One of the world's most dangerous jobs: change agent

This article (registration required, sorry) from Booz & Co's "Strategy and Business" will send a chill up your spine. The article, "Stand by Your Change Agent," by Stratford Sherman and Marisa Faccio, describes the results of a survey of 84 change initiatives between 1995 and 2005.

The initiatives themselves were successful, in the main: 85% met or exceeded the goals set out for them.

The leaders, though, didn't fare as well. Sherman and Faccio write: "Some 70% of the executives who led these major transformations went unrewarded, or were sidelined, fired, or spurred to leave."

The authors go on to describe types of companies at different levels of performance and how the change agent role is very risky in all but the very strongest companies. My take: large-scale changes disrupt the organization, stir up resistance, much of which gets focused on the change leader. If the change fails, the consequences are self-evident. If it succeeds, however, the pain endured in achieving it takes a toll on the person running the initiative.

If you're considering taking this role on, do it for the experience, the resume fodder, and the feeling of accomplishment if you're successful. Don't do it, however, for the recognition of your peers and leaders. Chances are, that won't be coming your way.

Business Book Hall of Fame: "War & Peace"

Heard of it?

Read it? Probably not. It's the dictionary example of a long book. And it is long. Based on some indirect prodding from Dave Snowden and Jochum Stienstra, I finally picked it up, determined to read the whole thing, in November 2008. It is now the end of January 2009, and that'll tell you what a commitment is required to finish it. (The pile of unread books by my desk is now immense.) I can also heartily recommend the new English translation by Pevear and Volokhonsky; the writing was easy to understand and felt modern and fresh.

Was it worth nearly three months of effort? Hell, yes. "War & Peace" is an amazing work for our time (or any time). There are great love stories and domestic dramas in the book as well, but for the purposes of this post I'm going to focus on how the book tackles leadership, strategy, complexity and chance.

Perhaps most amazing is how Tolstoy shoots down the historian's view of the power of individuals to shape history. Here he is explaining Napoleon's rise to power:

Chance, millions of chances, give him power, and all people, as if by arrangement, contribute to the strengthening of that power. Chance makes the characters of the then rulers of France submissive to him; chance makes the character of Paul I, who recognizes his power; chance makes a conspiracy against him which not only does not harm him, but strengthens his power. Chance sends d'Enghien into his hands and accidentally forces him to kill him, thereby convincing the mob more forcefully than by any other means that he has the right, because he has the power. Chance makes it so that he strains all his forces towards an expedition to England, which obviously would have destroyed him, and never carries out his intention, but instead unexpectedly runs into Mack and his Austrians, who surrender without a battle. Chance and genius give him the victory at Austerlitz, and by chance all people, not only the French, but all of Europe as well, with the exception of England, which does not participate in the events about to take place, all people, despite their former horror and loathing for his crimes, now recognize his power, the title he has given himself, and his ideal of greatness and glory, which to all of them seems something beautiful and reasonable. (pp 1134-1135)

Of course, when the chances turn against him, starting with the invasion of Russia, he quickly becomes a fool and a failure. Was he a genius, or an idiot? Neither, of course. He was participant in a sequence of events over which he had little control, according to Tolstoy. This is a humbling lesson for leaders of all types, who operate in the complex domain--whether that be warfare, business or politics. Events will define you far more than you define yourself. Your actions, to a large extent, will be overwhelmed by forces outside of your control.

Does this then mean that generalship doesn't matter? Tolstoy would say yes. Throughout the book he writes that the most carefully-created war plans go off the rails immediately after the battle begins, while a single junior officer, deciding on his own to attack the French flank, can have an immense impact on winning or losing. And that the passions of the soldiers have much more effect on the outcome than the best leadership and training.

In my times working at very large companies, this seemed true to me. The accomplishments of the company were the agglomeration of thousands of small efforts on behalf of the rank and file. [You could argue that company failures--Enron, AIG, for example--also work this way.] First-line managers had a big impact. Directors, somewhat. But the plans and strategies of the C-level executives, sitting in the God Pod, at the end of the day, didn't mean much at all.

Customers are talking: the Blackberry Storm/Twitter project

Like a lot of people, I've been trying to get a handle on what Twitter means for businesses. My professional interest is in finding unsolicited customer stories and making sense of them--wherever they are. In this, Twitter has a lot of promise. It's easy to use, brief and spontaneous. So are customers using this forum to talk about products? I decided to find out.

My test case was the Blackberry Storm. It received an absolutely terrible review from David Pogue, the New York Times' consumer-electronics columnist. It also had very good early sales numbers--500,000 units the first month of its release, according to the Wall Street Journal. The combination of these made it an irresistible subject to study: would the Twittersphere be flooded with posts from enraged buyers?

The project was made more interesting today, when the Wall Street Journal published an article entitled, "Bumpy Start for Blackberry Storm," which referred to complaints of early Storm users (but not Pogue's review), including this vibrant quote: "I found myself wanting to throw it in the ocean due to my frustration with its overall usability." The article also referred to a release of firmware soon after launch intended to address some of the early complaints, particularly response time.

I used Twitter Search to look for messages containing "Blackberry Storm" and a happy or sad emoticon (there's a button on the advanced search page that enables you to restrict searches this way). I looked at 88 English-language tweets going back to December 27. Here's what I found:



The biggest surprise to me was: where were the complaints from users? While half the Tweets were from Storm users, as opposed to people commenting on the Storm, or thinking about it, only 4 out of 44 (9%) of the users' tweets were negative, while 23 (52%) were positive.

(If you want to check out the searches I created for this project, they are here: happy search, sad search. Twitter Search has been acting funny the past few days--I'm only able to get one page of recent results, and can't search farther back. I used an RSS feed of the search over a period of weeks to gather the entire list of 88,)

From a customers are talking perspective, this isn't a terrible outcome at all for the Storm. Whether the firmware change made that much difference, or the Blackberry brand loyalists are immune to hardware glitches, or simply that devices like this aren't perfect and users expect that--they are not saying this is a terrible device. Many are saying that they like it. If I'm Blackberry and Verizon, I'm not discouraged by the Storm's initial reception.

By the way, the WSJ has already started to backtrack. On the web site, the article is now entitled, "Blackberry Storm Is Off To A Bit of a Bumpy Start."

(Disclosure, I am a Verizon customer and a Blackberry 8830 user. If you think I am a shill for Verizon, please don't make up your mind until you read this post, or this one.)

"Underground" as an example of narrative sensemaking

Over the last couple of years, I've gotten more involved with collecting and sorting through multiple narratives to help businesses understand and deal with difficult problems. (Difficult, meaning the normal tools such as numerical analysis, process mapping, etc., are insufficient to understanding the issue.) This has become a cornerstone of my professional life, and it's been a rewarding and at times thrilling undertaking.

Shawn Callahan at Anecdote introduced me to this area, and then I learned about the work of Dave Snowden at Cognitive Edge. I met Cynthia Kurtz, who was an early collaborator with Dave Snowden, and have learned a lot from her as well. To the extent that the work I do is valuable to my clients, these folks deserve much credit.

Yet one of the best teachers I have had here (and I'm still a rank beginner) is the book "Underground" by Haruki Murakami. He's one of my favorite novelists, and this is one of his few nonfiction books. I read it years ago, long before I'd learned the terms "story listening," "mass narrative capture," or "sensemaking." But when I began learning from Shawn, Dave, Cynthia and others, it immediately came to mind.

In "Underground" Murakami seeks to understand and to help readers understand one of the most terrifying episodes in recent history--the sarin gas attack on the Tokyo subway system perpetrated by members of the Aum Shinrikyo movement in 1995.

Except for a brief author's preface, the book consists of the stories of survivors of the attack. Murakami interviewed everyone he could find from the list of victims, and presented their stories, unadorned, one after the other. He then interviewed a number of members of Aum Shinrikyo, and presented their stories, as well (a decision that is aligned with goals of narrative learning to take in multiple perspectives of a situation).

The result is a chilling, relentless book, that nonetheless does what no news report, CNN story or even historical chronicle could do--shows the impact of the attack and its aftermath on the real people who were caught up in it; and illuminates the puzzling (to outsiders) behavior of the Aum Shinrikyo members. It's a fully-realized, three-dimensional picture of a disaster, and goes a long way to explaining the unexplainable. In this way it's like an extended version of John Hersey's great "Hiroshima," though shorn of the authorial voice.

When you read this book, the stories layer and layer; you see the event from a deeper and deeper perspective, till you almost feel like you're there, inside the attack, experiencing it with the victims. And then you read the Aum Shinrikyo stories, and somehow you see that their world has its own internal logic. You finish the book, and you're exhausted, but you know deeply about this terrible event, how it happened and what it did to people. Your brain is working hard throughout--you're sensemaking.

If you're interested in narrative sensemaking, or you just want to learn the full story of a human disaster, you must read "Underground."

(Here's a much earlier reference to "Underground" and the subject of story-listening.)

Customers are talking: the empathetic company

The New York Times today features an interview with Dev Patnaik, a consultant specializing in helping companies to develop growth strategies and the author of a new book, "Wired to Care: How Companies Prosper When They Create Widespread Empathy," which claims that a missing ingredient in recipes for corporate success is the human train of empathy:

[Patnaik] argues in the book that it is not the lack of innovation that hampers companies, but the “empathy gap” — the chasm between employees in organizations and the people that they serve. Companies, he said, “do a good job of stamping empathy out of employees, then are surprised when employees make poor decisions or try to sell things that people don’t need.”

In a way this reflects the "bringing the outside in" concept from Kotter's "A Sense of Urgency." Patnaik gives the example of the auto managers who never experienced the car business from a customer's point of view--buying a car, financing it, servicing it, etc.--and thereby lost touch with the consumer and the marketplace.

Part of this "empathy gap" is the distancing of management from the customer and the customer experience--where dashboards and status reports have crowded out anecdotal information and real human experience. This is what the "customers are talking" initiative is attempting to do--to connect managers and leaders with the ground-level experience of their customers and by so doing to equip them to make better decisions about their products and services.

Here's an interesting observation from Patnaik about one of the big problems with marketing:

The companies are trying to get the customers to identify with their product rather than getting their own employees to identify with their customers.

In other words, companies are trying to make up for their lack of customer insight with messaging. These marketers believe that if they create a powerful, resonant message, it will draw people to their products. But if the product is not created with a deep sense of the customer in mind, the message won't work.

I'll have to pick up a copy of "Wired to Care" and see what else the book has to say about this important subject.

Related posts:
A Competitive Advantage: Employees who spend most of their time talking to customers
Time to start listening to front-line employees

3rd Annual Top 5 HBR Breakthrough ideas

... in which we winnow down Harvard Business Review's yearly list of 20 breakthrough ideas to a manageable 5.

1. The Business of Biomimicry, by Janine M. Benyus and Gunter A.M. Pauli. Many of the most important new innovations we'll see in 2009 and beyond will involve borrowing and inspiration from nature's processes.

2. Institutional Memory Goes Digital, by Gurdeep Singh Pall and Rita Gunther McGrath. What will happen when every word, gesture, etc., of business interactions are recorded and stored? [I'm most interested in the subset of this involving intentionally captured and signified narrative information for knowledge sharing. The Mistake Bank is an early stab at this idea.]

3. How Social Networks Work Best, by Alex Pentland. New research shows that collaborations work best when social networks are used differently for discovery and integration activities.

4. The Ikea Factor, by Michael I. Norton. Having a hand in building a product leads to a stronger emotional connection with it. [Does this say anything about self-service gas stations and supermarkets?]

5. Forget Citibank, Borrow From Bob, by John Sviokla, and Consumer Safety For Consumer Credit, by Elizabeth Warren and Amelia Tyagi. It's inevitable that the fallout of our financial crisis will be a radical restructuring and reinvention of the financial industry. And it's about time.


Related posts:
2008 Top 5 Breakthrough Ideas
2007 Top 5 Breakthrough Ideas

Customers are talking: The Eureka Button

I was talking to Cynthia Kurtz once and she mentioned, "If I were developing a piece of software I would always want to put a Eureka Button on every page."

A Eureka button is this: if while using the system a user just figured something out that others might benefit from, he/she would click the button and be presented with a page where she could enter:

What Happened?

Where does this apply?

When should people read this story?

This input and information about where they were in the system (page & data) would be uploaded to a database. The database can be searched for patterns or browsed periodically, looking for bugs or unexpected uses of the system.

It's easiest for me to think about the Eureka Button in the context of enterprise software. Having worked a lot with CRM systems for telephony, I know that these systems have hundreds of user pages, with a virtually infinite number of paths through the system.

In these environments, product managers may know in theory how people should use the system. But their knowledge is quickly overtaken by experienced users, who learn how to apply the system to their jobs, often finding tricks or shortcuts to make the system work better for them. ("Eureka! I just figured out that if I dummy out some data items, I can capture information & save information from a prospect before they decide to make a product purchase. If they call back, I can look them up by their phone # and I don't have to start all over again.")

In this situation, a Eureka Button has great value for the product manager and the users. Product managers can learn about difficulties users have and how they overcome them. The tricks can be incorporated into the product, or deficiencies addressed. Users can learn from each other--perhaps Eureka Button entries can be blogged automatically and read by other users, dispersing tips and tricks and encouraging others to share their stories.

I can't even begin to catalog how a Eureka Button could benefit consumer sites, where (especially recent) products follow an emergent, iterative development approach and patterns of usage can affect the entire purpose of the product (e.g., Twitter). There are people much better suited than I to discuss some of these implications. If you're one of them, please let us know in the comments how the Eureka button could be used with these products.

(In searching for prior references to a "Eureka Button," I discovered this NY Times article from 2004. The article mentions that "'It's amazing how many people there are who find pleasure in sharing the little discoveries they make.'" The article focuses on undocumented features in PC software and in consumer electronics. The article references a site that publishes user stories of hidden Windows features.)

Customers are talking: using reverse logistics to improve products

As part of our regular Tuesday series on finding and acting on customer use stories, let's talk about reverse logistics. This is the process by which retailers and manufacturers deal with customer returns.

This article (hat tip Colin Shaw) discusses how companies can examine and make changes to their reverse logistics procedures to reduce costs and streamline the process. This is good advice as far as it goes.

But like many "customers are talking" topics, companies need to take an additional step in order to really utilize the reverse logistics process to its utmost.

Each customer return is a story. Capturing and collecting those stories, and regularly examining them for patterns, can yield important information about how the product is designed, communicated and supported. For example, consumer electronics are notorious for their returns frequency, and the reason for these returns often is that the product is difficult to use or its documentation is poorly written or inadequate (multi-language manuals introduce another set of obstacles for customers).

A company can work with its retailers, as part of the overall design of the reverse logistics process, to capture important information about why the product was returned. Ideally, the verbatim customer story is captured--which is easy to do with online returns.

The collection, of course, is the simple part of the equation. The more complex task is the sensemaking of the numerous narratives captured. This sensemaking, more of a collaborative thinking process than an analytical one, can be accomplished with training and skilled mentoring.

The potential payoff is large: marketing managers who are made of aware of why returns happen can make (often simple) changes to packaging, design, channel strategy or documentation to improve initial customer satisfaction. Not only does this reduce returns, it also increases the likelihood that more people buy the product in the first place.

A friend owns a company that manages reverse logistics for name-brand consumer electronics manufacturers. I asked him if he knew why a certain product was often returned and he said, "Yes, always." I asked him if he had a way of letting the marketing folks at his client know these reasons. And he shook his head.

Given that many companies are outsourcing their reverse logistics operations to third parties, they need to take care that they keep the channel of communication open to learn why items are returned, and what can be changed about the product, its support documentation or its point of sale in order to make more initial purchases successful ones.

Sometimes crowds aren't wise

I like Surowiecki's book, a lot, and I have experienced many instances where the collective judgment of a group was far better than even an informed individual. But the "wisdom of crowds" catchphrase is dangerous--oftentimes crowds are not wise at all.

We are experiencing right now an era in which crowds are really dumb. I'm referring to the financial markets and the related economic recession. The financial markets and news affecting the financial markets have merged into a massive echo chamber, wherein bad news begets pessimism which keeps prices down which begets another cycle of bad news.

We've seen this in reverse, of course. Do you remember 1998-1999, during which time everyone was watching CNBC or checking Yahoo Finance all day long, in real time assessing the value of their stock portfolios? Oversubscribed IPOs begat good news, which kept prices high, which begat more buying, etc., until it all came crashing down.

I thought it was clear to everyone that market groupthink, which afflicts us in good times and bad, obscured the true value of securities, and therefore paying close attention to news items in order to make sense of the markets and our economy was, at best, a waste of time.

But no. Felix Salmon, in his Portfolio Market Movers blog, points to a Financial Times article introducing us to a service from Reuters that collects news items and alerts traders when news trends indicate potential market movements.

In other words, lean into the echo chamber, and listen real hard for signals you can use to make decisions. Um, it's only January, but I will bet there's not a stupider product idea introduced for the rest of 2009.

Grounded qualification corollary #1 - don't companies know why they win or lose?

Yesterday's post spurred some interesting comments, including Dave Stein's observation that "80% of B2B deals are lost for one of two reasons: inadequate (or no) qualification or inadequate (or no) planning."

I wanted to elaborate on one point, which is that grounded qualification is built on a deep understanding of why a company won and lost each opportunity, both in the past and going forward.

Which begs a question: "Don't companies already know why they win or lose?"

This question has two answers: sometimes they don't know at all, and sometimes they think they know the reasons but are wrong. Let's take each of these in turn.

We don't know why we won or lost. This situation is influenced by many factors in today's working world. First, there is little time for reflection built into sales professionals' (or sales managers') days. Everyone carries long to-do lists, attends too many meetings and is measured to death. (See this post for the implications of this culture on innovation and creative thinking.) There is also a culture of looking ahead: "let's not rehash the past," especially if it the outcome was negative.

We think we know why, but we are wrong. This point gets to a cognitive bias called the "actor-observer bias." According to the Wikipedia definition, this means people "tend to attribute their own behavior to their circumstances (i.e., situation causes), but tend to attribute the behaviors of those [they] observe to their dispositions (i.e., person causes)." In sales campaigns we will attribute a successful outcome to our superior strategies or tactics (rarely luck), and blame failures on ignorant or biased prospects or factors out of our control (product was deficient, price was too high, etc.). We are so satisfied with these rote explanations that we don't probe deeply into the reasons, nor do we ask the prospects to explain their actions.

If we recognize that (1) we need to reflect on and learn from each deal we pursue, and (2) question our assumptions and dig for the deeper reasons we won or lost, we are on the way to understanding our position in the marketplace--a tool we can use to be more selective in our pursuits, address our weaknesses, and generate more business at lower sales costs.

Grounded qualification: an emergent approach to assessing sales positioning

For the past eight years, I've worked with helping midsized IT companies sell their products into a maturing telecom market. This is so different from the earlier times of unbounded growth that it doesn't even feel like the same industry anymore.

In the old days (i.e., before 2000), there were so many new telecom companies sprouting up that a company did not have to be a leader to be successful. They just had to be good enough.

Today, telecom vendors circle prospects like hungry dogs around a restaurant dumpster. The biggest and strongest elbow their way to the front, and the midsize guys try to keep from starving.

Some midsize guys do survive, though. They have enough of the right kind of customers, and gain enough new customers to keep making profits. How? The only way is to be very careful in planning and deploying their limited sales resources. Which gets down to a question of qualification.

In a B2B world, companies narrow down their range of prospects by deciding which sales opportunities they wish to pursue and which they don't. This process is called qualification. Strong sales organizations that I've seen are really good at qualification, and poor ones are really bad at it. Successful midsized companies have to be good at it, because they don't have enough resources to compete on all fronts and win. Stretching out their resources by definition is a failing strategy.

Good qualification means that you deploy your sales resources on opportunities that are large enough, profitable enough and winnable enough. In a virtuous circle, deploying lots of resources on good opportunities means that you have more likelihood of winning those opportunities compared to a company that spreads its resources over both good and "bad" opportunities.

One sales qualification methodology I'm familiar with segments the process into the following categories: "is there an opportunity?" "is it worth pursuing?" "can we compete?" and "can we win?" The first two categories are based on objective data--i.e., the company size, defined project budget, identified executive sponsor, etc. The final two are almost entirely subjective--are we positioned well? are our allies powerful? etc.

The challenge for midsized companies is that the subjective answers to the final two categories can make the difference between an opportunity worth pursuing and one to no-bid. Most salespeople, in my experience, hate turning down opportunities and so have an unconscious bias toward over-rating the subjective categories, resulting in lots of weak pursuits rather than a few, well-chosen, strong pursuits.

As a different approach, is it possible to create some criteria that are more observable and objective that nonetheless help answer the "can we compete?" and "can we win?" questions?

I propose the answer is yes, and we can call these items "grounded" qualification criteria. (Grounded theory, from the Wikipedia definition, is "a systematic qualitative research methodology in the social sciences emphasizing generation of theory from data in the process of conducting research.")

What I'm trying to say is this: when a company wins an opportunity, there are reasons why--they may be emotional, logical, cultural. Similarly in a loss. The company can use grounded theory methods to gather winning and losing examples, to sort them out and generate from them several insights as to signals of potential wins and losses. Those signals can then be used as part of the qualification of new opportunities.

By way of example, a former employer of mine had a product that was functionally adequate but which was built on a technology architecture that had fallen out of fashion. It had few references. Not surprisingly, most of our sales pursuits were failures. Yet the company made several strategic sales of this product. (As a middle manager, I was surprised by these wins.) If we'd deeply examined those wins and compared them to our losses, grounded theory would have helped us understand that the company's executives were very well connected to certain telecom ventures, and those connections were vital to our winning that business. Knowing this, we could have planned and evaluated opportunities based on our executives' connections, and possibly found more strategic wins (at minimum, we could have spent less time on sure losers).

Doing a grounded theory assessment means deeply understanding why companies that bought your product did so, and why those that didn't made that decision. (See an earlier post on the value of detailed prospect loss reviews.)

It's important to point out that competitive and market positioning is a complex system (per the Cynefin Framework), and therefore a company's position and qualification rules will shift over time. The grounded evaluation is therefore something that needs to be updated continuously.

One of the benefits of grounded theory is that it can generate new and unexpected areas of opportunity and unveil hidden dangers. Midsized companies need to "rifle shoot" opportunities and put sufficient resources into the very best opportunities in order to be successful. Grounded qualification is a potentially important tool in these companies' arsenals.

(Acknowledgement to Cynthia Kurtz for first exposing me to grounded theory.)

Customers Are Talking: Reading Between The Lines

One of the important insights in looking for meaningful stories in customer interactions is the following: you can't read a story by looking at metrics. That is to say, how long someone talked, what time of day it occurred, etc., has no relationship to the content itself. In my work, I listen to lots and lots of customer stories, and I have experienced this very thing. If you want to understand the story, you have to read, or listen to, the whole thing.

It's unfortunate that this is so, because the quickest way to absorb information is to read it in summary. It's also the easiest way for computers to process information. Computers are excellent at counting, measuring, etc., but terrible at reading and interpreting.

I hear you already: what about semantic analysis? Good: doable by computers. Bad: doesn't provide much insight. Here's an example: evaluate all customer service calls longer than 8 minutes and containing the word "unhappy." Let the computer pull out two sentences before and after that word. Won't that sort out all the unhappy customer calls and allow us to analyze a manageable data set? [If you think this is difficult to do, I can point you to a slew of vendors who are dying to talk to you about their products.]

The problem is, "unhappy" is context-dependent. The caller may be unhappy with the quality of her service. She may also be unhappy she forgot to pack her son's lunch that morning, Someone else may be unhappy for a completely unrelated event.

[As an experiment, I've been monitoring Tweets referring to the Blackberry Storm using the happy :) or unhappy :( emoticons--easy to do with Twitter Search. With more than 100 tweets examined, very few of the emoticons represented satisfaction or dissatisfaction with the device itself--they were related to wanting the device and not getting it, or hoping to get it, for example.]

In a recent discussion, a friend talked about word clouds as very useful summaries of social media data. I pointed out to him that the appearance of a word in a story doesn't create significance. Similarly, the absence of a word doesn't mean that word is insignificant. (What's unsaid may, in fact, be the most important words in the entire dialogue. Harold Pinter won a Nobel Prize for his mastery of this truism.)

In sum, at present, the intervention of a person close to the customer interaction at the time it occurs is the best way to determine if a communication is significant or not. If it's someone looking at it after the fact, that person will have to read the entire story, not a summary. I wish there were a shortcut, but there's not.

Are keyword searches or word clouds useless? No. If you are a cable company, searching for specific, unambiguous words like "DVR" in your customer communication is likely to be useful. Searching for context-dependent items like "unhappy" or "delighted" is not.

Learn from your predecessors--the only way, if you're a CEO or President

Imagine that you have a job that's so exclusive that not only could you not find a book teaching you how to do it, you'd be hard-pressed to find anyone in your town, or state, who could give you much help.

The job of corporate CEO is like that. So is President of the United States. In each of these positions, learning on the fly seems costly. Is there an alternative?

Yes there is. If only it were used more often.

This question was taken up in two recent articles. In the January Harvard Business Review, Thomas Friel and Robert Duboff discuss "The Last Act of a Great CEO." The last act being an outgoing CEO's sharing knowledge, experience, and perspectives on the job with her successor.

And an opinion piece by Sheryl Gay Stolberg in yesterday's New York Times remarked on the rarity of gatherings like Pres-elect Obama's recent lunch with four other living presidents ("The Very Elite Club that Never Meets").

Friel and Duboff write this about new CEOs learning from their predecessors:

It is difficult to imagine a richer source of information and advice for a new CEO, even on a purely personal level. Being successful as the chief executive of a major enterprise is hardly a straightforward matter; the right combination of style, skill, and focus can vary dramatically depending on the context. One CEO we interviewed put it simply: “You can’t really understand this position until you’re in it.” At the very least, the departing executive has a unique and relevant point of view on the dynamics of the board of directors and the executive team. Often he or she has the most strategic and current understanding of the issues the company faces.

Stolberg's article hits the same theme:

“One thing historians have talked about for years is that there should be a better way for sitting presidents to use the experience of former presidents, and it doesn’t happen enough,” said the presidential historian Michael Beschloss. “The reasons are varied: sometimes personal antagonisms, shyness, the feeling that the former president is too removed from today’s politics to know very much. The result is that there is a reservoir of wisdom and experience that is not relied upon.”

I have an idea that might help. Or, rather, my wife Maura had the idea and she let me borrow it. Companies, and the executive branch, need to create narrative repositories like The Mistake Bank. A repository would be a place for presidents or CEOs to recount events. (Especially mistakes, since we learn very well from mistakes.) and what they learned from them. The repository would be available only to successors. New CEOs and presidents, or experienced ones, could dip into the repository when they had a question or issue they wanted some perspective on.

I've done this, and I know how to set them up, and how to make use of them. CEOs, Pres.-elect Obama, it's time to put this into action. You know where to reach me.

Studying what customers do, and acting on it: marketing as an "art form"

There's a great op-ed piece by Judith Flanders in today's New York Times, covering the recent bankruptcy filing of Waterford Wedgwood and recounting how the company has lost its way, especially in comparison to the marketing genius of its 18th centry founder, Josiah Wedgwood.

According to the article, two innovations catapulted the pottery company from humble origins to leadership. One was a technological breakthrough, "creamware," a process that created high-quality earthenware nearly indistinguishable from porcelain.

The other was marketing acumen that would impress Steve Jobs. I love this quote, discussing Josiah's focus on learning from buyers and leveraging that knowledge to improve his product and its marketing:

In a letter to his business partner, he marveled at “how rapidly the use of [creamware] has spread” and “how universally it is liked,” and tried to balance how much this had to do with its royal “introduction” versus “its utility and beauty.”

That is the true Wedgwood. It wasn’t pleasure at past achievement, but instead determination to understand why success had come about, so he could build on it. Selling was an intellectual pleasure, an art form.

What a refreshing viewpoint, during these days when selling and marketing are portrayed (often by people in those professions) as a grind, perhaps even dishonorable.

Female guru alert

The members of our list of overlooked female business gurus continue to spread their important ideas:

- Herminia Ibarra of INSEAD has published an article in the January Harvard Business Review ("Women and the Vision Thing") asserting that peers, subordinates & bosses see female leaders as equal to or superior to their male counterparts in every area except one--creating and articulating a strong vision.

- I just got in my hot little hands an advance copy of the new book by Rita Gunther McGrath (& collaborator Ian MacMillan), "Discovery-Driven Growth," which I'm very much looking forward to reading. (I've got to finish "War & Peace" soon!)

As a reminder, the rest of the list includes Amy Edmondson of Harvard Business School, Deborah Ancona of MIT, Traci Fenton of WorldBlu and Rosabeth Moss Kanter, also of HBS. Be sure to check out their work.

You can learn a lot about market psychology at the craps table

You think I'm kidding, right? Let me tell you a story.

My friend Tom and I took the occasional trip to Las Vegas in our single days, and after I got tired of trying to count cards in blackjack, he convinced me to try craps.

In craps, you can bet with the shooter ("pass" and "come" bets) or against ("don't pass" and "don't come"). The same bets are possible, and the payoffs are proportional to the odds of each occurrence. In other words, it's the same game either way.

Given all that, you'd imagine that as many people would bet the don't pass and don't come as the pass and come lines. But they don't. My unscientific observation is that 90% of craps players play with the shooter, not against.

I noticed something else. When I played "don't pass" and "don't come," people gave me dirty looks. They completely forgot that the dice have no emotion; they come up seven or eleven or eight or whatever and the game pays out or takes your money accordingly. After a while, it just seemed easier to play with the shooter. I could then be part of the crowd.

I sense a similar psychology at work in the markets. Shorting stocks is more complicated than playing the "don't pass" line, but there's no significant impediment to doing so. But not only is shorting much less common than going long, there's also a stigma against doing so.

Companies whose stocks are shorted scream that the short-sellers are generating and amplifying negative news to influence the direction of prices. You'll never see even the world's most successful short-seller compared to Warren Buffett or Peter Lynch. Analysts (perhaps till recently) rarely trotted out "sell" recommendations.

This wouldn't be a problem except the goal of an efficient market is to price a security properly. This requires downward pressure when things aren't as they should be. If there aren't enough short sellers, there won't be a counterbalance to ebullient buying. Momentum kicks in, and a bubble ensues.

I don't know how much this had to do with our current problems, but I bet it was a contributor.

(For those wanting to read interesting perspectives on the financial crisis, I'd recommend Felix Salmon's blog on Portfolio, James Surowiecki's blog, and the Economist's Free Exchange blog.)

Photo by runneralan2004 via Flickr Creative Commons

Is 2009 "the end of analytic science"?

Getting my head around the ideas of Mihaly Csikszentmihalyi is more difficult even than spelling his name correctly, but I think that this statement has real ramifications for the work I and others are doing in applying mass customer narrative to marketing and business issues (from edge.org via TEDBlog):

Mihaly Csikszentmihalyi predicts:

The End of Analytic Science: The idea that will change the game of knowledge is the realization that it is more important to understand events, objects, and processes in their relationship with each other than in their singular structure. Western science has achieved wonders with its analytic focus, but it is now time to take synthesis seriously.

Customers are talking: you can't listen to customers if you hate them

Every Tuesday, this space will cover "Customers Are Talking... Are You Listening?"

"Customers Are Talking" builds on the work I've been doing for the last fifteen years in product management, sales & account management, & specifically on the story-listening work I've embarked upon in the past year. (I cheated a little by sneaking in two posts on this subject yesterday.)

It was great to read a recent interview with one of the quietest great thinkers I know, Cynthia Kurtz.

While discussing some things she had learned in her work helping companies and governments gather and work with stories from customers and employees, she said this:

Several times now [in these projects] I have seen people viewing their clients or customer or employees or constituents with contempt, for example equating weakness, confusion or ignorance with insignificance, low status/value/worth or even wrongdoing.

As I read this I was surprised and shocked, yet at the same time I nodded my head and said to myself, "Oh, yeah, I've seen this lots of times." No company would admit that it hates its customers, but if the leadership looks deep into their hearts they may recognize the behavior that Cynthia mentions.

And for marketers this is a big concern. Because marketers, more and more these days, need to listen to and act on customer feedback. People don't listen to those they hate. They disregard, dismiss or rationalize their statements. Even when marketing believes in its customers, if the organization's culture is a customer-hating one, the messages won't get acted on. [It may go without saying that customer-hating companies will be punished first in a difficult economic environment.]

So, if you're instituting a voice of the customer program, or if you've already got one, answer these questions first: do I think my customers have something valuable to say? Will I listen to it and try to act on it?

Because if you're one of those companies that holds their customers in contempt, asking them what they think won't do you any good.

[By way of equal time, I should probably refer to this earlier post where I talked about companies who are hated by their customers.]

Stop reacting, and start listening, to customer online feedback

I generally like this post from Matt Rhodes, my fellow Futurelabber ("How to react if somebody writes about your brand online"), but I have a bone to pick with the premise.

One of the biggest mistakes marketers are making in social media now is focusing on reacting. They are taking lessons learned from political campaigns and applying them to their relationships to the public. It's a misfit. Political campaigns are adversarial. If your relationship with the public is that way, you have bigger problems than what people say about you on Twitter.

Reacting as strategy is a last, desperate attempt to deploy the marketer's favorite tool, "messaging," into a connected marketplace. As Doc Searls wrote, "There is no market for your messages."

Rather than a futile tit-for-tat, your post to my counterpost competition to establish the preeminence of a company's message in the networked marketplace, how about listening to what customers are saying, and taking it to heart? Thinking about it, perhaps? And, if warranted, a respectful, measured contribution to the dialogue? It can be done. Ask Comcast, and Dell, for starters.

Why you should listen to customers even if they're wrong

Even companies who believe "the customer is always right," if there are very many of them left, don't mean it literally. They mean something like, "We try to accomodate the customer, even when they are wrong." But beyond addressing the immediate symptom (the heart of "the customer is always right" philosophy), there are valid reasons why you shouldn't dismiss (or disregard) customer stories that you don't consider accurate:

1. There is truth in their perceptions, even if the facts don't add up. Customer outcry is emotional, not logical, in nature. If they complain, they are feeling pain, and even if they can't articulate the reasons to your satisfaction, the root issue is very likely significant to you.

2. Customers have more credibility than companies. Recently, in my town, there's been a conflict between the private water provider and the town government over a proposal to raise water pressure and whether that might be causing an increase in water main breaks. In an "open letter" to customers, the regional president of the utility tried to dismiss criticism of the program. Who was more credible to town residents: the elected town representatives, or a water company regional president?

3. Being factually correct is overrated. In marketing, perception is reality. Brand is an accumulation of perceptions. Jochum Stienstra discussed in a recent post how those perceptions create a profound, cognitive reality for customers. So, in focusing on the data and dismissing the perceptions, you may be missing the point.

4. They may, in fact, be right :)