Milwaukee Companies Thrive with Authenticity

In a world of contrived experiences and products, consumers no longer accept the fake from the phony. They would rather buy the real from the genuine.

That’s the central premise of “Authenticity: What Consumers Really Want” (Harvard Business School Press), a new best-selling business book by co-authors B. Joseph Pine II and James Gilmore.

Pine will kick off the 2008 Small Business Times BizTech Expo as the keynote speaker of the CEO Strategies Breakfast on Wednesday, April 30.

In a pop culture in which “reality TV” has become the norm, distinguishing between “real” authenticity and phony claims to authenticity becomes a significant challenge for consumers and corporations alike, Pine says.

Pine’s premise of corporate “Authenticity” recently received international acclaim when it was named one of the “Ten Ideas That Are Changing the World” in a cover story in Time magazine.

Pine rose through the ranks of IBM to become a business consultant who has provided advice to Fortune 500 companies and entrepreneurial start-ups alike. He is co-founder of Strategic Horizons LLP, an Aurora, Ohio-based thinking studio dedicated to helping businesses conceive and design new ways of adding value to their economic offerings.

In this special report, SBT chronicles how five Milwaukee companies have developed uniquely authentic brands, products and services: Fred Usinger Inc., Harley-Davidson Inc., Steinhafels Inc., Alterra Coffee Roasters and Hunzinger Construction Co.

SBT executive editor Steve Jagler recently interviewed Pine about his concept of “Authenticity.” The following are excerpts from that interview.

SBT: Let’s start with your book being featured in a cover story of Time magazine as one of the “Ten Ideas That Are Changing the World.” How cool is that?

Pine: “(Laughs) Yeah, that was pretty cool. I tease my wife now that she is married to a legendary consultant with a cult-like following.”

SBT: Does she buy that?

Pine: “She rolls her eyes.”

SBT: How did the Time story come about?

Pine: “The reporter, John Cloud, told us he sort of had this existential moment when he found himself in a Starbucks, listening to his I-Pod, reading Harry Potter in a brown paper bag … He didn’t want anyone else to know he was reading it. That sent him on a search for like, ‘What’s going on here?‘”

 

SBT: In your own words, can you give our readers the elevator speech of your concept of “Authenticity,” and why it’s so important in today’s business world?

Pine: “What’s going on is that in a world of paid-for experiences, where life is something we pay other people to stage for us, then naturally, people question what is real and what is not. Increasingly, they don’t want the fake from the phony, they want the real from the genuine. So, ‘Authenticity’ is becoming the new consumer sensibility, the primary buying criteria by which people choose who to buy from and what to buy. They, today, want it real. Therefore businesses, the No. 1 imperative for them, is to render their offerings to be perceived as real.”

SBT: OK, does that start with an internal mindset for a company, in terms of how it operates, how it interacts with its own people, etc.?

Pine: “There’s basically two key things, and that’s one of them. You have to look inward, but you also have to look outward in how you represent yourself and your offerings to the world. In the book, there’s what we call the ‘Polonius Test.’ That’s where the two key standards of ‘Authenticity’ actually come from Shakespeare’s ‘Hamlet,’ where Polonius says, “And this above all unto thine own self be true and it shall follow as the day the night – thou can’st not then be false to any man.'”

SBT: You’ve got that memorized.

Pine: “Absolutely. That first line is that internally focused one, the self-directed task, which means you have to know who the self is that you have to be true to. What is it about your company, its heritage, its values, its sense of purpose and so forth, in order to have every behavior, every decision, every offering you come out with to be perceived as something that, yes, that is the right thing for that company to do? The third line of Polonius, where you must not be false to any man, is other-focused, that is, looking at how you represent your offerings to other people, and in particular, where you have to be what you say you are. That means that your marketing messages, your advertising, your public statements, your declared motivations, how you package your offerings, the places in which they are sold … All of those things are representational aspects that have to match what people actually experience when they buy your particular offering.”

SBT: What’s a company to do if they look internally first, and they realize what they maybe intuitively knew, that they don’t have a unique, authentic core, but they’d like to start one? Can that be done, or would that just make them, by definition, a fake?

Pine: “It can be done. But what you may often find is that if they are not truly authentic, then maybe they can try for one of the other modes of authenticity in the book, other than the ‘real-real.’ They can actually create values through authenticity by being ‘fake-fake.’ It’s that notion of ‘faux,’ where we know it’s fake, but we like it anyway. In the same way, companies can say, ‘We know we’re fake, but we think you’ll like us anyway.'”

 

SBT: Can you give our readers an example of “We know it’s fake, but we like it anyway”?

Pine: “It is companies that use the word ‘faux’ in their offerings, like faux furs, faux finishings, faux fireplaces, even. One of the really fake-fakes is all the counterfeit things from China, like the Gucci handbags and Rolex watches that are not Gucci or Rolex. Those are acknowledging they’re fake. There’s also real-fake or fake-real. That, for some companies, is the most they can ascend to.

“Think of Disneyland. It’s not really the Magic Kingdom. It’s not really Cinderella’s castle up there. But it is wonderfully true to self, because everything about the place flows out of the heritage of the man, Walt Disney. Everything there is managed. It’s fake-real. Disneyland is a fake reality that is so good that, for many people, it is perceived authentic, even though it will never be as authentic as going to a baseball game at Miller Park.”

SBT: In a recent blog, you talked about the “corrosive” impact of inauthenticity. Tell us more about that.

Pine: “Corrosive eats away at the very fabric of it. They (employees) look internally and realize that we’re doing a lot of things that really are fake. We’re making decisions that belie who we are. We’re coming out with offerings that don’t fit. We’re taking actions that are not fundamentally honoring our heritage. And I think it’s usually the employees that notice that first, even before the consumers do. They know that something is rotten in Denmark. That’s where that corrosive effect starts in. They buy into its purpose less and less, because they realize the company isn’t living up to its purpose. That corrosive effect sort of eats away from the inside, where they no longer believe it’s authentic. So, the decisions that they make and the interactions they have with customers are less and less authentic, and at some point, you hit that tipping point, where all is lost, and people say, ‘This is just not the company it used to be,’ and people start to leave and you get into that downward, vicious cycle.”

SBT: So, it’s imperative, for true authenticity, to have the ‘buy-in,’ so to speak, of a company’s key people and staff members?

Pine: “Right. Not even just key people, but as much as possible, all the way down, so people believe in the company and a purpose, outside of making a buck, where people believe they belong to a company that is making a difference in the world.”

SBT: What about a company like Southwest Airlines? For years, they had this carefully crafted image, internally and externally, as something special. And now comes this scandal-like report about their lack of safety inspections on their fleet of airplanes. What do you make of that?

Pine: “It is something that very many people will perceive as not being true to self. Southwest has been the safest airline for its entire 40 years of existence. It never had an accident. Think about that. Just amazing. And now all of a sudden, they’re caught cutting some corners, not doing some things right. That is fundamentally against a key part of their identity. So, for many people, that is going to lessen that ‘Authenticity’ in their eyes. Some people might say, ‘OK, that’s a black eye, but that’s not something that is fatal. It will depend on how you respond.’ From what I read, Southwest said it was a very serious issue, said, ‘We at the top of the company didn’t know this was going on, and we’re going to get to the bottom of it, and we are going to make this right.’ So, they’ve had this opportunity to retain their authenticity in doing that.”

SBT: Of course, Milwaukee’s hometown airline, Midwest Airlines, is having some “Authenticity” issues of its own. Its slogan has been “The Best Care in the Air.” The company rejected a hostile takeover bid from a discount airline, AirTran Holdings Inc., and then was bought out by an investment group led by TPG Capital of Fort Worth, Texas, and Northwest Airlines Inc. Time will tell whether Midwest’s authentic brand and service will survive, I guess.

Pine: “Right, exactly. One key issue is they were probably right to resist AirTran, because they have fundamentally different philosophies. AirTran is very much a low-cost carrier, and Midwest was a high-end carrier. That is very difficult to mesh. Acquisitions is one of those key points where ‘Authenticity’ really has to be strongly thought about. Of course, you’ve got the issue of private equities, and most private equities look to create cash and resell something. So, the question is, do they fully understand what got Midwest to where it is today? Or will it be AirTran by a different route?”

SBT: I guess we’ll find out over time.

Pine: “Which is why a wait-and-see attitude is probably appropriate there.”

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