Although the story is not new, the resurgence of Avis represents one of the classic examples of CEO leadership via redefining the corporate value story.
In a nutshell, new CEO Robert Townsend took the controls of an Avis company on life support: on a 12-year P&L losing streak, absolutely being dominated by Hertz -- the proud owner of 90% market share. Hertz pride became one of the leverage points of the iconic We Try Harder campaign (details below). Note that the campaign's core appeal is emotional not factual.
Townsend's marketing team developed the value-story messaging. A major internal effort re-shaped the corporate culture, energizing the previously demoralized employee team. That team, of course, was critical to making the value claim a reality.
The result was profitability within a year and today Avis has matched Hertz size and is far more profitable.
Although the dramatic turnaround stories make the news, there is major opportunity in the creative review of the combination of value story and culture. The book Corporate Culture and Performance by James Heskett and John Kotter proved by rigorous financial analysis that positive culture correlates closely with consistent financial results.
In the early ‘60s, Avis car rental was in critical condition. Twelve consecutive years of losses, employee morale in the tank, absolute marketplace domination by Hertz which held a 90% market share.
Desperate for a turnaround, Avis brought in a new CEO named Robert Townsend. Townsend knew that survival required some form of attack rather than retreat. He began holding focus groups with Avis employees, aimed at identifying distinctive competences—reasons that customers might choose Avis vs. Hertz.
The process was grim. Dispirited employees weren’t coming up with ideas better than Avis availability when nearby Hertz locations ran out of cars. Finally an employee suggested, timidly, “Because we try harder?”
Townsend and his Turnaround Team realized it was a Eureka moment. Indeed Hertz’ enormous success had led to complacency in the marketplace. It was often a long and painful process to secure a car or to resolve billing or claims issues.
We Try Harder could spearhead a value story that gave annoyed customers a reason to give Avis a try.
A KEY POINT: At no point in the process did Avis stress its number of locations, number of available cars or low pricing. An effective value story appeals first to emotions. Supporting facts are the horse on which emotion rides.
The next challenge was clear and even more important. There was no marketplace reality on which to make the claim. If anything, Avis morale issues were creating inferior customer service. Townsend and team launched a spirited culture-shaping campaign to sell a new vision and inspire the individual effort and the teamwork that would make “We Try Harder” be a valid predictor of customer experience. Progress vs. Hertz became benchmark and battle cry.
Avis returned to profitability in the following year. The company steadily added market-share and today is essentially the same size as Hertz and consistently more profitable. As focus of the value story, “We Try Harder” lasted for over 50 years.
There is a highly relevant follow-up to this story: Today Enterprise is larger than Hertz and Avis combined -- and the growth secret is the same. A dynamic value story built around extraordinary customer experience (they'll even pick you up) and a culture that actively encourages go-the-extra-mile customer support.
Scroll down to video; more on Value Story and Related Culture Building.