Unsolicited Advice for Bobby Jindal

February 26, 2009

jindal

1. There is such a thing as bad press.

2. You will recover from it.

3. Your competition for 2012 is not Governor Palin, as delighted as Democrats are by the prospect. You’re now competing against the version of you we just met, the party hack with bad advisers and worse comic timing.

4. Americans can handle the complexity of your thinking. We can handle the scary part of “scary smart.” Risk it.

5. Your intellectual curiosity is an enormous public asset. Come out as the Brown University-attending-Rhodes-scholarship-receiving-McKinsey consultant that you are.

6. A great gift to the nation would be a serious fight over who gets to be the “Party of Ideas.” You could lead that fight.

7. The country watched in horror as public incompetence destroyed communities and lives across the Gulf Coast. The mainstream media has moved on, but the rest of us are still paying attention to what happens next. Your career depends on getting it right.

8. Earnest, we like earnest, but you need to calibrate it slightly. More Eagle Scout, less kindergarten teacher.

9. You’re right to wonder about all the boas and wigs around you this month. They’re not all being worn by imports from West Hollywood — you’re representing a lot more queer, tax-paying Louisianans than you may realize. Consider the wacky idea of granting them full citizenship.

10. Natural disasters – even the volcanic variety — are never a good punch line.

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Posted by Anne Morriss

Extreme Customer Service

February 24, 2009

BusinessWeek’s cover story this week is called Extreme Customer Service. The title has an aspirational ring to it, and the article celebrates examples of “extreme service,” including a UPS delivery person who is instructed by his president to defy the firm’s six-hour delivery window policy, show up at a customer’s door at precisely the scheduled time (extreme!), and deliver chocolates and dog treats along with the storage unit the customer was anticipating. As the story is written, it’s meant to be a beautiful ending, complete with the delivery person offering to assemble the unit.

Extreme Service Man looks like a hero, but he’s actually a symptom of a serious service problem. Defining his behavior as excellent service is contributing to escalating costs and plummeting satisfaction in almost every service industry.  When employees must go “above and beyond” to satisfy customers — a natural impulse in environments where dissatisfaction is rising –  it means that something is broken in the service model.  And responding with costly, ad-hoc spikes in service quality makes it harder to surface and solve the underlying problem.  Serving some clients with excellence, it turns out, increases the likelihood of serving the rest of them with mediocrity.

The goal for service businesses must be reliable excellence. Organizations that deliver truly great service build service models that consistently meet the needs of all clients. They invest in the systematic delivery of outstanding value — and treat Extreme Service Man as a well-meaning menace to the pursuit of excellence.

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Posted by Frances Frei

Righteous Indignation Doesn’t Make It Right

February 22, 2009

I have always had a soft spot for A-Rod. He is so exposed relative to other professional athletes. I suspect other high-profile players have gone to therapy, for example, but how many are willing to talk about it publicly? How many walk around without the public armor and discipline to prevent those disclosures? (It’s hard to imagine Derek Jeter going off message, for example, regardless of what’s going on at home.) It’s the combination of A-Rod’s fragility and pursuit of excellence that gets me. Occasionally, I simply can’t avert my eyes, in that accident-on-the-side-of-the-road kind of way, like when Madonna gets involved, but I’m riveted nonetheless.

A-Rod is human – replete with flaws and insecurities – and we’re not used to seeing that much humanity on the world stage. I guess it’s the lack of polish that I find so appealing, particularly as other players of his caliber lather it on. As for the steroid use, I’m also having a hard time blaming individuals. The system was designed to reliably produce abuse of its policies, which practically had a wink and nod attached to them. That we then blame the individuals and not the system’s architects seems absurd. Maybe if we perp-walked those who benefited the most first – the commissioner, the head of the players union, the owners and network executives seems like a good place to start – then it wouldn’t feel so ridiculous to be focusing on the players.

This is a classic case of addressing the symptom with righteous indignation while willfully ignoring the cause. History suggests that our response will not only perpetuate the problem, but it’s also likely to make it worse.

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Posted by Frances Frei

Contortionist Baseball

February 21, 2009

alex-rodriguez-picture-5

Can we pause for a second and talk about A-Rod? This all feels like another public hanging that obscures the origins of the problem. It seems clear that Major League Baseball – and by extension, all of us who consume its products and services – are unwilling to enforce a clean game. There are difficult problems to solve (see Afghanistan, toxic derivatives) and not-so-difficult problems to solve. As David Ortiz pointed out, this feels suspiciously like the latter:

“I think you clean up the game by the testing,” Ortiz said. “I test you, you test positive, you’re going to be out. Period.”

The system is perfectly designed to produce Alex Rodriguez. The testing policy is lax and bizarrely enforced. The rewards to owners, managers and players for performing well are astronomical, to say nothing of the sweeteners for breaking records and extending the life cycle of good players. And as fans, we’ve invested our viewing power and discretionary income in the game’s fireworks, the home runs and closers and inhuman endurance of the greats. That’s how we’ve defined entertainment, and MLB has delivered.

Changing that system is fraught with tremendous financial risk, and it’s clear that no one really has the stomach for it, particularly right now, when institutional trust is at a all-time low in this country. Kill baseball, too? In the middle of a recession? It’s not going to happen.

But it could, and it should, and this may be precisely the moment to do it, when Americans are ready to clean up the indulgence and toxicity in the rest of our lives. We could all keep contorting ourselves to preserve the illusion of a clean game, or we could take down the big tent and play baseball again.

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Posted by Anne Morriss

What Business Can Learn from Basketball

February 19, 2009

battier

One of the more remarkable sentences I’ve seen in a long time appeared in an article by Michael Lewis on  performance measurement in the NBA:

“Battier’s game is a weird combination of obvious weaknesses and nearly invisible strengths. When he is on the court, his teammates get better, often a lot better, and his opponents get worse — often a lot worse.”

Michael Lewis wrote Moneyball, a best-selling book about understanding performance in baseball. The story was a powerful example of how to use analysis to uncover undervalued assets, in this case, underpaid baseball players. Players who performed well in remote statistical categories (think number of walks, not home runs) turned out to be creating tremendous value on the field (in terms of runs scored or wins, for example), much more value than conventional wisdom had led managers to believe.

The most incredible part of the story was that everyone had the same numbers.  Everyone knew every player’s stats, and yet the experts were simply ignoring some data and overemphasizing other data. This is a common phenomenon, where data is used largely to illustrate existing knowledge rather than as a source for new knowledge.  Moneyball highlighted the value of analyzing all of the data to evaluate performance. The approach is sensible in its ease of implementation and potential for impact.

But basketball is different. A baseball player’s stats can be reflective of true impact. If you have a higher batting average, more home runs, and fewer errors, it’s a safe assumption that you’re a better player. In basketball, that assumption is less safe because of the interaction of players throughout the entire game. With the exception of free throws, there are no solo-sport activities in basketball; it’s all based on what everyone else on the floor is doing. Even though analysts know this, they still rely almost exclusively on individual stats because it’s the best they have. This is where the Lewis article shakes everything up.

Lewis articulates how Daryl Morey set out to analyze the game differently to see if he could gain new insight into player performance. And the results are powerful. Daryl found that individual stats could be looked at collectively to learn how the presence of one player influenced the performance of others. This is new territory — and it speaks to the essence of leadership, which is about making other people better as a result of your presence. Daryl measured how individual players performed on their own, and with the help of new data and improved processing, also assessed how other players’ performance changed as the result of each player.

With this knowledge, Daryl could uncover the “hidden gems” on the basketball court, undervalued players whose presence positively influenced the performance of his teammates, but whose individual stats were unimpressive. It’s an incredible shift in my mind, a way to begin measuring leadership that may have exciting application off the basketball court, in the domain of another team sport, namely business management.

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Posted by Frances Frei

Feed Our Need for Control

February 16, 2009

Americans are shaken, some of us to the core. We thought we were rich, and now we’re poor. We thought the future was ours, and now we wonder, for the first time in decades. We thought our lives were capable and in control, the operational equivalent of a competent system, and now the foundation of our identity is under attack.

We are changed people in the marketplace for goods and services, and not just because we have less discretionary income and less “consumer confidence” to upgrade the washing machine. We define value differently now, and the companies that understand that difference will prevail in this environment.

We’re still getting over the shocks to our individual economics, but I believe we’re ready for the reaction to the action, ready to be coaxed out of the fetal position with news of our autonomy. We’re ready to be reminded that we are in charge of what happens now.

The shift is a clear opportunity for firms that are already in the business of control. Financial control is the natural starting place – financial services are well positioned to compete on consumer empowerment – but it doesn’t end there. Any product or service that helps us design our own destiny can have a new conversation with customers. That includes healthcare and fitness (control over body), education and training (control over mind), travel and entertainment (control over spirit). The more interesting opportunities will appear in the less obvious industries.

I spent a bit of time with Walt Whitman over the weekend. His defiance fed my own hunger to shed the anxiety – and reminded me of the genius and passion that built this country. I’m convinced that Americans are ready to be large again, to sing songs of ourselves for the next chapter of our experiment in self-determination. We will come together where we have always come together, in the marketplace, and we will disproportionately reward anyone who helps us compose that song together.


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Posted by Anne Morriss

Better Service Without Higher Costs

February 12, 2009

Managers today are fighting for a smaller share of smaller wallets. Many are in a defensive crouch, focused on retention and looking for ways to deliver greater value to their customers. Some companies see possibility in the inevitable churn this economy will create, but everyone is getting stuck on the same challenge:  to improve customers’ experience, they have to spend more money they don’t have.  Better service means higher costs.

While this sounds like a given, it is not necessarily true. It is a particularly good time for managers to go through the following exercise. First, identify your largest, most persistent buckets of cost.  Then explore ways to simultaneously reduce these costs while adding services your customers will value.

Sound crazy?  Consider Progressive Insurance. Progressive offers customers an optional concierge level of claims service in which it will arrange for the customers’ cars to be repaired after an accident. This removes a great deal of hassle for the customers who choose to use the service, who would typically have to  find a repair shop, navigate the reimbursement policy, and hope they get good service.  Progressive handles all these steps for the customer, saving them time, hassle and anxiety.  And it does it all without charging extra.

How is it possible?  Progressive addressed one of its largest and most unwieldy cost categories, reimbursements to independent auto repair shops.   These shops delivered uneven quality for a wide range of prices, and insurers felt helpless in maintaining control over them.  Progressive designed a mechanism to reduce these costs — by coordinating the activities among a much smaller group of repair shops where experience and scale could be leveraged – and improved the customer experience along the way.

Can it work for your business? I have yet to find an organization that has tried and failed with this approach, but execution matters. Changes in your value proposition must be truly valued by your customers. As obvious as that sounds, it trips up a lot of managers. The exercise also works best if you start with costs and then work your way over to delivering additional customer value.  Starting with improvements to the customer experience and then trying to reverse engineer cost savings, while possible, turns out to be much less reliable.

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Posted by Frances Frei

Unsolicited Advice for a Congressional Tongue-Lashing

February 11, 2009

The bankers will be scolded today. The theater of it all will be familiar and ridiculous. The lawmakers will climb up onto the stage, tap the full depths of their moral authority and deliver judgment as the cameras roll. It will remind us of similar performances with auto executives and baseball managers – and the current news cycle, which still has A-Rod by the scruff of the neck, will remind us that oversight without teeth is a very possible outcome.

As a taxpayer, the whole thing makes me tired. I’m numb to the show. I don’t want to know which plane, train or automobile delivered these guys to the gallows. I don’t want to hear the carefully scripted claims of disbelief that investment bankers were motivated by profit. I feel like Mary J. Blige, ready for a life of “No More Drama.”

I’m craving a technical solution, not a public hanging, as gross as some of the behavior may have been. There’s certainly enough blame to go around the hearing room for creating a system that made this moment possible.

I just have one piece of advice, and it goes for everyone in the room today – channel the Pottery Barn, a company that’s inspired public leaders in the past, despite its crass interest in wealth creation. You broke it. You own it. Fight the temptation to strut and fret and focus on putting it back together again.

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Posted by Anne Morriss

Donors v. Clients: Overcoming the Tradeoffs

February 9, 2009

Measuring performance can be even harder in the non-profit sector, where satisfying the non-paying clients (e.g., poor children in Honduras) and the paying clients (e.g., rich donors in Houston) are often very separate challenges. This dynamic is complicated by the fact that survival depends more on serving donors with excellence than on wowing the kids with outstanding service. Their likelihood to recommend your services to other poor children is not economically relevant, at least in the most direct sense.   

Most non-profit organizations are not designed to serve both client segments well. One usually trumps the other in the organizational hierarchy, and either donors get neglected or the team under-delivers on advancing its mission.  Many Executive Directors end up embodying this tension. They got into this business to save the children, and now they’re spending most of their time eating Event Chicken and making conversation with eccentric oil executives.  In this scenario,  the mission often loses. Impact is undermined by the distraction of leaders who can’t fully leverage their talent to improve service delivery “on the ground.” 

The tension reminds of your research, Frances, on how difficult it is in the for-profit world to serve distinct customer segments with one service model. Tiffany’s is my favorite example. The difference between Tiffany’s mass-market customers and its traditional blue-blooded segment is wreaking havoc on company operations, and that’s got nothing on the gap between clients and donors in most non-profit organizations. Rural Honduras is a long way from C-suites and charity balls.

Trying to serve vastly different customers with one set of systems is widespread in the non-profit sector, a practice accepted as a cost of doing business with other people’s money. But it may be possible to overcome some of the tension by creating distinct service models for clients and donors. These models would coexist under one organizational umbrella, but each model’s resources – including its human resources – would be aggressively customized to the needs of one segment. There are hints of this structure in many organizations, where the fundraising team is often compensated differently, but there may be advantages in pushing the design towards its logical conclusion. At the very least, it might help coax a few Executive Directors I know back off the ledge.

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Posted by Anne Morriss

Net Promoter Score – When Logic and Data Diverge

February 5, 2009

I am regularly asked for my opinion of a performance metric called the Net Promoter Score (NPS), which has become a popular way to assess an organization’s effectiveness by measuring the ratio of loyalists to detractors. Many companies have adopted the metric as a leading indicator of growth — the logic being that as the NPS score goes up, increased growth will naturally follow.  NPS is often adopted at the urging of very senior levels of management, and people want assurances that it’s worth the effort. My advice is always to not take anyone else’s word for its utility; test NPS with your organization’s own data, and if NPS correlates with growth (or whichever ultimate measure of performance you are trying to improve), consider using it.

A pattern I’ve observed is that many firms adopt NPS because of the rationale behind it — not because the evidence at their organizations supports its use. Indeed, an uncomfortably large number of managers have sheepishly admitted to me that they found no correlation between their NPS scores and ultimate performance, long after they’ve adopted NPS as a key organizational metric. This puts them in a terrible bind. NPS is often embraced with great fanfare, complete with incentives and systems that are redesigned to focus the organization on improving the metric.  When NPS is not a leading indicator of growth, organizations expend tremendous effort with little to show for it.

After seeing enough of these examples, I began to investigate what was going on.  Here’s what I’ve learned.  The logic of NPS is very persuasive. It’s clean and intuitive, and feeds our hunger for one clear goal on which we can focus the troops. If a company has more advocates than detractors, good things should happen. And the greater the imbalance, the better the things, right? The problem is that while this might be true as a general principle, it may not be true in a specific context. For example, if all those advocates are consuming your outstanding pre-purchase service, but closing the deal with cheaper competitors, as happened to Gateway computers, their advocacy is doing you little good.

Here’s my advice. Most organizations are already collecting the big three customer metrics — customer satisfaction, customer intention to repurchase, and customer likeliness to recommend.  I strongly encourage organizations to have a runoff between all three measures and the performance measure they’re trying to improve. If NPS is the strongest driver of performance, either in an existing time period or as a leading indicator, then by all means use it. But if it’s not, I suggest discarding it, regardless of the shiny appeal of its high-level logic.

7 Comments | Business, Leadership, Performance Management | Tagged: , , , , | Permalink
Posted by Frances Frei

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