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"Fl!p Your Mindset!"

Peter Sheahan will speak on the topic of “FL!P: Creative Strategies for Turning Challenge into Opportunity, and Change into Competitive Advantage,” 11:30 a.m.– 12:30 p.m. on Friday, March 22, during IHrSA’s 32nd Annual International Convention and Trade Show in Las Vegas. His presentation is generously sponsored by MYZONE. The best-selling author and IHRSA ’13 presenter explains how club owners can Fl!p their perceptions to improve their business

Peter Sheahan, 32, is a best-selling author and the founder and CEO of ChangeLabs, a global consultancy that helps organizations implement change to transform communities, increase brand equity, and create a sustainable competitive advantage. His firm has developed programs for, among others, IBM, Apple, Google, Coca Cola, Hilton Hotels, and Goldman Sachs. Last year, the company delivered more than 14,000 workshops around the world. Sheahan’s six books include Generation Y: Thriving and Surviving with Generation Y at Work (2005); Fl!p: How to Turn Everything You Know on Its Head—and Succeed Beyond Your Wildest Imaginings (2009); and Making It Happen: Turning Good Ideas into Great Results (2011). ChangeLabs has also developed a series of projects that are designed to improve education and learning environments for students; those initiatives include Get Wise, SmartStart, Beyond Chalk, and the Productivity Project. 

CBI: Fl!p, one of the international bestsellers that you’ve written, serves as the basis for the presentation that you’ll be giving next month at IHRSA 2013. To start, could you explain the basic premise of Fl!p?

Peter Sheahan: Fl!p is about helping leaders develop the ability to see their world, their business, and its challenges in a new light. It’s very easy for individuals to become locked into a certain way of thinking and, therefore, a certain way of doing business. As customer expectations change, and as new competitors vie for the same limited share of consumers’ disposable income, companies need to revise, or reinvent, their business model and value propositions. This requires courage at the leadership level, but it also requires a fresh perspective. Fl!p was written to make leaders aware of their biases and the impact they have on their decision-making.

CBI: Let’s touch upon some of the key ideas that you’ve introduced in Fl!p. One of them has to do with improving margins though “non-sexy” innovation. What is that, and how might it apply to health clubs?

PS: Many business owners and operators have been conned into thinking that innovation is always about doing things that are fresh and brand-new. This inevitably leads them to focus nearly exclusively on their products. In reality, though, value can be unlocked in processes as well. Take, for example, the way communication takes place in clubs. Many people join a club and then fail to avail themselves of what it has to offer, either because they’re unaware of what’s going on, or because they’re afraid to get involved. Eventually, the membership becomes a case of no-perceived-value, and, at some point, the member doesn’t bother to renew. Developing a more effective member-communications strategy could unlock massive value for the club.

CBI: You also suggest that companies can turn “chaos into opportunity” in order to become a market leader. How does that differ from being a market disruptor?

PS: Being a market disruptor, by definition, requires that you disrupt the market. However, there are plenty of factors that are constantly stirring things up without any help from you—improved technology, more sophisticated competition, new sources of fitness services, customers’ evolving expectations, etc. You don’t have to do the disrupting to feel the brunt of the chaos that ensues. What’s important, what matters, is how you choose to respond to it.

One of my favorite examples is how Progressive Insurance responded to the emergence of the Internet as a medium for purchasing property casualty insurance. The Web created instant price transparency in the insurance market, requiring little work on the part of the consumer to compare rates. While most insurers hoped the “new kid on the block” would go away, Progressive rolled with the development.

It decided to publish its own premium estimates, as well as those of its competitors, on the Progressive home page. ... Of course, there were other factors at play. Progressive had a best-practice set of algorithms for accurately pricing risk that allowed it to be confident its price was the right price, even if it wasn’t the lowest.

The firm’s willingness to evolve with the times, and how it responded to this chaos, helped it to grow to become No. 2 or No. 3 in a mature and highly competitive market.

CBI: It would seem that capitalizing on chaos, as you suggest, might require changing the behavior of an entire organization—a rather challenging prospect. What does it take to do so successfully?

PS: We’ve been involved in a number of projects that produced wholesale changes in a company’s culture, and even the business model that determined how it made money. First, it’s important to realize that it’s never one thing—an external factor, a corporate division, an internal initiative—that drives this type of thoroughgoing change. Generally, it involves a complex combination of many things. Some of the common attributes of such scenarios are “leadership appetite” (the most influential people in the organization need to be hungry for change); “alignment” (the company’s incentives, structures, and culture need to align over time to achieve its goals); and “activation” (the company must spend more time and energy implementing change than thinking about what has to change).

CBI: Many well-known companies have attempted change, but failed, while others have succeeded. What’s the difference between the two? How hard is the process?

PS: If it were easy, we’d all be on the cutting edge, reporting great margins, and creating mind-blowing member experiences. Having said that, the companies that do well tend to have four things going for them that help to facilitate change: (1) CEO leadership: All of the successful transformations I’ve witnessed in for-profit organizations were driven by the CEO. This isn’t the same as a “CEO buy-in.” rather, here, the CEO is the symbolic driver of the change. (2) Ambition, not urgency: Over the long haul, an inspiring vision is more productive than a constant state of panic. Sure, you might need a proverbial “burning platform” to get things going, but people burn out under too much pressure. (3) Honesty: Transformations are hard on a business and its people. An honest and compassionate culture is crucial to sustaining the journey. And (4) hard decisions: Not every employee will be willing to embark upon, or be able to complete, the journey. Management needs to help them make their exit in a gentle and supportive way. Too many leaders lack the courage to make this sort of tough decision.

CBI: In another one of your books, Making It Happen, you identify the five competencies that help companies understand and use the forces that drive buyers’ behavior. What are they?

PS: The complete answer to that would require a book, which, as you’ve just pointed out, I have written. But I’ll attempt to summarize. (1) Package your idea well: You have to transform it into something you can sell in the market- place. (2) Position it: You have to align your offer to a market need, even if it requires nudging the market a little bit. (3) Influence the prospective buyer: You have to convince them that they want your product or service so much that they’re willing to part with some money, time, or energy to obtain it. (4) Accelerate the process: You have to capitalize on the opportunity you’ve created, increasing the demand for your product. And (5) reinvent what you’re doing by utilizing your expertise and brand to create entirely new opportunities.

CBI: Can you relate those factors to the process of someone’s purchasing a club membership?

PS: Let’s take a look of three of them—positioning, influence, and acceleration.

In terms of positioning, it may be important to note that the role a club plays in people’s lives is constantly evolving. Today, there are fewer marriages and kids, more individuals living alone, people living longer, etc.; and, as their customer base diversifies, clubs may run the risk of trying to be everything to everyone. Proper positioning requires that you be very clear about the market need you intend to address, and then align both your marketing message and the member experience you deliver to communicate that. It’s hard to do if you’re trying to do everything.

With respect to influence, it’s one thing to get someone to join, but quite something else to get them to obtain value from the experience. The price competition we currently see in the club space would be less intense if clubs had more leverage over their members—not contractual leverage, but, rather, value leverage. If members received more or better benefits, they’d place a higher economic value on their membership. ... Which brings us to acceleration. What “adjacencies,” complementary goods and services, could clubs offer? Classes on nutrition? Holistic health management? There are lots of ways to accelerate growth. 

CBI: You’ve also written a best-seller on Generation Y. How important is fitness to this cohort?

PS: It’s paradoxical. On the one hand, this is the most overweight youth cohort in history, so let’s say that, for them, fitness isn’t important enough. But, on the other, more members of this generation are committed to health and wellness at a younger age than was the case with previous generations. ... That said, it would be a strategic error for a club to define and target an audience strictly on the basis of generational modeling—generations are too broad a category. Instead, at the very least, clubs should segment the population vertically—on the basis of factors such as interests, activities, goals, etc.—and, then, possibly, narrow their focus further by applying a horizontal age-based filter.

CBI: You’ve also observed that Gen Y has an outcome focus, not a process focus. How does that affect the way they make decisions?

PS: They’re very explicit about understanding why they do things. Their attitude is “I’m not going to do this because you say I should. I want to know what the payoff is, what the outcome is going to be.” This has clear relevance with respect to customers, but it also has implications for employees. This, at times, has driven managers crazy. Companies are often overloaded with process—there’s simply too much of it; it becomes counterproductive. Younger staffers have the confidence and are naturally inclined to question processes that appear, at least on the surface, to offer no extra value. To keep them in place, part of what’s going on, and to foster adherence, managers may find themselves obliged to justify some processes. If they discover they can’t, then the process in question might have to be changed or eliminated. These employees can actually help change the organization for the better, serving as an internal form of chaos, of positive disruption, to propel the business forward.

CBI: Which brings us nearly full circle, back to the notion of transforming “chaos into opportunity.”

PS: Indeed. Well, there will always be plenty of both—chaos, that is, and the new opportunities it creates.

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