Navigating Change in the Era of Digital Transformation Through Targeted Innovation, Customer Understanding, and Courageous Leadership
Understanding the Challenge of Legacy Companies
One of the most significant obstacles faced by legacy companies today is their tendency to optimize existing successes rather than innovate. As Steve Dennis, a seasoned retail expert and author, points out, this stems from leadership structures that reward managers for maintaining the status quo. The conversation highlights the prevalence of incrementalism driven by a natural aversion to risk. This becomes a significant hurdle in environments where fast-paced disruption requires more audacious steps.
Dennis shares a poignant example from his time at Sears, where the focus was on defending the status quo instead of embracing substantial changes. This attitude is deeply rooted in organizational cultures that lack incentives for challenging the established way of doing things.
The Seven Mind Leaps for Mastery in Leadership
Dennis introduces the concept of the “seven mind leaps” essential for current and future leaders to succeed. The first and perhaps the most crucial leap is to crush the ego. Leaders often struggle with admitting that they do not fully understand new concepts, fearing vulnerability or appearing weak. Dennis openly discusses his battle with imposter syndrome during his tenure at Neiman Marcus and how overcoming this enabled him to take greater risks, such as transitioning to entrepreneurship and authorship.
Leveraging Human Connection in a Technology-Driven World
In the conversation, Dennis emphasizes the necessity for leaders to understand both the emotional and practical aspects of customer experiences. For instance, shopping fulfills emotional needs just as much as practical demands. Leaders must carefully distinguish areas where efficiency is vital from where human connection should be prioritized. While technology can make humans more effective, powerful brands appeal to our irrational side and forge deeper connections.
Generative AI, discussed by Speaker B, illustrates this pivot. AI amplifies business efficiency but should be seen as an enabler rather than a replacement for human creativity and connection.
Toward Targeted Innovation and Customer Segmentation
A recurring theme in Dennis’s discussion is the necessity for companies to narrow their focus and aim. Instead of striving for vast scale and scope, businesses should zero in on a specific customer base, providing a “wow factor” that deeply resonates with that niche audience. Tractor Supply Company is cited as a prime example of this targeted approach. By honing in on its target market, it has evolved into a powerful retailer.
Restoration Hardware’s RH gallery stores are another example where delivering a “wow factor” for a specific clientele has proven to be a successful strategy. This concept of “Brandwow” champions going deeper and becoming more meaningful to a smaller set of customers.
Balancing Core Business and Innovation
Dennis emphasizes the importance of crafting a balanced approach to transformation. Traditional businesses must adopt a portfolio approach, incorporating both cutting-edge innovations and core business considerations. This involves a culture of experimentation, where prioritizing smaller transformation projects becomes critical. Organizational processes and mindsets must be geared towards saying yes to innovation and allocating budgets for early-stage initiatives.
Both speakers underscore the necessity for agility and disciplined innovation. Companies should approach innovation as a core discipline, ready to adapt to changing circumstances.
Courageous Leadership and Navigating Challenges
Courageous leadership is a recurrent theme throughout the conversation. Dennis discusses the importance of awareness, acceptance, and action in navigating the inevitable changes in customer dynamics, competitive landscapes, and technological advancements. The journey from acceptance to action is fraught with challenges and requires a realistic understanding of an organization’s limits and opportunities.
Leadership must not let ego inhibit effectiveness. Instead, it should prioritize the most crucial objectives, avoiding distractions and fighting through perfectionism. Dennis also touches on personal growth, citing his struggles and eventual path towards confident, effective leadership.
Conclusion and Continued Dialogue
In conclusion, mastering leadership amidst disruption demands a nuanced understanding of current market dynamics, a targeted approach to customer engagement, and the courage to innovate and adapt. Steve Dennis’s insights offer invaluable guidance for leaders striving to navigate this complex landscape.
Future discussions promise to delve deeper into these themes, offering continued learning and exchange of ideas. For those interested in more of Steve Dennis’s wisdom, he can be reached through his website and is active on LinkedIn and other social media platforms.
Stay tuned for further insights from the world of applied intelligence, where the intersection of technology and human creativity continues to unfold.
Hosted by: Imteaz Ahamed
Video Transcript
Steve Dennis [00:00:02]:
Welcome to applied intelligence, a conversation at the intersection of people, technology and getting stuff done. Now here’s your host, Imtea Ahamed.
Imteaz Ahamed [00:00:18]:
Welcome to implied intelligence. Today I’m excited to have Steve Dennis on my podcast. Steve is a retail luminary known for his insights and innovative ideas about growth, innovation and digital disruption. He’s also a bestselling author and his book remarkable how to win and keep customers in the age of Disruption has been celebrated across the world for its fresh take on consumer behavior and the future of shopping. We’re here to talk about his latest book, leaders transforming your company at the speed of Disruption, which has recently hit the shelves. Steve has a rich history as a c suite executive at major Fortune 500 companies and now lead sageberry Consulting. His experience has given him a unique perspective on driving customer growth during constant change. Besides being a senior contributor to Fords and hosting the top rated remarkable retail podcast, Steve dynamic keynote speeches have captivated audiences across six continents.
Imteaz Ahamed [00:01:11]:
His deep understanding of market dynamics and consumer engagement makes him a go to expert for navigating today’s complex business landscapes. Before founding Sagebrey Consulting, Sae was the chief strategy officer at the Newman Marcus Group where he led efforts in customer insight, loyalty and multi channel marketing. Join us today as we dive into the key insights and transformative strategies from leaders leap with Steve Dennis hi everybody and welcome to applied intelligence. Today I have the pleasure of speaking to Steve Dennis. Steve, I’m going to let you tell your story as the introduction and we’re going to open with a question that I ask all my guests, which is if your autobiography had five chapters, what would the chapter titles of each section be?
Steve Dennis [00:01:55]:
Well, it’s a great question. It’s not one that I’ve been asked too much, but in that way I think the first would be some version of kind of lost and afraid. My childhood was very difficult. I had a mother with mental illness and so there were a lot of things that quite challenging in many respects. Then probably chapter two was something like wandering because I was trying early in my career, well, and as I went into the professional life to try to find what I was excited about and one of those kinds of things. Third would be probably something like me, me, me, because I got very selfish, ego driven, success driven, really decided to try to focus on working my way up the corporate ladder. Once I went through a series of jobs, I guess fourth would probably be something like awakening or wake up where I realized some of things I was doing were not really super helpful to me and tried to understand what I really wanted to do and explore a different path and get moving in that direction. And then the fifth, which is the last bit here, is probably like growth and transformation, something along those lines.
Imteaz Ahamed [00:03:05]:
So when it comes to having life where, you know, you start off with a lot of adversity, you start off with a lot of challenges in that as a child or in your teens, what motivated you to work hard and do the things that you got to do in your career?
Steve Dennis [00:03:20]:
Well, I think some of it was trying to find a path that got me out of some of the things that weren’t so enjoyable and, you know, get attention or success. So for me, that was initially around athletics. Then it moved more towards academics, some leadership kind of positions. So both high school and college, I was kind of an extracurricular overdoer or whatever. And, you know, that got me affirmation and attention and those kinds of things. And so I could kind of compartmentalize aspects of my life over here and, I guess double down on saying I had some success or get the kind of attention I desired.
Imteaz Ahamed [00:04:00]:
And as you start to achieve things, how do you notice or how do you realize that you’re very good at something and double down on that?
Steve Dennis [00:04:07]:
Well, I suppose it’s. Well, early in my life, earlier in my life, I would say I did a lot of things that my dad did to get into some psychoanalysis here about why that was. But to the extent I looked up to him, I probably leaned into things that he was successful at. And then in particular with sports, he was a much more successful athlete than I was. So I tried that for a while to see that, well, I’m never going to be as successful as he was. Maybe moved to something else, which is more about academic leadership, but that’s certainly a little bit of trial in our. Was pretty willing to try at a fairly narrow range because I was willing to try things. And then, you know, I get some positive feedback and then I just do a little bit more and more.
Steve Dennis [00:04:54]:
If it doesn’t go, things don’t go so well. I’m like that know less of that or maybe stop. So there’s definitely an aspect of trial and error and encouragement. I had a few mentors of sorts that also pushed me in a certain direction or helped me get better at some things.
Imteaz Ahamed [00:05:09]:
So I had the pleasure of reading your book, which recently launched, which is leaders leap, transforming your company at the speed of disruption. For me, the book, it tells your story, and it tells the story of how organizations really need to adapt and change and how they could possibly do that. And so for me, the beginning part of your book, you advocate for a complete reset in leadership mindset. So could you share, like in a story and an example of a time where a traditional leadership approach failed and how a reset could have really changed the outcome?
Steve Dennis [00:05:44]:
Sure. Well, part of my background was when I first got into retail, which was several years into my career, and I joined there’s Red Buck and company, which I imagine some of your listeners would know at one point was the world’s biggest, most profitable retailer. When I joined, they had lost the top position to Walmart, but was still a very huge company with lots of struggles. And I spent twelve years there, the last few years particularly working on trying to turn around the company. And aside from that’s just a sad story, and it demonstrates how very successful companies can fail over time if they don’t evolve. The leadership mindset there was largely around protecting the core business, even though we were quite aware of many of the struggles and many of the things we needed to do to get on a better path. In most cases, when push came to shove, we protected the core business, we defended the status quo or we did very incremental things. And since then, I left there 20 plus years ago.
Steve Dennis [00:06:44]:
So. But you know, what I’ve observed is lots of companies, lots of organizations, in many cases even the most successful ones, struggle to make that transition to the new world order, so to speak. So I think I was affected pretty early on in my career by seeing how a large successful company could really struggle to navigate disruption. In Sears case, it wasn’t so much e commerce or digital. Obviously, what we’ve seen more recently in last 15 years or so has been much more affected by digital technology and other forces.
Imteaz Ahamed [00:07:15]:
So what do you think in terms, and you had a beautiful term for me in the book, which is about incrementalism, being married to incrementalism rather than taking step changes. Right. That safe space of just changing one or two things and not doing anything big, what do you think really drives that within a big organization, considering the impacts of doing transformation has. It’s expensive. There’s a lot of people around that. Why do people just play safe?
Steve Dennis [00:07:43]:
Well, I think there are at least a couple of things at work. The first, which is out of my lane of expertise to a certain degree, is that as human beings, we’re wired, generally speaking, to avoid risk. So as I talk about in the book, that’s super helpful when a bear is charging towards you, but not so helpful in lots of everyday or more strategic kinds of decisions. So I think we actually have to be very intentional and very focused and work hard to overcome how most of us are wired. Obviously people are along a spectrum of how risk averse are not. They are. But it is something, I think that requires a lot of attention and intention. I would say in the corporate world or bigger organizations, most people, myself included, that have success within a more bureaucratic kind of organization, you generally don’t get rewarded for rocking the boat.
Steve Dennis [00:08:36]:
You generally get rewarded for perpetuating the organization, meeting your quarterly targets. If you’re a publicly traded company, being focused on continuing to do what made you successful in the past. So if there needs to be a shift, it’s not automatically something that people gravitate to a lot of this. Some folks may be familiar with Clayton Christensen’s work, his book the Innovator’s Dilemma, which I try to update in many respects. He basically says part of the reason why legacy companies don’t innovate is leadership gets rewarded for optimizing what they already have, and that often makes them blind or even if they see it, unwilling to compete with themselves. And so disruptors come along and they find a little weakness or opportunity, which might be just two or 3% of the business. That’s the wedge in, and that allows them to expand and get scale and scope to perhaps totally remake an industry. So I think this is a pretty well understood phenomenon.
Steve Dennis [00:09:38]:
I don’t think I bring a lot of insight necessarily to the problem. I think the question is, what do we do about it? And what I try to do at leaders leap is provide a different perspective than some of the territory that’s been covered by others.
Imteaz Ahamed [00:09:51]:
So you describe the seven mind leaps that leaders must undergo to succeed in the future. Which of these mind leaps do you think that leaders most struggle with and why?
Steve Dennis [00:10:02]:
Well, I would probably say the first one, and maybe I should explain a little bit what I mean by a mind leap. I try to make the distinction between a set of mindsets that, generally speaking, leaders have and then to contrast that with a pretty different place to move. So that’s the leap, and which, depending on your situation, may or may not be more or may or may not be super significant. But the first one I talk about is crush your ego. And I would say, I don’t know if it’s the one that most people struggle with, but in my experience, it’s pretty foundational, because as leaders, if we’re gonna change what our organizations do, we have to change ourselves first. And I think in many cases, ego is the enemy to steal Ryan Holiday’s title of his book. But I start off the chapter with a quote from a different author, which is, there is an enemy and that enemy is you. And I think we’re often our own worst enemies.
Steve Dennis [00:10:56]:
And sometimes that’s because we relentlessly cling to power. Sometimes it’s because we have to be right. Sometimes it’s because we’re unwilling to see that what made us successful in the past actually may not serve us very well in the future or actually might get in the way. So it may play out differently for different people. But I think in a lot of cases, the unwillingness to challenge your ego, get over yourself, so to speak. I’m the problem. It’s me to channel Taylor Swift, that great leadership and thought leader. So that would probably be the one.
Steve Dennis [00:11:28]:
But it’s related to fear, which is one of the other chapters.
Imteaz Ahamed [00:11:32]:
So for me, I’ve been in many instances, especially being on an e commerce and digital media journey in my career, where I’ve been presenting to a lot of senior stakeholders and most of them had no clue what I was talking about, but they would never say that in a public forum, in a business meeting. So, you know, later on, some of them, not all of them, some of them would reach out and go, hey, can you explain ABC to me in terms of what you were kind of explaining in that presentation? But a lot of people wouldn’t.
Steve Dennis [00:12:05]:
Yeah.
Imteaz Ahamed [00:12:05]:
And they were very happy to just continue at the status quo. And as of the latest that, you know, typically how that don’t necessarily progress and adapt well.
Steve Dennis [00:12:14]:
Yeah, I do think being a little bit older than you, so this is a bit of a generational thing, but not completely, is that I think there was this kind of militaristic, like, top down command and control sort of model that many of us grew up in. That was definitely my experience at Sears, to a lesser degree at Neiman Marcus. And I see it to varying degrees with organizations that I consult to and leaders I work with. But if you as the leader are supposed to be the source of all wisdom and it’s not to your advantage or not perceived to your advantage to be vulnerable, because to admit that you don’t know what’s going on when you’re supposed to be in charge and in control and so skilled is often a scary thing to do. But it’s perpetuated, I think, by a lot of the way I was taught and I was brought up and what made me successful. So to, oh, and I guess the other thing is, which I talk about a little bit in the chapter is imposter syndrome, right. That I think many of us, and I’ve talked to colleagues and people I’ve advised, you know, if you get them in a vulnerable moment, they may say, you know, a lot of times I’m deeply insecure, you know, like, I may look like I’m in charge or that I’ve got everything, but I’m projecting an image partially to protect myself. But in many cases, that’s what makes you successful.
Steve Dennis [00:13:36]:
I talk a little bit, though, not too much, about my experience at Neiman Marcus. And during that time, my personal life was a mess. At one point, I was separated from my wife. I had health problems, I was depressed. I never told anybody at the company that how bad struggling. I was just going to fake it, fake my way through. And, you know, it turned out that for a bunch of reasons probably not worth getting into, was a bad path to take. It neither served my job.
Steve Dennis [00:14:07]:
It didn’t serve my family. It didn’t serve me personally. So, but what I made up there was that the last thing I’m going to do is let anybody know that I don’t know what I’m doing, that I’m struggling. I’m just going to grin and bear it and muscle my way through it. And that was certainly not the right path for me. And I would argue that generally speaking, that’s not a good way to show up at work, much less show up in your personal life.
Imteaz Ahamed [00:14:33]:
So you also discuss fear and biases can lead to timid transformations. Can you talk about a time when overcoming these personal challenges led to a breakthrough in your career or a company you advised?
Steve Dennis [00:14:46]:
Well, when I left the corporate leadership positions, which was 1516 years ago now, I had really been on a pretty great trajectory. I was the youngest vice president of a division over a division at Sears, 100 plus year old company, joined the Neiman Marcus senior leadership team, was getting more responsibility, making a ton of money. But ultimately, I wasn’t very happy and I wasn’t doing the kind of work that I felt was bringing out the best in me. And as I said, some of that had to do with what was going on in my personal life, but a lot of that had to do with trying to understand where my interests and my skills really sat. And when I left and I took some time off and dealt with some of my personal stuff, I started to get to the point where I said, well, you know, what, what are my skills? What are the things I really do? What brings me joy? What kind of impact do I want to make? And fortunately, I was at a place that I was relatively financially. So I realized that I found myself in a position that many people don’t find themselves in. So I’m very grateful for that and try to have some humility around that. So that was a big advantage for me, to be able to go in a different direction.
Steve Dennis [00:16:03]:
But I try to really understand how I was my own worst enemy, what limited beliefs I had, and kind of open the aperture in terms of possibility. And I’ve taken a couple of pretty significant risks. Stepping off the corporate ladder to be an entrepreneur was a pretty big risk. Deciding that I was going to try to be an author and a speaker, which wasn’t something that I had been doing in the first 50 years of my life or something. I mean, a little bit, but not in this particular way. You know, that was a risk. Even writing this book, I’m pretty comfortable in the retail lane and talking about strategy from a more academic perspective, but to talk about leadership in a broader basis, to write in a less argumentative left brain sort of way as a stretch for me. So, you know, I think it’s easy to say, oh, just take a leap, you know, let go of the past, all those kinds of things.
Steve Dennis [00:17:00]:
I mean, those are very trite things to say, but I say them all the time. But there’s an element of truth in it, I think, for many people, definitely has served me well, and in many cases where I wasn’t willing to walk through my fear or take some of those chances or trust my intuition, that’s kept me stuck.
Imteaz Ahamed [00:17:18]:
A lot of CEO’s right now, they’re under a lot of pressure to deliver rapid transformation. But how do you balance that rapid transformation or the promise of delivering transformation with strategy development at the same time?
Steve Dennis [00:17:34]:
Well, so one of the concepts in the subtitle of the book, transforming your company at the speed of disruption, is to really understand and accept the speed of disruption for your particular situation. So in retrospect, I probably could have been a bit more clear about this in the book, but there’s plenty of industries where the speed of disruption is more or less non existent or quite slow. I keep using the example of my dry cleaner. I don’t know that my dry cleaner is going through a ton of disruption, but I don’t know, maybe there’s robotics or AI or something like that. But my sense is they don’t need a bold transformation. If you’re in the department store industry, you’ve needed a bold transformation agenda for 20 years so you have to understand how quickly you need to adapt, as well as the degree of change you need to deliver. So your mileage will vary, so to speak. But I think that’s part of what I get at in chapter two about waking up, which is you have to, number one, open the aperture.
Steve Dennis [00:18:37]:
Cause many companies, of course, get blindsided because they define their business too narrowly. Just go back to the department example. If you said, well, my business is I sell a bunch of different merchandise from brands, in a regional mall, in a two or three story building with escalators and departments, then your focus is on optimizing that. If you look at it from what the customer ultimately wants, there’s lots of ways for customers to get the cosmetics sell. For example, Ulta is a company that started 25 years ago, and it’s now worth more than the top five department stores in North America combined. So some of that is understanding your domain. What business you end is kind of the cliched way people have talked about it. So a lot of it is doing the homework, accepting the reality, what’s changing, seeing how fast and how and boldly you need to move, and then being willing to do it.
Steve Dennis [00:19:37]:
But you’re always, or shouldn’t say always in most cases, you’ve got a balance. Moving the core business forward, optimizing, turning the dial while investing in that next set of things that are going to determine your future. So again, that’s a portfolio approach. It’s going to vary depending upon where you find yourself. It’s just the worst situation, which, unfortunately, I’ve experienced this years I’ve experienced as an analyst and studying different situations, is some companies get so far behind that they can’t come back from it.
Imteaz Ahamed [00:20:11]:
That’s always a struggle. I think the analogy that I’ve always gifted once is, and I worked in a very small team within a rotary company. And the analogy given to me was, think about yourself as a small cog in a clock, right? You’re spinning, but you spin faster than the large clock. Sorry, the large wheel within the clock. But eventually your wheel, if you maintain your growth rate, is going to catch up to the big clock. And then we’re going to need to work out how do we integrate all of this stuff. Right?
Steve Dennis [00:20:51]:
Right.
Imteaz Ahamed [00:20:51]:
How do you take a bet on which of those small clocks or which of those small cogs in the watch that you need to take? So how do you prioritize those smaller transformation projects to start with over just doing everything that technology or other companies kind of push you to do?
Steve Dennis [00:21:15]:
Well, it’s not always easy, particularly since things are moving so quickly and we live in a, for most of us anyway, a more complicated world. So I think the starting point is to do your homework, understand very realistically break through any denial you might have about your situation, understand your threats, understand your opportunities, try to assess the stage of those. But in most cases, it’s going to be a discovery and experimentation process. Like usually you don’t go from a place of doing nothing to a bold moonshot. Moving at the speed of disruption is not about being reckless or a bunch of Hail Marys, the situation you want to avoid. So, like I said, I think it’s typically a portfolio approach where you’ve got some research kinds of things, you’ve got some probes, minimally viable products, prototypes, what have you, as well as more pilots and everywhere in between. So again, depending on your situation, you’re going to need a more robust pipeline business that is purely sunsetting. You’re going to have to fill your pipeline and be moving many more pipes through.
Steve Dennis [00:22:25]:
Maybe you need to make an acquisition to jumpstart that. If youve gotten so far behind other companies where things arent moving so quickly, you can take a more leisurely pace. But I think the key is to develop the knowledge, develop the discernment, to be able to separate things that are the bright, shiny objects. I was giving a speech the other day and I said, well, there was a point when I was at Neiman Marcos where we were trying to figure out our strategy to deal with second Life and MySpace, because there was a time where that seemed like those might be big things. And I think actually we took a very good approach, which is we studied them, we tried to understand them, we talked to people who understood the market. We compared that to our knowledge. We tried to say, are we thinking about this too narrowly? Are we being dismissive of it? So we did a low level about approves. And so when it turned out that those didn’t go anywhere ourselves too badly, had they turned out to be more promising, we were a year ahead of where we might have been if we just sat back and watched.
Steve Dennis [00:23:27]:
I think you could say the same thing about metaverse. And where we are with AI is a different kind of thing. But if you go back a year ago, where most people weren’t doing very much about AI at all unless you were OpenAI or Microsoft or some others. So I think it’s doing your homework, it’s building agility, it’s test and learn. Being willing to step on the gas when you have to. That tends to separate the great innovators from the companies that, that struggle.
Imteaz Ahamed [00:23:53]:
The piece here for me is if you’ve always done what you’ve always done, and you need to start taking school bets. Typically, getting the time and attention of a senior executive to make $100,000 bet or a $500,000 bet when they’re usually dealing in magnitudes of tens of millions is very different. Right. So, yeah, in terms of having a portfolio approach, how do you segment a senior executive’s time or a team to kind of go after these smaller things and still be abreast of all the things that are going on?
Steve Dennis [00:24:32]:
Well, the pithy answer to that is very carefully what I would say first and foremost, and I often start with potential clients with this question, which is, is your organization wired to say yes, or is it wired to say no? Because if fundamentally your organization is wired to say no, it’s going to be a struggle forever. So there’s an attitude, a mindset about playing offense versus playing defense. As much as I hate to use tired sports analogies, that’s the starting point, and the leader has to model it. I think if you look at the organizations that consistently innovate and stay at the head, that there is this culture of experimentation, there is this acceptance of failure as a part of innovation and all those kinds of things. So the cultural mindset and support is very important. Then you get down to the actual processes. How are you organized? How do people get money for early stage things? What’s the gating process? What percent of your budget every year is laid out against this portfolio approach? I can tell you I’ve worked at several companies where there was essentially no R and D budget. So the most significant thing that we did at Neiman Marcus, without getting into the weeds on this too much, is.
Steve Dennis [00:25:52]:
But because we had essentially no budget for new stuff, when we had a pretty significant idea that was going to require several millions of dollars, we basically had to go find the money to do it. And in this particular situation, the only way we got the money, because, frankly, our CEO was kind of rope it, doping us, and wanting to do anything, was one of the other senior executives said, I will find the money in my budget. And that’s because she felt so strongly that we had to do it. It was to the disadvantage of her personally in the short term, and to her organization, because having to find the expense meant their annual budget not be as good. So it’s a very courageous thing to do, and I’m very appreciative that she chose to do it, but that’s demonstrably a bad process. So if you can’t work in innovation, see it as a discipline, see it as an expertise, you’re very unlikely to have any real success.
Imteaz Ahamed [00:26:51]:
I’m transitioning into one of my favorite topics right now, which is generative AI. And AI in general, you emphasize human inspiration over AI in leadership. How can leaders cultivate human inspiration in their teams, specifically in tech savvy industries?
Steve Dennis [00:27:09]:
Well, I’m not sure that’s exactly what I meant, because that’s not really what I believe, but I think that what we need to understand, and this is a little bit overly black and white, is there are things that lend themselves to very left brain approaches, and there’s things that lend themselves to very right brain approaches. And just to pick one example, a very famous venture capitalist made this statement quite a few years ago that in the future, all retail would be done online, that stores would go away, which I don’t know if it’ll prove to be the dumbest thing anybody ever said, but it’s one of the dumbest things that anybody said. But I think the reason he said it, other than it was probably in his interest to set, given all the investments they were making in tech driven companies, was that he didn’t understand the emotional need of shopping as well as some of the practical benefits of physical stores. So all these years later, since he said it, physical retail has grown positively, even though e commerce has grown more quickly. So, I mean, you have to understand where human connection, emotion, et cetera, is important to accomplishing what you need to get done versus where, say, efficiency is most perfect. Technology is generally really, really good at efficiency. Sometimes it’s quite good as effectiveness. When I think about AI, I think there are absolutely plenty of applications where rote tasks can be automated, where the machine can do things much more efficiently than a human being ever could.
Steve Dennis [00:28:43]:
And we’ve already seen that with other technologies. It’s not that AI uniquely serves to do that. There are also going to be cases where AI can help human beings be more effective. So you may still have that face to face kind of or direct with a human being kind of interaction, but it’s fueled and made more powerful by technology. And there will also be times, at least in the near future, where, because we are human beings, that crave connection, where we’re just going to want that face to face. Now, can machines eventually mimic that? Yeah, probably, but I think you would just. I guess my point in all that is we have to be very careful about where we’re striving for efficiency, speed, convenience, low error rate, and where we’re striving for connection. Most of the powerful brands, whether we’re talking about retail or a cruise ship or whatever, the ones that earn the greatest returns, play to our irrational side.
Steve Dennis [00:29:47]:
It makes no sense in one way of looking at it, to spend $3,000 on a handbag. LVN Reach is one of the most valuable companies on the planet because they sell. I mean, we used to say this in even Marcus, we don’t sell anything anybody needs. It’s all about want, desire, etcetera. So you can’t line up the left brain thinking with the right brain thinking and explain how some of these things exist, and I think will continue to exist. But technology absolutely can enable things in much more powerful ways than we could imagine a few years ago. I can’t even imagine what AI and some new generation is going to be able to do in a few years time.
Imteaz Ahamed [00:30:31]:
So I think this is the point people are missing, right? In the sense that AI is just another tool. It is just another tool, part of the toolkit of how we are going to continue to do business. We’ve always been doing things more efficiently. Now it’s just accelerated. And as we think about Moore’s law and computers getting more powerful over time, this is just the acceleration of what’s already been happening, just in a new fallout. And rather than just linear tasks, it’s grappling more complicated problems for us now.
Steve Dennis [00:31:04]:
Yeah. The thing I might add to that, I’m not really disagreeing with you, but I think if you look at what’s happened with the Internet broadly, there’s a series of things where you say, okay, we’re able to do more or less what we already did in a better way. So if you think about, we used to sell mail order catalogs, now we can put that on the web, save the paper cost, change it more quickly. It’s a vastly superior mail order catalog. That’s one way of looking at it. The thing that I think also happens with the Internet is it did reset fundamentally certain things like the ability. If you think about Uber, Uber can match supply and demand virtually in ways that just weren’t remotely close to possible. I think there are these step functions, businesses that are enabled by leveraging technology in a profoundly different way.
Steve Dennis [00:31:57]:
So theres the continuous, though, to your point, Moores law, kind of exponential slope. But theres also sometimes these big step functions. And those are the ones that tend to really shake the incumbents because they just cant anticipate it or they cant get their investors to support that to go after it, or they just get caught up in defending the status quo. So theres really, in some respect, no excuse to the more exponential progression. I kind of understand sometimes why the step function thing catches many companies, not that they still shouldn’t be prepared for it, but it is a harder, you don’t see a lot of success. Every business, as many people said, is ultimately going to fail. It’s just a question of how fast.
Imteaz Ahamed [00:32:44]:
So in terms of sharpening customer focus, what are practical steps that companies can do to better understand and anticipate the.
Steve Dennis [00:32:53]:
Requirements of their well, it’s funny that so many companies still struggle with this because I feel like there are different forces, I guess, social media, et cetera. But what I see with most companies aren’t good at this is they don’t have a workable customer segmentation. They do it by catchy sounding Persona titles, or by spending or by RFM or some other technique, but they don’t have, in many cases, what we were talking about earlier, which is the emotional overlay. They have behavior, but they don’t have intention, wants, desires, what tribes I want to affiliate with myself. So you need to have a workable customer segmentation, and then you need to be able to track. And this sounds really simple, but a lot of companies don’t do it. How are you doing with each customer segment in terms of awareness acquisition, average purchase frequency, net promoter score, whatever, but there are certain levers for each of those segments that you should really understand how well you’re doing. And if you aren’t performing as well as you aspire to, or if you see a weakness in where you need to be or hope to get what’s the why, and you need that whole system of measurement and understanding and response, and then ultimately the willingness to do something about it.
Steve Dennis [00:34:12]:
So lots of companies don’t even have the foundational elements, much less the capability or the desire to go after them. But I do think it’s getting harder and harder because there’s so many other factors that might affect how you’re doing with a given customer base. And it’s not always to piece together, like even in a pre social media world where we’re affected by all sorts of forces, it could be pretty complicated. When I was at Sears, we didn’t have to worry about TikTok or whatever, but it was still often hard to understand the drivers of purchase behavior. Some were quite straightforward, others were a bit more nuanced but again, you have to do the work. You have to be willing to dig deep, challenge maybe some of the beliefs that you’ve held for a while. I’ll give you one example. I’ve had any number of clients that acted as if the customer journey hasn’t changed much in the last ten or 15 years.
Steve Dennis [00:35:11]:
It’d be like, well, we would run a radio ad or tv spot and then customers would come and check out our store, or we’d have the big sale of the year or whatever. Or we’re in a mall, customers are walking down, and then we’re successful based upon how well our sales associates close to sale, right? As opposed to saying, well, customers may not even know about you because you have no presence digitally, right? Or even if they know about you, they come in, they’ve already done research, and in many cases, they may even know more than your sales associate for all sorts of reasons. And so as soon as the sales associate looks like he or she doesn’t know what they’re doing, then they’re out. Like, I’m going to go someplace. We’re just going to go online because I don’t have to deal with this incompetent person who’s trying to sell me a maintenance agreement or open a credit card or whatever. So it comes back to one of the quotes that I don’t include in the book, but I found myself saying, which is, if the world has changed so much, why have you changed so little? Because I think most of us, even if we’re not a great student of strategy, just observes all this change. Yet so many companies and so many leaders say, oh my God, the world is so different. Oh my God.
Steve Dennis [00:36:24]:
TikTok. Oh my God. You know, shein, taemoo, whatever, AI. Yet they kind of keep doing the same, the same set of things, and most cases that’s going to catch up with them. Or like I said earlier, you get so far behind that your options become.
Imteaz Ahamed [00:36:41]:
Constrained in terms of Persona definition and really going after the target markets that you want to focus on. Who do you think does it really.
Steve Dennis [00:36:51]:
Well, one company I would point to is tractor supply company. I’m not sure how many of your listeners would know them. I think there’s a company that is in a lot of categories, that product categories that are available from all sorts of other retailers. You know, Home Depot, Petsmart, et cetera, Cabela’s, bass pro shop. Like, you know, there are plenty of places to go buy physically and online the sort of products that tractor supply offers. But what tractor supply understands really well is who’s at the center of their bullseye. And they, it’s the mix of things that they put together for their target customers that is so powerful. So they’re not trying to be a little bit of everything to everybody.
Steve Dennis [00:37:36]:
And they’ve managed to go from kind of a niche player 2025 years ago to one of the most powerful retailers in the US anyway. So I think they really know who they are. One of the benefits, by the way, which is a challenge in e commerce is that a tractor supply is very focused by the size of their stores. So if you want to contrast tractor supply to say a home Depot or a department store which has ton of space and the luxury of having a lot of space, physically, again, you know, the Internet can be different, but physically is, you’re not that constrained by space. Tractor supply though is, is constrained and it’s a real benefit because they don’t get talked into, well, maybe we could offer a little bit of this, a little bit of that. Maybe we could go after some of Home Depot’s customer if we had 5000 worse square feet. Now that’s not to say, and I don’t know, I have worked with them in the past. I don’t know what their current plans are for bigger stores.
Steve Dennis [00:38:39]:
But that discipline of being special, not big of narrowing your aim, but really being stronger on the things that you stand for, that can be a real advantage.
Imteaz Ahamed [00:38:50]:
I like that special, not big because, you know, the incumbents, there’s so many of them, right. And I think in order to stop that, you have to be special. Which leads me to, well, and one.
Steve Dennis [00:39:01]:
Of the challenges just quickly, one of the things I get to in the book is I believe this era of kind of massification is over. Not that Walmart, Costco, Amazon are going away. I don’t mean that at all. But I think that when you look at in technology, the kind of money that Google and Amazon and Microsoft, et cetera, are spending for this enormous scale and scope to try to chase that in the technology world, to try to change that in the retail or chase that in the retail world, good luck. You’re not going to out Amazon Amazon, you’re not going to out AI Microsoft or somebody. So I think for most of us we have to figure out how to narrow our aim, go deeper and become more meaningful to a smaller set of customers. It doesn’t have to be small. Tractor supply is not a small company.
Steve Dennis [00:39:59]:
RH is not a small company. Lululemon is not a small company. So there’s plenty of brands, retail and otherwise, that can be quite powerful and significant. But they’re not trying to be a little bit of everything to everybody. They’re not trying to win on price and scale and scope. They’re trying to work on doing something special and powerful for a narrower set of customers. And that’s the moat, the competitive moat you can build.
Imteaz Ahamed [00:40:28]:
Which leads me to the question of Brandwow. And Brandwell is a significant thing in your book. Can you provide an example of a brand that successfully achieved this? And what can other leaders kind of learn from that?
Steve Dennis [00:40:40]:
Well, one example I use in the retail context is what restoration hardware has done, both in terms of transformation, but in terms of delivering wow. If you’ve seen the RH gallery stores, there are a couple things there. One is, I think it’s very clear who it’s for and who it’s not because of the price points, it rules out a lot of people. Because of their style point of view rules out a lot of people. But for the, I don’t know, half a percent of the home furnishings market, they have really amplified the wow. They’ve taken the typical furniture, you know, use a little spinal tap strategy, turned it up to eleven in terms of the environment, in terms of the breadth of assortment, having a coffee shop and a beautiful restaurant, and in some cases a pool on the roof. So for the people that are kind of in on the joke, it is a must visit store. And I think if you can get to that point where almost subconsciously you’re saying, if I’m in the market for X, I’d be an idiot not to check this store out because it has such a powerful place in the real estate of the mind.
Steve Dennis [00:41:51]:
So I think they’re a good example. And they’re also somebody that went from a store model, these little stores with random hardware and gifts and tchotchkes and something to moving over about, I guess it’s about 1012 years now to a really different business model. So there aren’t that many examples actually in retail of companies that have gotten into trouble and have been able to really get themselves out of it and in fact thrive. So visually, I think people have seen it. You can get that. I think a lot of the luxury fashion retailers with some of their flagship stores deliver a real wow. Again, not for everybody, but for the people that aspire or love the brand. It’s just a place that people love to go.
Steve Dennis [00:42:32]:
If Gucci or Chanel or LV opens a new store, their fans are going to go there.
Imteaz Ahamed [00:42:39]:
So looking forward with the constant evolution of disruption, what are the following significant challenges you foresee leaders facing and how do you think they should best progress?
Steve Dennis [00:42:50]:
Well, I would sort of go back a little bit to. I don’t know if this directly answers your question, but I think a starting point is the psychological principle of awareness in action. So you have to become keenly aware and a real student of how you’re doing. And what are those factors which could be changes in customer dynamics, competitive dynamics, technology regulation, climate change, I mean, others, a lot of factors that could affect the prospects of your business going forward. So you really have to be a student of that. Like I said earlier, you have to develop a capacity of discernment, not necessarily personally, but bringing people into the equation on your management team, advisors, whatever it might be, to have that discernment and open the aperture so you can see some of the possibilities. The acceptance part, because I see a lot of companies, and my experience at Sears and Neiman Marcus and with some clients is there was plenty of awareness. We do a ton of research, we did lots of analysis.
Steve Dennis [00:43:51]:
We throw a few million dollars to McKinsey or Bain or BCG. There was no lack of awareness, really. But then there’s the acceptance, breaking through the denial, really understanding the charge, I guess the change platform that you really, really do have to change and understand at what rate. Then ultimately there’s that action. So I think sometimes, very simplistically, I say to people, well, do you have an awareness problem? Do you have an acceptance problem or do you have an action problem? Many cases is that transition between acceptance and action, that’s the hardest one. And then you have to be also just really realistic about your degrees of freedom. Like, I look at some of the retailers that are struggling right now, and this is what’s totally unhelpful at advice. I think there’s several retailers that will not recover from their struggles because they started too late.
Steve Dennis [00:44:44]:
So I often say, well, since I don’t have a time machine, I don’t know what kind of advice to give you because you should have started earlier, because now, particularly if you’re a publicly traded company, you may not, even if you have the most brilliant strategy. I’ll just go back to my own personal experience at Sears. I’d love to tell you that we came up with a strategy that I was absolutely convinced to turn the company around. We couldn’t figure that out. But I could tell you, even if it existed, it would have been incredibly expensive, risky and time consuming, and there’s no way our board would have approved it because we didn’t have the credibility, we didn’t have the balance sheet, we didn’t have investors that would support that. So when people say, oh, Sears could have been the Amazon, they missed that opportunity. I always say, well, that’s a cool story. That sounds pithy.
Steve Dennis [00:45:33]:
But what people forget is that Amazon was a fast growing startup company, was able to lose many, many billions of dollars in retail for over ten years, and there was no way we were going to be able to do that. So you have to be really realistic about where you stand in terms of your organizational capacity. And in many cases that comes down to capital structure and investor support. So the sooner you can head off things before you get to crisis mode, generally speaking, the better off you’re going to be. Or wait for that time machine, in which case you can go back and kill Hitler and do a bunch of other things.
Imteaz Ahamed [00:46:10]:
So moving on to a personal front, Steve, what habits and productivity hacks make your life easier?
Steve Dennis [00:46:16]:
Oh, the. I don’t know if this is a productivity hack. One thing is just don’t sweat the small stuff. I mean, that’s don’t take things personally. Realize, I just had a conversation with this about this morning with a few people about how the need to be right gets in the way. Like not everything is worth a fight or trying to be right. So usually it gets back to what we were talking about earlier. My ego is usually the thing that gets in the way of my being productive or effective.
Steve Dennis [00:46:59]:
I more focus on effectiveness than productivity per se. But pick the most important things. Don’t get distracted. Don’t let your ego get in the way. Fight through perfectionism. I have a quote from Anne Lamott in my book about perfectionism is the voice of the oppressor. You know, keep you stuck and miserable your entire life or something like that. That’s not the exact quote.
Steve Dennis [00:47:25]:
You know, most of the time, a pretty good thing that you actually do is better than waiting and spinning for the perfect solution. I’ll tell you, with a book, maybe this is a really obvious thing, but one of the scariest things about writing a book, which is maybe kind of anachronistic at this point, is I finished this book six months ago. I couldn’t touch it substantively after about November 1 or something. So here we are many months later, and now it’s a thing. And I worry that some of the things I might reference turn out to be stupid references or what have you, but there’s a point at which it’s got to be shipped. And I could spend forever trying to make this book perfect. And, you know, I got to the point with my first book and this book and speeches and other things that I put out in the world that if I’m really going to make a difference, I’m going to have to take some chances and I’m going to have to be willing to be wrong or look foolish or what have you. And, you know, when you sign up for certain kind of leadership things, whether it’s running a company or launching a podcast or whatever, or doing a dance or writing a song, whatever your particular form of expression is, that’s an act of courage.
Steve Dennis [00:48:48]:
But you’re never going to be able to get stuff out in the world if you’re not willing to look foolish and be wrong. And easier said than done. But when I see leaders struggle, it’s often because they’re putting their ego first and they’re afraid to look weak or unskilled or just silly, you know, in some cases, super cool.
Imteaz Ahamed [00:49:15]:
What books do you usually gift out the most to your friends?
Steve Dennis [00:49:20]:
I almost never give what I would call serious academic books. I shouldn’t say serious, but I love books on courageous leadership, like Brenny Brown’s work. I love Adam Grant’s, pretty much all of Adam Grant’s stuff. I’m also very interested in eastern philosophy and things. So, you know, Dalai Lama, thich, nhat Han, mainly because that helps me get out of my own way more, and I see a lot of my friends. Well, first of all, I don’t. I try not to give books that are too heavy handed and saying, like, if you would just read this book and do this, you would be better. I usually just say, I actually don’t give them any books.
Steve Dennis [00:49:58]:
I usually recommend books or say, I found this to be interesting for these reasons and let people grab it if they want to. I used to give out a lot of books, but I felt it was kind of a manipulation. So I don’t. But, no, if you look at my acknowledgments in this book, you’ll see the sort of people that I think are great thinkers. I definitely, though, have been affected by blue ocean strategies and, you know, those sort of books as well. I just feel like they are often overly sort of academic and prescriptive. And so I’m trying to kind of buffer, but that’s because I’ve been overly academic in my plan and pull myself, I guess, to a different side. Very cool.
Imteaz Ahamed [00:50:38]:
Thank you for being on the podcast, Steve. How can people reach out thanks for having me. How can people can. How can people reach out to you if they need to find out more?
Steve Dennis [00:50:46]:
Sure. Well, of course, I have a website which is Steven P. Dennis. Steven with a v. The correct way to spell Stephen. And I’m pretty active on LinkedIn, on most of the socials. I’m even P. Dennis.
Imteaz Ahamed [00:50:58]:
Super cool. Thank you for being on the show and hopefully catch up.
Steve Dennis [00:51:01]:
Thank you. I enjoy the conversation. Hopefully.
Imteaz Ahamed [00:51:03]:
We’d love to catch up with you at a future conference sometime.
Steve Dennis [00:51:07]:
Yeah. This thing we call real life. Bye.
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