Nadella Pushes Microsoft to Rediscover Its Soul

In a letter to all Microsoft employees called Starting FY15 – Bold Ambition & Our Core, CEO Satya Nadella established a mandate and vision for significant change across the technology behemoth.

Microsoft has great assets, but it has not kept up with changes in how people use technology. The Redmond giant was becoming increasingly less relevant in a world where digital technology is becoming more relevant.

Microsoft has needed to change for a while. There’s a saying that the best time to plant a tree is ten years ago and the second best time is right now. Nadella has made it clear that Microsoft’s time for change is right now.

My take: First of all, it’s hard to talk about any large-scale culture change without recommending that people review our model called Employee-Engaging Transformation, which is built on five practices: Vision Translation, Persistent LeadershipActivated Middle ManagementGrassroots Mobilization and Captivating Communications.

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We work with many of the world’s leading technology companies, so I could go on and on about what changes are necessary at Microsoft. But I’d rather examine broader lessons from Nadella’s letter. Here are some excerpts that I thought were particularly valuable to discuss:

“...in order to accelerate our innovation, we must rediscover our soul – our unique core

Successful companies almost always start with a strong raison d’être, but it can get lost as the company grows and the world changes (see my post on Starbucks). Without a “soul,” companies drift along as employees across the organization start operating in a disconnected way. This is where the brand comes in. Companies need to constantly refresh their brands and make sure that the brand drives decisions across the organization (see my post on Walmart).

More recently, we have described ourselves as a “devices and services” company. .. At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

Our research shows that employees are more productive and engaged when they are inspired by their organization’s mission. Which one of these statements do you think is more inspiring: “We are the devices and service company” or “We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

“We will create more natural human-computing interfaces that empower all individuals.”

This is a comment about technology, but its also points to a broader commentary about making things easy to use. We have entered into a world where people have more options, more distraction, and less patience. Every organization needs to relentlessly focus on making their products, services, and processes easier for customers to use.

Obsessing over our customers is everybody’s job. I’m looking to the engineering teams to build the experiences our customers love.

What’s not to love about this excerpt. My customer experience manifesto (and Temkin Group, for that matter) is built on a fundamental belief that sustaining great customer experience is not about applying a veneer, but about building competencies across the entire organization that create great experiences for customers (see our four CX core competencies). Also, it’s interesting that Nadella used the word “love.” Experiences are made up of three component (functional, accessible, and emotional) and our Temkin Experience Ratings show that companies are weakest at driving the emotional component. To get people to “love” your company, I suggest applying what we call People-Centric Experience Design.

“I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work.”

One of the Six Laws of Customer Experience is that unengaged employees can’t create engaged customers. Any company looking to improve how it interacts with customers almost certainly needs to focus on its employees.

“We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market.”

How companies use customer insights is changing rapidly. Technologies such as text analytics and predictive analytics are helping companies tap into more comprehensive and ongoing insights, rather than relying on periodic customer surveys. Ultimately, companies will need to reinvent their operating frameworks so that they can adjust more frequently to take advantage of these rapidly-flowing insights.

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy.”

This type of statement only works if it’s backed up by clear actions that employees can observe. These “symbols” of change need to be clear departures from how the company operated in the past, and can include reorganizations, firings/hirings/promotions/demotions, killing projects, accelerating projects, etc.). Don’t just say change is coming, demonstrate it (see the 3 characteristics of transformational leaders).

“We must each have the courage to transform as individuals. We must ask ourselves, what idea can I bring to life? What insight can I illuminate? What individual life could I change? What customer can I delight? What new skill could I learn? What team could I help build? What orthodoxy should I question?”

The notion of a personal challenge is a great way to help employees think about how they can be (and must be) a part of the change. But the questions won’t be too powerful if they are just statements in a letter from the CEO. Use these questions as part of discussions across the organization and embed them into leadership training and competency models.

 The bottom line: Change isn’t easy, but Microsoft seems ready to give it a try.

Don’t F*ck Up The Culture, Says Airbnb CEO

Brian Chesky, co-founder and CEO of Airbnb recently wrote a post, Don’t Fuck Up the Culture. It’s a note that he sent to all of the Airbnb employees. It’s a good, short read. Here’s an excerpt:

Culture is a thousand things, a thousand times. It’s living the core values when you hire; when you write an email; when you are working on a project; when you are walking in the hall. We have the power, by living the values, to build the culture. We also have the power, by breaking the values, to fuck up the culture.

My take: Chesky is absolutely correct. Culture is a manifestation of an organization’s true values and it shows up in a myriad of ways. It can be an invaluable asset when it’s good and an insurmountable obstacle when it’s bad. It aligns the thinking and actions of employees in ways that are even more powerful than controls and measurement.

I’ve been writing about this topic for a while, so I went back into the Customer Experience Matters way-back machine and found three very relevant blog posts from 2008:

In Inspiration Trumps Coercion And Motivation, I included what I believe is a seminal quote on the topic from Herb Kelleher, founder of Southwest Airlines:

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.

In Discussing Zappos’ Culture With Tony Hsieh, I write about my interview with Zappos’ CEO. Here are a few of the takeaways from that discussion:

  • 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.
  • 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.

In Management Imperative #1: Invest In Culture As A Corporate Asset, I offered four ideas about how execs can manage their corporate culture assets. Here’s the first one on the list:

Track employee goodwill. When companies buy other companies, they often account for part of the price as “goodwill;” acknowledging that items like brand name and competitive positioning can be long-term assets. Following this approach, companies should track “employee goodwill.” How? By surveying employees and reporting the results like you report the balance sheet; analyzing quarterly snapshots and changes over time. Think about creating a metric from  questions like “How committed are you to helping the company achieve it’s mission and objectives?” “How likely are you to recommend this company as a place to work to your family and friends?

I also feel the need to point to a blog post from 2009, Fundamental Flaws In Management Education. This post discusses a fantastic article written by Sumantra Ghoshal, a leading business thinker. Here’s an excerpt:

Unlike theories in physical science, theories in social science tend to be self-fulfilling. A management theory that catches hold, therefore, can change the behavior of managers who act in accordance with that theory. As Ghoshal states, “the “scientific” approach of trying to discover patterns and laws have replaced all notion of human intentionality with a firm belief in causal determinism for explaining all aspects of corporate performance.” In other words, the belief that management is a social science has removed any humanistic traits (like corporate culture) from the equation about what drives corporate performance.

The bottom line: Don’t f*ck up your culture

Report: The State of Customer Experience Management, 2014

1404_TheStateOfCX2014_COVERWe just published a Temkin Group report, The State of CX Management, 2014. It examines the CX efforts within more than 200 large companies. Here’s the executive summary:

We surveyed more than 200 large companies and found an abundance of Customer Experience (CX) ambition and activity. Most companies have a CX executive leading the charge, a central team coordinating significant CX activities, and a staff of six to 10 full-time CX professionals. Using Temkin Group’s CX competency assessment, we found that only 10% of companies have reached the highest two levels of customer experience, although this does represent a slight increase from last year. Most firms struggle most to master Employee Engagement and Compelling Brand Values. When compared with CX laggards, CX leaders have stronger financial results, enjoy better CX leadership, and implement more successful employee engagement efforts. Executives in companies with stronger CX competencies also tend to focus more on delighting customers and less on cutting costs.

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The percentage of large organizations that have reached the two highest levels of customer experience maturity has grown from 6% in 2013 to 10% this year. During the same period, the percentage of companies in the lowest level of maturity has dropped from 40% to 31%.

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Here are some additional findings from the research:

  • Companies with good or very good ratings in Purposeful Leadership rose from 39% to 45%, the largest improvement for any customer experience competency.
  • The research also revealed a significant focus on improvement. While only 6% of companies believe that their organization currently delivers industry-leading customer experience, 58% have a goal to be an industry-leader within three years.
  • Sixty-five percent of companies have a senior executive in charge of customer experience.
  • More than half of companies have at least six full-time customer experience professionals.
  • Almost two-thirds of respondents rate customer experience with phone agent as good or very good, the highest rated interaction. Less than 30% rate mobile phone and cross-channel experiences at that level.
  • The top obstacle to customer experience is the same as it has been for four years, “other competing priorities.”
  • We compared companies that have strong customer experience maturity with those that are weaker and found that customer experience leaders have better financial results, have more senior executive commitment, and focus more on their organization’s culture.

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The bottom line: Most companies are in early stages of CX maturity, but are getting better

10 Behaviors That Distinguish Purposeful Leaders

To better understand the behaviors that are most indicative of successful leaders, we asked 5,334 U.S. consumers who are currently employed to answer some questions about their direct managers. We asked them to rate the success of their manager as a leader within the organization and to describe how often those managers demonstrate 41 leadership behaviors that we tested (click to download full list of behaviors (.pdf)).

We compared the frequency with which very successful leaders demonstrated the behaviors with the frequency demonstrated by other managers. The behaviors with the largest gaps represent the most distinguishing characteristics of purposeful leaders. It turns out that these very successful leaders are much more likely to:

  1. Motivate other people to deliver their best work
  2. Help people understand complex situations by describing things in simple terms
  3. Help people make decisions by presenting clear options
  4. Motivate other people to work together to achieve a common goal
  5. Look beyond obvious choices to find innovative solutions
  6. Admit to his or her mistakes when there is a problem
  7. Help his or her employees identify and achieve their personal goals
  8. Make decisions that will help the organization achieve its long-term goals even if they do not benefit the organization right away
  9. Coach and mentor other people
  10. Communicate a clear and compelling vision of the future

1402_10TopLeadershipBehaviorsThe bottom line: Purposeful leaders help their people succeed

 

NCAA Provides A Lesson (Not) in Values

In a recent Boston Globe article, Northeastern University’s athletics director Peter Roby reflected on the notion of the NCAA’s “values” given Louisville’s hiring of Bobby Petrino as its football coach. Petrino was fired by Arkansas because of a scandal involving a motorcycle accident and an improper relationship with a female employee.

Here’s an excerpt of Roby’s comments:

“If we’re going to have a conversation about values, then we should understand how those things are lived on a daily basis and what it looks like when you’ve got a set of values that underpin what your activities are… I just didn’t feel like the hiring of someone like Bobby Petrino was consistent with what we say our values are. I wanted people to understand that if we’re going to put values on paper, we better be prepared to defend them and to be held accountable for them.”

My take: Roby is absolutely right, and his comments are applicable to any organization. True values aren’t the things you write down or proclaim in a speech in front of customers, employees, and shareholders, they’re the principles that shape how you make decisions. What you do and don’t do are the only accurate measures of true values. That’s why one of our Six Laws of Customer Experience is “You Can’t Fake it.

Without a clear set of true values, companies lack a “due North” that empowers everyone in the organization to make decisions because they understand what’s important. One of our principles of People-Centric Experience Design is Align with Purpose, an approach that would fail unless organizations have true values.

It’s okay to change your values or aspire to a new set of values, but it’s very hard to live up to them. You need to be very conscious of every decision you make and constantly look in the mirror and ask yourself, is that decision consistent with what I believe my values to be?

The bottom line: True values are defined by actions, not words

CVS Drops Tobacco, Demonstrates Purposeful Leadership

CVS/Caremark announced that it will stop selling tobacco products. According to Larry Merlo, CEO of CVS:

We have about 26,000 pharmacists and nurse practitioners helping patients manage chronic problems like high cholesterol, high blood pressure and heart disease, all of which are linked to smoking. We came to the decision that cigarettes and providing health care just don’t go together in the same setting.

My take: Given the horrible affects of tobacco (I lost my sister, an active smoker, to cancer over 15 years ago), there’s certainly commentary to be made about how this affects the public at large. But that’s not what I want to discuss. Instead, I applaud CVS for behaving consistently with what we call Purposeful Leadership, which is one of Temkin Group’s four customer experience core competencies.

We describe Purposeful Leadership as operating consistently with a clear set of values. In a large organization, leaders influence only a very, very small portion of the day-to-day decisions of their employees. That’s why values are so important, they keep the myriad of things that people do every day collectively heading in the same direction.

While it’s easy to write up something you call values or even announce them at a company meeting, the measure of true values is that they jibe with the decisions that executives make. If leaders aren’t willing to forego short-term profits to advance their values, then they aren’t really values; they’re just bumper stickers. That’s why our last law of customer experience is simply, You can’t fake it.

Here’s how the CVS/Caremark’s About Us page describes its collection of operations: “Our businesses help people on their path to better health.” Selling products like tobacco that are known to have negative health effects is not consistent with that statement. Removing those products from CVS shelves make it much more believable, and an act this is consistent with Purposeful Leadership.

The bottom line: Congratulations to Merlo and the rest of CVS/Caremark leadership for being purposeful.

CX Tip #5: Lead with “Why” in Communications

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CX Tip #5: Lead with “Why” in Communications
(Purposeful Leadership, Employee Engagement)

How does Herb Kelleher, Founder of Southwest Airlines, describe the company’s secret to success?

“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.”

To elicit this type of connection with employees, leaders must focus their communications on answering a critical question, “why?” Most corporate communications focus on “what” and “how,” telling people what needs to be done and how they should accomplish it. This command and control pattern may elicit short-term compliance, but it’s efficacy decays quickly and it loses value completely when situations change and the “how” no longer applies. Leaders need to elicit buy-in from people by starting communications with “why,” explaining the reason that something is important to the company and to the people who are being asked to do something. To fully empower people, share “why” a goal is important and “what” success looks like and leave it up to the individuals to figure out “how” to make it happen. Click for more info

See full list of CX Tips

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