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January 2008

BUILD THE RIGHT THINGS AND THE RIGHT PEOPLE WILL COME

This is month we have a more interactive read. As you read the case studies below, see if you can extract some primary lessons or ‘take aways’ for leaders-at-large. At the end, we’ll compare notes.

On Hyde Park Corner…

In the 1970′s an aspiring hotel operator called Isadore Sharp opened a property near London’s Hyde Park Corner called ‘The Inn on the Park’. It was identified as being part of ‘The Four Seasons Group’. It was a pleasant, elegant, well-functioning hotel.

Surrounded by iconic hotels like the Dorchester, Claridges, the Connaught, the Ritz and the Savoy it was unlikely to amount to more surely, than another Hilton-esque North American upstart. Little did people realize…

What initially drew traffic was the quiet elegance, nothing cavernous or anonymous like other North American imports like Hilton or Sheraton. Yet there were wonderful North American as well as local touches. Showers with real water pressure, air conditioning in sweltering summers (at that time unheard of in London hotels), casual dining alongside fine cuisine, intimate attention and friendly beaming staff (as opposed to some of the gargoyles employed by their competitors back then), and a crack concierge team that made getting to know London a realizable pleasure.

As this focus on top individuals (from the piano player, to the doorman, to the person who took your room service order), understated elegance (rather than choking formality), and wonderful facilities ‘caught on’, the formula was repeated in other parts of the world, with equivalent success.

And the Four Seasons, arguably the world’s finest large-scale luxury hotel chain was born, and created a niche and a global market to boot.

It will never work here…

Lingerie had never been something understood in the United States. Anyway, we called it ‘underwear’ and the description related to its functionality. The Protestant/Puritan strains in American culture still make us blush ever so slightly at over the top displays of sensuality (unless they are unabashedly prurient like varietals of porn), our bars have dimmed lights (the better to conceal what transpires — the idea of a well lighted pub or ‘public house’ is alien in the US). And surely celebrating undergarments was not for us, but rather for more feckless cultures.

Well, never say never. The founder of Victoria’s Secret seeing lingerie as a staple of fashion in Europe, realized that something could be sexy and inviting, without being tawdry or vulgar.

In creating a space for women to pamper themselves by luxuriating in intimate apparel and for the men in their lives to enjoy shopping for them and enter into a dance of romance precipitated by garments no one else would see but which would highlight exciting personal particulars to be shared between them, Victoria’s Secret invented an industry, a fashion following and huge profits.

Not another Walkman…

From the man (Steve Jobs) who brought us user friendliness in computing, it was time for another coup. It came by taking existing technology and providing more than portability in being able to listen to music anywhere, but portability in terms of having your music, game, video and other libraries portably and accessibly at your disposal as well.

Moreover, by creating something ‘cool’ rather than something clunky, something that hooks up with software that allows for music and other downloads (ITunes), Apple created a life-style sensation by aggregating technologies that were in existence, and which could be brought together to provide a solution of instant access to all of your entertainment virtually anywhere.

While there are kinks to be worked out, the IPhone then took it still one step further. Already phones were taking photos, able to surf the web and more. By creating a phone/IPod, we now truly have everything in one place. How that works when your phone goes off and you’re listening to your favorite music, and whether there’s a point as which everything gets so aggregated that you get aggravated rather than served, remains to be seen.

But there’s no doubt that entertainment, and possibly telephony, will never be the same again.

Low prices or Luxury?

Truly the airline industry roils with challenges. In the United States in particular, airlines flirt annually with bankruptcy and seem determined to hire ghoulish, uninspired people and to inflict customer misery at every turn imaginable.

Into this sad mix, came Herb Kelleher. He decided to focus on a region (the Southwest), he decided to not serve food (lowers costs and improves punctuality), he decided to benchmark race car pit stops not other airlines at the gate (hence faster turnaround time), he chose to hire for attitude over experience (outside of the pilots!), and he passed back the cost savings in large part to the customers, and gave them a promise of punctual, high quality service, at a fraction of the cost.

Southwest Airlines became a darling of customer service case studies, internal company culture case studies, and investor delight due to its profit and share performance over a more than 20 year period.

At the other end of the spectrum, flag carrier, Singapore Airlines decided the luxury market should be done right. First, by having an outstanding airport partner in Changi, they had the best baggage delivery and ground handling imaginable (the bane of most airlines who are let down at their ‘hub’ airports over and over). Singapore staff members, particularly the emblematic ‘Singapore girl’ were chosen for gracious beauty and an almost intoxicating empathy for client needs. Absolute manic quality control went into food (that was prepared and properly served to us in First and Business Class, not rattled down the aisle in a trolley while it congealed — thanks to SQ this is now de rigeur for other airlines too), equipment, cleanliness and more. SQ provided travelers with peace of mind and an enhanced sense of well-being.

SQ became the darling of discerning travelers world-wide and has soared in profitability, customer loyalty and virtually every other indicator of performance — including having its partner airport consistently being voted the world’s best airport by virtually every discerning reviewer anywhere.

Who wants to watch the news all the time?

Surely for many, there was little that was more banal than the nightly news. News rarely happens nightly, hence we get a rehash of the same things, a dissection of the same situation from various angles. Moreover, if you’re travelling, you could rarely get news in a common language, and other than global newspapers, you could feel cut off from the world.

A savvy Ted Turner realizing that people would be travelling and would like to watch the news when it suits them, not as per 7 pm on the East Coast of the United States, and might like to know what’s happening in different parts of the world, envisaged and launched CNN.

Now, in lounges and airports, in homes and hotel rooms, CNN or its take-offs, the newly adapted BBC, Fox, MSNBC and others (including financial networks like Bloomberg) bombard us with much that is unfolding all around us.

Sadly as newspaper reading has declined, more people get their ‘news’ from these 24 hour cable networks. While we may bemoan a decline in serious reporting, there’s no doubting that Ted Turner created a global phenomenon that has made news more accessible, more available and more abundant than ever before.

When the Chips are down…

Intel dominated memory chips for years. Then came the Japanese Tsunami of consumer electronics and along with it, commodity memory chips.

IT legend Gordon Moore was at the helm of Intel at that time, and Andy Grove was his number two. Flummoxed by the continuing decline, Grove asked Moore one of his ‘inflection-point’ discerning questions. Namely, if the Board of the company brought in new leadership, and we were those new leaders, what would we do?

Moore answered that we’d probably get ourselves out of the Memory business. Indeed, and so they did.

They mentally walked out the door, and re-entered ready to re-invent, and Intel morphed into the microprocessor dynamo it is today and created the basis of what is one of the world’s greatest branding successes as well: ‘Intel inside’.

A real headache…

Less affirmatively, we have all heard years back of the shocking episode of poison found in Tylenol. This could and very likely would have destroyed the brand, and perhaps irretrievably tarnished the standing of the parent company, Johnson & Johnnson as well.

Instead, by removing all bottles from the shelves, by engaging and assuring consumers and employees alike, J&J not only retained its overall trustworthiness but rescued a key lucrative brand as well.

They did this by anchoring themselves back to the Johnson&Johnson credo that puts customers and people and partners ahead of short-term money and profits.

TAKE-AWAYS AND LEADERSHIP APPLICATIONS

  1. From the Four Seasons situation — don’t let even exceptional competition daunt you. Check out whether all the competition seems to be following a certain trend. In the case of London there were anonymous homogenous international chains and very luxe, historic hotels. Something that straddled the two was an opportunity — the convenience of international facilities with the intimacy and elegance of a bespoke London residence.

    Where are the ‘patterns’ in the way competitors approach the market, and where can we differentiate, disrupt and distinguish our delivery? And how can we make our people, our dedication, our responsiveness, our ‘mode’ of service distinctive enough that it becomes an experience we can replicate and others actively seek?

  2. From Victoria’s Secret, we understand that innovation often means taking what has worked in one environment or industry or location and transplanting it, with appropriate adaptations and discernment, into a different environment, industry or opportunity-scape.

    It then requires however the creation of collateral around it — in this case catalogues, fashion shows, and creating a community of ‘buzz’. We need to make enough of a splash that positive word of mouth is evoked and people talk about the novelty but in ways that draws them in and enhances their lives. In Europe, lingerie was an extension of aspects of their culture. In the US, the culture had to be created. But it can be created as long as we tap common human desires, passions and interests.

  3. From the IPod — what already exists that can be recombined in new ways — where individual benefits can be aggregated or combined? This can also occur when we take our ‘products’ and wrap ‘services’ around them as say when medical companies provide hospital management support and not just equipment (GE for example did this very effectively). So we look for the value ‘around’ what we offer or what already exists and package it such that a larger and more complete value can be delivered.
  4. From the Southwest/Singapore Airlines dichotomy we learn a common lesson — there is always opportunity at both ends of the spectrum — ultimate simplicity and convenience, and utter customization and luxurious responsiveness. However, a personal touch always matters, and the competitive position has always to be justified by experienced customer value.

    Charge less and provide ultimate convenience, efficiency and friendliness. Or else charge more but then create an enhanced sense of well being in addition to providing an exquisite core service.

  5. From CNN, what is it that we take for granted that nevertheless aggravates people? How can we listen beneath the aggravation to the hopes, aspirations and needs of people? How can we re-imagine an existing paradigm of ‘value’ or ‘access’ or ‘content’ to re-establish precedents and paradigms? How can we therefore create a market and convert current non-users (or in this instance non-viewers) into customers and fans?

    Google has done this for research, Amazon for ordering online, Skype aims to eliminate ‘long distance’, perhaps organizations will seek to fulfill, in rational and appropriate ways, the life dreams of their people and not just provide employment. What might be the organizational windfalls of actually inviting such mutual accountability between company and team members?

  6. From Intel the reminder is that great companies can nevertheless see incipient decline take hold. And rather than fight today’s battles with yesterday’s ideas, methodologies and technologies, it is useful to ask what someone with an entirely fresh slate would do to leverage our real competencies and abilities and thereby locate markets and value domains where we truly can win in a distinctive and profitable way.

    What are the potential 10X inflection points as Andy Grove would call them, huge transformational impacts that we are just beginning to sense, that we can lead rather than resist, and come to ‘own’ rather than avoid?

  7. Finally, from J&J, our values have meaning in action — and only when they are tested do we discover if they truly exist.

Customers, partners, employees, stakeholders will gravitate towards companies with a purpose, that stand for something.

Stating what we value and taking a stand for it is a way to also create value — brand value, competitive value, motivational value, and perhaps even strategic value. We discover what we will at least partially do by understanding clearly what we won’t do.

WRAP-UP

Taken together these are powerful prescriptions for a New Year in which we can challenge our vision, our strategy, our processes, our assumptions, our behavior and thereby our leadership impact. Let’s do so in a way that allows us to continue to create the future not just respond to it haplessly in the wake of the innovation and leadership drive of others.

Let’s remember what Peter Drucker sought to help us understand so long ago. The ultimate purpose of a business is to create a customer. Let’s create the best customers we can and engage our teams to ensure we are the right people to serve them, partner with them, and innovate for them.

LET’S LEAD THE WAY!