until Adobe I'm the head of strategy and innovation for the budget truck rental group would literary of Avis Budget Group what we're going to cover today is setting up for success the core tenets of continuous business transformation that do it's method and a real world example of this.

So how did we actually do this within the truck rental division so setting up for success right here you know in in organizations really of any size we face the challenge of linking strategic vision and execution estimates that I've seen say roughly 8% of companies are good at both vision and execution.

So this is definitely a problem in just about any company companies tend to be good at either strategy vision or strategy execution so how do we how do we go about how do we go about bridging that gap I served eight years in the United States Marines.

One of the ways that we were able to do something very similar in the United States Marine Corps is we had a philosophy of centralized command and decentralized control what this means is that the overall vision for what we were trying to accomplish was very centralized.

We all knew the major goals that we were trying to accomplish but it was decentralized control people in the field had the ability to adjust and adapt in real time to real events sénèque talks about simon Sinek talks about you know imagine somebody with a box on their head and all they could see is backwards and yes then they'll walk across the room in a straight line well if there's no obstacles they could probably do it but what happens if we put a chair in the way you know do they go around the chair you've told them to go in a straight line do they go around the chair do they go over the chair if you don't decentralize the control of the situation.

If you don't give those people control over the situation and they don't have the ability to adapt to reality so the core tenants in enabling continuous business transformation we're only going to cover a handful of these in the interest of time we only have a half an hour here some of them that I won't cover is like from Intel one that.

I absolutely love disagree but commit we won't cover start with why bison act but if you've not had a chance to view that video that TEDx talk I highly recommend it absolutely phenomenal talk we won't dig into agility though it's it's absolutely important to the continuous business transformation method so what's wrong with how we view transformation today.

The first core tenets that we have is that business transformation is continuous oftentimes we tend to think of transformation like a like a butterfly it's going from a caterpillar and then BOOM it's a butterfly because that's what we see but in reality transformation is not a singular event transformation there's a bunch of micro processes inside of that they create an environment for this caterpillar to turn into a butterfly.

So in reality transformation is not singular it's not instantaneous their processes within the processes by the time you realize you need transformation it's going to be too late examples are numerous I think blockbuster Toys R Us taxis how many taxi services are dying just getting killed by uber car and truck rental uber uber definitely had an impact on on car rental many of you probably used an uber to get here when you would have rented a car before by the time you realize that you need transformation it will be too late another core tenet is to always use an emergence strategy and what I mean by this is the difference between a deliberate strategy.

Which is we have this plan and it's unchangeable versus emergence strategy which always looks at
what are the inputs that we're getting so it's continuously changing it's continuously adapting to the environment that we're running into we need to embrace this you know a a deliberate strategy is no longer providing us safety it used to be that incumbents could execute a deliberate strategy and rely upon the barriers to entry to prevent other companies from disrupting them and the reality is today that just does not work the deliberate strategies no longer provide us with a with a source of comfort emergency emergency a tidge ease typically and benefited disruptors they've didn't benefited the companies that were small and nimble and could react very quickly unfortunately for incumbents we can no longer rely upon a deliberate strategy we have to rely upon an emergence strategy we have to start thinking like smaller companies the last one.

I'll cover is fail fast and fail small we often here fail fast right we want to go out we want to test something we want to try to see if it worked or not I am out and fail small and what I mean by that is when we test these things let's not test am enterprise-wide let's let's try to contain that test as much as we can and truly be able to learn from from what we do but we need to do that quickly we're going to iterate through a whole lot of these things to find the winning profit formula.

So the do it's method is a formalization of what I've been doing at Avis Budget Group we'll go through again a real-world scenario with that we'll go through a real-world how we actually rolled this out but I want to go over it from a very high level first this is a structured continuous business transformation method so it starts with the define phase it then iterates through observe improve or innovate test and then sustain or scale these are the overall this is the overall method but will iterate through those three as much as we need to fast small until we come with something that we can win on and sustain in scale.

So during the define phase you'll want to distill that big picture vision down into a goal and I'll tell you about what our what our vision was and how we distilled that into a goal you'll need to secure funding and resources for that initiative in many cases you're going to be guessing many times here you you're not going to have a comfort level that many incumbent businesses are accustomed to you're going to be guessing you're going to be rolling the dice yeah it's potentially high risk executives and incumbent businesses typically didn't get there by taking these kinds of risk but you just have to remember to fail fast fail small move on sir during the observed phase we're going to quickly understand what our current state is we're going to understand the customers jobs to be done.

This comes from disruptive strategy this concept of jobs to be done you may be familiar with it from the innovators toolkit or work by clay Christensen but we're really trying to understand what the customers really really trying to do you know clay Christensen uses an example of a milkshake at McDonald's what they found was that McDonald's was selling a lot of these things in the morning and they were trying to figure out well great but how can I sell more of these things so they looked at the jobs that the customers we're trying to do and what they found out was that making the milkshake healthier wasn't beneficial you know making.

It thicker wasn't beneficial what they found was that making these things better for customers that were on a morning commute to keep the one hand busy and give them something to do can actually beat other alternatives that they had like donuts which were Messier bagels which were harder to consume during the morning commute and McDonald's was able to move the needle on this which is a great example of a incumbent business.

Acting a bit like a like a startup or a disrupted the improver ant of innovate phase comes from our strategic goal so what was it that we were trying to move the needle on did we want to take a sustaining innovation or a disruptive innovation.

If it was sustaining then we're improving if it's disruptive then we're innovating and this is really a key difference that we need to be aware of next we'll test we're going to keep iterating through this we're going to keep testing our hypothesis until we find that winning profit formula that we can then take to the next phase so we'll continue to iterate iterate iterate until.

We get there molasses sustain and/or scale so sustaining would typically come from an improvement right we want to ensure that that improvement lasts scaling typically will come from an innovation.

So once we figured out that you know the fast and small solution that got us to a profit formula that we need to be a winner now we need to scale that thing rapidly we need to we need to forego profits in favor of rapid growth so that we could stay ahead of our ahead of our competitors so now let's look at a real world example of this in real life directly from the trenches you all, may be familiar with with the truck rental model wasn't invented in the 1950s by u-haul and it really has changed since all of the competitors used roughly a copy of u-hauls methodology.

They follow that pretty closely and that's how truck rental works now if you've ever rented a truck you'll know that that's not a great experience right it takes a while it's fairly slow cumbersome you're working with people so Avis Budget Group we were tasked with reinventing the truck rental model and this was in support of our vision in which we believed that the entire mobility space will be changing very dramatically over the next ten years we believe mobility mobility will not exist the way it does today in tenures we may not even recognize it.

So we've decided that we're in a good strategic position in that we can actually act like a start-up have budgets truck rental and disrupt the truck rental industry now typically if you follow Christensen you'll know that the prevailing thought is that you can't disrupt from within you can't disrupt from within your own company you need to disrupt from outside.

We're challenging that belief we're challenging it and we're trying to disrupt an entire industry from within our own own organization so we've come up with a self-service truck rental this is actually this actually been piloted right here in the Orlando area so we have 13 locations with 49 trucks these are completely self-service so there is no counteragent there is no nobody to get a key from the keys are already inside the truck.

They're absolutely fast so if you went from hey I took an uber to Walmart and I want to pick up a big-screen TV - how do I get this thing home literally two to three minutes facial recognition works matches with your driver's license marries up your insurance information and you're in a truck now the great thing about the technology was that even if you break the window the truck take the key out of the unlocked glovebox.

You still can't start the truck so we we solved for that so again you know we started by clarifying the vision and we defined our goal so our goal was to reinvent the truck rental model we said about doing that with a very streamlined process we listen to our customers the things that they don't like are going to a rental counter.

Taking a half an hour or more to go from showing up to getting in a truck we did we distilled those down into key actionable items and that was during the defined phase we also secured funding resources for the initiative so that we could actually implement we observed our customers we observed them actually renting our trucks we observed them actually talk to them about the jobs that they were trying to get done to build our our initial improvement and then test it found some really surprising responses one of our initial philosophies or initial hypothesis was that this would be a product that was used by consumers.

We didn't necessarily believe that there would be a large commercial application for this product feedback that we got from customers was actually favorable for commercial it surprised us so this project again was an innovation project we decided to take a disruptive innovation strategy and emerges strategy.

So that we could roll this out so again we're in an emergent strategy we are constantly looking for feedback from our customers to let us know how we need to pivot how we need to change until we find that winning combination that brings us a profit and again we test we're constantly iterating through this.

We're testing so we both will build a hypothesis do we have a customer does the technology work in the operations support it and we'll test what we successful or not and constantly pivot constantly iterate through this again until we find that winning profit formula once we do we're going to scale now you may wonder hey if you guys actually done this yet you know all right have you found that what profit formula .

I'll tell you that we have not yet will keep running this minimal Viable Product here in the Orlando market until we do until we can figure out how to profit from this and then we're going to grow very rapidly with it so that covers what I wanted to cover during this during this segment and I'd like to open it up for questions and answers yes yes yeah it's a great question so how do we handle disruption from companies like uber.

You know I see uber really more disrupting taxi cabs than thinking car rental while they're still disrupting car rental I think that we stay ahead of it by keeping a small emergence strategy and then moving forward with that so for us that means things like reinventing the rental model as a whole bringing more choice to customers cutting down on our rental lines gentleman named Jeff Kalin is leading up a great initiative.

There on the car rental side of it yes yeah yeah so question was you know isn't you know honest enterprise some of the others are actually partnering with these car hailing services and absolutely correct we've partnered with lyft I believe one of our partners is partnered with with uber but yet we absolutely rent cars to drivers who otherwise could not qualify or do not have their own vehicle so that they can now drive for these car healing services other questions.

Yes so we're we have been in a common business for quite a while where we have a winning profit formula already any time you're in it income a business that already has established a winning profit formula it's very hard to overcome that inertia so that's been one of the biggest challenges for us is overcoming that inertia that we already had our key executives are absolutely on board you know our employees are getting on board but you know this is something that absolutely challenges the status, quo inside of any company of any size.

So that's been I think the biggest challenge that we've had when you're being able to adopt this technology you've said turning together that's the implication so so far we really haven't had any real impact on people but people do see that impact coming so specifically with our our current model involves primarily rental dealers we call them which are outside agencies that rent our trucks you know some have expressed some some concern about what we're doing but this is you know absolutely the future of vehicle rental.

Yes yeah there's definitely similarities so in developing the douens method I incorporated parts of PDCA so standard PDCA de Mayock definitely came into play in developing that you know specifically with demand I felt like there was too much of a too much of the analyze phase.

So I definitely wanted to cut back on that so that we don't get caught in an endless analysis loop agile came into play for me much later in that I was trying to develop a way to do these things much faster.

So you know typical strategy execution on something like this would be measured in years we did this in six months. so I think you're saying similarities because I've incorporated different pieces you know into the duyst method well you see.

I lost my and if you did what are the percentage I can't share specifics on how much we reduced our cost but absolutely we reduce our cost let's call it between 10 and 15% passed on some of that to the customer so we're able to disrupt on both the low-end in a new market all right any other questions well I certainly appreciate it thank you all.