CHAPTER FIVE
Rethink What You Sell

The best—maybe the only?—real, direct measure of “innovation” is change in human behaviour.

—STUART BUTTERFIELD

Slack defines itself on its website by what it does. And what the company does, its stock-in-trade, is “bring all of a company’s internal communications together in one place.” At the next layer of detail, the company website specifies that the Slack app provides real-time messaging, archiving, and search for modern teams.

But internally, Slack’s CEO, Stuart Butterfield, answered the question “What do we sell?” in an unexpected, impactful way. In an internal email he sent to all hands two weeks before launching the wildly popular Slack app, Butterfield asked his team to move past the idea that the company’s product is group chat software:

We are unlikely to be able to sell “a group chat system” very well: there are just not enough people shopping for group chat system (and, as pointed out elsewhere, our current fax machine works fine).

What we are selling is not the software product—the set of all the features, in their specific implementation—because there are just not many buyers for this software product. (People buy “software” to address a need they already know they have or perform some specific task they need to perform, whether that is tracking sales contacts or editing video.)

However, if we are selling “a reduction in the cost of communication” or “zero effort knowledge management” or “making better decisions, faster” or “all your team communication, instantly searchable, available wherever you go” or “75% less email” or some other valuable result of adopting Slack, we will find many more buyers.

That’s why what we’re selling is organizational transformation. The software just happens to be the part we’re able to build & ship (and the means for us to get our cut).

We’re selling a reduction in information overload, relief from stress, and a new ability to extract the enormous value of hitherto useless corporate archives. We’re selling better organizations, better teams. That’s a good thing for people to buy and it is a much better thing for us to sell in the long run. We will be successful to the extent that we create better teams. ¹

Now, Slack is a B2B company. Its customers are teams and enterprises. So of course it makes sense that the transformation Butterfield initially focused on was organizational. But the decision makers who subscribe their companies and the team members who need to use it to be successful are each individual people, individual consumers. I’d hazard a guess that those to whom Slack appeals are more likely than not Transformational Consumers.

They are people who want to excel at their work, people who want to make the most of their work life so they can be more productive, be more fulfilled, be more efficient, earn more, create more, and ultimately have more time to spend with their families and pastimes. And at least in the early wave of adoption, which started here in Silicon Valley, they are likely people whose income, their actual compensation, is partly dependent on the company’s success, via stock options.

If Butterfield asked me, I would say that Slack sells both organizational transformation and individual transformation, for the wealthier and the wiser.

A year after Butterfield sent this prelaunch email, Slack was live with over 60,000 teams and over 700,000 paid seats. ² The app went from having 16,000 daily active users at launch in February 2014 to over 2.3 million daily active users in March 2016. The company has been valued at well over $3 billion. And Slack has been named by Financial Times as the first business technology to have crossed over into personal use since Microsoft Office and the Blackberry. ³

What You Sell Is Transformation

Most companies think they sell a product. To transcend the transactional, your company must expand the way it conceives of what it sells. Like Slack, your company must sell a possibility: it must sell a specific sort of transformation, a specific sort of behavior change, a specific sort of journey from a problematic status quo to the new levels and possibilities that will unfurl after the behavior change you help make happen.

I understand that this is asking a lot, to challenge a whole company to change the very way it conceives of itself. Even if you buy the concept that Transformational Consumers are essential to your business, you might resist this admittedly massive paradigm shift. So, before I go into how to make this shift, let’s talk about why you should make it.

The truth is that this is a shift that companies must make to survive whether or not they are interested in serving the Transformational Consumer. But if you know the Transformational Consumer is essential to your business, it’s nonnegotiable.

Product-First or Problem-First

You really only have two choices. You can be a product-first company or a Problem-First company. There are companies that build things that they are good at building and then look to their marketing teams to get them sold. These are what I call product-first companies.

Other companies build things that people want or need to solve a reallife Problem they have. These are Problem-First companies.

Product-first is the descriptor I use for companies whose entire identity, R&D pipeline, offerings, marketing, and internal cultural narrative are oriented around a focus on their products, their features, their pricing, and what the products do—their function or even their benefit to the customer.

   The dictionary name of the product might actually be part of the company’s name, whether it’s paper, software, bikes, or shoes.

   The company’s brand guidelines are rigid and unyielding, even in the face of evidence that its brand messages and communications are not effective with customers.

   The company’s research program is the CEO taking things home and trying them out or a group of people charged with finding evidence to confirm the rightness of whatever the CEO has already decided to do.

   Product-first companies pride themselves on being very good at making their kind of product. They pride themselves on having great institutional knowledge of how to deliver the best versions of that product into the marketplace. They talk about themselves in terms of being the biggest, best, most innovative, or oldest producer of their type of product in the world.

Problem-First companies operate very differently. Sure, if you ask them what they sell, the literal answer might be a particular category of product. But Problem-First companies’ point of view is a fixation on solving a Problem or set of problems for a particular customer audience or segment. They lead with that. They innovate by that. Their institutional knowledge is focused on knowing everything about the Problem they solve and the people who have that Problem. Their R&D program is a constant exploration of all the ways that this Problem could be mitigated at any given time, by their product or otherwise.

As our world grows ever more complex and the way customers interact with products changes, Problem-First companies are able to evolve in step with customers and with the market. They constantly evolve their offerings to meet consumers where they are and solve their Problem, however that Problem manifests itself at a given moment in time.

The Perils of Product-First

Don’t get me wrong: you can become a successful company with a product-first mindset, so long as you find product-market fit at one moment in time.

Historically, product-first made total sense. When there were three paper vendors, it was super important to let people know (a) that you were one of them and (b) that your paper was better than the other companies’ paper. As companies got larger and larger and needed a guiding principle around which to innovate, it became more important for them to focus and specialize.

Product-first made sense back then.

But in a sophisticated marketplace, with sophisticated buyers who have near-infinite products to choose from and a cacophonous media environment through which your marketing messages must break through, productfirst simply no longer works for reaching and engaging customers.

What Transformational Consumers care about are their problems, their dreams, and their lives. The companies that are committed to alleviating those problems, facilitating those dreams, and improving those lives are the ones that Transformational Consumers pay attention to.

To be product-first is to be attached to your product, in your mind, in the minds of your employees, and in the minds of your customers—those you have and those you wish you could get through to. The best case scenario for a product-first company is that customers understand their product and why they need it, prefer it over competing products, and try it, hopefully more than once.

Unfortunately, there are many scenarios that are more common than the best case scenario. You might have experienced one or more of them:

   People don’t understand your product.

   People don’t understand why they need it.

   People prefer to buy a competing product.

   People try your product once but never again.

   Once-loyal customers eventually switch to a new product or switch to a totally new category of product.

If you are comfortable with your product being viewed by customers as a commodity, because you feel that your product always wins on price or quality, then being product-first and operating with a literal answer to the question of what you sell might be fine.

Until it’s not.

If your product is so innovative that people might not actually know what it is or why they need it, product-first is not the approach to take.

If your product needs to constantly compete in the marketplace (and, trust me, it does), ditch product-first.

If you need people to buy your product over and over again—and you almost certainly do—product-first will only ever work for a season.

Here’s why.

Product-First Companies Have a Limiting View of What They Do

If your self-concept as a company leads with product, that will limit how creative your product and marketing can ever be. If your self-concept as a company leads with a transformation you want to create, it empowers all of your teams to think much more broadly and creatively about ways you can facilitate that transformation.

This point was not lost on Butterfield, who wrote in his prelaunch email,

Consider the hypothetical Acme Saddle Company. They could just sell saddles, and if so, they’d probably be selling on the basis of things like the quality of the leather they use or the fancy adornments their saddles include; they could be selling on the range of styles and sizes available, or on durability, or on price.

Or, they could sell horseback riding. Being successful at selling horseback riding means they grow the market for their product while giving the perfect context for talking about their saddles. It lets them position themselves as the leader and affords them different kinds of marketing and promotion opportunities (e.g., sponsoring school programs to promote riding to kids, working on land conservation or trail maps). It lets them think big and potentially be big. ⁴

Product-First Companies Build Products and Brand and Marketing Campaigns Based on This Limiting View of Why They Exist

Product-first companies build the things they know how to build and then look to their marketing teams to convince people to use them. The Problem is that people’s minds and values and dreams aren’t broken down into product categories—they want what they want, or what they think they want, on the basis of the real problems and challenges they face in their real lives.

Problem-First companies work to fix these problems and to translate their fix into customers’ preexisting mental frames for things they already care about.

Product-first companies ask too much of their audiences. You’re already asking them to change their behavior to buy your product and to use it and to buy it again. To also ask them to interpret your product into their personal value systems is simply too much to ask. People won’t do it. More importantly, they don’t have to—some other company is already out there doing a brilliant job of translating what they sell into terms that already mean something important to customers.

Product-First Companies May Succeed with an Initial, Innovative Product but Struggle to Innovate Competitively over the Long Run

Often, a product-first company’s initial product was developed by a founder who was a member of the customer group, had the same Problem that customers in that group have, and innovated a solution to it. But if the company then begins to idolize that product, there will be neither direction nor impetus for innovation. It’ll build years and years of new products that are slight tweaks on the old. You see it flailing and floundering to keep up with other, more innovative companies, because the DNA of innovation requires detachment and focus on a customer group and its Problem, not on the product itself.

Successful Product-First Companies Will Nearly Always Be Disrupted by Purpose-Driven, Behavior-Changing, Problem-First, People-First Companies

Hotels kept making slightly better hotels, while Airbnb innovated ways people could travel and live like locals. Taxi companies kept making new taxis, while Uber innovated ways people could use the newest human body part (their smartphone) to get their physical bodies and other items wherever they need them to be, on demand.

This will continue to happen: companies that fixate on solving a Problem will build subject-matter expertise around that Problem and, as a result, will disrupt the companies that fixate on their product.

This last point is a cautionary note for even the Ubers and Airbnbs of the world. Despite the fact that they are changing virtually every industry right now, many disruptive tech companies are actually product-first. I chalk this up to the fact that most tech-company founders and leaders are actually technical, product people—they are engineers and coders, by background. They love to play around with technology and built lots of things before finding one thing that found a product-market fit.

Most tech investors and venture capitalists are also fixated on technology, looking to put money into multiple products that use a certain technology in a gamble to find one that fits, versus seeking to deeply understand a Problem and a customer segment and then organizing their investments and innovations around that.

The other Problem with product-first in a tech environment is that you may innovate products way before people are ready for them, without being able to create the behavior change you need to succeed as a business. In Silicon Valley, it is often said that pioneers perish, but settlers prosper. In a TED talk, “The Surprising Habits of Original Thinkers,” the Wharton professor Adam Grant said that about 47% of “first-mover” companies fail. ⁵ Often the first couple of innovative products in a category are so avantgarde that people have no idea they need them or struggle to create behavior change around using them regularly. It’s only after a MySpace and a Yahoo! and widespread mobile-phone adoption, the thinking goes, that a Facebook can thrive. (Side note: RIP MySpace and Yahoo!.)

Pioneers can prosper. But historically, the only times they have is when they took a Problem-First approach; then rigorously, consistently created products that solved the Problem; and then marketed that product with constant reference to that Problem so that people would know the product is actually for them even though they’ve never heard of anything like it before.

This is what we call “making a market.” It’s hard to do but not impossible. Butterfield described it as “marketing from both ends” when he wrote to his team:

We should be working carefully from both the product end and the market end [by]:

   Doing a better and better job of providing what people want (whether they know it or not)

   Communicating the above more and more effectively (so that they know they want it). ⁶

How to Become a Problem-First Company

There are two parts to every Problem-First mindset: you must know the Problem your company exists to solve, and you must understand the people who have that problem.

Don’t think because I’m using the term “Problem” that your customer must be experiencing a dysfunction or disorder, breakdown, or crisis. The capital P “Problem” of your company’s Transformational Consumer audience simply refers to the specific Personal Disruption Conundrum that they are experiencing and that your company can help solve. The Problem is the specific behavior change they want to make. It’s the specific health, wealth, or wisdom goal they hope to reach, with your help.

Use the Story Spine to Rethink What You Sell and Shift to Problem-First

The power of anecdote is so great that it has a momentum in and of itself. No matter how boring the facts are, you feel inherently as if you are on a train that has a destination.
—IRA GLASS

One tool I’ve used to help companies understand how to orient around their own Transformational Consumer and that customer’s behaviorchange Problem is something I learned from the world of improv, of all places.

It’s called a story spine. For my dime, it is the fastest, most effective tool I’ve ever used to work with leaders through the process of rethinking what they sell.

The story spine is a simple template for telling a story, and it goes like this:

1. Once upon a time, there was .

2. Every day, .

3. Until one day, .

4. And because of that, .

5. And because of that, .

6. And because of that, .

7. Until finally, .

8. And ever since then, .

Fill in the first blank with your customer. Fill in the second blank with the Problem your customer is experiencing: the behavior or status quo about your customer’s life that he or she wants to change.

Now—and this is critical—do not, for the love of all that is sacred, fill in blank 3 with some version of “they used MagicGlo toothpaste” or whatever your product is. Trust me—you will be tempted to do this. Fight this temptation. Most companies at least have an answer for what they sell. They have an elevator pitch for their product, a tagline, SKUs, maybe even a set of statements like vision, mission, purpose, and such, that they trot out in answer to that question.

But this doesn’t actually work. Not if you want to reach and engage Transformational Consumers, which I’ll assume you do, since you’ve read this far.

Blank 3 must be filled in with some progress or behavior-change trigger. Blanks 4–6 are for the behavior change and the consequences thereof. And blank 7 is for the “Aspiration achieved” state of the customer’s life.

Where is your product in this story spine? Most often, when it’s done right, it’s implied. Again, what Transformer companies sell—what you sell, if your company wants to be one—is not a product.

What You Sell Is the Transformation Itself

You sell a particular category of behavior change and its consequences.

What you sell is the transformation, the behavior change that happened that one day, to go back to the story spine. And you also sell everything that changed about the protagonist’s life as a result of that change, all of the “because of thats,” the “until finally,” and the “and ever since then.”

Here are some considerations that will help you create your company’s story spine:

   Tell the story of your Customer-Hero’s Journey. Remember, in the archetypal Hero’s Journey as we apply it to Transformational Consumers, your company plays the role of mentor, adviser, guide, tool (or supply) to the customer-heroes you serve. If you create a story spine, you might want to keep the specifics of how your product helps the customer relatively vague, directional, or implied. This helps keep it open as to specifically how your brand and company will empower and aid the people you serve.

   Your customer matters most, but your beliefs, theory of change, and values matter, too. The story spine can hold the space not only for the Problem and the people you serve but also for your values, beliefs, and the wrongs in the world that your company hopes to right. With intentionally selected words, it can paint a picture of how you believe change will happen and what function you want to fulfill, in your Customer-Hero’s Journey, without overprescribing or overemphasizing your company, distracting focus from your customer.

Remember B. J. Fogg’s Functional Triad and the other progress triggers—they can also inspire how your company shows up in the story spine. Experiment with ways your story might answer these questions, when it comes to the role your company or your products play:

– Do you facilitate or simplify what’s hard on your customers’ journeys with knowledge or logistical ease?

– Do you remove resistance? How?

– Do you hope to provide tools that make something hard easier or to lead your customers through a process?

– What triggers your customers to make change?

– Do people see others model their ideal behavior or get social support or encouragement?

   Use the story to make your shift from product-first to Problem-First stick. The power of the story spine to help reorient your team members is driven by the power of narrative. Unlike many other ways you can communicate a message throughout your company, this story will stick with them.

The goal of this exercise is not only to rethink your actual product and what you sell. It’s also to rethink the prioritization your whole organization places on product versus Problem, especially if it has been fetishizing the product itself since time immemorial. The Problem and the people who have it, your customers, move to priority one. Product comes after.

   There’s no perfect, final story spine. There’s no just-right answer for how this comes out. The story spine is just the very first step of shifting your company’s orientation from product-first to Problem-First. But it’s a powerful first step and can be especially helpful in activating others to see your vision for this shift and to begin a change-management action plan in this direction.

So use the story spine to kick this process off. But see it as an organic, evolving project—a constant work in process. Hone and revise it as you work through the rest of the questions and shifts recommended throughout this book, as you rethink your customer, your marketing, your competition, and your company culture.

Many Teams, One Single Story

By the time you’re on the final rethink of your Leader-Hero’s Journey, you’ll be able to use the story spine as a check and balance, even a decision rubric, that every single person in the company can use. If a new product feature or marketing campaign does not fall in line with this narrative or does not further the transformation story of your hero-customer, that’s a great signal to revisit the thinking and decision making behind the initiative, before it gets too far gone.

This is not a matter of just marketing or messaging or semantics. If you do it right, your Problem-First approach will permeate everything about overall company strategy, research and development, product-market fit, design, customer service, and then also content and marketing.

Now, to make this all concrete, here’s an example of a story spine I developed a few years back with my clients at Lumo Body Tech.

Problem-First = Purpose-Driven = Profitable

My friend and mentor Jim Stengel was the global CMO for Proctor and Gamble for years. During his tenure, he managed over 7,000 employees and a multibillion-dollar annual marketing budget, reviving brands like Covergirl and Pampers with what he calls a “purpose-driven” approach to brand management.

RETHINK YOUR BUSINESS MODEL
Transformer Case Study: Credit Karma (Aspiration: Wealthy and Wise)

Credit Karma’s 50 million members have used the platform to access more than one billion of their own credit scores since 2007. The staffer Frances Cohen told me that the company defines itself as “a platform that helps make financial progress possible for everyone.” ¹⁰

Credit Karma’s defining what it sells as “financial progress” is by no means a given, in a field of companies that get paid by banks for every consumer lead or every consumer click. The company’s model is to never charge consumers and to only take a fee from its bank partners when customers successfully receive the credit they apply for. The company calls this its win-win-win model, a legacy of Credit Karma’s launch in 2007, at the peak of consumer distrust of and disgust with the financial markets.

Sixty million Credit Karma customers use the site’s score access and dispute features to raise their credit score, which translates into interest-rate savings. Providing clear insight into the murky world of debt and credit scores and empowering members to save money by improving their scores at no cost? That’s progress.

Stengel teaches that a brand’s purpose is a living, breathing organism rooted in ideals. The deepest roots are the people your company serves. Out of these roots grows what Stengel calls the brand ideal, “a shared goal of improving people’s lives.” He goes on, “A brand ideal is a business’s essential reason for being, the higher-order benefit it brings to the world.” He shares a valuable model for building purpose into every element of the business in his book Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies (2011).

Stengel teamed up with the research firm Millward Brown and analyzed the performance of over 50,000 companies across a ten-year period of time, comparing companies on the basis of whether they were product-first or Problem-First (i.e., purpose-driven). Here are the results:

   The 50 top-performing companies were brands built on a differentiated statement of higher human ideals, a purpose statement similar to what we’re calling the “Problem-First” approach here.

   These companies’ stock price grew three to four times faster than their competitors’ did. ¹¹

So how is “purpose” different from “Problem,” as I’m using it here? It’s not. Jim once told me that his definition of “brand” includes, well, everything—he defines “brand” as the collective behavior of everyone at your company. By design, then, that would include product design, engineering, customer service, and research and development.

That said, my experience teaches that all employees might not internalize this broad a definition of “brand” or “purpose.” When most people hear “purpose,” they think marketing, corporate social responsibility, or maybe branding. There’s a connotation that purpose is a snap-on marketing message that can be built on top of an otherwise product-first company.

So I stay away from the term “purpose” when advising companies on the change-management process away from product-first, because employees’ existing mental categories often slot “purpose” under brand, marketing, or generally “something I don’t have to think about if I don’t work in marketing.”

On the other hand, the word “Problem” conjures up something that is desperately waiting to be fixed. And that causes even the most marketing-detached product engineer or user-experience designer to prick up his or her ears and get interested in creating solutions.

In fact, Stengel’s framework for disseminating purpose throughout a company includes “delivering a near-ideal customer experience,” an aim that necessarily includes delivering a product that enchants and delights the people who buy and use it. ¹² Marketing alone won’t get it. Butterfield echoed this mandate in his prelaunch email, writing, “we need to do an exceptional, near-perfect job of execution” in order to get people to try a product they don’t even know they need yet. ¹³

Manifesto Marketing

“People don’t buy what you sell; they buy why you sell it,” says Simon Sinek, the TED star and author of Start with Why. ¹⁴ Manifesto marketing makes the most of this truth, attracting a tribe of people who agree whether or not they happen to be in the market for the company’s product at a particular moment in time.

I call it manifesto marketing when a company broadcasts the reasons why it does what it does, its values, or its beliefs externally, even if they are not strictly related to its products, incorporating them in its communications, products, or packaging.

The best known example of manifesto marketing is the lululemon manifesto, a long list of declarations of the company’s beliefs about how to live a long, healthy life, which is emblazoned on the company’s signature red-and-white reusable bags and even on some of its actual products.

But manifesto marketing may include executive thought leadership on topics that are more tangentially related to the business, such as Sheryl Sandberg’s new-classic book Lean In ¹⁵ and Arianna Huffington’s Thrive. ¹⁶ And open letters on subjects that are only distantly related to what the company sells also qualify, such as the “welcome to the world” letter that

Mark Zuckerberg published when his daughter was born. ¹⁷

Even internal communications can serve as manifesto marketing, if they get out. One of the most visible examples in recent history was Zuckerberg’s email detailing his and the company’s support of the Black Lives Matter movement after the motto was replaced with “All Lives Matter” on a board at the company HQ. ¹⁸

Manifestos are less about what you sell and more about why and how you sell it, how you operate, or how you see the world. But the why, how, and worldview are like magnets to your company’s tribe of Transformational Consumers, inspiring them to take action and connect with your brand.