The Soft Edge

Any person that’s either been in business school or has studies business for some period of time know that in order to be successful, you’ve got to spend lots of time working on your strategy as well as developing the processes that will ensure that it gets executed perfectly.

In reality , though, there is a whole lot more to creating a successful business than just strategy and execution. You have to work on creating a relationship with people as without them, regardless of if they’re your staff or your customers, you can’t expect to succeed.

The next paragraphs, will outline how successful businesses, starting from Amazon and going to Northwestern Insurance, have been able to succeed as they were able to create meaningful connections with others.

You’ll find out:

How come there isn’t an alternative to basic good taste;
How come only a few partake in the process of making a Porsche, and
How come you shouldn’t ever have to purchase more than a couple of pizzas for your team.

Successful companies are founded on three key elements: a strategy, a hard edge and a soft edge.

What comes to your mind whenever you think about successful companies? Do you think of great leaders, management, or products?

At the base of every company is their strategy. Think of a company as an equilateral triangle; the base is the strategy, which outlines the market that you’re in, the customers that you have, and what it is that your rivals are doing. This base helps support the triangle’s other two sides.

One side of the triangle is the hard edge. This side outlines how the company actually operations. You can’t simply have a solid strategy; you need to be able to carry it out expertly, too. You are able to measure the success of that wide via raw figures that calculate production speed, capital efficiency, logistics, along with many others.

It’s more difficult to calculate the other side, which is the soft. This side is the more profound meaning that the business conveys to both its customers and staff. This unquantifiable part is exactly what makes a business great.

Decent companies have a strong base and they comply with an effective hard-edge operation modal. However, you’ll find that the best companies always do a whole lot more than it, which is what gives them the soft edge.

Therefore, how are you able to calculate your business’s soft edge? You need to take a look at values, innovation, culture, as well as creativity, which are thinks you aren’t able to put on a graph and monitor if they go hand in hand with your investment returns. That being said, there is a model that will assist you manage and look after your business’s developing soft edge.

Suppose that your soft edge is a platform that is held up by five pillars. One pillar is the trust that you earn from your staff and customers, the other is the knowledge that nurture both learning and innovation, another is the teams that work together to share ideas, the fourth one is the taste that provides your item with depth, and the last one is the story that provides your company with purpose.

Let’s now dive deeper into each pillar that supports the soft edge.

Trust is a fundamental part of the soft edge.

You know that feeling that your best friends give you; the feeling that in the end, everything will be alright? That’s exactly what trust is. Can you imagine if that’s how you felt at work?

At the core of the soft edge is trust. It’s just as important to create external trust with your customers and internal trust with your employees.

It’s incredibly crucial that your customers are able to trust you. Indeed, the most recent Edelman Trust Barometer, which is an internal study of trust in companies and various other organizations, demonstrated that trust impact corporate reputation much more than how quality the items or services are.

You are able to gain the trust of your customers by showing them that your company is secure. Take, for instance, Northwestern Mutual, which was founded on trust. It’s the biggest American insurance provider and they’ve spent 157 building trust with their customers.

The ratio of their contracts to their assets is 7:1, which results in $1.5 trillion in contract while resulting in assets worth $215 billion. It’s obvious that these numbers help prove how both sound and frugal their company is that their customers aren’t afraid of trusting them with their money. This goes to show how there is a lot to be gained from turning trustworthiness into one of your business’s main values.

You can start building internal trust the moment that you’re honest and open with your staff. NetApp, a network storage business, has been pretty successful with that. NetApp is constantly in a number of “top places to work” lists; they were even on Forbes’s list of the most innovative companies.

Even when the business had gone through a rough patch where they had to get rid of some of their employees, their reputation of being both honest and open remained. How come? They had treated their employees with the utmost respect. In fact, their executive management team had even gone to all of the offices that had been impacted in order to deliver the unfortunate news in person. Since they had trusted their company, the rest of the staff, although understanding that they could also potentially get laid off, still worked just as hard.

A company needs smarts to keep up with the latest ideas and technologies.

You know those business that always look as if they are one step ahead of their rivals? What makes them that intelligent; do they have a lot of staff that are able to read at lightning speeds? On the outside, it’s difficult to figure out why a company is intelligent, but the thing is, intelligent companies are actually defined this explicit outline: hard work and the continuous search for improvement.

A strong business always needs to be prepared from change. Therefore, they have to work hard and be ready to make some mistakes. This is exactly what makes a business intelligent.

The most effective way to boost the intelligence of your business is to learn from all of the mistakes that you’ve made. The infamous chef and owner of the Momofuku restaurant group, David Chang, understands this very well. He had been taught in Japan, which is where they highly value the concepts of kaizen (or constant improvement) and hansei (which means to acknowledge your own mistakes.

Change makes sure to follow this in his restaurant, therefore, he provides his employees with the freedom to try out different things, which lets them make mistakes and then learn from them. That’s how he is able to enhance the dishes that he ends up serving.

Therefore, intelligent companies are continuously trying to learn and improve. This is accomplished by both learning from their mistakes as well as from other businesses, too, including those in other industries.

For example, the healthcare giant Mayo Clinic uses that type of lateral mentality when training their staff. They had sent their employees to train at the world’s two biggest businesses in the hospitality industry. They had wanted their staff to learn how to treat their patients as customers, meaning they learned how to treat them with lots of respect and care. Therefore, Mayo Clinic staff are taught skills that aren’t usually taught in the healthcare industry, such as how to make their patients feel more at ease with a bit more than just a simple greeting.

Therefore, you need to think outside of the box and both learn from your competition as well as look for inspiration from various other industries. Don’t forget that in business, being intelligent is a continuous process.

Teams facilitate learning, productivity and innovation most effectively when they’re small and diverse.

Obviously intelligence isn’t the only key to success; your company need to have a proper organization as well.

People have been programmed to operate and do well in groups like families, tribes, and communities. Companies need to try to recreate the types of groups that we naturally work nicely in.

As a result, teams have to be little as companies are able to make sure that communication is both efficient and effective.

The CEO of Amazon, Jeff Bezos, had once stated that a development team has to be little enough that just two pizzas will be able to feed all of them. That means that your teams shouldn’t be any more than eight to twelve people. In a group that little. Each person is able to get their hands dirty by testing out new ideas before talking about the results with the entire team.

Porsche had also put forth this strategy. Indeed, as soon as they made mini-teams that were focused on enhancing both their items and development process, their production had increased four fold while their profitability rose 19%.

Yet another instance of that is SAP, which is a German software company that had been inspired by Porsche, so they also ended up scaling down their development teams to around eight to twelve staff. As a result, their development time decrease by half, dropping from 14.8 to 7.8 months on average.

The most successful teams included staff with a broad range of backgrounds, beliefs, as well as skill sets. Diversity helps makes sure that there are a number of perspectives on whichever project is being worked on.

Nest Labs, which is a business that creates smart thermostats is a believer in diversity across teams. Therefore, they always ensure that engineers, marketers, designers, as well as other staff together that way they get a multifaceted perspective on each item that they are working on.

Nest Labs’ CEO, Tony Fadell, states that the decision behind that is basic; their customers are diverse, therefore, their own teams need to be, too.

Taste is a combination of function, form and meaning - it gives customers an emotional connection to a product or brand.

What is it that makes smartphones so great? Is it the way that they look, how they work, or how it feels in our hands? Great design doesn’t only depend on a good interface; there is constantly something else.

The items that are top-tier require taste. Taste needs to seem as if it comes naturally, which gives the item a sense of both intelligence and mystery. The quality is what’s difficult to pinpoint, however, it makes the customer feel both enthusiastic and smart. Even though taste may feel like an abstract idea, each business needs to go after it.

By taking into consideration taste, Tony Fadell attempts to provide his customers with a Nest Labs experience regardless of whether they are doing something as basic as purchasing a thermostat.

Nest Lab thermostats have a very clear design that doesn’t have any buttons and they are remotely controlled via WiFi. Customers receive them in bamboo boxes that symbolize Nest Lab’s promise to both green production as well as waste reduction. In addition, they come with a unique screwdriver and screws that let customers put up the device where they think it would look the best.

Research about aesthetics has proven that people would rather have familiar designs and objects instead of get new ones. The thing is, we’ve got a sort of affection for those designs that we can identify to since they bring out all sorts of emotions and memories that we potentially link with objects close to it from the past. Therefore, whenever you are working on your own brand, try to associate it to something that people already really like.

The infamous Apple designer, Jony Ive, had been inspired by Dieter Rams, who was the designer for Braun who had been inspired by the Bauhaus school of design. Therefore, what makes Apple items so awesome is that their design embraces the minimalist tradition.

The founder of Starbucks, Howard Shultz, had also understood the value of taste which is why he didn’t simply create a coffee business; he had remade the way that Americans drank coffee by bringing over Italian coffee culture to the states. His cafés were infused with ambience, which embodied baristas and Italian words for the sizes of the coffee.

A company gets its purpose from its story.

Now, let’s outline the final pillar that supports a business’s soft edge. Just take a look at the initial Apple items which had been created in the garage in Palo Alto. Stories such as that one play a huge role in molding our perception of businesses that are successful. In fact, often times, it’s the story that makes us look at those companies as great.

A business’s story is what helps us get a good understanding of it. The brand finds its purpose that way while letting us know where it’s from, what it is today, as well as where it is headed.

For example, Northwestern Mutual helps create their story by hosting a yearly two-day meeting in Milwaukee’s BMO Harris Bradley Center, where over 10,000 financial representatives attend. Those representatives share their experiences of getting over obstacles and reaching success. This meeting is a part of their 157-years-long-story.

Another big part of their story is the 10-3-1 sales formula: ten calls need to lead to three meetings which then lead to one sale.

Whenever Northwestern is hiring, their candidates have to prove their perservernence by attempting to land sales with the help of that formula. This ends up increasing their recruitment costs five times, however, it’s necessary in order to uphold the story.

The best stories are always the simplest ones which is why you don’t want to make yours too complex. People always have the best reactions to simple and direct messages, regardless of whether it’s visual arts, writing, or the story of your brand. Therefore, you want it to be simple.

In addition, steer clear of making assumptions about your story as you will end up looking silly should they not come true. Therefore, embrace unpredictability.

Teams, taste, intelligence, and trust, are easy to forget, just as your story is, too since the business environment is so fast-paced today. However, we’ll outline in the last section how the pillars of the soft edge can help you stand out from your rivals.

The soft edge is what separates you from your competitors.

It’s crucial that you don’t think about the soft edge as just another department in business, such as marketing or logistics. In fact, it’s so much more. Don’t forget how it’s the human part of a company.

Today, businesses have an unexpected amount of data that calculate their hard edge. The soft edge, on the other hand, is build on human ingenuity as well as innovation, which is what helps some businesses stand out from others.

Sauber, which is the Swiss team that competes in Formula One helps outline the importance of the soft edge. Sauber utilizes systems that collect a lot of information to assist them with enhancing their vehicles. The thing is, though, in the end, it’s the driver who needs to innovate and perform at 200 MPH. A race that’s successful combines both human awareness and useful data.

If a business would like to constantly innovate, deal with rough patches, and revel in everlasting success, they have to have a business model that is able to cover all three of the edges: strategy, the hard edge, and the soft one. The soft one, however, is the simplest to disregard which is why many companies don’t even attempt to do something about it whatsoever.

For example, Wall Street is propelled by the hard edge which revolves around speed, execution, as well as capital efficiency in the short term. A lot of CEOs, who had been annoyed by investors and overloaded with stock market data, end up forgetting about the values of their staff and their customers. It goes to show how this hard-edge method definitely won’t help them stand out from their rivals.

On the contrary, businesses such as Northwestern and Apple stand out since they care a lot about their soft edge. This not only makes them popular, but it also enhances their relationships with customers, bringing financial wins as well.

Therefore, don’t disregard the soft edge as it is too important and valuable to not be looked into, despite the fact that so many businesses do just that. Don’t forget that a business with a soft edge is a business that stands out.

Final Summary

The soft edge is exactly what makes amazing companies stand out in today’s very crowded business environment. Therefore, make sure that you put in the time that it needs. Create trust with your customers and your staff, use intelligence to keep up as well as put people into groups that’ll be effective. Get your business to have solid taste and create a captivating story for it. You company will not only be more successful, but it’ll also end up being more meaningful.

Practical advice:

Create teams that you only need two pizzas to feed.

This rule of thumb has proven to be effective for both Amazon as well as Porsche, so it will work for you as well. Teams are the most effective whenever they are diverse and little that way everyone is able to be completely engaged. This is why two pizzas should be just enough to feed the whole team.