by Tiffani Bova
Lemonade knew that its Giveback program would help it attract a certain type of customer, but as you have learned throughout Growth IQ, it is the combination of efforts that provides the competitive advantage. In this case Lemonade used Unconventional Strategies approaches with Optimize Sales and Customer Experience in combination as its secret sauce.
This approach has allowed Lemonade to buck another industry trend—selling insurance to women. To put that statement in context, in the United States, a man is 50 percent more likely to buy a home insurance policy than a woman. But at Lemonade, a woman is 50 percent more likely to buy a policy than her male counterpart. The unintended consequences of the various growth paths Lemonade has chosen to pursue in combination has been attracting an “underrepresented” segment of the market: women. Lemonade didn’t intentionally target female customers; rather, it focused on its core mission and value proposition of giving back, ease of use, and aligned values. Male or female, that is the target demographic it is attracting.
Lemonade is the most exciting and innovative company the insurance industry has seen in a long time. It has managed to do what was considered impossible until now: form a huge community of like-minded people in insurance, while maintaining growth at a historic pace. As consultant Miguel Ortiz told the Economist, the big bet for Lemonade is that “it can stay ahead of a sleepy industry by doing standard insurance processes better than everyone else.” For now and into the foreseeable future, Lemonade is winning that bet. John Sheldon Peters, Lemonade’s chief insurance officer, wrote: “We love our customers, think they fit well with Lemonade’s values and mission, and are thrilled each time another member joins the Lemonade family.”
LEMONADE INSURANCE
KEY TAKEAWAYS
Lemonade Insurance used the historic preconceptions and poor customer experience in the insurance industry to its advantage. Market intelligence was its road map. When developing its product, it looked to significantly improve customer experience across the key pain points current insurance customers were complaining about. First, it began with the idea that it would give unclaimed premiums to charity via the company’s Giveback program. Next, it launched on Product Hunt—a website that lets users share and discover new products. It was the first insurance company to be featured on the site. Then it was very clear about its target demographic. And finally, and maybe most important, it focused on user experience, meaning: everything from buying insurance to making a claim can be completed via the app, with no human intervention: It “takes as little as 90 seconds to get insured and just three minutes to get paid.”
Lemonade prides itself on its transparency. It uses its blog Transparency Chronicles to share metrics and performance data—information that other insurance companies don’t freely share. Providing this information creates a brand that is open and socially conscious, which appeals to its customer base.
Lemonade Insurance knows its target demographic and uses technology to constantly monitor changes in its customer base. Its customers are “25–44 and 87% have never bought insurance for their homes before.” The millennial generation is more socially conscious and technically savvy, so Lemonade’s giveback philosophy and technology investments resonate well. The technology investments specifically have proven to be a huge industry differentiator.
STORY
3
GRAMEEN BANK IN BANGLADESH
ON PURPOSE
Purpose is that sense that we are part of something bigger than ourselves, that we are needed, that we have something better ahead to work for. Purpose is what creates true happiness. . . . To keep our society moving forward, we have a generational challenge—to not only create new jobs, but create a renewed sense of purpose.
—MARK ZUCKERBERG
THROUGHOUT GROWTH IQ, EACH PATH chapter included a “Story 3” emphasizing “what not to do.” Path 10, Unconventional Strategies, lives up to its name by breaking from that tradition and ending with a positive Story 3. Social entrepreneurship comes in as many forms as there are human needs in the world. Hunger, exploitation, illiteracy, deep poverty, and disease still threaten the lives of hundreds of millions of people around the world. Traditionally, helping to alleviate this suffering has been the work of charities and nonprofit institutions. But beginning at the turn of the century a new philosophy, a new business model, began to emerge: social enterprises, as they are called.
In their original incarnation, these enterprises were almost always nonprofit. There were two differences between them and traditional charities. First, they weren’t targeted at a single group, location, or project but were designed to create sweeping societal change. Second, they were designed to emulate existing commercial entrepreneurial start-ups. That is, they were designed to be scalable up to millions of people, they would eventually become self-sustaining, and their impact would be measurable and comparable.
A classic example of great social enterprise is Grameen Bank in Bangladesh, for which its founder, Muhammad Yunus, was awarded the Nobel Peace Prize. As their website explains, “The origin of Grameen Bank (‘Grameen’ means ‘rural’ or ‘village’ in Bangla language) can be traced back to 1976 when Professor Muhammad Yunus, head of the economics program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor.”
THE GRAMEEN BANK PROJECT CAME INTO OPERATION WITH THE FOLLOWING OBJECTIVES:
Extend banking facilities to poor men and women;
Eliminate the exploitation of the poor by money lenders;
Create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;
Bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format that they can understand and manage by themselves; and
Reverse the age-old vicious circle of “low income, low saving & low investment,” into virtuous circle of “low income, injection of credit, investment, more income, more savings, more investment, more income.”
Grameen pioneered micro-loans: tiny, no-collateral loans to the very poor that depended on social pressure to guarantee their payment. He did so in the belief that capital is a friend of the poor and that its accumulation by the poor represents their best means of escaping the abject poverty that the welfare state and wasteful, corrupt, and incompetent international aid organizations have failed to combat. Yunus’s concept not only had a major impact on Bangladeshi society but has been duplicated with great success around the world.
SOCIAL ENTREPRENEURSHIP
Part of the impetus behind social entrepreneurship came from foundations, which found themselves unable to turn off the money spigot for ongoing legacy causes, often for years—even while new programs clamored for their support. The idea was that these programs could, through thoughtful product and service development, financial discipline, and good business practices, eventually become self-sustaining—either through covering their costs or, as in the case of the Red Cross, gaining sufficient support of the general public.
The pursuit of this goal led, two decades ago, to the creation of important new institutions, including the Skoll Foundation and Ashoka, dedicated to investing sizable sums to get the kinks out of this new model and educate the first generation of social entrepreneurs. They have had mixed success—too often, these programs fail to become self-sustaining and fall back onto the rolls of perpetually requiring institutional support.
More successful has been the arrival, in the Internet Age, of crowdsourcing: the use of the scaling powers of the Web to present charitable (as well as commercial) opportunities in front of millions of private citizens. Crowdsourcing can claim credit for the support of thousands of social enterprises in its first decade.
But an entirely unexpected revolution in
the support of social entrepreneurship has been the arrival of for-profit commercial companies—such as TOMS Shoes and Lemonade Insurance—on the scene. At first, most of these initiatives were seen as the product of a softhearted senior executive or as positive public relations for a company caught in a scandal . . . but in recent years, that has seen a radical change.
Today, an increasing number of companies have recognized social enterprise investment—from a company foundation to setting up an independent entity to integrating social entrepreneurship directly into company operations—as an important new way for a company to combine its current operations with an Unconventional Strategies approach. Not just as a way to look good but actually as a way to grow the organization.
For that reason, social entrepreneurship can be considered one of the most compelling forms of Unconventional Strategies paths—one that can not only bind existing customers (who want to be part of such a positive crusade) but also attract new ones (who are attracted to the company’s image). It can also discipline a company in special ways, create healthy corporate culture, attract top-notch new employees, and give the company a higher, long-term purpose beyond simply short-term profits.
Pioneers in this work have been The Bill and Melinda Gates Foundation, notably in their work fighting malaria in Africa. Though, strictly speaking, theirs is an extremely well-funded charitable organization, the presence of one of the most successful commercial entrepreneurs in history at its helm, with his tough, empirical discipline regarding investments, has been a signal to other business leaders to investigate taking the same step.
A growing number of companies are experimenting with different forms of “conscious capitalism,” ranging from direct donations to the matching of employee donations, setting aside a fixed percentage of quarterly profits, one-to-one matching between sales and donations, creation of independent foundations, sponsorship of training schools, and even supporting a shift to social entrepreneurship through new value measurements (intellectual capital audits, carbon offsets, etc.). In classic fashion, these companies are experimenting with new models in a way that nonprofits rarely do—all disciplined by customers, investors, and the marketplace.
The good news: “Doing well, by doing good” is not only possible—done right, it can be an authentic way to connect with your employees, customers, partners, and shareholders in a meaningful way. But more important, it goes a long way to make all the hard work have greater impact than just dollars earned.
When we know better, we do better. When we get, we should give.
THE “GOOD-IFICATION” OF BUSINESS
UNCOVENTIONAL STRATEGIES
KEY TAKEAWAYS
Looking for an unmet need in the market and aligning that with a socially conscious business model can be a compelling combination. It can reshape an entire town, city, country, or demographic. Like what PayPal is trying to do by bringing the “un-banked” into the fold: giving access to money, financial tools and loans can lift people out of poverty and give them a chance for a better life.
Ideas can come from even the briefest of encounters. As with TOMS and with Grameen Bank, a single interaction transformed an entire “microlending” movement. Looking for a market “need” may be as simple as—well, experiencing a market need. When you see an opportunity to make a difference, and you have the means, wherewithal, and capital to do so—do it!
PUTTING IT ALL TOGETHER
“WALK THE WALK”
When you sacrifice [corporate culture] all on hyper-growth, it has a price on human capital.
—ARIANNA HUFFINGTON
ONE OF THE BIGGEST ADVANTAGES of pursuing an Unconventional Strategies growth path is that, when it works, it draws considerable attention from customers, the media, the markets, and competitors. Get it right and you can help change the world even as you reward your shareholders. “Mission-driven” companies tend to have 30 percent higher levels of innovation and 40 percent higher levels of retention.
Companies with highly engaged workforces outperform their peers in earnings per share by 147 percent. Growing a great company can be immensely satisfying, but saving millions of lives is a supreme achievement for you and every employee and stakeholder in your company. What greater legacy?
WHAT WORKS—AND POTENTIAL PITFALLS
COMBINATION: PATH 10—
Unconventional Strategies + Path 8—Partnerships
As we showed in the chapter on this path, Partnerships are a very powerful growth tool, as they enable you to reduce the risk of taking on some higher-risk strategies, including entering into new markets, developing new products, marketing and promotion, and filling in blanks in your company’s skill portfolios. One of the advantages of having pursued the Unconventional Strategies growth path is that it expands your universe of potential partners beyond the conventional choices pursued by your competitors.
COMBINATION: PATH 10—
Unconventional Strategies + Path 9—Co-opetition
We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.
—KLAUS SCHWAB, founder and executive chairman of the World Economic Forum
The idea of finding common cause to work in targeted areas with your competitor is appealing. But it usually runs into one big problem: your competitors usually have pretty much the same strengths and weaknesses that you do. Otherwise, they would have either fallen behind or raced ahead to industry dominance. The chances that you can find a scenario where you can slot together to produce something greater than the sum of your two operations are likely pretty slim.
On the other hand, if you are successfully pursuing one or more Unconventional Strategies approaches, it is likely that you now really are different from your potential partner/competitor in important and valuable ways. The result is a chance for an industry “hat trick”—success in pursuing an Unconventional Strategies growth path that sets you apart from the competition that segues into a Co-opetition growth path with one of those competitors that slingshots into a position of defensible industry dominance.
KNOWING WHEN TO JUMP
TEN GROWTH PATHS—IT’S COMFORTING TO think that’s all there are: a manageable number of options for how to proceed into the future. But I also suspect that a thought has been growing in your mind as we’ve marched through the descriptions of these paths: How do you know when one path is ending and it’s time to jump to another?
This may be the most important question of all. Even if you choose the right path to take, if you do so too early or too late, it may all be for naught. The analogy is trying to cross a stream by jumping from boulder to boulder . . . except that the rocks are moving. Time it wrong and you may find yourself falling into the water.
You can understand the context of your business, you can determine the combination of actions you need to take, and even execute in the right sequence. You may even accurately pick the next growth path you need to take. But if you jump too soon, you may leave money on the table from your current growth path (and maybe land in a still-unformed opportunity), and if you jump too late, you may miss altogether the window to that opportunity. Jumping from one growth path to the next requires the orchestration and precision of a military campaign.
In other words, to context, combination, and sequence, we need to add one more factor: timing. That kind of timing is not an instant in time. No company should ever identify a need to change a current growth path and then instantly take the leap. Rather, there are three crucial factors that must be addressed: monitoring, preparation, and execution. Let�
��s look at each in turn.
MONITORING
The key to operating any of the ten growth paths is to ride them until you have wrung out every ounce of revenues, profits, and market development and then make the (next) leap—that is, when the growth curve of the path begins to plateau, when you still have the maximum momentum, not when the financials have begun to flatten—or worse, to fall—and the company starts to stall, lose customers, and see the departure of key talent.
How do you know if your current growth path is about to stall, before it does? If you wait for two quarters of flattened or falling revenues, you may be too late.
Not everything that can be counted counts, and not everything that counts can be counted.
—WILLIAM BRUCE CAMERON, novelist
The answer? Establish metrics for your company’s health and put systems in place to monitor those metrics. Doing so is more possible than ever before, thanks to complex algorithms, artificial intelligence, CRM, analytics, information processing, and big data. Some companies are even establishing the new position of chief data officer (not to be confused with chief information officer), whose task is to continuously gather data from operations throughout the company, process it, and deliver it in a cogent way—often some kind of user-configured control panel—so that management can monitor the “vital signs” of a company in real time. Short of that, smaller companies can use the Web and internal networks to constantly poll existing operations and assemble the equivalent overview.