Once in a lifetime... more on the financial crisis

I'd love to write about innovation, growing new markets, etc., but for the moment I'm preoccupied, like many others, with the financial crisis, especially a feeling that I can only express in the words of David Byrne from "Once In A Lifetime":



How did we get here?

To that end, Harvard University held a panel discussion last week, nicely summarized at the Working Knowledge web site, that helps to illuminate the situation. Lots of wisdom and perspective here, including this sobering (but perhaps welcome) observation, from another summary of the conference by Andrew O'Connell of the HBR Editors' Blog (the post at Editors' blog also contains a link to a video of the entire event.):

As management professor Robert Kaplan pointed out early in the discussion, Americans' ability to tap into their home equity had for years masked a fundamental deterioration in their ability to pay for goods and services with their wages. And as we all can see too clearly now, what's under that mask isn't a pretty sight.

I imagine many bankers feel like the besieged, buffeted, sweating, stunned character Byrne plays in the video. Do they say to themselves, "My God, what have I done?"

finance, credit crisis, leverage, equity, banking, mortgages

A lucid description and debate on the current banking crisis and proposed intervention

You may be burned out reading about the banking crisis and the prolonged efforts at agreeing on a "rescue" or "bailout" package (depending on your viewpoint). But this post and the comments at A VC blog do a great job of looking at the plan from an investor's viewpoint.

And that, after all, is what all we taxpayers will be if the package goes through. We will be the proud owners of hundreds of billions of dollars of lousy mortgages. If we pay little enough, it could be a good investment. If we pay too much, it'll cost us big time.

Corporate change #5 - role of consultants in "bringing the outside in"

In earlier segments of this thread, we discussed how "bringing the outside in" is imperative for companies to keep aware and humble enough to avoid complacency and drive their organizations forward successfully. By contrast, companies in which the context inside the company drowns out voices from the outside tend to attribute their successes to their internal competencies, blame their failures on outside entities, and stagnate their way to failure.

I was talking to an old customer earlier in the month about working to help companies learn about the world outside. "Exactly!" he said. "Companies need people like you to come in and help them learn about what customers think."

To a point, yes. Having an outside perspective that is less invested in the company's culture or politics is valuable. But not at the expense of a broad, internal effort to understand and make sense of the outside world.

Referring to the business complexity literature we've touched on a few times in this blog, the world outside is a complex, messy place. It's constantly changing. So old information, and limited sources, are not very useful. To gain the best, most supple understanding of the outside, a company needs lots of eyes and ears, a diverse group gathering and interpreting information, and creating stories about it. Consultants should be among that group, but not the only or the most credible source for outside information.

Management's job is to enable that story-creation, create systems for capturing and making sense of it, and above all to honor and use it to create strategy, spur innovation, and otherwise enable Kotter's "sense of urgency."

That's a job that even McKinsey might hesitate to take on.

Prior posts in this series:
Part 1 Part 2 Part 3 Part 4

Reading list:
Gary Hamel, "The Future of Management"
John Kotter, "A Sense of Urgency"
Charlene Li & Josh Bernoff, "Groundswell"
Dave Snowden & Mary Boone, "A Leader's Guide to Decisionmaking," Harvard Business Review, November 2007.

Related post:
Complex business problems need diagnosis

Tags:
change, innovation, leadership, management, communication

Boards CAN give the CEO a proper performance appraisal

The CEO is an island. His/her boss, the board, meets infrequently, has many unrelated obligations, and possesses a fraction of the corporate knowledge the CEO has. The result is CEOs who operate with little oversight--until things go horribly wrong. After which the bluntest performance appraisal is applied: "You are fired."

There is an alternative. In the October Harvard Business Review (link), Stephen Kaufman, former CEO of Arrow Industries, describes the effort his company made to create a review process that was more like the one applied to his direct reports. It involved numerous board members interviewing executives throughout the company and was intended to provide a window into Kaufman's needed development areas--and to complement the financial and business objectives he was judged on.

I wonder how other CEOs would view this type of process. Would they see it as an intrusion into their space? Or as a yearly checkup that could prevent the root canal of a surprise firing?

Customer complaints as a source of business insight

We're taking a brief detour from the corporate change series to discuss customer complaints (every businessperson's favorite subject) though in truth it is very much in sync with the "letting the outside in" philosophy we've been discussing in those other posts. The Wall Street Journal's occasional Business Insight section prompted the thoughts with today's article, "Making the Most Of Customer Complaints," by Stefan Michel and David Bowen of the Thunderbird School of Global Management and Robert Johnston of Warwick Business School.

"Making the Most..." focuses on the relationship between the customer, the front-line rep, and service management, and correctly describes how to manage a complaint to minimize damage to customer satisfaction without "giving away the store," and to incent behaviors that will result in customers leaving the interactions feeling good (or at least not badly) about their vendor. It's particularly insightful when describing the conflicts the front-line reps feel when trying to deal with a difficult customer situation:

These workers have the difficult task of dealing with customers who hold them responsible even when the failures in question are completely out of their control. The attitudes of customer-service workers, positive and negative, spill over onto customers.

Yet companies do surprisingly little to support them.

To be successful, these workers need to feel that management is providing the means to deliver successful service recovery on a continuing basis. Alternatively, when employees believe management doesn't support them, they tend to feel they are being unfairly treated and so treat customers unfairly. They display passive, maladaptive behaviors and can even sabotage service.

This alienation is compounded when the workers believe that management is not improving the service-delivery process, which keeps employees in recurring failure situations. Even though complaining customers represent an opportunity to fix problems and improve satisfaction, alienated employees often see them as the enemy.

In addition to the sound advice to repair the processes, provide appropriate guidance to employees and management, and incent customer-delighting behaviors, there's a broader value that I see to studying these interactions.

Customer complaints are a window into the customer's use of the product and perception of the company. Virtually all satisfied customers are silent. Many dissatisfied customers are silent as well--calling customer service is time-consuming and frustrating. The fact that many problems aren't resolved compounds people's feeling that engaging with the company is simply not worth the trouble.

This means that any customer complaint reported to the company is a very important piece of data. Taken together, complaints can illuminate patterns pointing to product over-complexity, poor usability, underservicing, poor expectation-setting. The patterns might tell you that the customer-service approach you are so proud of is not working as well as it should. Or that customers are using a product differently from how you expected them to. The patterns serve as marching orders to product management, marketing and customer service for important value-adding projects.

But... you have to collect and sort through the data. It can't be resigned to the bit bucket because it's unpleasant or tells you things you'd prefer not to hear. I have started to work with clients to learn from customer-service interactions--the raw material, not just the statistics. And, not surprisingly, we are always surprised by what we learn.

Related posts:
Time to start listening to front-line employees

Tags:
narrative, learning, customer relationships, customer service, knowledge

Corporate Change #4 - don't leave engaging with the outside to marketing/PR

In the prior post in this series, I talked about galvanizing the will to change through "bringing the outside in"--learning what customers, the press, influencers--really anyone--thinks about the company, its products, its marketplace, industry, etc.

To which a reasonable person might ask: "Isn't that my marketing department's job?" Especially with newer tools like blogs, wikis, Twitter, etc., marketing is taking the lead in engaging with the "groundswell."


While marketing has a significant role to play, they cannot own this function, any more than finance can own any decision that has to do with dollars and cents--it's too big, too comprehensive and too important to be limited to one group. Here are several reasons why:


Marketing is obsessed with brands & messages. Brands and messages are relentlessly positive--who buys a negative message? But learning comes from both positive and negative stories. There are threats as well as opportunities. Marketing is asked to convey messages, not to understand the world in all its messiness and complexity.

PR is asked to get positive stories out there, and to counter negative perceptions--not to learn or to inform the company. True dialogue involves listening--even when the conversation is negative or you don't agree with it--and trying to find lessons in that. Perception is reality, and PR tries to change perception--what we're talking about here is, by contrast, understanding reality.


The view of both is too limited. Different parts of the organization have different things to learn from the outside. Operations needs to learn new ways of working. Product management needs to understand how customers actually use products. HR needs to know how the workforce is evolving. Groupthink is also less likely when a diverse group of people is examining the world--with more likelihood that sound actions, and commitment to achieve them, will result.

Comcast's experiment with Twitter-based customer service (see example here of "Groundswell" co-author Charlene Li Tweeting for help and Comcast responding) works because the Comcast guy is trying to solve a customer problem, not deliver a message. If Charlene ends up feeling better about Comcast, it is a side effect, not the intent, of the action. The tech is also in a position to learn deeply about this customer situation and, I'm certain, to disseminate the learning to colleagues.

Imagine this fictional Twitter dialogue if Charlene had to engage with marketing instead of with a real tech (I've reversed it for readability. In real Twitter, the newest message is on top):

charleneli: @comcastmktg My connection keeps going in and out, happens every few months. Comcast Cust service has no idea why. Any way to escalate?

comcastmktg: @charleneli That's hard to believe. Comcast has the highest network reliability in the industry.

charleneli: @comcastmktg Yeah, fine. Can you help me with my question?

comcastmktg @charleneli Of course. One more thing. Did you know we have twice as many HD channels as DirecTV?

charleneli: @comcastmktg What? Who are you? Can you get me to someone who can help me?

comcastmktg @charleneli Right away. Please email help@comcast.com and you'll get a response within 24-48 hours. Have you heard about our community service initiatives?

charleneli: @comcastmktg Aaargh!

Coming next: what is the role of consultants (written by an actual consultant!) in bringing the outside in?

Prior posts in this series:
Part 1 Part 2 Part 3 Part 5
Reading list:
Gary Hamel, "The Future of Management"
John Kotter, "A Sense of Urgency"
Charlene Li & Josh Bernoff, "Groundswell"

Tags:
change, innovation, leadership, management, communication, social media

Corporate Change #3 - Bringing the outside in, for real

OK, so you've read my prior two posts on the subject of corporate change, and recognized your need to greatly enhance the information you get from the outside world. Now what?

You'll need to embrace a few basic principles (it won't be easy!):

Enable employees:

1. Reward curiosity and information sharing
   
2. Make time and space for employees to engage with the outside world--wall-to-wall meetings are a no-no
3. Tap existing conduits to the outside (sales force, retail clerks, customer service reps, marketing, investor relations)
   
4. Ensure your information systems and policies don't get in the way

Listen hard:

1. Don't tune out bad news
2. Try to assemble information from many constituencies (customers, competitors, employees)
3. Embrace raw/inarticulate/emotional input
   
4. Honor dissent
   

Create systems and methods to gather and utilize information:

1. Deploy information "commons" where information can be posted, commented on, and passed across and up to aid in decisionmaking
2. Systematically gather information relevant to your business and add it to the commons
   
3. Regularly gather and sensemake commons-generated information
4. Use the information to inform strategy, planning, organization, etc.
   
5. Demonstrate to the employees that the information is used, to encourage ongoing contributions
   

Most companies are not ready for this. Some are. Those that aren't: start getting ready. If you think implementing the above is a lot of work, think how hard it is to navigate out of a crisis--an avoidable crisis, if only you paid attention to and utilized what was going on all around you.

In the next few posts, we'll dig into some specific high-value areas of bringing the outside in.

Prior posts in this series:
Part 1 Part 2 Part 4 Part 5

Reading List:
Gary Hamel, "The Future of Management"
John Kotter, "A Sense of Urgency"

Tags:
change, innovation, leadership, management, communication

Corporate Change #2 - Why are companies so inwardly focused?

In part 1 of this series, we discussed one key reason companies fail to change even though it's vital: the inability to, using John Kotter's term, "bring the outside in." In other words, companies don't choose to look outside their walls to see what's happening around them, assess the implications, and absorb that into their strategies, products and operations.

Why is this so?

Reason #1 - The Community Effect
A company, as it expands from one person, to ten, to one hundred, to a thousand and beyond, takes on the identity of a community. The employees usually work in an office or plant together. They get information from the same sources--the company newsletter, intranet, staff meetings (more on that later). They spend more time with other employees than with anyone else other than family. A culture develops that inspires curiosity about what's happening inside and reduces it about what's happening outside.

Reason #2 - Leadership Arrogance
I talked to a former client last week and told him about some work I'm doing mining insights from customer-service calls. He told me, "Our CEO thinks he's just like our customers." Since this CEO sees himself as a perfect proxy, there's no reason to dig deeply into customers' feelings.

Reason #3 - Information Flows Top-Down
Leadership serves on outside boards, goes to conferences, talks with consultants. They are tasked with creating strategy, which requires some curiosity and information about the world outside the corporate walls. They process that information into strategy documents, brand images, mission statements, etc., and send it down the line.

Leadership likes orderly information, not the messiness that real engagement with the outside world creates. Most leaders believe that employees don't want that much engagement (in some cases they may be right). Employees realize that the highly-packaged, spun information that they receive is bland and biased. I recently re-encountered a saying familiar from my early working days: "We workers are like mushrooms. Leadership keeps us in the dark and feeds us s--t." I heard that expression countless times till I became a senior leader--interestingly, I never heard it after that.

Combine reasons 1, 2 & 3 and you have an inwardly-focused, uncurious company. Information is either packaged pablum from above, or internal gossip. Conduits to the outside--front-line customer service reps, retail clerks, B2B sales people--are drowned out by the inside talk. Marketing communications staffs engage with the external but are dedicated to sending out messages or countering negative news.

What we've created here is company-as-fortress. Suspicious of the outside, comfortable with colleagues, uncurious. Information is routinized and bleached of content and contrast. Clearly, there's a lot to be done to realize Kotter's prescription to bring the outside in. We'll begin discussing how in the next post.

Other posts in this series:
Part 1 Part 3 Part 4 Part 5

Related posts:
A competitive advantage: employees who spend their day talking to people
Time to start listening to front-line employees

Reading List:
Gary Hamel, "The Future of Management"
John Kotter, "A Sense of Urgency"

Tags:
change, innovation, leadership, management, communication

Time to rescue "corporate change" from cliché bucket

Every company recognizes the need to change, correct? There are so many failure stories describing the terrible consequences of companies standing still that no executive in her right mind would ignore the need to reinvent the business on a continuous basis. We hear this all the time:

"The only constant in our business is change."

Yeah, right. Even if the idea is understood on its surface, companies worldwide are doing a terrible job of implementing it. If you read the newspaper, outside of mergers and acquisitions, change occurs only when companies are in crisis.

In other words, only when the situation is so bad that it can no longer be ignored or rationalized away do companies take on the hard work of reinventing themselves. What does this mean? As Gary Hamel wrote in 2007's best business book:

...In recent years, entire industries have been caught behind the change curve. Television broadcasters and newspaper publishers, record companies and French vintners, traditional airlines and giant drug companies, American carmakers and European purveyors of haute couture--all have been struggling to rejuvenate seriously out-of-date business models. Sure, many of the companies in these industries will regain their footing--eventually. But in the meantime, billions of dollars and millions of customers will be lost. Such is the price of maladaptation. (p.42)

No CEO wants to squander billions of dollars of lost opportunity--not least because of the primordial urge to save one's own skin. Yet it doesn't happen. This week's series of posts takes on one large reason why change rarely happens without crisis, and a way to start a fundamental culture change that can help instill the ability to recognize opportunities and threats and move more quickly to address them.

The root of this thinking is John Kotter's great new book, "A Sense of Urgency." Kotter takes his lifetime of study of organizations and wonders why so many organizations are so complacent, or worse, running around frantically accomplishing nothing. I'd like to focus on one reason why:

...Organizations of any size or age tend to be too internally oriented. Even people who know this fact often underestimate the size of the problem and its consequences. The disconnect between what insiders see, fee, and think, on the one hand, and external opportunities and hazards, on the other, can be astonishing at times--even in organizations that are producing very good short-term results. (p.67)

Kotter's prescription for companies is to "bring the outside in." To inform their people and thinking with a knowledge of the environment outside the company's walls. That's what we'll elaborate on in our next post.

Other posts in this series:
Part 2 Part 3 Part 4 Part 5

Related posts:
Best business books of 2007
On "A Sense of Urgency"

Tags:
change, innovation, leadership, management, communication

A Mistake-Bank-perfect epigraph

I just unwrapped "Einstein's Mistakes" and this appears before the Preface:

Errors are the portals of discovery.
James Joyce, Ulysses

Is it time to downsize that big house?

Friends of ours, as their small business grew, moved up into a large, spacious house with a big deck and yard overlooking a creek. Business is still good, but this month they are moving back to the smaller house they used to live in.

The VP of Common Sense has from time to time floated the idea that we downsize our house as well. "Wouldn't it be great to live in a nice little Cape?"

And today's New York Times profiles people who are radically downsizing into "tiny homes" that measure 100 sq ft or less.

Rising energy prices and carbon-awareness are certainly impacting this thinking, but there are other factors as well. Bigger houses mean more stuff--furniture, wall hangings, rugs, toys (if you have kids). Keeping them clean is hard to do yourself. Maintenance costs are higher. And neighborhoods can be a factor--our friends found that their large-home neighborhood was too quiet. They rarely saw their neighbors, there weren't kids around. It was lonely.

The "little Cape" discussions in our house usually don't last long. But they keep coming back. Who knows? If you come visit us someday, you may have to sleep on the living-room couch.

(Photo: a Tumbleweed Tiny House)

Tags:

real estate, housing, environment, New York Times

Follow my Twitter updates

I know you've been hankering to read even more of my nuggets of wisdom :). Now my last 10 Twitter posts are on the sidebar of this blog. I'm at CTIA, and doing formal blog posts is difficult at best, so Twitter will be the best way to learn what I'm seeing at the show. If you want to follow me over on Twitter, I'm at jmcaddell.

Behind the Google Chrome comic

The New York Times discusses Google's decision to use a comic to illustrate the thinking and concept behind the new Chrome browser, including an interview with Scott McCloud, the creator of the comic. A notable quote:

“I don’t think the potential for comics in nonfiction has been exploited nearly as much as it could be,” [McCloud] said. And what they can teach people should not be underestimated. “When you’re on an airplane and your life depends on it,” Mr. McCloud said, “comics are going to tell you how to open an emergency exit.”

(Photo: a page from the Google Chrome comic)

Related post:
The Chrome Comic book
On "Understanding Comics"

Tags:
communication, comics, visual

More Friday randomness

If you love music and occasionally like to peek behind the curtain to learn more about how a recording is made, then this post by Thomas Dolby is essential reading.

If your only recollection of TMDR is "She Blinded Me With Science" or "Airhead" you'd do well to check out all his discs. He remains an excellent and creative musician. And it's wonderful that he lets us in on how he works.

Reading this reminds me that I need to buy the CD of Dolby's "The Flat Earth." It's one of those titles that I had on vinyl but never replaced when I went to CDs.

UPDATE: Just downloaded the MP3 of "The Flat Earth." Ain't e-commerce great?

Creative Destruction?

I'm thinking of the phrase popularized by Joseph Schumpeter. He writes, in Capitalism, Socialism and Democracy:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

I took the photos below last week near my house. Times gave gotten tougher--there are more of these boarded-up places around. I'm planning to revisit these locations over the next year or so and see what, if anything, these two sites turn into.

32nd Street, Camp Hill, PA. 28 August 2008

Carlisle Pike, Silver Spring Township, PA. 28 August 2008

Tags:
creative destruction, renewal, failure,

HBR adds to business failure learning library with "7 Ways to Fail Big"

This article in the September 2008 issue of the Harvard Business Review, by Chunka Mui and Paul Carroll, discusses seven corporate worst practices and relates business stories that demonstrate them. The practices are:

1. The Synergy Mirage - companies justify acquisitions by touting synergies that just aren't there, or aren't there in enough volume to make the price worthwhile. (Quaker buys Snapple, Unum and Provident merge.)

2. Faulty Financial Engineering - companies borrowing from the future to make today's revenue look better. Enron, anyone? How about Green Tree Financial?

3. Stubbornly Staying The Course - Kodak, slow to react to digitization of photography, and Pillowtex, which failed to see the trend in outsourcing textile manufacture.

4. Pseudo-Adjacencies - the authors point to Oglebay, a company that thought it could deploy its expertise in shipping limestone to actually quarrying it. Result? Chapter 11.

5. Bets on the Wrong Technology - for example, FedEx ZapMail.

6. Rushing to Consolidate - too often mergers focus on the top-line increases but neglect "increased complexities [that] may lead to diseconomies of scale."

7. Roll-ups of Almost Any Kind - As with Loewen Group, a funeral-home aggregator, roll-ups can't withstand downturns and usually provide a short-term revenue bump at the expense of the long term (see #2).

Leaders, you have been warned. Avoid these at all costs!

Related Posts:
NASA learns to avoid its worst practices in safety
Worst practice learning means our favorite business bestsellers are all wrong

Tags:
worst practice, strategy, learning, mistakes, Harvard Business Review

Buyer's hubris harms revenue growth from acquisitions

Accenture recently released a report entitled “Leveraging Sales & Marketing to Maximize the Value of Mergers and Acquisitions.” This report quantifies what many people have felt about M&A—as far as growing revenue long-term, it’s not a successful strategy. Among Accenture’s findings was that while 56% of companies studied grew faster than their industry groups in the two years before they made a large acquisition, only 33% duplicated that feat in the two years following the year the deal closed.

The report lays out reasons this is so: disruption to customers, loss of key customer-facing staff, unexploited opportunities to market to new customers. (They also provide suggested remedies—they are consultants, after all.)

After living through three significant acquisitions (being bought twice, buying once), I believe there is a deeper reason that drives what Accenture observed—buyer’s hubris.

In spite of rhetoric like “merger of equals,” “best of breed,” and so on, in my experience buyers develop a mindset that they are superior to the company they purchased—smarter, with better products, processes, etc. (Otherwise, perhaps the shoe would be on the other foot!) This is especially true when the merger consolidates the businesses of two once-competing companies.

I recall pleading with one acquirer to retain the name of our company’s flagship product—it had brand value and keeping it would signal to the large customer base that the product itself wouldn’t be retired. At first, the integrated marketing group (led by the buyer’s VP of marketing) thought this was a crazy idea. But, after much discussion, the group reluctantly agreed. That acquiring company no longer exists, but the product—with that old name—lives on and supports many of those same customers.

Buyer’s hubris extends to the acquired company’s customers. Rather than being carefully cultivated, they are frequently taken for granted. (What they need is to be resold on the new company. This is rarely done, in my observation.)
Similarly, the people who support those customers are seen as suspect. Those people may have competed—in some cases, successfully—against the buyer’s sales team. (Perhaps sour grapes is a reason the customers are not treated as carefully as need be.) At any rate, it’s difficult to trust former competitors. As a result, they are not welcomed; their opinions are not solicited.

When consolidating a market, real humility on the buyer’s part is required. There’s a lot of human nature obstructing that, and perhaps it’s unrealistic to think hubris can be overcome. Until that day, however, we’ll continue to read studies documenting poor growth results from mergers.

(Thanks to New York Times Dealbook for the pointer to this research.)

Related posts:
Ultra-competitive mindset costs dealmakers

Tags:
acquisitions, integration, psychology, growth

The Chrome Comic Book

OK, so everyone is writing about Chrome, the new Google browser. But the most innovative thing about it so far is the comic book used to explain its objectives and design.

Comic books are great communicators. They provide a very flexible palette for explaining things (as Google did) or telling stories. If you're interested in creating comic books for business use, you should check out these resources:

"Understanding Comics" by Scott McCloud--the best reference on what a comic is and how it works.

Bitstrips.com - a very cool place to make your own comics if, like most of us, you can't draw.



Josh Neufeld's A.D. - an epic retelling of the story of Hurricane Katrina, in comic-book form.

(Hat tip to Patrick Byers at Responsible Marketing)

UPDATE 9/3/08: Just learned that Scott McCloud (discussed in this post) actually drew the Google Chrome comic. I thought the drawings looked familiar!


Related posts:
Josh Neufeld's story from The Mistake Bank
About "Understanding Comics"


Tags:
communication, comics, visual

A question for the readership--please help!

Hi, all,

We're approaching 1000 posts on Shop Talk, and I'm reflecting on the mission and approach of this blog. I'd like your help.

Please post comments about the blog on any of the following:

There should be more of (fill in the blank).

There should be less of (fill in the blank).

I wish this were discussed: (fill in the blank).

Get rid of: (fill in the blank).

...or anything else that would make the blog more interesting, useful or entertaining to you.

Thanks, John

A competitive advantage: employees who "spend most of their day talking to people"

I recall a number of years ago dialing 411 (Information) and asking the operator for a phone number for a store a few miles away in Boston. In a thick Dorchester accent, she corrected the name of the store for me. "I think you mean this one," she said, and she was right.

Old school customer service has been in decline for some time now--pushed out by the costcutting allure of self-service, offshoring, IVRs, etc.

Impersonal customer service works in some cases. Shopping for a known commodity like a book, or CD, for example, or putting a vacation stop on your newspaper delivery. But companies have thrown the baby out with the bathwater, because if it's really important to understand what a customer needs, a trained, empathetic person is the best resource a company can have. These folks, as John Kotter writes in "A Sense of Urgency," help "bring the outside in"--in other words, they provide insight from a vital outside constituency--customers--into the organization.

I've talked before in this blog about how data about customer interactions will be captured and mined for insights about customer perceptions of products, service and the company that provides them. Today, surveys and focus groups attempt to paint this picture. Tomorrow, the real, raw data will be used. Stories from customers, and the stories from the people who serve them directly.

This will provide a new value proposition for customer service. As opposed to a replaceable part hired at the lowest hourly rate possible, front-line staff will be well-paid and well-trained. Their insights will be carefully collected and utilized, and products (and the customers that buy them) will be better off for them.

Shifting customer service to a different location to save $1.00 a call will be unthinkable.

It's possible that Best Buy's Geek Squad is an early prototype of this mindset. In an article in today's New York Times, Matt Richtel depicts a power struggle between computer manufacturers who install application craplets on their PCs, and retailers, who are responding to customers' desire to buy a PC free of craplets. This section was notable:

Mr. Stephens of Geek Squad says he agrees with H. P. that the future is in allowing computer buyers to choose and download what they want. But he said he believed Best Buy, not H. P., was in the best position to help people choose what works for them because, he argued, the in-store technicians are in closest contact with them.

“Geek Squad agents have one thing over Apple and Microsoft engineers. We spend most of the day talking to people,” he said.

Related posts:
Businesses need "A Sense of Urgency"
Time to start listening to front-line employees

Tags:
narrative, learning, customer relationships, customer service, knowledge

Why don't businesses change and adapt? No "Sense of Urgency"

John Kotter is the change guru. His article "Leading Change" from Harvard Business Review is a classic I've recommended to a number of people. His newest book, "A Sense of Urgency," focuses on the one area where companies most often fail the change test--establishing an organization-wide priority to, using Kotter's words, "move, and win, now."

It's a terrifically-written book, with lots of stories of organizations succeeding at or failing the urgency test. Kotter points out (as I've experienced) that many organizations in trouble foster a sense of "false urgency"--an inwardly-focused, fearful level of intense activity (wall-to-wall meetings; sound familiar?) that harms the organization, perhaps as much, or more than, old-fashioned complacency.

By contrast, "true urgency" engages employees' hearts; focuses outwardly on customers, competitors and the industry environment; and is practiced by everyone in the organization, most especially the leaders. It also requires understanding the true priorities of the company and purging activities that are not connected with those priorities, thereby opening up time for reflection, experimentation, and immersion in the world outside the company walls.

Here's my favorite snippet from "A Sense of Urgency":

imagine

We call this a thought experiment. Imagine, if you will, an organization where people up and down the hierarchy, and systems throughout the organization, help pull the outside in through

• Sending out people
• Bringing in people
• Bringing in relevant data in an eye-catching manner
• Listening to customer-interface employees
• Creating video about the outside
• Widely sharing what is learned instead of shielding others from possibly troubling news
• Changing the visuals

Nearly everyone in an organization can use these tactics to create more urgency among peers or their bosses. Imagine what would happen to complacency if many people at many levels did so. (p.100)

I can't think of a better book for today's business environment, when so many companies are struggling to reinvent themselves, while companies clearly in deep trouble continue to be surprised by the outside reality (example). " A Sense of Urgency" is a must-read.

Related post:
Time to start listening to front-line employees

The power of "anecdotal evidence"

We have a bike rack on our 12-year-old Isuzu Trooper that fits into the trailer hitch. I mentioned to my wife the other day that perhaps next year we should add a hitch to our 6-year-old Acura MDX, so we can use the bike rack on the MDX after the Trooper gives out.

She laughed. "What if the Acura dies first?" she said.

My wife holds the perception very firmly that the Isuzu is a highly-reliable, trouble-free car, and that the Acura is a fragile thing, constantly in need of expensive maintenance.

Statistics say otherwise. JD Power gives Acura four stars for reliability (out of five), and Izusu only two stars--tied for the worst rating.

But looking beyond statistics, at the stories, the Trooper has a bunch of ardent fans. Some people have had terrible problems and hate the car, yet many others, a larger number, love it. (See this group of epinions posts for an example.)

And the MDX's reliability has some detractors as well (see reviews from Edmunds.com), with many complaints about transmission problems (writer crosses fingers).

What's most amazing is the firmness with which the reviewers--positive and negative--hold their opinions. It demonstrates the "tyranny of the mean," in which a lot is lost by averaging ratings together. A car is an emotion-laden product--expensive, used daily, inconvenience-causing when broken. Opinions then vary dramatically based on personal experience. The stories are arguably more important than the statistics when evaluating this type of product. And product managers, as well, should be especially attuned to the stories customers are telling about their products.

The lesson here is that "anecdotal evidence" should not so easily be dismissed, and that statistics can be useful but, just as when buying a car, you should look under the hood for yourself.

It might help you figure out why your wife thinks the old Izusu kicks the newer Acura's butt.

narrative, product management, learning, Mistake Bank, customer relationships

A meeting in Boston goes awry

From The Mistake Bank.

This happened to me some years ago, but the unpleasantness of the encounter still is fresh today. And aren't all great lessons like that?

You can download the podcast here (5 minutes).

Please consider rating and reviewing The Mistake Bank for the Forrester Groundswell awards by following this link.

narrative, mistakes, meetings, Mistake Bank, customer relationships, conflict, preparation

The Mistake Bank would like your vote

I've entered The Mistake Bank in the Groundswell awards for social media. Please visit if you have a moment and rate the site or write a review. I'm sure there will be lots of great contenders, but the M-Bank has proven to be a very nice learning experience for me and hopefully for others. If you feel the same way, please visit the awards site here and weigh in. Thanks.

Power of story

For men (this one anyway), sports stories are incredibly resonant. Just saw this Visa advertisement about the Derek Redmond story from the 1992 Olympics. I remember seeing that live. It still made me cry sixteen years later.

Stories engage the heart, essays engage the mind. See how two minutes of moment-to-moment narrative can inspire hours of conversation:



Tags:
narrative, storytelling

DOPPLR - a fascinating tool to enable serendipity

In 1996, I was wandering down a street in Kansas City when I unexpectedly ran into an old colleague of mine. It was a delightful encounter. We spent ten minutes or so catching up and reminiscing about great concerts we had attended together. I remember it now as if it happened yesterday.

This story may explain why I am in love with a new website called DOPPLR, which connects you and friends/colleagues and allows you to share information with them.

(I can hear you already. What, another social site? I'm already on Facebook, LinkedIn, Twitter, seven Ning networks. Enough!)

DOPPLR's unique twist is that it allows you to share travel itineraries with your circle--something of exceptional utility if you travel much, and if members of your circle travel as well. It lets you know when members of your network are traveling to your town, or (coolest of all), when you and an acquaintance just happen to be traveling to the same place at the same time.

For example, even though I have a small circle in my DOPPLR network, I already learned of two folks who will be traveling to the same conference with me in San Francisco next month. This piece of information spurred me to email them and set up get-togethers.

I've discussed the benefits of networking again and again in this space. The new social tools allow you to keep up with a much larger circle of acquaintances. The catch is, since they're all virtual, they don't help much in actually getting together with members of your network if they're not in the neighborhood.

But DOPPLR does exactly that.

Tags:
web 2.0, websites, travel, networking, social networking

Time to start listening to front-line employees

I have a colleague who runs a small outsourced contact center in the Pacific Northwest. I told him of my project to find and use stories from call centers to get more useful customer input. He said, "It's a great idea, but nobody listens to the reps."

Then, as I wrote about last week, a bank that is renowned as a great place to work told me that an idea to have tellers share via internal blogs customer interactions they found interesting was a non-starter: "We just put into place a policy to limit the access our employees have to the internet."

Well, it's time to start listening to the reps. It's time to let tellers blog about what they experience.

We generally accept that having happy employees at the front lines can help revenues, because happy employees convey good feelings to the customers they meet, making those customers feel better about who they're buying from, etc.

But it's now clear that in addition to courtesy and helpfulness, front-line employees also know more about what customers want, what they like and don't like, how they feel about the company, than anyone else. Because "the reps" hear it, every day, direct and unfiltered.

Back in the day, the only way an executive could access this insight would be to visit stores and talk to employees and customers him/herself. This still happens. But with cheap, ubiquitous data-sharing technology like blogs, RSS, wikis, social sites, etc., there's nothing standing in the way of systematically gathering and immersing oneself in detailed, rich information about customer interactions--even if you're the CEO.

And don't you think getting the chance to communicate, and being listened to, might increase the job satisfation of the front-liners?

An executive at a large US insurer told me that at their quarterly management meetings they listen to selected recordings of customer calls. "It's always a shock when you hear what customers say directly. We're so far removed from the customer."

Precisely.

Related post:
Enterprise use of 2.0 collides with restrictive access policies

Tags:
narrative, social media, blogging, learning, customer relationships, customer service, knowledge, knowledge management

Cognitive bias trumps intelligence

I always felt being smart was one of my major advantages in business--and there's no doubt that being well-informed and full (perhaps over-full?) of ideas helped in getting promotions, raises, etc.

What I've learned in the past couple of years has shaken that belief to the core. In particular, the writings of Dan Gilbert, Malhotra & Bazerman on negotiations, and Dave Snowden et. al. on complexity in management and business, have had a particular impact in revising this viewpoint, to the point that I won't take an important decision without reviewing it, at minimum, with the Vice President of Common Sense.

Central to this thinking is the idea that cognitive biases can cause us to overestimate our ability to make sound decisions, routinize complex situations, fail to see threats and weaknesses in our reasoning, and personalize conflicts. All leading to poor decisions, and sometimes decisionmaking disasters.

The way to overcome these dangers is to work with others, to consult, carefully listen (especially to dissenting viewpoints). In short, to shelve one's own learning and accept others' input with an open mind and heart. And in something that goes against my nature, to slow down and be patient.

For me, serving on a nonprofit's board of directors the past two years or so has been a signal lesson in the benefits of humility and collective thinking. Sharing monthly meetings with people possessing important skills that I lack utterly--knowledge of fundraising, city politics, risk management and others--but yet being able to contribute nonetheless through listening and inquiring has been revelatory. I am still learning, as you might guess, to listen hard to the "non-experts" on our board on subjects I know something about.

(Photo by Max Brown via stock.xchng)

Related posts:
Gilbert
Malhotra & Bazerman
Snowden
Senior Leadership Teams

Tags:
learning, management, psychology, humility, decisionmaking, irrationality, cognitive bias

It's 08/08/08, and dates are STILL arbitrary

This 2007 post is still relevant a year later, even down to the day of the week...

A Friday-afternoon rantTM

The Beijing Olympics are opening on 08/08/08 at 8:08 pm. An auspicious date, according to this horoscope writer.

And 07/07/07 was a very lucky day--ask Tony Parker and Eva Longoria--no? Well, no!

What about 06/06/06? Wasn't that supposed to be the devil's day? No again.

When will we realize that each of the numbers that makes up a date is an arbitrary creation of man, lacking any consistency or objective meaning?

AD 2000 wasn't 2000 years after the birth of Jesus (various sources place the date between 7 B.C. and 2 B.C.). And if you don't follow Christianity, what meaning would that number have even if it were accurately counted from Jesus' birth?

The month/day numbers have changed as recently as 1582, when the Gregorian calendar was adopted.

It's time to stop worrying about what's going to happen on a specific date. Truth is, if there are fateful dates out in the cosmos, we wouldn't be able to pinpoint them anyway. So savor the present moment.

(Picture by shadowkill via stock.xchng)

Friday afternoon rant, dates, superstition

Pilots learning by studying mistakes

Dave Stein took a break from writing about his core subject, building sales effectiveness, to discuss how pilots study the circumstances around crashes to learn what situations to be careful of. This kind of learning from mistakes can save one's life.

Dave is an experienced pilot. I don't think I knew that before reading the post. I like when people inject their personal passions into their blogs. I don't mean navel-gazing, but unveiling parts of their life experience that aren't visible in their professional profiles.

learning, mistakes, aviation

Does your business suffer from the "usual suspect" syndrome?

I've seen it at several places. It usually strikes fast-growing startup companies and becomes particularly painful as they grow past 200 employees. A small group of people emerges with either (1) authority or (2) key subject matter expertise. As the company grows, the group is stretched thinner and thinner, such that they appear to be invited to every meeting and involved in every decision of consequence. Without their input, nothing happens.

The usual suspects then are so busy that they don't have time to delegate or train people so that they can share the workload. Meanwhile, the company continues to grow, decisions stagnate, excellent people leave for lack of opportunities or simply out of frustration. Finally, there's an agonizing resolution, frequently as a result of a forced management change or sale/merger.

The suspects are exhausted, empty, and no longer needed.

Have you ever seen this happen?

Tags:
management, growth

Is Google listening to the stories around Knol?

I talk a lot in this blog about how listening to stories can help companies take the pulse of users. When a new product is released, people try it out, and provide all sorts of information that's critical to the future evolution of the product. They don't provide this information in statistics, but in stories. If you can make sense of the stories, it can give you insight that you can use to make adjustments in functionality, customer service, technical support, pricing, and strategy (as discussed in the section on emergent strategy in "The Innovator's Guide to Growth").

Here's an example of what I mean. On July 23rd, Google released Knol, a product that collects and organizes "authoritative article[s] about a specific topic," according to the company.

Here are some blog stories that emerged after the launch:

knol: content w/out context, collaboration, capital, or coruscation
...We're quite a few months into the Knol experiment. What I find particularly fascinating is that most of the knols that they promote on their front page are health-related, primarily by people who claim to have health-related expertise (doctors, nurses, professors) who appear to be copying/pasting from other places. Why health? What's motivating these people to contribute? (And why are they too lazy to fix the formatting when they copy/paste from elsewhere?)

Frankly, from my POV, Knol looks like an abysmal failure. There's no life to the content. Already articles are being forgotten and left to rot, along with a lot of other web content. There's no common format or standards and there's a lot more crap than gems. The incentives are all wrong and what content is emerging is limited. The expert-centric elitism is intimidating to knowledgeable folks without letters after their names and there is little reason for those of us with letters to contribute. While I don't believe in the wisdom of a crowd of idiots, I do believe that collective creations tend to result in much better content than that which is created by an individual hermit. (Case in point: my *$#! dissertation vs. any article I've co-authored.)

What makes me most annoyed about Knol though is that it feels a bit icky. Wikipedia is a non-profit focused on creating a public good. Google is a for-profit entity with a lot of power in controlling where on the web people go. Knol content is produced by volunteers who contribute content for free so that Google can make money directly from ads and indirectly from search traffic. In return for ?... (full post here)

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Knol for Google: It Is Not Evil, It Is Business
Google is a smart company - smart enough for many people to be surprised after they witness this or that move or an acquisition, surprised enough to say "Why has not anyone thought of that move earlier?" And now it seems that Google has finally realized that it sends way too much traffic from its search results pages to websites that do not contribute to Google's business. What would be the correct move for a business when faced by such a discovery? Find a way to make money by sending traffic to your own properties.

And this is exactly what Google needs Knol for: Google must be tired of being the major source of traffic for Wikipedia and many other independent publishers and now it looks for new ways to further monetize its own business. And for that it simply needed to have a platform of its own to be able to bring tons of content to internet users easily - and displace competitors from the search results. In this particular case Google serves as a full-cycle company: it provides the platform (Knol itself), the revenue (AdSense) and, finally, the distribution (search).

Sure, we hear lots of complaints about Knol already. It is quite obvious that from the day 1 of Knol launch we should have expected voices pointing at spam on Knol created in order to get revenue by building a page on a popular term. It was so obvious that it is almost ridiculous to complain about it now. The explanation here is that no matter what service people use they invariably are motivated by something. And often the motivation offered by the service determines exactly what type of users it will attract eventually... (full post here)

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Knol – from Google blog
There is a debate about whether Knol is an attempt at competing with Wikipedia. In academic use, its unclear where exacly it fits - for example, much of what you would think of writing a "knol" about seems better placed in a standard journal article review or scholarly dictionary. Does this offer a replacement for those? Scholarpedia is another potential candidate for competing with standard academic review formats. At the moment, there is not much incentive for individual academics to produce these types of documents but is it, more generally, a more logical way of reviewing fields that are very fast-moving?... (full post here)

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A Unit of What?
A knol, Knol says, is a “unit of knowledge”. I don’t think so. But I do think Knol is already becoming a den of spam.

My cursory research, at that link, suggests that the answer is yes. “Anemia“? No results. “Hair“? 12, including several (supposedly) by the top guy at the Beauty Network. “Cancer“? 38, so far, inncluding three in the first page of results for the biggest spam giveaway, Mesothelioma. Search for anything. Watch the results.

If this is about a fight with Wikipedia, I’d say it’s no contest. But it’s not. It’s about the corrupting influence of pure scammy ambition. Even if Google doesn’t have that, it plays host to plenty. And Knol (born on 23 July) was barely out of the womb before it got infected with it. (full post here)

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The Invidious Knol
My third post on the subject and potentially the most worrying. This blog suggests that Google are tipping the search balance so that knols come above the Wikipedia on search. Its also got a good quote from Nick Carr I'm guessing that serving as the front door for a vast ad-less info-moshpit outfitted with open source search tools is not exactly the future that Google has in mind for itself. Enter Knol.

Now the evidence here is anecdotal, but it will be interesting to see if others carry out more scientific and controlled tests. If it is true then Google's famous Do Good, already tarnished for its willing to compromise its principles in China would be finally shot. It would be an interesting new form of monopoly and a major issue of trust. Any other evidence out there? (full post here)

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Twitter is also a neat place for Knol micro-stories. Here are some:

I would suggest Google Knol. It is a combination of Squidoo and Wikipedia. Plus, it is SEO-ready.

admiring my knol, and blogging about Intranet Week and my new gig at J&J

the geekosphere hating knol out of gate only makes me that much more bullish on it longer term...

I love that the wikipedia article for Knol ranks above Knol itself. I wonder how long that will last?

google knol has boobies. Goodbye wikipedia!

Ready to pronounce knol a failure already? I think we'll see over time. Life is not *all* wisdom of crowds.

it's pretty cool that Google can afford to have full on projects that are pointless - and it doesn't really hurt - Knol, I'm looking at you

If I am Google, I am collecting every story I can find like this, and reading them all (including, and perhaps especially, the ones that are critical). There will be some randomness and noise, but with enough volume there will also be themes that emerge. Some that came out of my reading were:

- there's a feeling that Google will favor Knols in its search rankings, and that's a risk not only to the success of Knol, but also to AdSense, one of Google's cash cows.

- the commercial model for Knol, and the perception of can encourage spammers and risk degrading the content available via Knols, tarnishing all of them.

- the perception that Google is taking on Wikipedia (or "commercializing" it) is clashing with Google's "do no evil" mantra.

The Google team may find different patterns. Or they may not care to do anything about them. But they should at minimum understand them. Hopefully they're doing so. The changes that come in Knol over the next few months should provide some insight.

(To see the links for thirty-five stories found on the web about Knol, both blogs and tweets, click here.)

Related post:
Review of "The Innovator's Guide to Growth"
What in hell do stories have to do with innovation?

Tags:
narrative, sensemaking, innovation, Google, product management

Enterprise use of web2.0 collides with restrictive access policies

I've been talking to a prospective client in the banking industry about a project to have tellers blog about interesting customer encounters they have, as a way to share knowledge on the behaviors of fraudsters and other front-line customer service issues, especially with executives who are removed from most front-line customer communication.

I talked to them yesterday and they said they can't pursue the project for two reasons. One was a concern about wide sharing of possibly sensitive data, a reasonable concern that can be addressed with standards and practices of data accessibility, and guidelines about appropriate and inappropriate subjects.

The second was a show-stopper. "We just put a policy in place to strictly limit the amount of internet usage by our people. This project would go counter to that by encouraging people to use the internet more to blog and to monitor RSS feeds."

I went slack-jawed, hearing this. With the potential of web2.0 tools to open up lines of communication, gather and share vivid data, and generally create a stronger, more capable staff, this company was concerned about people spending too much work time on Myspace or eBay.

Under Jeff Thull's credo of "going for the no," I stopped working this opportunity immediately. If a company wants to reduce their team's internet usage, and my project is predicated on increasing it, that's not a battle I will win.

But worse than the opportunity lost was the sinking feeling that enterprises are just not understanding the value in the new social media and by choking off access they risk permanently missing out on the possibilities. Perhaps Andrew McAfee's healthy pessimism about business' adoption of these tools is warranted.

Tags:
narrative, web2.0, enterprise2.0, knowledge, knowledge management