Inspiration Trumps Coercion And Motivation August 11, 2008
Posted by Bruce Temkin in Executive leadership.Tags: Herb Kelleher, Tom Coughlin
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Just read an excellent article on the Business Week site called The Era Of Inspiration which looked at the leaderships styles of Tom Coughlin (NY Giants Coach), Herb Kelleher (former chairman of Southwest Airlines), and Bill Marriott (CEO of Marriott). It discusses three different management styles: coercion, motivation, and inspiration.
Coughlin was considered an “autocratic tyrant,” but became more inclusive, creating a leadership council of 11 players. In effect, he shifted his style from coercion to inspiration. The changed paid off with a Superbowl championship.
The article also quoted Kelleher who was Southwest Airlines’ beloved leader:
If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need.
The article also makes the following key point:
Unlike coercion and motivation, the source of inspired conduct is intrinsic and internal. Inspired employees act on something they believe in; they are in the grip of ideas; they are compelled by a deeper purpose and propelled by values they hold fundamental.
My take: Inspiration is a fundamental part of good leadership; and it’s important that leaders instill a strong sense of purpose with their people.
The bottom line: Get your people do things because they want to, not because you want them to do it.
Great Advice From IBM’s Former CEO August 4, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: IBM, Lou Gerstner
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I just ran across a post in Fortune’s Postcards blog about a speech that Lou Gerstner gave at the Yale CEO Summit in New York in last month. Here’s a summary of his advice for how to transform a Fortune 500 company:
- Distinguish between transformation and turnaround. A turnaround is about management execution, but a transformation is about a fundamental change to the business. Transformation is much harder.
- You can’t transform a dodo. Gerstner quoted Warren Buffet’s rule: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.”
- It’s all about the culture. I love what he says on this topic: “You have to transform the culture, not just the strategy. Culture is what people do when no one is watching.”
- Integrate as a team. He notes a major inconsistency within IBM: there were “Team” signs all around, but people were paid based on individual performance.
- You have to understand what people do everyday – the processes, the values, the rewards. This requires a great deal of involvement by the CEO
My take: Gerstner is a great leader; his turnaround of IBM will be remembered as one of the greatest management accomplishments of our time. So I was thrilled to see that his advice matches a lot of the advice that I’ve written in my (mini) book ”The 6 Laws Of Customer Experience.”
The bottom line: Get the business model right and focus on the people.
Four Leadership Competencies From Warren Bennis July 31, 2008
Posted by Bruce Temkin in Executive leadership.Tags: Warren Bennis
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In an article in The Economist, there was some great insights about leadership from management guru Warren Bennis. His fundamental tenet is that leaders are made, not born. Bennis lists four competencies that leaders need to develop:
- forming a vision which provides people with a bridge to the future
- giving meaning to that vision through communication
- building trust, “the lubrication that makes it possible for organisations to work”
- searching for self-knowledge and self-regard
My take: There’s a big difference between manging and leading. Unfortunately, too many executives don’t understand the difference and don’t work hard enough on building these leadership skills.
The bottom line: You can manage dozens of people, but you can lead millions.
Lessons From Dunkin’ Donuts Chief July 28, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: Dunkin' Donuts, Jon Luther
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I’ve been pretty impressed with the pace of innovation at Dunkin’ Donuts over the last few years. A few years ago the firm spotted demand for Starbucks’ new Frappuccinos and came out quickly with its own drink, Coolattas. Dunkin’ recently expanded its menu to include smoothies, flat bread sandwiches, and pizzas that draw in the post-breakfast crowd.
So I was interested in reading an article about what the Dunkin Brands CEO, Jon Luther, had to say to the Entrepreneur Organization in Boston.
Luther transformed Dunkin’s stagnant brand by focusing on the organization’s culture and a refined view of it’s target customers.
The CEO developed a company-wide value system based on honesty, integrity and humility. And he took a pretty aggressive stance in making sure that it was adopted. As he said:
Workers who couldn’t or wouldn’t ascribe to those values left the company. The ones who remained, shared a common value system.
The company then focused its efforts on its core customers that consumer research showed were a no-frills bunch that love routine, and are proud of their busy schedules.
The bottom line: Dunkin combined the ingredients for transformation: culture + customers + innovation.
Biggby Coffee Takes On Starbucks July 25, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: Biggby Coffee, Starbucks
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Biggby Coffee, a chain based in Michigan, just opened it’s 100th coffee shop. While this franchise-based company isn’t about to displace Starbucks’ 11,000 US locations, it has an attitude that should help it continue to grow; even while Starbucks closes down some of its newer locations.
I really like what the Biggby Coffee CEO had to say (from an article in the Lansing State Journal):
- “Customer engagement is exactly what the folks at Biggby strive for“
- “The culture is what makes us successful. The Biggby way is a way of looking at customers as people, and that kind of engagement we have at our stores makes it a personal experience. People love our coffee, but the reason they come to our stores is it makes them feel good.”
- “We are a franchise company and Starbucks is not. Most of our operators are people from the community. There’s a big difference between an owner running the store and any other restaurant chain with many, many units. They’re not just an employee; they own the business. It adds energy, excitement and enthusiasm.”
- “The most effective thing I can do is go out and spend time at the stores, just hang out and engage. What I’m trying to do is make sure people have that heart that it takes.”
One of the larger franchise owners added this: ”One of their philosophies is every customer must leave the store in a better mood than when they arrived.”
The bottom line: Seattle doesn’t have a monopoly on great coffee experiences; or good moods
The CEO’s (Key) Role In Customer Experience June 18, 2008
Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Executive leadership.Tags: Ken Thompson, Wachovia
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I recently discussed Ken Thompson’s impact on the customer experience at Wachovia. That post highlighted this excerpt from his “letter to shareholders” in Wachovia’s 2004 annual report as a blueprint for CEO’s who want to transform their company’s customer experience:
Our longtime shareholders will recall, however, that it was not that long ago - 1999 - when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.
The power of these words may have been dampened by the length of the excerpt, so I dissected it into components that are critical for CEOs…
“Our longtime shareholders will recall, however, that it was not that long ago - 1999 - when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality.”
=>Insight for CEOs: The focus on customer experience (or, as it is called here, service quality) must come from the CEO’s clear belief that it impacts business results (in this case, retention). It is a core business imperative, not a “nice to have” initiative.
“We increased staffing levels in our financial centers, call centers, and operations area.”
=>Insight for CEOs: Since customer experience provides real financial benefits, it’s worthy of investment. And the CEO’s willingness to invest in these areas is a clear signal to the organization that customer experience excellence is critical; not just an empty slogan.
“We revised our incentive compensation plans to emphasize not only sales performance, but service as well.”
=>Insight for CEOs: People focus on what’s measured, incented, and celebrated. To embed customer experience within the core operating fabric of a company, therefore, firms need to refine what it measures, incents, and celebrates. So make sure that your HR exec is involved in the customer experience effort.
“We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly.”
=>Insight for CEOs: Any customer experience transformation needs to be driven by the voice of the customer; so CEOs should look for a customer experience dashboard with a handful of customer metrics (like satisfaction or Net Promoter). And hold your entire executive team accountable for improving those metrics; don’t offload the responsibility to a chief customer officer.
“And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.”
=>Insight for CEOs: This effort requires the active involvement and commitment by the CEO. Why? Because transformation efforts can easily get bogged down in politics and silos. So reviewing progress of the firm’s customer experience efforts needs to become a regular part of the executive agenda.
The bottom line: Customer experience success requires CEO nurturing.
Leadership Lessons From Tim Russert June 14, 2008
Posted by Bruce Temkin in Executive leadership.Tags: Tim Russert
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I’m one of the millions of people who regularly looked forward to seeing what Tim Russert had to say on Meet The Press, The Today Show, or during one of his appearances on the NBC Nightly News. He had a knack for providing deep insight in a clear, straightforward, and engaging way. I aspire to be more like Tim!
After listening to hours of programming dedicated to Russert’s extraordinary life, I realized that he was not only a great inspiration for me, but he embodied characteristics that are critical for good leaders. So here are some lessons that executives can learn from Russert’s life:
- Tackle complicated situations, but simplify your communications.
- Expect a lot from your people, but help them succeed.
- Push for excellence, but do it with enthusiasm.
- Ask the hard questions, but stay fair.
- Focus on the issue, not yourself.
- Act professionally, but don’t lose your humanity.
The bottom line: We’ll miss you Tim Russert; Rest In Peace.
A Look Back At My First Year Of Blogging June 13, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership, Experience-Based Differentiation.Tags: Alan Mulally, American Express, Barnes & Nobles, Bob Iger, Borders, Cablevision, Charter Communications, Circuit City, Costco, Ford, Indra Nooyi, Jason Varitek, JetBlue, John Hancock, JP Morgan Chase, Ken Thompson, Kenneth Chenault, Mackey McDonald, Mark Hurd, Medicaid, Tony Hsieh, VF Corp, Wachovia, Zappos
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Today is a big day. It’s exactly one year after my first post “Lessons Learned From 1,001 Web Site Reviews.”
It’s hard for me to believe that I’ve been doing this for a whole year. Or as the song from Rent goes, for five hundred twenty five thousand six hundred minutes. But my measurement is not in daylight, sunsets, midnights, or cups of coffee. It’s in blog posts, 184 of them!
While blogging takes a ton of time (I’m constantly looking for interesting topics and drafting posts), it’s been a great experience. Why? Because of you! Readership continues to grow and this blog now has more than 10,000 visitors per month. So I want to say thank you to everyone who has been reading, linking to, writing about, and passing along my blog.
In honor of the 12 months of blogging, I’ve picked out 12 of my favorite posts (in no particular order):
- Experience-Based Differentiation. This is the core idea which drives my research; it also won the best research award at Forrester. Experience-Based Differentiation, or EBD as I fondly call it, is based on three principles: Obsess about customer needs, reinforce the brand with every interaction, and treat customer experience as a competency. This remains a powerful blueprint for customer experience excellence. If you’re interested in customer experience (who isn’t?!?), then you may want to use the EBD self-test as a starting point. You can also find many other posts about EBD on this blog.
- My Manifesto: Great Customer Experience Is Free. This post summarizes my perspective on customer experience; it’s a lot like the quality problems of the 1980s. While customer experience is not an easy situation to deal with, it can DEFINITELY be improved with a systematic effort; it just takes discipline (see EBD above). There was also a follow-on to this post called Great Customer Experience Is Free, Part II.
- Don’t Let Profits Replace Purpose. Companies need to make profits, but here’s the dilemma: if they just focus on making profits, then they lose sight of what makes them special. Firms that lack a strong raison d’être have a hard time aligning the efforts of their employees. In a related post, I discussed how Firms Need Some Soul Searching.
- The Holy Grail: A Link Between Customer Experience And Loyalty. I’ve been hoping to do this for a while: use data to provide the connection between customer experience and loyalty. And I finally did it. My analysis shows a high degree of correlation across the 9 industries that I examined, with the the strongest linkage for banks. That finding fits nicely with an earlier post which said that banks need to prepare for customer experience wars.
- Trend Watch 2008 Wrap-Up. I really enjoyed writing a series of posts over the New Years break that examined trends published in The Economist, The McKinsey Quarterly, Advertising Age, Business Week, and Trendswatch.com. While I discussed 52 trends across all of the posts, this wrap-up looked at 14 that covered 4 areas: Consumer needs, online opportunities, required skills, and strategy & culture.
- Learning From The Good Fortune Advice Of Others. Fortune Magazine published advice from 25 famous people, and I commented on 8 of them that I really liked. There was great advice from big names like HP’s CEO Mark Hurd, Disney’s CEO Bob Iger, and Ford’s CEO Alan Mulally. But my favorite person on the list is Indra Nooyi, Chairman and CEO of Pepsico (who I found out about in a Time Magazine article). Her advice: “Whatever anybody says or does, assume positive intent.”
- Discussing Zappos’ Culture With Tony Hsieh. As a researcher, I get to interview a lot of people. But my discussion with Tony Hsieh, the CEO of Zappos was really memorable. It started a few minutes before our call when Tony twittered that he was waking up early (7:00 AM on Memorial Day) and needed a Red Bull before he spoke with me. Tony was great and I’ve become an even bigger fan of Zappos after the call. I also wrotr about another CEO that really understands customer experience, Wachovia’s Ken Thompson.
- JetBlue’s “Happy Jetting” Is More Than Empty Promises. After a series of posts that looked at companies trying to change their customer experience through advertising efforts (JP Morgan Chase, Circuit City, and John Hancock) it was great to see that JetBlue was engaging its employees in its Happy Jetting efforts. I also wrote about how Ford is starting to view employees as potential brand ambassadors.
- Forrester’s 2007 Customer Experience Rankings. We used responses from nearly 5,000 consumers to rate the customer experience of 112 US firms. Our customer experience index (CxPi) examined three areas:meeting customer needs, being easy to work with, and being enjoyable. The three organizations with the highest CxPi were Costco, Borders, and Barnes & Nobles. The bottom three: Charter Communications, Medicaid, and Cablevision.
- Amex CEO Gains Insights From Napoleon. Kenneth Chenault, Amex CEO, used a quote from Napoleon that I really liked: “The role of the leader is to define reality and give hope.” This gave me an opportunity to discuss key leadership attributes: Deal with the reality of the world, engage your employees, provide a clear vision, and maintain a sense of purpose. While I’m discussing quotes, I really liked this one from Mackey McDonald, Chairman of VF Corp: “We realized we didn’t have to come up with brilliant ideas - we needed brilliant ways of executing good ideas.”
- Mashup: Halloween + Red Sox + CxP. This was a unique opportunity for me to combine three of my favorite things: my family, Red Sox, and customer experience. We had a great interaction with Jason Varitek on Halloween that ended up with my kids getting his autograph. You can see where he signed my son’s World Series ticket in this post. In another mashup of my interests, I my posted about how The Colorado Rockies Embraces Its Guests.
- The Best Of CxP Matters: Volume #1, Volume #2, and Volume #3. It’s amazing how quickly time (and many blog posts) just flies by. That’s why I’ve been writing ”The Best Of Customer Experience Matters” to summarize every 50 posts; they also give me a reason to reflect on what I’ve written. So I decided to bundle all three of these as one of my favorites.
In case you’re interested, here are the 10 posts that have been read the most:
- Experience-Based Differentiation
- My Manifesto: Great Customer Experience is free
- Forrester’s 2007 Customer Experience Rankings
- USAA: A Positive Example Of Customer Experience
- Trend Watch #5: Trendwatch.com “8 Important consumer trends for 2008″
- Webkinz: An example of a disruptive customer experience strategy
- Five Disruptive Customer Experience Strategies
- Are you listening to the voice of the customer?
- Apple’s Truly Genius Service
- Trend Watch #4: Business Week “Innovation Predictions 2008″
The bottom line: If you’d like to celebrate this anniversary, send a link to this blog to five of your friends.
Will Thompson’s Departure Hurt Wachovia’s Customer Experience? June 12, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Financial services.Tags: Ken Thompson, Wachovia
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Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:
- According to American Customer Satisfaction Index (ACSI), Wachovia has the highest customer satisfaction of any bank it tracks, and has led the way since 2001.
- Forrester’s Customer Experience Index (CxPi) ranked Wachovia 4thout of 14 banks, only falling behind smaller banks: credit unions, BB&T Corp., and Citizens.
- Of the 14 banks in the Forrester’s CxPi, Wachovia placed 2nd in phone satisfaction, 5th in store/branch satisfaction, and 4th in Web satisfaction.
To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:
- 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
- 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
- 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
- 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
- 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
- 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
- 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”
Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:
Our longtime shareholders will recall, however, that it was not that long ago - 1999 - when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.
The bottom line: Great customer experience takes Thompson-like leadership.
Can Frank Blake Revive Home Depot? June 7, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: Frank Blake, Home Depot
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Home Depot’s stock closed yesterday at $27.18; 29% lower than a year ago. That’s certainly troubling, but what’s even more concerning for the retailer is the poor feedback from its customers:
- According to the American Customer Satisfaction Index, Home Depot’s satisfaction dropped 4.3% in 2007 — the largest drop of any specialty retailer that it tracks. By comparison, Lowe’s customer satisfaction increased by 1.4% over the same time-frame.
- In Forrester’s Customer Experience Index, Home Depot received a score of 72%; 25th out of 27 retailers. Lowe’s, on the other hand, ended up with a 79%; 15th out of the retailers.
This is a terrible story. So is Home Depot doomed to failure? Not necessarily. While the firm has a lot of problems to fix, it’s got one key part of the solution in place: Frank Blake as CEO. I just read a Q&A with Blake in the Wall Street Journal which really impressed me. Blake seems to be doing a lot of the right things to make the company more customer-focused, in particular:
- He went to the founders for advice. During store visits with Bernie Marcus, Blake learned the importance of the connection between associates and customers. As I’ve said many times in this blog, companies often lose site of what’s important; letting the hunt for profits obscure the company’s purpose. Founders can often help restore the original sense of purpose.
- He thanks employees– personally. When it comes to great customer experience, it’s critical for executives to get actively involved. I’ve often discussed the thank you notes (called “Blue Notes”) that David Neeleman (JetBlue ex-CEO) sent out to employees who did something good for customers. It turns out that Blake asks for examples of associates doing extra-ordinary things and he sends out 40-50 handwritten thank you notes per week.
- He understands the levers of leadership. To quote Napoleon: “The role of the leader is to define reality and give hope.” Blake understands that he needs to lead the entire organization through major change so he sticks to simple messages that everyone can understand and pushes his executive team to make decisions.
If Blake is looking for what to do next, he should take a look at following eight questions that gauge the customer-centricity of management teams:
- Do senior executive staff meetings have a recurring agenda item on customer experience? (this does not include dealing with customer emergencies)
- Do internal communications from the CEO/President regularly include discussions of customer experience?
- Do external communications from the CEO/President regularly include discussions of customer experience?
- Is customer experience explicitly discussed (in some form) within the company’s strategic plan(s)?
- Does the executive team have a clear set of customer experience objectives?
- Do most of the executive team members have goals based on customer experience objectives?
- Is the compensation of executive team members tied to customer experience objectives?
- Does the organization believe that the CEO/President would trade-off some short-term financial results for longer-term customer experience gains?
The bottom line: Home Depot appears to be in good hands.
More About Tony Hsieh And Zappos June 5, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: Tony Hsieh, Zappos
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If you enjoyed my post Discussing Zappos’ Culture With Tony Hsieh, then you should definitely read an article in Forbes called “A Step Ahead.” It provides a great sense of Tony as well as the Zappos culture . Here’s one of my favorite parts of the article:
Not long ago Hsieh created a “cultural fit interview” for prospective hires. It includes questions such as: “On a scale of one to 10, how weird are you?” “If they say ‘one,’ we won’t hire them,” says Hsieh. “If they’re a 10, they’re probably too psychotic for us. We like 7s or 8s.”
The bottom line: I guess it’s accurate to say that Zappos is a little wierd.
Discussing Zappos’ Culture With Tony Hsieh May 28, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.Tags: Tony Hsieh, Zappos
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As I mentioned in my post about popular customer experience topics, I’m currently researching best practices for the 3rd principle of Experience-Based Differentiation: Treat customer experience as a competence, not a function. It’s a topic that I sometimes call customer-centric DNA.
As part of that research, I’m interviewing a number of executives. So I reached out to Tony Hsieh, the CEO of Zappos, a company that’s renown for its great customer service.
Given our schedules, Tony and I ended up speaking on Monday (Memorial Day) morning at 10:30 AM EDT (7:30 AM his time). I checked out Tony’s twitter right before we spoke and found this tweet:
About to do a conference call. Way too early to be awake, couldn’t find another time to do it. Getting out of bed was not easy. Red Bull!
So let me start by thanking Tony for getting on the phone so early on a holiday. That shows his commitment to getting the Zappos word out!
How good is Zappos’ customer experience? Well, my wife loves Zappos. And my mother-in-law, after finding out about my discussion with Tony, excitedly told me that she loved Zappos because “it is so easy it use.” She once ordered a pair of shoes at 10:00 PM and was amazed to receive them before noon the next day.
Those are not isolated impressions about Zappos; the retailer has a lot of adoring customers. As a matter of fact, Tony shared an interesting fact with me: the company’s Net Promoter Scores (NPS) are so high that they do not provide any guidance on areas for improvement.
Well, the interview was great. Tony was open, informative, and inspiring. Here are some of the interesting factoids from our discussion:
- The company’s culture is defined in its ten core values that include items like “deliver WOW through service” and “be humble.”
- Tony felt funny when the company codified those core values, because it felt a bit too corporate. But he realized that it needed to happen given the company’s growth.
- Tony doesn’t want to prescribe actions for employees that show how much Zappos cares about customers; he wants employees to do things because they genuinely care about customers.
- Zappos uses its culture as a reason to hire and fire people. All new hire candidates have a separate interview with the HR department that focuses just on cultural fit.
- New employees go though 4-5 weeks of training that includes education about the culture and spending time on the phone with customers.
- To ensure that employees have a strong fit with the culture, new employees are offered $1,000 to quit after their first week of training. That way they weed out the people who aren’t committed to working at Zappos. Hsieh didn’t feel like enough people were taking the company up on its offer, so he discussed raising the bonus to $1,500.
- Every year Zappos publishes its “Culture Book” in which all employees are encouraged to write about what the culture means to them.
- Tony recognizes that cultures often go downhill when companies scale. He wants Zappos’ culture to get stronger as it grows.
- Tony offers this advice to Zappos employees: It’s completely up to you guys. I can’t force the culture to happen; so part of your job description is to display and inspire the culture.
I asked Tony if I could share some of our discussion in my blog. He said yes. Why? It met his basic principle for deciding what he’s willing to share:
Would sharing it make the world a better place?
The bottom line: Most firms would be a better place if they were more like Zappos.
The Tale Of Two Airlines: Southwest And American May 22, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: American Airlines, Herb Kelleher, Southwest Airlines, Southwest Airlines Pilots Association
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Yesterday I was struck by the contrast between two pieces of news; an ad in the USA Today from the Southwest Airlines Pilots Association (SAPA) and a new fee from American Airlines.
First of all, I found a full page ad in the USA Today which was a letter from the SAPA to Herb Kelleher, the newly retired chairman of the airline. Here’s some of what the pilots had to say:
As you step down from the SWA Board of Directors, the pilots of Southwest Airlines would like to thank you, Herb, for 38 years of positively outrageous service to our Company and our pilots. It has been an honor and a privilege.
I also read yesterday that American Airlines has decided to impose a $15 fee for the first bag that passengers check. This announcement comes two weeks after announcing a $25 fee for the second bag that customers check. Wow, that will be a customer experience nightmare in so many ways: slowing down the check-in process as customers find out the news and have to pay the fees, slowing down the boarding process as more people try and find space for their luggage in the overheads, and pushing more luggage off the plane when overheads get filled up (once again slowing the boarding process).
In addition to this news, I thought there was an interesting contrast with a full page ad in USA Today from the American Airlines Pilot Association that I found about a month ago. Here’s some of what American’s pilots had to say at that time:
We’re embarrassed that so many passengers are inconvenienced and dissatisfied and hope you’ll accept our apologies for our airline’s unreliability… Due to mismanagement, our airline doesn’t have enough workers to run dependably…
The bottom line: Which airline do you think is best equipped to deliver a great customer experience?
Learning From The Good Fortune Advice Of Others May 15, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership, Words of wisdom.Tags: Peter G. Peterson, Mark Hurd, Indra Nooyi, Eddie Lampert, Bob Iger, Nelson Peltz, Charlene Begley, Alan Mulally
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Fortune Magazine asked 25 accomplished people about the best advice that they were ever given; it’s worth reading. I picked out 8 pieces of advice that I thought were particularly relevant to customer experience efforts. Here they are, with my comments:
- “Focus on those things you do better than others.”
Peter G. Peterson, Co-founder and Senior Chairman, Blackstone Group
My take: You need to understand what makes your company special in the eyes of your customers; and it should show up in everything you do and every decision that you make. This fundamental premise is captured really well in a couple of older Harvard Business Review articles (that later became books): The Core Competence of the Corporation and Customer Intimacy and Other Value Disciplines. - “Good story, but it’s hard to look smart with bad numbers.”
Mark Hurd, Chairman and CEO, Hewlett-Packard
My take: It’s hard to convince business leaders to make an investment in customer experience if you use bad or superficial numbers in your analysis. So spend time with the finance department and other internal financial analysts to make sure your business case is solid. - “Whatever anybody says or does, assume positive intent.”
Indra Nooyi, Chairman and CEO, Pepsico
My take: It’s official; I’m joining the Indra Nooyi fan club. This Fortune article and her description in Time Magazine shows that she has a great sense of leadership. All too often, burdensome processes are put in place to keep customers from defrauding the company or to keep employees “in line.” Using Nooyi’s advice, you can simplify many processes by assuming that most customers are honest and that most employees want to do what’s right. - “If I waited for you to turn, you and the defensive player would have an equal chance to get the ball. Your opportunity is gone.”
Eddie Lampert, Chairman and CEO, ESL Investments; Chairman, Sears Holdings
My take: You need to think several steps ahead, like a chess player, in every strategy that you are considering; factoring in the response by customers and by competitors. This reminds me of a quote from Wayne Gretsky when he was asked what made him a great hockey player: “Other people skate to where the puck is, and I skate to where it is going to be.” - “To thine own self be true.”
Bob Iger, President and CEO, Walt Disney
My take: This is a key message at a personal level, but it also has meaning for companies. Organizations need to continually foster their key purpose, or they will lose site of who they are. That’s clearly part of the problem that Starbucks is facing today. This advice is also useful when thinking about your marketing efforts; don’ t try and portray your company as something it’s not; that’ll just lead to empty promises. - “Get sales up, and keep expenses down.”
Nelson Peltz, CEO, Trian Fund Management
My take: Promoting customer experience for the sake of customer experience is not a sustainable approach. At the end of the day, you need to make the clear economic case that customer experience efforts will improve business results. If not, they’ll get displaced by other initiatives that have a clear economic benefit. - “Spend a ton of time with your customers. Especially when you’re new, the first thing you should do is go out to customers and ask them how you compare with competitors, how your service is, what they think of your products.”
Charlene Begley, President and CEO, GE Enterprise Solutions
My take: There’s nothing more powerful or aligning than clearly hearing the voice of the customer. All too often people put their own spin on what customers need or want, so it’s important that you hear what customers are saying in their own voices. But don’t listen though a starry-eyed lens, make sure you hear the reality of the situation. As I learned from Jack Welch: “Deal with the world as it is, not how you’d like it to be.” - “Have a point of view about the future that focuses on the customer.”
Alan Mulally, President and CEO, Ford Motor Company
My take: While companies often have visions, many aren’t in the right form. Start with a picture of where your customers will be and make sure that your vision is described through their eyes. If you can’t articulate what customers you’ll serve and describe what they’ll want, then you can’t hope for anything more than an empty vision.
The bottom line: When it comes to good advice, borrowing is a virtue.
Off Topic: Perusing Time’s Most Influential List May 10, 2008
Posted by Bruce Temkin in Executive leadership.Tags: Time Magazine's Most Influential People, Indra Nooyi, Shigeru Miyamoto, Rain, Stephen Colbert, Heidi Klum, Tyra Banks, Dalai Lama, Madeeha Hasan Odhaib, Larry Brilliant, Miley Cyrus
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Time Magazine published its fifth annual list of the world’s 100 most influential people. So I decided to take a look at that list from two angles: popularity and inspiration.
Entertainers Win The Popularity Contest
As part of the story, Time let readers vote on who should be on the list. Here are the five people who received the highest ratings (with my commentary):
- Shigeru Miyamoto (video game designer; creator of the Nintendo Wii).
My take: Video gaming is now a mainstream activity; we’ll see it continue to boom and show up in different places in our lives. - Rain (25 year old Korean pop sensation)
My take: A lot of Koreans must read Time’s Website; I’ve never heard of him. - Stephen Colbert (Comedian, host of The Colbert Report)
My take: Even in the face of global unrest, people still like to laugh (I am a huge fan of Colbert). - Heidi Klum (Supermodel, host of Project Runway, and married to the singer Seal)
My take: Project Runway is an incredibly creative and entertaining show. Or, as its many fans might call it, “Fierce!” - Tyra Banks (Talk-show host, America’s Next Top Model mentor).
My take: There will always be things in life that I just don’t understand.
The Best Stories Are Both Influential And Inspirational
The list of 100 people, which covered 5 categories, contained people who I would classify as both good and bad. I picked one person from each category that I felt provided a good story.
- Leaders & Revolutionaries: Dalai Lama. He remains calm and nonviolent even while fighting against China’s oppression of his people. There’s a lot to learn from a couple of his quotes in the article: “We <the human race> are the superior species on Earth but also the biggest troublemakers,” and “I don’t dislike the Chinese, only their actions.”
- Heroes & Pioneers: Madeeha Hasan Odhaib. She built a business in Iraq sewing hospital sheets and flags and she now employs 100 women. While she might not have the most powerful resume on the list, I think she demonstrates how the world can become a much better place if everyone finds a way to make (even a small) difference.
- Scientists & Thinkers: Larry Brilliant. As part of the World Health Organization, Brilliant was a key player in the eradication of smallpox. He has been appointed to lead Google.org, the philanthropic arm of Google. This move by Google is an example of an important trend called “The responsible company: Performing with purpose is the new challenge” that I highlighted from The Economist.
- Artists & Entertainers: Miley Cyrus. Cyrus (a.ka. Hannah Montana) has a cult following (which includes my daughter with whom I went to see Cyrus in concert). What I like about Cyrus is her apparent good values; on and off the screen. While she’s taken a hit lately with some Vanity Fair photos, it’s critical for the entertainment industry to provide good role models. Hopefully she won’t turn into a disappointment like the Spears sisters (Jamie Lynn and Britney).
- Builders & Titans: Indra Nooyi. As chairman and CEO of PepsiCo, Nooyi has been leading the company towards sustainability and social responsibility. As an example, she led the company’s move to healthier products; removing trans fats well before competitors. Here’s how Howard Schultz who authored Nooyi’s description described her management style: She welcomes hearing from people who disagree with her, but she is single-minded about following the path she believes is best for her company and its shareholders.
The bottom line: When it comes to getting the popular vote, entertainment rocks. But nothing beats a good inspirational story.
Senior Execs Are Not Fully Customer-Centric May 6, 2008
Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.2 comments
As any regular reader of this blog knows, my research focuses on a concept called Experience-Based Differentiation (EBD). A key principle of EBD is to Treat customer experience as a competence, not a function. To achieve this principle, companies need to infuse customer-centric DNA into their culture. But this level of change requires a high degree of commitment from the senior executive team. I think this quote from Mario Andretti explains why:
Desire is the key to motivation, but it’s determination and commitment to an unrelenting pursuit of your goal - a commitment to excellence - that will enable you to attain the success you seek.
In a previous post I discussed how companies with customer experience leaders are progressing faster than other firms. The creation of that type of role can be a sign of commitment, but the president or CEO and all of her/his direct reports must demonstrates an ongoing commitment in order to change the culture.
My sense is that senior executives are intrigued with customer experience, but most are not yet fully committed to it.
8 Signs Of Executive Commitment
If a senior executive team is fully committed to customer-centricity, then it can answer yes to all of the following questions:
- Do senior executive staff meetings have a recurring agenda item on customer experience? (this does not include dealing with customer emergencies)
- Do internal communications from the CEO/President regularly include discussions of customer experience?
- Do external communications from the CEO/President regularly include discussions of customer experience?
- Is customer experience explicitly discussed (in some form) within the company’s strategic plan(s)?
- Does the executive team have a clear set of customer experience objectives?
- Do most of the executive team members have goals based on customer experience objectives?
- Is the compensation of executive team members tied to customer experience objectives?
- Does the organization believe that the CEO/President would trade-off some short-term financial results for longer-term customer experience gains?
The bottom line: Senior execs with less than full commitment need to be committed.
Customer Experience Thrives With Executive Leadership April 29, 2008
Posted by Bruce Temkin in Chief customer officer, Customer experience, Executive leadership, Experience-Based Differentiation.add a comment
In a recent research report called Customer Experience Thrives With Executive Leadership, I examined data from 287 large US firms in our customer experience panel. Almost half (45%) had an executive in charge of customer experience across products and channels; a role that I refer to as a chief customer/experience officer (CC/EO). Here’s a summary of what I found when comparing responses from the firms with a CC/EO to those without one:
Firms with these leaders view customer experience as more important, have more enterprisewide customer experience efforts, report having fewer obstacles, do more primary customer research, and score better in all three areas of Experience-Based Differentiation.
When it came to the Experience-Based Differentiation (EBD) self-test, here’s how many firms ended up with a rating of either “excellent” or “good” for each of the three principles of EBD:
-
Obsess about customer needs, not product features
With CC/EO: 39%
Without CC/EO: 24% -
Reinforce brands with every interaction, not just communications
With CC/EO: 46%
Without CC/EO: 30% -
Treat customer experience as a competence, not a function
With CC/EO: 42%
Without CC/EO: 24%
The bottom line: A CC/EO can help turn customer experience into a competency.
Sometimes Good Is Better Than Brilliant April 28, 2008
Posted by Bruce Temkin in Executive leadership, Words of wisdom.Tags: VF Corp
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Have you ever heard of VF Corporation? Well, I hadn’t heard of the company until I read an article in Fortune magazine called How a 100-year-old apparel firm changed course. It turns out that VF owns a bunch of familiar brands like Vans, Lee, Wrangler, Nautica, Eastpak, Reef, and The North Face. The article talks about how VF converted its strategy to focus on “lifestyle brands” that appeal to consumers’ desires for fashion and status.
While discussing how the company shifted its strategy, Mackey McDonald, Chairman of VF Corp, provided this fantastic insight:
We realized we didn’t have to come up with brilliant ideas - we needed brilliant ways of executing good ideas.
My take: Very well said! I expect to be repeating this quote a lot in the future. It captures two concepts that I think are important:
- You often get the most bang from your buck (or ROI on your effort) if you figure out what is “good enough.” (The 80/20 rule)
- You should focus your efforts on things that you can actually implement.
The bottom line: Hopefully you found this post to be good, or at least brilliant.
Chrysler Avows New Customer Experience Religion April 15, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership, Experience-Based Differentiation.Tags: Chrysler
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Yesterday’s USA Today provided a double-header for my blogging. In addition to the ad from AA pilots, there was also a full-page ad from Chrysler that started as follows:
Quality is one of those fluffy words. After you see it or hear it enough times, it doesn’t mean anything anymore
The ad announced that the auto maker had created a Chief Customer Officer position and that it aims to put the customer first, which it described as a “basic rule of corporate etiquette.”
My take: The beginning of the Chrysler ad reminded me of My Manifesto: Great Customer Experience Is Free. In that post, I discussed how customer experience is a lot like quality. So, hopefully, Chrysler execs are reading my blog and/or research.
If they are reading this blog, then I suggest that they also follow my advice about how to successfully implement the role of Chief Customer Officer. That research outlined five broad areas of focus: 1) Make sure that you’ve got the right environment; 2) Prepare to take on a broad change agenda; 3) Establish a strong operating structure; 4) Kick off high-priority activities; 5) Look ahead to the future.
But the presence of a Chief Customer Officer does not immediately convert Chrysler to the customer experience sect. The entire executive team needs to learn, internalize, and dedicate themselves to a new set of sacred rituals. What text can they use for guidance and inspiration? You guessed it: Experience-Based Differentiation (EBD). EBD is a blueprint to customer loyalty that builds upon three principles:
- Obsess about customer needs, not product features
- Reinforce the brand with every interaction, not just communications
- Treat customer experience as a competency, not a function.
As a start to the conversion process, the executive team should take the EBD self-test and use the results as a basis for discussing where to invest their time and energy.
The bottom line: You can’t convert to the customer experience religion by proclamation; you need to dedicate your professional life to it.
AA Pilots Slam Management On Behalf Of Customers April 14, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.Tags: American Airlines
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My previous post discussed American Airline’s Web response to the grounding of its planes. But the airline’s problems go beyond maintenance issues with the FAA. While I was sitting on an AA flight today, I read something amazing in USA Today. The Allied Pilots Association (representing American Airline’s 12,000 pilots) had a large ad that was titled “Why is American Airlines Failing Its Customers?” Here’s an excerpt from the ad:
We’re embarrassed that so many passengers are inconvenienced and dissatisfied and hope you’ll accept our apologies for our airline’s unreliability. Why is American Airlines failing its customers?
Due to mismanagement, our airline doesn’t have enough workers to run dependably. It also doesn’t keep enough spare parts to ensure prompt repairs — and with the industry’s second-oldest fleet, the need for repairs is more and more frequent. American Airlines needs to reinvest in our airline, and do so quickly.
My take: This is even worse news than the groundings. When a major part of your workforce resorts to advertisements to tell management about the root of customer dissatisfaction, you’ve got a very serious problem. And, it’s not just the pilots that feel this way. I asked several AA employees that I ran into about the ad. While most did not want to speak badly about their company, it was clear from their responses (and sometimes, non-responses) that many AA employees agree with the pilots.
If the AA leadership team (execs and board of directors) have not yet gotten the message, then hopefully this is their wakeup call. As a frequent flier on AA, I hope that the company treats this as its “low moment” and commits itself to rebuilding trust with employees and customers.
The bottom line: It’s hard to excite investors when you irritate customers and employees.
Amex CEO Gains Insights From Napoleon April 10, 2008
Posted by Bruce Temkin in Executive leadership, Words of wisdom.Tags: American Express
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I was reading USA Today yesterday and ran across an interview with American Express CEO Kenneth Chenault. I really enjoyed his response when asked to characterize leaders who do well:
The best definition of leadership to me is summed up in a quote: “The role of the leader is to define reality and give hope” - by Napoleon.
(No need to harass Chenault about his management style, he goes on to say that he does not want to end up like Napoleon).
My take: You may not like what Napoleon did, but it is hard to deny that he was a great leader. His quote really does define the essence of leadership. It nicely captures many of the characteristics that I think are critical for good leaders:
- Deal with the reality of the world. I’ve always loved Jack Welch’s quote: “Deal with the world as it is, not how you’d like it to be.” Many executives think they can impose their will on the rest of the world. Unfortunatley, this makes it very difficult for the people who work for them who must operate within the constraints of the real world.
- Engage your employees. Walt Disney really understood the importance of motivating the people in his organization. He captured it well in this quote: “You can design and create, and build the most wonderful place in the world. But it takes people to make the dream a reality.”
- Provide a clear vision. Leaders are involved in only a small fraction of the decisions within their organizations. So they need to make sure that the myriad of other decisions will collectively drive the organization in the right direction. They can’t be wishy-washy. As Newark’s Mayor Booker said: “Life is about focus. What you focus on, you become. If you focus on nothing, you become nothing.” If people know where they are going, they are more likely to get there.
- Maintain a sense of purpose. It’s not good enough just to have a vision; leaders needs to make sure that their organizations have a strong sense of purpose. And it needs to be clear to their employees and customers. As Howard Shultz, founder and Chairman of Starbucks, has been quoted as saying: “Customers must recognize that you stand for something.“
The bottom line: While Napoleon’s quote is a great guidepost for leaders, I don’t condone adopting his practice of resolving conflicts with a coup d’état.
Note To Circuit City’s Board Of Directors March 9, 2008
Posted by Bruce Temkin in Customer experience, EBD #2: Reinforce The Brand With Every Interaction, Executive leadership, Experience-Based Differentiation.2 comments
Since my previous post talks about customer service and my next post will talk about customer loyalty, I felt compelled to squeeze in something about Circuit City. The retailer just announced that both its CMO and president of small stores are leaving — just a few months after the retailer’s exec VP of multi-channel sales also left the company. In the midst of this turnover, I have a few thoughts for the Circuit City board of directors as they retool their efforts.
To being with, let’s look at how customers rate Circuit City. Here are some findings from my research which shows Circuit City’s rankings:
- Overall customer experience: 26th out of 27 retailers
- Usefulness rating: Last out of 27 retailers
- Ease of use rating: 26th out of 27 retailers
- Enjoyability rating: 26th out of 27 retailers
- Phone interaction satisfaction: 47th out of 78 firms
- Web site interaction satisfaction: 46th out of 83 firms
- In-store interaction satisfaction: 44th out of 70 firms
- Customer intentions to switch: 110th out of 112 firms
- Customer plans for repurchasing: 106th out of 112 firms
It’s clear that Circuit City has it’s work cut out for itself when it comes to Customer Experience. I think it makes sense to repeat advice that I gave to JP Morgan Chase in ”Chase Can’t Advertise Its Way To Customer Friendliness:” You can’t advertise yourself out of this problem.
So here’s a suggestion for the Circuit City leadership team: Transform your latest marketing slogan, ”Simplicity guaranteed,” from a tag-line into an operational blueprint. How? By following the second principle of Experience-Based Differentiation:
Reinforce brands with every interaction, not just communications. Traditional brand messaging is losing its power to influence consumers — that’s why branding efforts need to expand beyond marketing communications to help define how customers should be treated. To master EBD, firms must articulate their brand attributes to both customers and employees, clearly describing how the firm wants to be viewed. That’s just the first step, because companies must go on to translate brand attributes into requirements for how they’ll interact with customers.
The bottom line: Circuit City should stop guaranteeing simplicity and start delivering it.
Lead Your Company Out Of A Downturn February 16, 2008
Posted by Bruce Temkin in Customer experience, Executive leadership.1 comment so far
I just read an article in Fortune called Managing your business in a downturn. The author, Ram Charan, says that smart executives can use the downturn to make their companies better, stronger, and faster by following t