Customers don't measure how hard you tried....

What customers really want

7 business lessons from a post WWII immigrant entrepreneur

The migration post-World War II from Europe brought to the Americas millions of tradesmen, an important component of economic growth and expansion for countries like Canada, the US, Venezuela, Argentina, Brazil and Uruguay, to name a few. Today we all recognize the role that “selected” migration plays as a stimulus for growth [i.e. today the Canadian Oil and Gas industry employs over 3,000 Venezuelans in Alberta, most of them were fired from the state-run oil corporation, Petróleos de Venezuela]

Back in 1953, my dad [Francesco Russo, who was a shoemaker by trade and also learned about the jewelry family business in Italy] and my grandfather started their tour through the Americas, trying to find that special place to call home. After exploring NYC and Buenos Aires, someone suggested to visit Venezuela: the country of eternal spring. That’s where the entrepreneurial venture started for both of them, in the capital city of Caracas, my home town.

I could continue the story by narrating how they survived without speaking Spanish and not finding “real nonna’s food”, or why my dad couldn’t see my grandma again backhome, but the purpose of this article is to share what I have learned from a man that has been an entrepreneur for 60 Years!

1. Get commercial real estate early in your life: My father has been always against leasing, unless you don’t have any other option to start your business. He always recommends to save enough to have a decent down payment and to convert personal expenses into valid business deductions.
2. You won’t get rich overnight…. but you need to start a business with regular cash inflow! The secret to have a comfortable life: self- discipline, get up early every day and stay focused.
3. Make your customers fall in love with your business, treat them right and reward them often. My dad is well known for his business gift baskets at Christmas, jam-packed full of Italian gourmet products and wine. At his stores, early bird customers get complimentary coffee and, of course, they always get to chat with him.
4. It’s all about who you know and who knows you: According to Francesco, you should know key people at all levels: C Level executives, decision makers, someone’s driver, the priest, your city councilor …. and the valet parking guy!
5. Always look your best even through rough times: this one I have applied it several times as an immigrant, and it is true, you can attract what you want by projecting it. In North America is very easy to recreate a wealthy image thanks to access to credit!
6. Diversify your portfolio: you should always have a second or a third business and save/invest those earnings - even if small- and carefully consider who you partner with.
7. Give back to your community: my father never had the opportunity to go to college, but he truly believes in education as a way to succeed in the new economy. I cannot thank enough to my parents for all the moral and financial resources that they made available for us to become accomplished professionals. They have also helped over 50 people with tuition fees, books and campus accommodation expenses. I can proudly say that my parents have helped many times and many people to accomplish milestones in their careers paths.

Francesco is now on his 80’s, he has more patience to tell his stories and give you real advise; he never got rich but as a family we always have it all: support and love from an exemplar immigrant couple that we are proud of!
Thanks dad!

Written by

Giuseppina (Pina) Russo

Why CEOs Fail

by Vistage chair Glenn Waring

Since 1994 I’ve worked with many CEO clients, both privately and in groups. In two thousand individual conferences and nearly two hundred all-day group meetings, I’ve begun to recognize some patterns.

First, there is a positive side to failure - successful people almost have to fail more frequently than others because they’re making more attempts. Few of us were sent off to school by mothers who said, “Take Risks!” yet successful CEOs have to learn to do this, decisively. With this “systems view” of failure, successful CEOs take losses in stride, even if that stride includes an occasional kick at the cat. So - one answer to “why CEOs fail” is “Because they understand that calculated risks are necessary to succeed, and such ventures will involve failure.”  Most of these CEOs recognize the status quo is not an option, and by “playing it safe” the

organization may actually be put at great risk.

Failures teach successful CEOs, and over time the following lessons seem to account for most of the learning:

1.      An inability to see the bigger picture. If you’re being eaten by a lion, it’s tough to see the lion.  Some pressures are industry-wide, even global, and the successful CEO may have to divest a core business to succeed (John Teets revamped Greyhound by selling the buses). This is difficult, and it is why so many successful CEOs surround themselves with good peers and mentors.

2.      An aversion to using solid financial practices. A CEO I know once shared with me over dinner that he didn’t pay enough attention to financials until he put a publicly traded company into bankruptcy. The reason, he said, was that the numbers would simply “swim together,” overwhelming his discomfort with financial indicators. Although it’s not hard to remedy - I have seen hundreds of CEOs do it - a CEO first has to admit there’s a compelling need to learn how to avoid going broke.

3.      A lack of clear vision: successful CEOs lead the organization to where it needs to be, and find ways to get buy-in at all levels. This is hard - otherwise, all organizations would do it well. Done right, clear vision can substitute for the field manual, empowering everyone to make crisp decisions in the company’s interest.

4.      Lack of passion. Most organizations no longer need arms and legs (command and control); instead, they need hearts and minds (sell and enroll). People need to be led more than they need to be managed. Provided things are going well, a lack of passion is usually burnout, which comes from solving the same problem over and over. When things aren’t going well, avoidance may look the same as ‘lack of passion,’ but it’s not - CEOs may talk about packing it in when instead they really need to face the difficult task at hand. Some years ago Fortune magazine polled 500 of its more successful readers and learned their strategies for success: (1) know thyself (2) seize opportunity, and (3) pursue meaning. When I encounter a lack of passion in an otherwise successful CEO, I gently suggest a process to revisit personal core beliefs. The fundamental questions of Who am I? Why am I here? beg to be answered, and if urgent tasks continually pull me away from considering these important questions, depression may be the result.  Passion matters, greatly.

5.      Lack of clarity on the reasons for success. Great CEOs hold their associates accountable for knowing what activities cause results. CEOs focus on what to do, and let associates take care of the “how.” Then, on a regular basis, associates monitor the activities that lead to success. For a sales manager this might mean counting and publicly posting the number of cold calls and referrals every week, in addition to the actual sales results. The difference between champions and good performers isn’t terribly great sometimes, but champions win consistently because they understand what causes a win. Finally, successful CEOs foster (and insist on) the use of reliable, continuously improving, and innovative methods for getting work done before they let their associates take care of the “how.”

6.      Distractions such as acquisitions (most of these fail), golf, and other anxiety management techniques. Successful CEOs pay attention to the central task, which is putting the organization in touch with reality, and leading.

7.      Disconnecting from customers. Some of my most successful CEO clients are on the road over half the time, talking to customers.

8.      Integrity outages. I’ve heard many MBA candidates complain about leadership that says one thing and does another. I don’t have hard data on this, but I suspect that associates will tolerate no more than about three inconsistencies before they start to tune out.

My CEO clients work hard, teaching me every day what it means to be decisive and fully engaged in life. I am certain of only two things: confusion is a precondition to learning, and losses accompany success.

For more information on making yourself and your organization more effective, go to www.effectiveorganization.com and login using password “ceo147”.  

The 11 Rules of Highly Profitable Companies

Image credit: Shutterstock

 

How do you generate the most profit with the least effort? How do you maximize margins without sacrificing quality? 

 

I'm not talking more customers, nor more revenue, nor more offices and employees. Profit.

 

Based on my interviews with high-performing CEOs ("high-performing" determined using annual-profit-per-employee measurements) in more than a dozen countries, I've listed 11 common "rules" below. This is a return-to-basics call.

Here's your cheat sheet for consistent profitability -- or doubling of it -- in 3 months or less. 

1. Repetition is Usually Redundant — Good Advertising Works the First Time

Use direct response advertising (call-to-action to a phone number or website) that is uniquely trackable – fully accountable advertising — instead of "image" or "brand" advertising (e.g. billboards with no URL/phone/messaging), unless others are pre-purchasing product to offset the cost (e.g. “If you prepurchase 288 units, we’ll feature your store/URL/phone exclusively in a full-page ad in….”).

Don’t listen to advertising salespeople who tell you that 3, 7, or 27 exposures are needed before someone will act. Well-designed and well-targeted advertising works the first time. If something works partially well (e.g., high click-through with low percentage conversion to sales (CVR), or low click-through with high conversion, etc.), indicating that a strong ROI might be possible with small changes, tweak one variable and micro-test once more.

Cancel anything that cannot be justified with a trackable ROI. 

2. Pricing before Product – Plan Distribution First 

Is your pricing scalable?

Many companies will sell direct-to-consumer by necessity in early stages, often through a simple website. Only later do they realize that their margins can’t accommodate resellers and distributors when they come knocking. This is true whether your "distributor" is iTunes, a worldwide widget distributor, or Orbitz.

If you have a 40% profit margin and a national distributor needs a 70% discount off of retail (or "cut") to sell into wholesale accounts, you’re forever limited to direct-to-consumer… unless you increase your pricing and margins after-the-fact, or launch new "premium" products to fix the problem. For a bootlegged start-up, this distraction can equal sky-high customer churn or death altogether.

Plan out your first two years of distribution plan before setting pricing.

Think digital is different? Think again.

Test assumptions and find hidden costs by interviewing those who have done it: will you need to pay for co-op advertising, offer rebates for bulk purchases, or pay for shelfspace or featured placement? I know one former CEO of a national brand who had to sell his company to one of the world’s largest soft drink manufacturers before he could access front-of-store shelving in top retailers. 

3. Less is More – Limiting Distribution to Increase Profit

Is more distribution automatically better? Not necessarily.

Uncontrolled distribution leads to all manner of head-ache and profit-bleeding, most often related to rogue discounters. Reseller A lowers pricing to compete with online discounter B, and the price cutting continues until neither is making sufficient profit on the product and both stop reordering from you (or selling/referring your product). This race to the bottom requires you to launch new products, as price erosion is almost always irreversible.

Avoid this scenario and consider partnering with one or two key distributors instead, using that exclusivity to negotiate better terms: less discounting, prepayment instead of net payment terms, preferred placement and marketing support, etc.

Whether Apple or Estee Lauder, sustainable high-profit brands usually begin with controlled distribution. Remember that more customers isn’t the goal; more sustained profit is. 

4. Net-0 — Create Demand vs. Offering Terms:

This is related to Rule #3.

Focus on creating end-user demand so you can dictate terms. Often one large advertisement, bought at discount remnant rates, will be enough to provide this leverage.
Just because everyone in your industry offers payment terms doesn’t mean you have to, and offering terms is one of the most consistent ingredients in start-up failure.

To avoid getting strung out and cash-flow poor: Cite start-up economics and the ever-so-useful “company policy” as reasons for needing prepayment and apologize, but don’t make exceptions.

If you agree to receive payment on net-30 terms (they pay 30 days from invoice, or receipt of product), it will become net-60, which becomes net-120. Time is the most expensive asset a start-up has, and chasing delinquent accounts will prevent you from generating more sales.

On the hand, if tons of customers are asking for your product, resellers and distributors will need to buy. It’s that simple. Think a big order from Wal-Mart is a godsend? Be careful.

Since they're almost always net-180+, and they can return unsold product, it could actually be the death of your company. How are you going to pay for the needed inventory?

Typically, debt. What will you do if they return half of it because they didn't give it proper placement, so it didn't have sufficient sell-through? Be careful, lads and lasses.

Put funds and time into strategic marketing and PR to tip the scales in your favor. Consumer demand = your ability to negotiate better terms. 

5. Limit Downside to Ensure Upside — Sacrifice Margin for Safety

Don’t manufacture products in large quantities to increase your margin, unless your product and marketing are tested and ready for roll-out. In other words, only when you already have a proven demand and can forecast sell-through rate.

If a limited number of prototypes cost $10 per piece to manufacture and sell for $11 each, that’s fine for the initial testing period, and essential for limiting downside. Sacrifice margin temporarily for the testing phase, if need be, and avoid potentially fatal upfront overcommitments. 

6. Niche is the New Big — The Lavish Dwarf Entertainment Rule

Several years ago, an investment banker was jailed for SEC violations.

He was caught partly due to his lavish parties on yachts, often featuring hired dwarves. No joke. The owner of the dwarf rental company, Danny Black, was quoted in the Wall Street Journal as saying: “Some people are just into lavish dwarf entertainment.”

Niche in the new big, I tell you. And here’s the secret: it’s possible to niche market and mass sell.

iPhone commercials don’t feature dancing 50-year olds, they feature hip and fit 20-30-somethings, but everyone and his grandmother wants to feel youthful and hip, so they strap on Apple gear and call themselves converts. Who you portray in your marketing isn’t necessarily the only demographic who buys your product — it’s often the demographic that most people aspire to. The target isn’t the market.

No one aspires to be the bland average, so don’t water down messaging to appeal to everyone–it will end up appealing to no one. 

7. Revisit Drucker — What Gets Measured Gets Managed:

Measure compulsively, for as Peter Drucker stated: what gets measured gets managed.

Useful metrics to track, besides the usual operational stats, include CPO (“Cost-Per-Order,” which includes advertising, fulfillment and expected returns, chargebacks, and bad debt), ad allowable (the maximum you can spend on an advertisement and expect breakeven), MER (media efficiency ratio), and projected lifetime value (LV) given return rates and reorder %. Consider applying direct response advertising metrics to your business.

Look at "lean start-up" metrics for more methods of measuring during the start-up phase. The work of Eric Ries is a good starting place. 

8. Hyperactivity vs. Productivity — 80/20 and Pareto’s Law

Being busy is not the same as being productive. In fact, being busy is a form of laziness -- lazy thinking and indiscriminate action.

Forget about the start-up overwork ethic that people wear as a badge of honor–get analytical. I'm not going to say "work smarter; don't work harder," as I'm fine with hard work...but only as long as it's applied to the right things.

The 80/20 principle, also known as Pareto’s Law, dictates that 80% of your desired outcomes are the result of 20% of your activities or inputs. Once per week, stop putting out fires for an afternoon and run the numbers to ensure you’re placing effort in high-yield areas:

What 20% of customers/products/regions are producing 80% or more of the profit? What are the factors that could account for this?

Invest in duplicating your few strong areas instead of fixing all of your weaknesses. 

9. The Customer is Not Always Right — “Fire” High-Maintenance Customers

Not all customers are created equal.

Apply the 80/20 principle to time consumption: What 20% of people are consuming 80% of your time? Put high-maintenance, low-profit customers on auto-pilot. Sure, process their orders, but don’t pursue them or check up on them. And “fire” high-maintenance, high-profit customers by sending a memo detailing how a change in business model requires new policies at your company: how often and how to communicate, standardized pricing and order process, etc.

Indicate that, for those clients whose needs are incompatible with these new policies, you are happy to introduce other providers.

“But what if my largest customer consumes all of my time?” you ask? Recognize that 1) without time, you cannot scale your company (and, oftentimes, life) beyond that customer, and 2) people, even good people, will unknowingly abuse your time to the extent that you let them.

Set good rules for all involved. Minimize back-and-forth and meaningless communication. 

10. Deadlines over Details – Test Reliability Before Capability

Skill is overrated.

Perfect products delivered past deadline kill companies. Better to have a good-enough product delivered on-time. Google "minimal viable product" for more on this philosophy. Even the great Reid Hoffman, co-founder of LinkedIn, has wisely said that, "If you are not embarrassed by the first version of your product, you've launched too late."

Test someone’s ability to deliver on a specific and tight deadline before hiring them based on a dazzling portfolio.

Products can be fixed as long as you have cash-flow, and bugs are forgiven, but missing deadlines is often fatal. Calvin Coolidge once said that nothing is more common than unsuccessful men with talent; I would add that the second most common is smart people who think their IQ or resume justifies delivering late. Don't tolerate it. 

11. Keep it simple. Complicated answers are rarely the right answers.
'Nuff said.

Tim Ferriss

Why CEOs Fail

by Vistage chair Glenn Waring

Since 1994 I’ve worked with many CEO clients, both privately and in groups. In two thousand individual conferences and nearly two hundred all-day group meetings, I’ve begun to recognize some patterns.

First, there is a positive side to failure - successful people almost have to fail more frequently than others because they’re making more attempts. Few of us were sent off to school by mothers who said, “Take Risks!” yet successful CEOs have to learn to do this, decisively. With this “systems view” of failure, successful CEOs take losses in stride, even if that stride includes an occasional kick at the cat. So - one answer to “why CEOs fail” is “Because they understand that calculated risks are necessary to succeed, and such ventures will involve failure.”  Most of these CEOs recognize the status quo is not an option, and by “playing it safe” the

organization may actually be put at great risk.

Failures teach successful CEOs, and over time the following lessons seem to account for most of the learning:

1.      An inability to see the bigger picture. If you’re being eaten by a lion, it’s tough to see the lion.  Some pressures are industry-wide, even global, and the successful CEO may have to divest a core business to succeed (John Teets revamped Greyhound by selling the buses). This is difficult, and it is why so many successful CEOs surround themselves with good peers and mentors.

2.      An aversion to using solid financial practices. A CEO I know once shared with me over dinner that he didn’t pay enough attention to financials until he put a publicly traded company into bankruptcy. The reason, he said, was that the numbers would simply “swim together,” overwhelming his discomfort with financial indicators. Although it’s not hard to remedy - I have seen hundreds of CEOs do it - a CEO first has to admit there’s a compelling need to learn how to avoid going broke.

3.      A lack of clear vision: successful CEOs lead the organization to where it needs to be, and find ways to get buy-in at all levels. This is hard - otherwise, all organizations would do it well. Done right, clear vision can substitute for the field manual, empowering everyone to make crisp decisions in the company’s interest.

4.      Lack of passion. Most organizations no longer need arms and legs (command and control); instead, they need hearts and minds (sell and enroll). People need to be led more than they need to be managed. Provided things are going well, a lack of passion is usually burnout, which comes from solving the same problem over and over. When things aren’t going well, avoidance may look the same as ‘lack of passion,’ but it’s not - CEOs may talk about packing it in when instead they really need to face the difficult task at hand. Some years ago Fortune magazine polled 500 of its more successful readers and learned their strategies for success: (1) know thyself (2) seize opportunity, and (3) pursue meaning. When I encounter a lack of passion in an otherwise successful CEO, I gently suggest a process to revisit personal core beliefs. The fundamental questions of Who am I? Why am I here? beg to be answered, and if urgent tasks continually pull me away from considering these important questions, depression may be the result.  Passion matters, greatly.

5.      Lack of clarity on the reasons for success. Great CEOs hold their associates accountable for knowing what activities cause results. CEOs focus on what to do, and let associates take care of the “how.” Then, on a regular basis, associates monitor the activities that lead to success. For a sales manager this might mean counting and publicly posting the number of cold calls and referrals every week, in addition to the actual sales results. The difference between champions and good performers isn’t terribly great sometimes, but champions win consistently because they understand what causes a win. Finally, successful CEOs foster (and insist on) the use of reliable, continuously improving, and innovative methods for getting work done before they let their associates take care of the “how.”

6.      Distractions such as acquisitions (most of these fail), golf, and other anxiety management techniques. Successful CEOs pay attention to the central task, which is putting the organization in touch with reality, and leading.

7.      Disconnecting from customers. Some of my most successful CEO clients are on the road over half the time, talking to customers.

8.      Integrity outages. I’ve heard many MBA candidates complain about leadership that says one thing and does another. I don’t have hard data on this, but I suspect that associates will tolerate no more than about three inconsistencies before they start to tune out.

My CEO clients work hard, teaching me every day what it means to be decisive and fully engaged in life. I am certain of only two things: confusion is a precondition to learning, and losses accompany success.

For more information on making yourself and your organization more effective, go to www.effectiveorganization.com and login using password “ceo147”.  

What is a brand?

CEOs share unexpected insights regarding "Ways to connect with customers"

Robert Reiss,

As corporations seek new ways to connect with customers, I set out to uncover insights from some of the top CEOs. Interestingly what emerged are some unexpected answers, like the value of simplicity and the power of the handwritten letter – both of which have elevated in importance in a complex fast-moving digital world.

Specifically, on June 7, 2012 I held a discussion with three CEOs who are leaders in connecting with customers: Bob Evans, CEO, Churchill Downs which hosts the seminal customer event with over 165,000 people — The Kentucky Derby; Dan Hesse, CEO, Sprint Nextel who The American Customer Satisfaction cited as the #1 most improved service company in America over the past 4 years in their evaluation of 47 industries; Tom Fricke, CEO, HMSHost, a 115 year old brand with 34,000 employees who serve over 1 million customers a day through the ownership and operation of most major retail and food & beverage at roadsides and in airports. My co-moderator was Ron Frank, who heads up internal strategy at IBM.

How have you changed your business around customers?
Bob Evans, Churchill Downs: “Five years ago or so our business was 100% horse racing from six thoroughbred racetracks, and we had little information about our customers because it was mostly cash-based, live wagering. Now we’ve diversified. We’ve built a regional casino, bricks-and-mortar gaming business and we’ve built an online gaming business. Because of our online growth now virtually every click provides information and we know a lot more about our customers than we ever did. This has helped us do more things directly with our customers and has helped drive our financial success.”

Dan Hesse, Sprint Nextel: “In the past four years, we’ve intentionally eliminated 85% of our rate plan combinations or choices. Customers like simplicity and they’ll pay a premium for simplicity. Steve Jobs focused on taking features out of devices and products. We’ve found that strategy works.” 

Tom Fricke, HMSHost: “Virtually everybody in America has gone through an airport and has been a customer of ours even though they may not realize it. We have learned that many people like being at their gate in advance.  So we’ve just created a new app which we’re testing at a few airports called, ‘B4 You Board’, which allows people to pre-order food from restaurants in that particular terminal and have the meal delivered to them at their gate or schedule to pick it up. Our mobile app is just one example of HMSHost’s, and our parent company, Autogrill Group’s, innovative approach to enhancing the travel experience for people on the move.”.”

What’s on your customer dashboard?
Dan Hesse, Sprint Nextel: “I have three: churn, meaning customers who leave, the number of calls to customer care, and customer satisfaction surveys.”

Tom Fricke, HMSHost: “I have two: Our monthly mystery shop scores, and capture rate which for us is measuring the percentage of the people walking through a terminal who are actually stopping and engaging with us.

Bob Evans, Churchill Downs:  “Just one: market share. It’s the relevant market for each one of the businesses, so for our casino in Greenville, Mississippi, I care about how we’re doing in that market.”

Anything special you do to connect with customers?
Dan Hesse, Sprint Nextel: “Handwritten letters. I know it’s kind of old fashioned, but I think in today’s digital world customers notice and appreciate that we take time to write letters to them. One employee and his team started a letter-writing campaign, thanking customers based upon their longevity. They would do it every Thursday, and it’s now mushroomed, and it’s become “thank you Thursdays” company-wide. Our employees sit down with a list of customers, which includes something about the customers, like how long they have been with Sprint, and they handwrite letters thanking the customers for doing business with Sprint.”

Tom Fricke, HMSHost: “We have a secret shopper program where  we will visit every unit in every airport at least once a month with a secret shopper and we get feedback on such simple things as the person behind the counter looks me in the eye, smiled and said good morning or good afternoon.  All of our efforts are focused on making the traveler’s day better, a goal to which all HMSHost associates aspire with every customer interaction.  Our Five Star Customer Service standard reinforces and measures this commitment to making the traveler’s day better.  We set a target score for the year to track our performance and progress.  As CEO, I review all comment cards, positive or not, and recognize associates whose exceptional performance merits special distinction.  Beyond just the scores, Five Star is designed to focus our associates on friendliness with the guest.”

Bob Evans, Churchill Downs: “What’s important is the broader concept of everyone going above and beyond for our customers. So personally, I try to find seemingly trivial things to do for customers because if the organization sees me doing that, there’s nothing too small for them not to worry about as well. Here’s one example that comes up all the time at Churchill Downs. People don’t know how to get from where they are to where they want to go at our huge property. It’s very large and confusing so I can tell them, or I can take them and I look for opportunities to take them because that reverberates through the whole organization. If I’m willing to take them for the next 15 minutes from here to there, then anybody can do that.”

What characteristics lead to exceptional customer service?

Bob Evans, Churchill Downs: “I love people who are just unwilling to stop until it’s right, whatever that is, they don’t stop until it’s right.”What are some additional insights about service? 

 
Tom Fricke, HMSHost: “A traveler’s most important impression or experience often comes from customer service—that personal contact with our sales and wait personnel.  We strive to make our guests feel not just important but genuinely welcome. With all the move toward and the discussion around social media and the ability for customers to comment immediately on Twitter and Facebook and all the other elements, the most impactful thing that I do is go visit our operations to personally engage with associates, and the second most impactful thing are handwritten notes to highlight and praise excellent customer service in action.”

Bob Evans, Churchill Downs: “I think increasingly products and services are being customized to what the customer wants. Simpler is better than complex but in the end the customer wants what they want. At the Kentucky Derby this year as example, we had 165,000 people over 147 acres. We have a very diversified crowd from the private jets and limos in designer clothes to half dressed in the infield swilling beer and sliding in mudslides. So we design customer experience by location and what specific customers are looking for.”
Dan Hesse, Sprint Nextel:“Three thoughts. First, Great customer service actually costs less because you can save expenses if you don’t have to fix problems or correct wrongs. 

Second, the key to great service is employees. We’re focused on empowering all employees to serve customers. I give out a quarterly award we call the “elevator speech” award, which is for non-front line employees, because there’s a 20% chance that anyone our employees meet is a Sprint customer. Third, compensation.  Every person, from me to someone in the mailroom, has their compensation linked to customer satisfaction and simplifying the customer experience.”

So, as I consider the comments from three CEOs who are leaders in the customer experience, it becomes clear that the more complex our world gets, the more value there is in authentic, clear, customer connections. Ron Frank of IBM summarizes, “As organizations become more intelligent, top CEOs are focused on drawing deep insights from customer data making it possible to understand customers and engage with them as individuals.  In parallel, some have leveraged more traditional ways to connect with their customers and the teams that serve them.”

Leaders Can’t Care What Other People Think

When you’re a true leader capable of making and sticking to decisions, you’re going to hear a lot of people call you crazy. No matter how practical or exciting your ideas might be to you, there will always be people who want to provide input, change your mind, or tell you that you’re wrong.

It’s your choice whether you listen to them. One thing is certain, though: True leaders don’t have any concern for the opinions of naysayers and detractors. They’re only concerned with taking the right course of action.

Breaking Away from It All
Twenty years ago, I was immersed in corporate life in Washington, D.C. I was a manager at a telecom company that employed 80,000 people and enjoyed a lot of success. It also had a lot of processes, protocols, and politics.

I was earning good money, driving a BMW, attending graduate school at Johns Hopkins University, and working on major accounts. If things continued along that path, I would retire in 30 years with a nice pension.

Six years after joining the company, disillusionment began to creep in. All of the 15-hour days left me feeling like a robot, and my sales quota began to dominate my thinking. There was no room in my life for creativity or imagination.

I began to question whether I was interested in telecom at all. I was in my twenties and already had all the outer signs of success, but something was missing on the inside. Fantasies of burning my suits and running away to the mountains, where I could work and meditate, began to take shape.

Then, I did it.

I quit my job, dropped out of school, traded the BMW for a used pickup truck, sold everything I owned, and headed for Boulder, Colo.

Everyone thought I was out of my mind, and they weren’t afraid to let me know it. My friends thought I’d lost it, my parents were furious, and my colleagues were certain that I’d had some kind of meltdown. They all tried to talk me out of it or push me to find some middle ground that wasn’t so drastic. Some of their arguments made sense, and there were even times when I was tempted to give in and listen. But in the end, I knew that I had to ignore all of the criticism and do what was right for me.

Upon arriving in Boulder, I took six months off to rest, bike, meditate, and hike through the mountains. Once I felt refreshed, I joined my first tech startup, and — just like that — I had found my calling. Two decades have passed, and I’m still in Boulder, living a life filled with passion for my work, my family, and my town. Life is 10 times better than it was in D.C., and I’m grateful that I had the strength and integrity to stay true to my opinion and follow my values.

Ignore the Naysayers: Their Real Concern Isn’t for You
True leaders will hear a lot of talk from naysayers, as was the case in my situation. They ask questions that might sound supportive or protective, but there’s always an underlying sense of defeatism. You might hear things such as: Do you really know what you’re doing? Do you really have enough experience to do that? Shouldn’t you play it safe? But what you’re really being asked is: Who are you to expect that you can achieve what others can’t?

Beware of this sort of talk because — deep down — these people, while sincere and innocent, may unconsciously be looking to validate their own need to play it safe. When you take on the impossible, succeed, and prove that anything is possible, you terrify the people who live on security and predictability.

Know When to Have Open Ears
When you’re a leader, you can’t just shut out the world, of course. There are people you should listen to.

First of all, you have to consider your customers. While you can’t please them all, remember that they are the reason your company exists. Take their feedback into account through every stage of your company’s growth. The customers who are the hardest to please will provide the most feedback, and if you can satisfy them, the rest of your customers will probably be happy, too.

You should also listen to people who have similar values and have achieved something comparable to what you’re trying to do. The best advice comes from people who have faced the same challenges and overcome them using values that match up with your own. How you handle a challenge is just as important as the result.

Knowing How to Keep It Real
It can be difficult to know whether you’re sticking to an approach because you’re convinced it’s the right thing to do or because you think it will gain someone else’s approval. So ask yourself: Will this take me one step closer to my dream, or will it just raise me in the eyes of another?

You can still give someone’s advice genuine consideration and choose not to act on it.

That’s not being indifferent — that’s being a leader.

 

 

 Posted by:

Holly Hamann

Top CEOs Agree: Let Customers Drive Your Business Strategy, Break Down Silos, And Be Entrepreneurial Comment Now

Robert Reiss, 

As we travel through untrodden territories of our digital new world, the old platitude “The only constant is change” has become our new compass. New competitors – in fact new industries – surface seemingly overnight as old business models flash into obsolescence; creating predictable quarterly growth is becoming harder to navigate.  So, in an effort to find solutions, on November 20,2013 I facilitated a conversation with leaders from several industries including healthcare, financial services, travel, and technology. Below are the two solutions that emerged where participant quotes provide perspective. The participants were:

• Keith Banks, President, US Trust
• Adam Goldstein, CEO, Royal Caribbean International
• Bob Lord, CEO, AOL Networks
• Alan Miller, Founder, CEO & Chairman, Universal Health Services
• Vasant Prabhu Vice Chairman & CFO, Starwood Hotels & Resorts Worldwide
• Brad Stewart, CEO, XOJET

Solution # 1: Companies need to involve customers in strategy and be more contextual with customer engagement. The customer now can drive strategy. In fact, according to a recent IBM study of over 4,000 C-suite executives, for the first time customers actually play a larger role in driving strategy than the board of directors cites Dr. Saul Berman, Leader of Strategy & Transformation at IBM. Clearly our digital world of social media and big data, combined with increased customer information and consequently expectations, has escalated the customers’ potential role where they are increasingly becoming involved in not just product development, service, sales, but even talent recruitment and strategy.

Keith Banks from US Trust talked about how clients have become part of the strategy process, “We recently created Client Advisory Councils, where clients share insights on how to best deliver service. We found the number one thing on the minds of our clients was inter-generational wealth transfer. We also found out our younger clients preferred younger advisors who talk like them, communicate in the way they do, use social media instead of meeting a lot.”

Alan Miller of Universal Health Services highlighted how the healthcare model is fundamentally changing, “Consumers are becoming more educated and engaged in making healthcare decisions for themselves and their families. As a result, we are reshaping the way we operate so that we can better meet their demands and become their provider of choice. We are constantly looking to offer new services to meet patients’ needs, and we are making investments in new technology so that we can continue to provide the quality care our customers want and deserve.”

Bob Lord, Global CEO of AOL Networks shared a personal example of how the customer experience is changing, “My daughter has a smartphone and there’s all this contextual information on Instagram that she’s doing when she’s shopping at UNIQLO. UNIQLO is creating a pool of assets that they can collect to learn more about her. That was never there before. But then they’re delivering her a service on the back end, saying for girls who bought this, they also like these kinds of things.”

And customers change in different settings. As Vasant Prabhu from Starwood discussed, “There is something we call a trip persona. You’re a very different person when you’re with family vs. a business conference. You can make big mistakes if you don’t know the context.” He continues, “Customers really drive our business decisions. For example there are now as many Chinese travelling out of China as Americans travelling out of the US. In the US, most people use their Starwood Preferred Guest points for hotel rooms. Well, in China, they want to use it for weddings or at our restaurants. Also, the Chinese guest has different preferences, for example, they like tea, not coffee. And, there is a revolution in how our guests interact with us, mobile has gone from 15% to almost 50% of our digital interactions. We must understand how customers are changing and deliver what they want real time.”

Brad Stewart talked about how the private jet industry is in the early phases of a potential industry transformation,  “What shocks me is that CEOs and private equity executives tell me they’re spending $250k to $1.5 million a year on private aviation and they always say it’s a top 2 or 3 spend, and yet while they are flying their family, kids and pets in this little cocoon, 9, 10 miles in the sky, they often don’t really know what they are spending money on. And so what we’re trying to do at XOJET is fundamentally change the conversation. So the trend needs to be about education and renting experiences.”

Companies also need to be seamless throughout the customer experience regardless of platforms. Adam Goldstein of Royal Caribbean shared, “The Royal Caribbean service standard that our guests expect on board our ships should be evident in all of their interactions with us whether they are onboard or not.” He continued talking about how he personally connects with the customers and the media in a digital world, “I guess I was one of the first CEOs to blog on a regular basis and to take the risks and seek the benefits of doing that. When I would ask journalists, why do you read my blog– and I really meant that question seriously– and they would say because it’s not marketing speak.”

Solution # 2: As the nature of competition intensifies, it is essential to continually innovate and act like entrepreneurs. As customers now control more information, competition intensifies. The winners innovate. And like the Intel slogan, in many cases ‘corporate entrepreneurship inside’ enables agile rollouts of new business models to drive success. As one CEO mentioned, consider the idea that you plugged in your television set and it worked for 10 years. That doesn’t exist anymore; now it’s getting software upgrades, it’s getting rebooted, and it’s changing what it does on any given day. The winners innovate and act like entrepreneurs.

Bob Lord of AOL Networks shared, “Silos are the enemy of business progress, and the way to break down silos is to have customers at the center. You test and you learn, test and learn. And you have to get the whole company including the board comfortable with that structure, so that they’re expecting every quarter that you have a new innovation that you’re testing. When you start acting like a startup, you can create cross-functional teams that have full ownership, work on a particular problem and create excitement, energy, fun and great solutions throughout your organization. You have to try to create that entrepreneurial culture within the bigger organization.”

Adam Goldstein of Royal Caribbean explained how cruise customers have completely changed with the times, “A radical change in our business over 20 years is that in the 90s a mainstay of our communication program was the ability to disconnect from the hassles of daily life and the importance of getting away from it all. Today, it’s unimaginable that you would go anywhere disconnected. In fact we have recently invested heavily to deliver a new technology enabling land line speed connectivity and pervasive Wi-Fi on several of our ships.”

Sometimes the innovations were actually about coming full circle to solutions of long ago. Brad Stewart stated, “It’s almost of going back to the late 1800s and early 1900s in terms of walking into that store. Customers are expecting you as a company to treat them as if you’re their one of five or 10 customers.”

Vasant Prabhu of Starwood provided more historical perspective, “The hotel business is centuries old and it started out with the innkeeper, and he knew everybody. He was always there greeting his guests, and he knew what they wanted. He knew which room they liked. He knew why they were there. He knew how they liked their food. And then we evolved to the era of the chains. They were important, because it was safe, clean and efficient, and very predictable. Now it’s coming full circle. People expect you to know who they are at all times. You’re not supposed to be a stranger. But the technology is getting to the point where you can do it, and frankly, you have to.”

Alan Miller of Universal Health Services shared how the CEO should view this environment, “The biggest thing for the CEO is adaptability. The CEO has to have a lot of different people who have totally differing ideas. And he has to have young people who see the world very differently. If you all wind up growing up together, that’s not going to be a good thing anymore. The way the world is seen by 20 year olds, 40 year olds, 60 year olds are three different worlds totally. Getting everyone to work together is exciting and the feeling of a start-up is great which is good because I’m a pure entrepreneur at heart.”

Keith Banks of U.S. Trust sums up the business climate, “I think it’s going to be a lot more intense competitively. So you’ve got to have the wherewithal to fight that fight. We’re seeing the degree of difficulty from a regulatory standpoint is growing at a rapid pace. And that’s making it more costly to do business, more risky to do business if you get it wrong. What companies need to do is evolve with the client, and sometimes evolve faster than the client. With so many data points, technology can help uncover new directions.”

… As we look at new business models that can help us lead in this new digital world frontier, CEOs need to involve their customers in driving strategy and have the agility and innovative spirit of an entrepreneur. As Len Green, professor of entrepreneurship at Babson College once explained to me, successful entrepreneurs continually exhibit several of the same characteristics. A. They are calculated risk takers;   B. They do not overanalyze problems or spend too much time in meetings discussion solutions.  

Instead they:                                                                                                                                              1. ACT                                                                                                                                                        2. Learn from the actions                                                                                                                           3. Build on what they have learned                                                                                                            4. Repeat the process to solve challenges