAPER-SCISSORS-ROCK?

WHAT CAN YOU DO WITH PAPER-SCISSORS-ROCK? TONS

① Exploit your company’s strengths and minimize its weaknesses;

① Exploit your company’s strengths and minimize its weaknesses;

② Exploit your competitors’ weaknesses and better prepare for their attacks;

① Exploit your company’s strengths and minimize its weaknesses;

② Exploit your competitors’ weaknesses and better prepare for their attacks;

① Use the unstable states to reinvent your ZAG;

① Exploit your company’s strengths and minimize its weaknesses;

② Exploit your competitors’ weaknesses and better prepare for their attacks;

① Use the unstable states to reinvent your ZAG;

② Renew your ZAG during the stable states to block a competitive move or simply remain vital.

HOW STRUCTURE BECOMES STRICTURE.

“The chains of habit, are too weak to be felt until they are too strong to be broken.”

Samuel Johnson

A TWO-STAGE ROCKET.

WHEN CULTURAL LOCK-IN PERSISTS, A COMPANY MAY FIND ITSELF IN THE SAME SITUATION AS SEARS.

ZAGGING AT THE SPEED OF CHANGE.

As choices in the marketplace multiply, the lifetime of a brand will shrink.

So how can your company win?

ONLY BY INNOVATING AT THE SPEED OF THE MARKET.

You’ll need to launch white-space brands while core brands are still performing.

You’ll need to launch white-space brands while core brands are still performing. You’ll need to organise the company around brand collaboration.

You’ll need to launch white-space brands while core brands are still performing. You’ll need to organise the company around brand collaboration. You’ll need to beat marketplace clutter instead of adding to it.

You’ll need to launch white-space brands while core brands are still performing. You’ll need to organise the company around brand collaboration. You’ll need to beat marketplace clutter instead of adding to it.

You’ll need to build a culture that thrives on radical differentiation.

You’ll need to launch white-space brands while core brands are still performing. You’ll need to organise the company around brand collaboration. You’ll need to beat marketplace clutter instead of adding to it.

You’ll need to build a culture that thrives on radical differentiation.

You’re top three business goals should be

① Sustained and steady top-line growth;

① Sustained and steady top-line growth;

① Speed, flexibility, and adaptability to change;

① Sustained and steady top-line growth;

① Speed, flexibility, and adaptability to change;

① Customer loyalty and retention;

IF YOU’RE NOT ZAGGING,

YOU’RE LAGGING

THANK YOU