How to Thrive in a Flat World

By Pam Holloway

December 2005

I’ve just finished reading Thomas Friedman’s The World is Flat.  This book is a must-read for every business professional, investor, and human being on the planet.  How’s that for a a recommendation? I’ve included a snipet from one of the reviews on Amazon.  Following that we discuss the implications of Friedman’s conclusions for financial services firms and in particular for financial advisors.  

 

What Friedman means by "flat" is "connected": Lowering of trade and political barriers and technical advances have made it possible to do business, or almost anything else, instantaneously with billions of other people across the planet. Globalization 3.0, as he calls it, is driven not by major corporations or giant trade organizations like the World Bank, but by individuals: desktop freelancers and innovative startups all over the world (but especially in India and China) who can compete--and win--not just for low-wage manufacturing and information labor but, increasingly, for the highest-end research and design work as well.

 Your world has changed. 
Have you?

 

Your world has changed dramatically already and will continue do so at an increasingly rapid pace. As Friedman points out its flat and getting flatter.  You’re getting new competition from unexpected places.  There is increased commoditization and decreased differentiation in all areas of business, and yours is no exception.   Understanding your changing market and changing what you’re doing and how you’re doing it in order to respond, is essential to your survival. 

Success today and in the future comes to those who not only recognize the shifts and trends in the marketplace, but who are able to re-valuate, re-focus and re-vamp themselves in order to respond accordingly. 

 

Three Key Questions

 

There are three important questions you should continually ask yourself and respond to in order to stay competitive in a flat world. 

1. How easy is what you do and provide your clients to duplicate?
2. Are you providing services that your clients highly value?
3. How good are you at anticipating your client’s needs?

  

1.  Are you easy to duplicate?

 

How easy is what you do and provide your clients to duplicate?  Are you really that different from the guy or gal down the street?

 

Take out a pen and write down the 3-5 key services you provide your clients.  Now ask yourself whether there is really anything different or better about what you do and how you do it?  Be honest.  I’m willing to bet that most of you will find that not only are you exactly the same, but you describe yourself and what you do with identical words and phrases. 

 

Now, let’s go one step further for those of you who do see yourselves as doing something just a little bit better than the competition.  Answer this question – Just how difficult would it be for the guy or gal next door to do the same thing?  Are you easy to duplicate?  If the answer is “yes”, then you’re in trouble. 

 

 

2.  Are you providing services your clients perceive as highly valuable?

 

Every time I ask advisors this question, I get a resounding “Yes!”  When I then ask for proof, or better yet ask their clients, the same question, I often get a different answer.  Many advisors have an even more telling response  “My clients certainly should value these services.”   That’s a dangerously arrogant response.  It implies that you know better than your clients what’s best for them.   Even if that’s true, and I seriously doubt that it is, it’s a lousy way to run a business. 

 

If you pay attention to nothing else in this article – hear this – It’s not what you think is best or most valuable to your clients that matters – its what they perceive as valuable that’s important.  

 

You have a choice.  You can figure out what it is your clients value most and give it to them or watch them take their business to someone else who can and does deliver these highly valuable services.

  

3.  How good are you at anticipating your client’s needs? 

 

How good are you at anticipating your client’s needs – in other words knowing not only what your clients want and value today and giving it to them, but knowing what they’ll want tomorrow and being prepared to respond before the competition?

 

Recent research comparing the results of a customer satisfaction focus to a customer anticipation focus found that strategies that ANTICIPATE customer’s needs are 10 times more predictive of success than those focused on customer satisfaction.

Why?  John Naver of the University of Washington Business School describes it this way "Customers' expressed needs and benefits can be known readily by all competitors - a situation that leads typically to competitors offering the same benefits to a given set of customers and then having to engage in aggressive price competition in the attempt to create superior value."

 

Got it?  Customer satisfaction is not enough.  Continued success comes to those who can anticipate client needs – figure out what they want and give it to them before they’ve even had a chance to communicate it.

 

 

A Flat World Requires a New Approach and New Skills

 

A flat world requires a new approach, a new consciousness and application of new skills.  As Einstein said, “Problems cannot be solved at the same level of consciousness that created them.”

 

In order to thrive in a flat world, you must:

 

1. Pay attention to what’s going on in the world – technology advances, business challenges, social and cultural shifts.   
2. Recognize how these changes effect your market, your clients and your business.
3. Continually re-assess the needs and wants of your target market and ensure you’re providing what they want, how and when they want it.
4. Go beyond mere client satisfaction into client anticipation.  Get out in front of the changes and position yourself to respond quickly and effectively.
5. Continually reassess your business and yourself against client needs and wants and against your competition.  Strive to provide services that are A) difficult to duplicate and B) of high value to the client.

Most Important Skills for a Flat World

 

If there’s one thing that rings out loud and clear from all the trends and changes we see happening in our industry, it’s the need for advisors to better understand their clients – both their needs today and anticipating their future needs.  With that in mind, I believe the single most important skill requirement for financial advisors is understanding people – both at an aggregate  or market level  and at an individual level.

 

This skill is followed closely by the ability to respond.  It’s not enough to know, you must also do. 

 

Third, response requires not only that you know your clients but also that you know yourself and how and where you best add value.  This requires continuous self-assessment, self improvement and alignment to your clients.