Category Archives: Customer Relationships

SNAFU: The New Normal

First published September 2, 2010 in Mediapost’s Search Insider

Last week I heard this in a meeting:”We’re in the middle of tremendous change. The organization is going through the biggest transition in its history.”

The line is usually delivered with a mix of desperation, a touch of helplessness and an apologetic tone. The admission comes, with the predictability of a carefully timed script, as I’m trying to assess where companies are in terms of their digital marketing maturity.

Just a few years ago there was a lot of brash boasting about how cutting-edge companies were, but it’s been a long time since I’ve heard that confidence. Even former dot-com rock stars are realizing that they have a lot to learn. They know things are messed up and they think it’s their fault. Somehow things have gotten fouled up in the execution machinery of their company. They’re not smart enough, nimble enough or gutsy enough.

Hello, My Name is Gord, and My Company is Struggling to Keep Up…

Here’s the secret that most of these companies don’t know. As gut-wrenching the changes they’re going through — as messed-up as everything seems to be — they’re not alone. I hear that same apologetic admission from almost every company I meet with. I say it myself with a regularity in our internal company meetings that has lead to the formation of a betting pool with our more cynical team members. The next line that follows in the script is a desperate question: “Can you give us an example of a company that’s doing this right?”

The answer, though disappointing, is at least succinct:”No.”

We’re all learning — and we’re all screwing up. Get used to it, because it’s the new normal. This is the environment in which we have to learn to exist. There are no blueprints or case studies of perfect execution, because we’re heading into virgin territory.

If You Don’t Laugh, You Cry

World War II gave birth to my favorite acronym: SNAFU. It stands for “Situation Normal: All F*&%ed Up.” As a born cynic, I love the tang of acrid yet amused resignation in the face of an impossible situation that the term carries. It sums up the one attitude that ensures that we will eventually triumph: Look, we all know the world is a big ball of crap. Suck it up and get the job done. And while you’re at it, stop your whining.

There are two things that have shoved the world into massive disruption. First, we have the tidal wave of change unleashed by digital technology. It was like strapping a rocket pack on the back of our society and lighting it up. The only problem was that we didn’t know where we were going. At first, it didn’t matter, as long as we were moving fast. We were just exhilarated by the speed at which we were moving.

That led to the second factor, the crumbling of the economy. Suddenly, fast wasn’t good enough anymore. We had to be fast and focused. The stuff we did had to make sense. We — and by we I mean everybody — were being held accountable.

There’s Actually a Name for This…

These twin factors are ushering us through a period economists call a Long Wave Transition. Venezuelan economist Carlota Perez, in particular, has spent a lot of time thinking about this.

Here’s a quote from one of her papers:

“The problem is that, in such periods, institutions face a chaotic and unaccustomed situation, which requires much deeper changes than the great majority of their leaders and members had ever experienced. The difficulty is increased by the fact that there are no proven recipes and change has to take place by trial and error experimentation under the pressure of the very high social costs of the techno-economic transformation.”

Or, in other words: SNAFU. Get used to it, because you’re not alone.

White Salmon and Black Swans

First published July 22, 2010 in Mediapost’s Search Insider

The conversation started innocently enough. We were entertaining out-of-town guests at a winery and restaurant overlooking Lake Okanagan. And, as often happens when people visit B.C., they ordered salmon.

“You know, I heard that not all salmon are pink. There are actually white salmon.”

“Really, I’ve never heard of that.”

“Well, let’s see if there really are white salmon.”

So, we turned to the arbitrator of all such things: Google. If it can be found on the Web, apparently it exists. Which is an interesting behavior in itself, and a point I’ll come back to in a minute. But first, let’s talk about why the existence of white salmon is important.

A Fish by any Other Color

A white salmon is important because it’s a black swan. Or, rather, it’s a Black Swan. The capitalization is critical, because it’s not the animal I’m referring to, but the phenomenon identified by Nassim Nicholas Taleb in his book of the same name.

For all of human history, until the 17th century, it was commonly accepted that all swans were white. But in 1697, Dutch explorer Willem de Vlamingh discovered a black swan in western Australia. Why is that important? Well, for the vast majority of us, it’s not. But what if, for some reason, our world revolves around swans? What if our ability to earn a living depends on the predictably of a swan’s natural coloring? Then suddenly, it becomes vitally important.

Black Swans — and white salmon, for that matter — are outliers. And outliers are important because they cause us to change our view of the world. The normal, regular and expected allow our lives to run down predictable paths. As long as this continues, nothing changes. But the unpredicted, the unknown outlier, is an undeniable occurrence that forces us to reframe our view of things and take a new path. It was a Black Swan that changed the world.

According to Taleb, Black Swans have to have three things: they have to lie outside the realm of regular expectations, they have to carry extreme impact, and, when we discover them, they force us to alter our view of things to explain their existence. We have to change our view of the world to accommodate them. Taleb asserts that all of human history has taken a path that pivots on the discovery of Black Swans.

Discovering Black Swans

Now, back to our dinner conversation. Black Swans only become important when they were discovered. The vastness of the physical world meant that it took us a long time to find that first black swan.

But the world today is significantly different than it was in 1697. Today, Black Swans pop up all the time on YouTube or in a blog post. Every single day, somebody somewhere is googling a Black Swan. And, when they find them, Black Swans go viral because the unexpected is naturally fascinating to us. We can’t help but talk about it, and today, when we do, chances are it’s through a digital channel.

The more the world becomes digitally connected and synchronized, the faster word spreads about Black Swans. And when word spreads, we are forced once again to change our view of the world. This means that the pace of change in human history, catalyzed by Black Swan discoveries, is picking up speed. Today, you can’t step outside your door without tripping over a Black Swan.

The discovery of a Black Swan sets in motion a recurring chain of events. First, we have to acknowledge its existence. Let’s call this the Black Swan Googling stage. Then, we have to talk about it. This would be the Black Swan Twitter stage. Then, we have to rationalize its existence, creating an explanation for it — the Black Swan Wikipedia stage. Then, it becomes an accepted part of our new worldview, the new normal. What used to take centuries to filter through the civilized world now happens in the matter of days, or, at the most, weeks.

After all, when I woke up yesterday morning, I didn’t know there was such a thing as a white salmon. Today, my world has changed forever.

The Two Meanings of Engagement

Engagement: a betrothal. An exclusive commitment to another preceding marriage

Engagement: as in an engaging conversation.  Being highly involved in an interaction with something or someone.

The theme of the Business Marketing Association conference I talked about in last week’s column was “Engage.”  At the conference, the word engagement was tossed around more freely than wine and bomboniere at an Italian wedding. Unfortunately, engagement is one those buzzwords that has ceased to hold much meaning in marketing. The Advertising Research Foundation has gone as far as to try to put engagement forward as the one metric to unite all metrics in marketing, a cross-channel Holy Grail.

But what does engagement really mean? What does it mean to be “engaged?” The problem is that engagement itself is an ambiguous term. It has multiple meanings. As I pondered this and discussed with others, I realized the problem is that marketers and customers have two very different definitions of engagement. And therein lies the problem.

The Marketer’s Definition of Engagement

Marketers, whether they want to admit it or not, look at engagement in the traditional matrimonial sense. They want customers to make an exclusive commitment to them, forgoing all others. It’s a pledge of loyalty, a repulsion of other suitors, a bond of fidelity. To marketers, engagement is just another word for ownership and control.

When marketers talk about engagement, they envision prospects enthralled with their brands, hanging on every word, eager for every commercial message. They strive for a love that is blind.  Engagement ties up the customer’s intent and “share of wallet.”  Marketers talk about getting closer to the customer, but in all too many cases, it’s to keep tabs on them. For all the talk of engagement, the benefits are largely for the marketer, not the customer.

The Customer’s Definition of Engagement

Customers, on the other hand, define engagement as giving them a reason to care. They define engagement as it would relate to a conversation. Do you give me a reason to keep listening? And are you, in turn, listening to what I have to say? Is there a compelling reason for me to continue the conversation? I will be engaged with you only as long as it suits my needs to do so.  I will give you nothing you haven’t earned.

The engagement of a conversation is directly tied to how personally relevant it is. The topic has to mean something to me. If it’s mildly interesting, my attention will soon drift. But if you’re touching something that is deeply important to me, you will have my undivided attention for as long as you need it. That is engagement from the other side of the table.

So, as we talk about engagement at a marketing conference, let’s first agree on a definition of engagement. And let’s be honest about what our expectations are. Because I suspect marketers and customers are looking at different pages of the dictionary.

Marketing: Leading the Way

First published June 10, 2010 in Mediapost’s Search Insider

At last week’s national Business Marketing Association (BMA) conference in Chicago, three marketing executives from three well-known B2B brands each made an interesting comment:

“In the 3M scheme of things, marketing wasn’t even a second-tier priority. It was fourth or fifth tier at best. But in the future, marketing needs to lead 3M.” — Jeff Lavers,  Vice President of Marketing, Sales and Communications, 3M

“Emerson didn’t even have a CMO before me. They didn’t believe they needed one.”– Kathy Button Bell, CMO, Emerson

“We’re announcing a marriage at GE. We’re not sure how they’ll get along, but IT and marketing are about to become married. We’re combining the two functions.” — Beth Comstock, CMO, GE

Wow! Three iconic B2B brands, each rethinking the role of marketing within their organizations. Is this a wave?

What Marketing Should Be

The reason I love marketing, at its purest, is because it’s the connection between an organization’s business model and their customers. Marketing owns that essential bond. But that’s a responsibility that has been abdicated by many organizations, and never explicitly acknowledged by others. That connection, that reason to do business in the first place, is ignored by a startling number of companies.

Marketing should be the voice of the customer, driving product development, service delivery, operation — indeed, every aspect of the business. That’s what Lavers was hinting at in his challenge to 3M. Companies need to be driven by their customers. Marketing should be accountable for keeping the two firmly in sync. But somehow, in the past several decades, marketing has become cheapened, to the point that the function was essentially abolished in many org charts.  3M relegated it to a seat way at the back of the bus. Emerson never even bothered to put in on the corporate directory until 10 years ago. Marketing needs to be put back on the org chart, right at the top.

The excuse in the B2B world was that there was no need for marketing. The channels owned the relationships with the customers.  But the digital marketplace is re-forging relationships between manufacturers and end customers. Suddenly, brands matter. Customer feedback matters. Conversations matter. Marketing has to be the one constantly reminding everyone inside the corporate walls that those connections are vital in the future.

The Marketing – IT Connection

So that explains the import of the comments from Jeff Lavers and Kathy Button Bell. What of the impending nuptials between marketing and IT at GE? What are we to make of Beth Comstock’s BMA announcement?

This signals a fascinating shift in the practice of marketing. If marketing takes over the wheel and drives the company forward, then IT has to provide the infrastructure to help it win. This will be an uneasy shift of power. IT is used to being the control point within organizations, though marketing folks would use a different label: “bottleneck” or ” black hole” is one I regularly hear. With the shift in importance of marketing, IT dragging their heels will no longer be tolerated. In their drive to be nimble, marketing will be pushing — and pushing hard. I see no signals here that indicate potential wedded bliss. Essential? Yes. Easy? Not on your life!

If America’s iconic B2B brands are now ramping up for a new kind of marketplace, one where they take back accountability for end-to-end relationships, we are definitely dealing with a new normal. But I fear many in the C-suite ponder the prospect with the same reluctance they would have about giving the kids the keys to the Porsche.  Sure, we’ll go fast, but we will be driving off a cliff?

Nimbleness is Necessary

This is a common theme I hear all the time, and one that runs directly counter to the structure of most companies: it’s all about nimbleness.

tony-hsieh-is-zappos-ceoI’ve spent the past few days at the Silverpop Summit in Atlanta and two of the keynotes touched on this theme. Tony Hsieh from Zappos talked about how nimble their business model has been, literally redefining their core purpose 4 or 5 times in the past decade. Yes, through that time, they’ve always sold shoes, but that only really defined Zappos in the first few years of business. Since then, they’ve focused on customer service, then on HR, then on culture, and most recently, on happiness. Shoes are incidental. The evolution of the core philosophy of Zappos has been extraordinarily swift by the standards of most companies.

Then, today, Charlene Li gave us a peak at some of the central tenants of her new book, Open Leadership. Again, it’s all about creating a revolutionary managerial framework that takes advantage of more touch points with customers, faster communication lines, the ability to tap into social communities and a leadership approach that can quickly recognize and seize on opportunities, as well as identify and mitigate failures.

But it’s all about speed and the ability to change (or at least, adjust) directions quickly. It’s as if Darwin is teaching an MBA course.

This got me to wondering. It seems that when we look at the best examples of nimbleness, they’re all online companies. Amazon, Zappos, Saleforce – to name just a few. Why is this? Why can’t traditional companies compete with their online cousins when it comes to doing things quickly?

Well, I think there are a few reasons.

It’s all about the Environment

Darwinian change is driven by the environment. The more dynamic and hostile the environment, the faster the change. Nothing changes faster than online. We call it Internet Speed. Entire new business models are built from the ground up in months. And outmoded ones fade away just as quickly. If you’re slow to move in the traditional world, you’ve got plenty of company. But slow to move equals death online. It’s simply not an option.

Closer to the Customer

Online businesses live closer to the customer. They handle the customer service calls, sales, fulfillment and all aspects of the client relationship. There are no middle men clogging up the pipeline between management and the customer. Technology allows online companies to collapse distribution into a much flatter model than is found in the online world. And that means the distance between a customer and the CEO is much shorter, especially if you have a CEO that makes it a point to reach out consistently, like Hsieh at Zappos. This shorter feedback loop makes for much faster change cycles.

Flatter Organizations

Most online companies don’t have a very long corporate history. They are younger companies started by younger founders. And most of the online plays I know started with a determination to do things differently. They’re run in a much more open and transparent manner. Management tends to value culture and communication more than is typical (or possible) in the multi-layered multinational. Communications lines are shorter and more effective. And because they’re new and built on a more efficient model, they tend to be smaller as well.

Less Baggage to Carry

Finally, things that don’t work can be jettisoned much quicker online. If you launch a new site and it doesn’t work, it simply goes dark and everybody gets on with their online lives. There is no chain of empty locations across the country with for lease signs in the window. Online plays don’t have to keep resource sucking bricks and mortar locations afloat. It’s faster to invest in new opportunities online and faster to cut your losses if they don’t work.

If the corporate world now spins on the axis of nimbleness, I suspect it’s going to be hard for traditional companies to keep up with their online competition. Things are just moving too fast to keep pace, given all the odds stacked against them. In the next act of corporate evolution, I think I would have to cast the Multinationals as the dinosaurs and the online players as the mammals.

A Case for Outside In Thinking

girlzooConsulting as a business practice exists to serve two needs:

  • To provide subject matter expertise on an “as needed” basis; and,
  • To provide a fresh perspective on things.

It’s the second of these that I want to ruminate on a bit today. Why is an outside look at things so valuable for companies? Why can somebody on the outside see so quickly what is all but invisible to those on the inside? Increasingly, as my consulting career grows, I’m astounded to continually rediscover how different the view from outside-in can be from the inside-out view. Consultants look at things differently. Good consultants can translate that into insight for their clients. Great consultants combine that with their own experience and expertise to deliver what is, dollar for dollar, the best investment their clients can ever make.

Ideas from IDEO

Outside-in is a great business model. One of the masters of this, the design firm IDEO, has built an entire methodology around “design anthropology,” helping companies reimagine their products by providing a fresh look at things. They base innovation firmly on observation of real people, basically providing an outside-in view of the world. I’ve always been a huge fan of qualitative research, with ethnography in particular being an underused secret weapon. IDEO lives, breathes and eats this stuff. Better yet, they’re willing to share their secrets. You could do much, much worse than learn about more about the IDEO approach to innovation. Spend some time on the IDEO Resource page.

But why does being on the inside blind you to insights that are instantly observable to people on the inside? It’s not that the people outside an organization are so much smarter than the people on the inside. They have no special gift or source of information. They simply have a different view. Why?

Conforming to the Norm

As with most everything in life, I approach these questions from a Darwinian point of view – I seek ultimate rather than proximate answers. I suspect it’s because we humans, being herders, have a need to conform to the norm.

I’m in a unique position right now to test this theory as I’m writing this from a different culture – Germany. In the past few years, as I’ve traveled through different parts of the world, I’ve been amazed at how cultures shape behaviors. Yes, we have inherent human behaviors, but as you travel from culture to culture in Europe, the difference in national behaviors is almost palpable. Or at least, it is to an outsider. It’s probably not a coincidence that the most insightful cultural analyses have come from observers from outside the culture in question, from Alexis de Tocqueville’s (France) Democracy in America to Friedrich Engel’s (German) The Condition of the Working Class in England in 1844. Canadians actually have a long history of observing other cultures, in particular, America. I’ll touch on why that might be more in tomorrow’s post

I’ve written before about Harvard political scientist Robert Putnam, a keen observer of culturally driven behavioral traits. His book, Bowling Alone, provides a razor sharp analysis of several cultural trends in America that are altering the very nature of our social bonds. But it’s an earlier work, Making Democracy Work: Civic Traditions in Modern Italy, that shows how our social connections determine not only our culture but also the effectiveness of everything from commerce to government. Let me veer a little off track to make a point.

The Making of a Clan

Analysis of cultures from mountainous, geographically isolated regions show that they tend to evolve around the power of the clan. These incredibly strong bonds of kinship have been documented in the Scottish Highlands, the Appalachians in the US and Southern Italy and Sicily as well as other similarly geographically restricted areas. There are strong divides between in-group/out-group that hamper the creation of inter-group trade practices and formalized governments. In particular, geographic restrictions on movement of genes in and out of the collective gene pool create even stronger kin selection bonds. Putnam, in his book, documents how this prevailing tribal attitude held Southern Italy back while Northern Italy flourished. There, easy trade routes lead to mercantilism and intergroup trading, reaching a peak in the trade guilds of Florence.

The impact of geography on evolved human behavior has also been fertile ground for UCLA’s Jared Diamond. Prevailing attitudes within a tribe quickly spread, bringing behaviors towards the group norm. The more isolated the group, the more homogenous the views and attitude of the group and the more resistant they are to an outside view. Because we conform to the norm, it quickly becomes true that either the members of the inside group are blind to realities easily perceived from outside, or, if they are aware, they cannot effect change because they’re stifled by the collective influence of the group.

There are some unique corporate conditions where this internal version of restricted group-think tends to flourish. Ironically, past success is usually a good indicator of future limitations in perspective. But again, I’ll get back to that in a future post.

A Brave New World That’s Not So New After All

First published May 20, 2010 in Mediapost’s Search Insider

What the hell is happening? Everything is changing, and it’s changing much too quickly. We keep hearing that the game has changed, that nothing we knew before is still applicable. Ironically, I’m seeing a different trend. I’m seeing a need to return to our roots. But it’s hard to see the truth of that through the technological maze we’re currently stumbling through.

There is a reason companies exist. Somewhere at their core, there is something that sets them apart. There was a reason, back in the misty recesses of their corporate history, why the founders thought they could actually make a buck at this. The older the company, the further it is from the original spark that gave birth to a new entity, but it still lies somewhere.

To Look Forward, Look Back

As companies struggle to adapt to the digital marketplace, they tend to look forward, which is a really scary view of things. Everything is uncharted, unknowable and uncertain. There is a sense that we don’t know what lurks around the next corner. This also makes it seem that it’s imperative to figure out what’s changed. “What,” I hear repeatedly, “is the thing I need to know about how the world is changing?” The answer, I suspect, is not so much what you need to know, but what you may have forgotten because you were distracted by the onslaught of change.

Let me get less cryptic. There is a company that sells technical innovation. It has been doing this for over a century. That original spark, way back when, was to take its understanding of its core technologies and apply them in new ways to solve customer problems. The entire company was built around that core.

Bigger was Better…

Today, the company is struggling with change. The marketplace is shifting. It seems that it must be time to grasp onto something new. At the very least, the company must be open to trying many new things, and trying them quickly. Like many manufacturers, over time those direct ties to the ultimate consumer of their products have had more and more links forcefully jammed into the supply chain, leaving the manufacturer several steps removed. Size and success used to dictate the creation of a distribution network, because physical proximity to the customer was required. Technology is sending that requirement into oblivion, industry by industry. At a minimum, it’s severely altering the importance of the middle links in the chain. Technology is allowing customers to get closer to manufacturers, and vice versa.

This is certainly a change in the way the company has done business over the past few decades, but if we look further back, the company gets back on familiar ground. Technology is bringing it closer to that original founding spark, and I have to believe that’s a good thing. This company became successful by having discussions on the shop floor with the people that were doing the job and struggling with a problem. They identified the need because they could see it. It was right in front of their nose. Innovation came from observation. The spark of success was alive and well and could be found in that small gap between the company and the customer. The 20th century need for infrastructural support stretched the gap, forcing the spark of innovation to become systemic and scalable. And in that, something important was lost.

…But it’s a More Intimate World Now.

But technology is closing the gap once again. And, in the process, as it brings the potential to relight all those sparks, it’s also bringing the opportunity to have those shop-room-floor discussions in millions of locations simultaneously. If the company looks back to the core reason it exists, and understands why that’s important to customers, it will know what to do with technology.  The answer isn’t in the sea of change that’s descending on it – but from remembering why the company’s founders decided this was something worthwhile, something that would make it worth coming to work each day, and turbo-charging that purpose with technology.

Making “Wow” Scalable

bad-customer-serviceAs I said in yesterday’s post…”Wow” is a moving target. As we have more “Wow” experiences, we expect more “Wow” experiences and if we don’t get them, we go away disappointed.

Does “Wow” Increase Share Prices?

Every year for the past 3 years, BusinessWeek does a national survey to find the top Customer Service champs in America. Last year, Amazon topped the list, followed by United Services Automobile Association, Jaguar, Lexus, The Ritz-Carlton, Publix Super Markets and Zappos.com. BusinessWeek poised the very pertinent question:  does increased customer satisfaction lead to greater equity values. Is being nice to people good business?

In a study from 2006, Claes Fornell and his fellow researchers found the answer was a strong yes. While customer satisfaction is a factor seldom watched by Wall Street, Fornell et al found that a portfolio comprised of the top 20% of companies in the American Customer Satisfaction Index would have outperformed the market (based on the DJIA) by 93% in the period 1997 to 2003. It also left the S&P 500 in the dust (201%) and the NASDAQ (335%). Interestingly, the only time the market indexes outperformed the customer satisfaction portfolio was during the irrational exuberance of the Dotcom bubble in 1999 and 2000.

In 2009, Bruce Cooil and a group of researchers from Vanderbilt did a similar study and added an interesting nuance to the Fornell study. They looked at four different portfolios picked on the basis of customer satisfaction scores and found that the portfolios that performed the best were the ones where the score was rising. Picking stocks based on high satisfaction scores alone wasn’t a consistent winning strategy. But picking stocks where the score was rising year over year and where the company’s scores were above the national average outperformed the market by over 100% through a ten year period. The worst performing portfolio? The companies where the satisfaction score was dropping, even if it started from a fairly high level.

So, it’s not necessarily the high score that generates the loyalty, it’s scaling customer satisfaction to keep it on the rise. As I said yesterday, the secret of “Wow” lies in exceeding expectations. This introduces a dilemma for the business owner. How do you scale customer satisfaction?

How Zappos Scales “Wow”

For the answer, let’s look at one of the consistent winners in the BusinessWeek Survey, Zappos.com. CEO Tony Hsieh approaches customer service with the ardour of a religious zealot. But the journey he and Zappos have taken there has gone through some twists and turns. In a recent keynote I had the opportunity to attend, Tony shared that Zappos core philosophy has evolved in the past decade. In the beginning, the core goal for Zappos was selection. They wanted to deliver online shoppers the largest selection of shoes available anywhere. Zappos founder Nick Swinmurn started Zappos because he was looking for a pair of boots. He came up empty handed. Surely, it shouldn’t be so hard to find the right pair of shoes, in the right size and the right color. Swinmurn’s answer? An online shoe megastore.

Soon, however, Zappos realized that selection alone wasn’t enough. In 1999 and 2000, people were wary about shopping online for anything, including shoes. Trust was essential in convincing customers to make a purchase online. Enter Hsieh. Zappos built the trust by focusing on customer service. No questions asked return policies. Free overnight shipping. Zappos switched it’s core corporate philosophy from selection to satisfaction. Happy customers fuelled word of mouth, which drove Zappos to higher and higher sales numbers.

Zappos retooled their operation to deliver a “Wow” experience. They brought shipping in house, creating their own fulfillment centre in Kentucky and later Las Vegas. They created a symbiotic, joined at the hip partnership with UPS. They re-engineered the process from order placement to doorstep delivery, aiming to knock the socks off their customers. Zappos began to systemize “Wow”.

It was at this point that Hsieh and Swinmurn learned their next lesson – “Wow” is best delivered person to person. People are the secret behind the scalability of “Wow”. If you hire great people, and treat them well, they’ll naturally aspire to deliver exceptional customer service, and because each employee is empowered to respond appropriately to each situation, they can scale “Wow” on the fly, reading a customer’s expectations and shooting to exceed it. Hsieh and Zappos switched their core philosophy yet again, from customer service to culture. HR became the primary focus of the company.

“I Just Want a Pizza!”

In his keynote, Hsieh gave us an example of how “Wow” could scale to ridiculous lengths if you let good people do good things.

Hsieh and some friends were celebrating one evening on the West Coast. As they headed back to their hotel, one of the group, an old college friend, mentioned how hungry she was. The group offered to stop for a bite. “No,” the friend said. Her heart was set on the pizza she was going to order from room service when she got back to the hotel. All day long she had been dreaming of this pizza. She went on at length to the group about how much she was going to enjoy this pizza. Very soon, Hsieh and company got very tired of hearing about this damned pizza.

They returned to the hotel at a very late hour and the friend phoned room service:

“I’m sorry ma’am, but room service shuts down at 2 am”

“But I was going to order a pizza…”

“I’m sorry ma’am, the kitchen is closed.”

“But my pizza…”

“Sorry, there’s nothing I can do.”

Crestfallen, the friend put the phone down. The group, who had gone up to the room to continue the celebration, looked up.

“Room service is finished. I can’t order my pizza. What kind of hotel shuts room service down at 2 a.m.? Pizza’s are supposed to be eaten late at night.”

At this point, Hsieh, inspired no doubt by some of refreshments consumed over the course of the evening, made a suggestion:

“Call Zappos!”

“What?”

“Call our call centre. We always say how great our people are…how they can solve anything. Call Zappos and see if they can help you.”

Soon, the group joined in, all gaining inspiration from the liquor consumed over the course of the evening:

“Yeah, phone Zappos. Let’s see how good they are.”

So, she phoned Zappos –

“Hello, Zappos. How can I help you?”

“I need a pizza.”

“Excuse me?”

“I was out with some friends and all I wanted was a pizza when I got back to the hotel. But I got back here and room service is closed. I can’t get a pizza!”

“Ma’am, you know you phoned Zappos, right?”

“Yes…”

“Zappos…the shoe store? Accessories? Clothing…?”

“Yes. But can you help me? I really need a pizza.”

“Just a minute…”

A few minutes later, the call centre operator was back….with a list of pizza delivery restaurants in the area that were open all night.

That’s how you scale “Wow”.

The Trouble with “Wow”

customer-service-cartoon-thumbThere’s been a lot of chatter recently about “Wow” experiences. This has been held up as the holy grail of customer satisfaction, an experience so amazing it makes the consumer stop in their tracks, jaws dropping and heart a flutter. But there’s a nasty little surprise awaiting any company aiming for impossibly high bar of “Wow.”

“Wow” is a moving target. “Wow” never stays in one place for long.

There’s a pretty simple equation that defines “Wow” for us:

Experience – Expectation = Reaction

So, Wow depends on our expectations going in. It’s only a Wow if it exceeds expectations. And our expectations are constantly changing.

Let me give you an example. Zappos.com is one of the poster children for Wow. CEO Tony Hsieh has tried to consistently deliver Wow to his customers. He gives one example. The Zappos Head Office is located a stone’s throw from the UPS distribution centre in Las Vegas. The reason is that Zappos works hard to get orders shipped as quickly as possible. Rather than waiting for a batch of orders to come in and be filled from the warehouse, which is more efficient, Zappos fills the orders immediately. The goal is to get the order into UPS’s hands as quickly as possible. So, theoretically, a person could order from Zappo’s at 10 pm and find the parcel on their door the next morning. One would hope that would elicit a “Wow!”

But once it happens, our expectations get reset. The standard expectation for Wow is now overnight delivery. If Zappos does it again, it’s not a Wow, it’s simply meeting expectations. And, if the planets aren’t perfectly aligned and the parcel isn’t delivered in 8 hours, suddenly the outcome is disappointment. In the equation of “Wow”, the higher the expectation, the more chance you’ll end up with a negative result.

I’m not downplaying the importance of a good customer experience. I’m simply letting you know that always aiming for “Wow” can lead to a never ending escalation of customer expectations. There are, however, some very interesting things at play here that I would like to explore further in the next several posts. I’m fascinated by how customer psychology has shifted now that technology has transformed the marketplace. For example, Tony Hsieh found that for Zappos, the secret of keeping “Wow” scalable lies in something pretty elemental – how you treat people. But that’s a topic for tomorrow.

10 Things I Learned from Disney – #10: How Do You Want to be Remembered?

walt-disney1I started out this series by saying that Walt Disney is one of my heroes. This is not to say that Walt was perfect, or even consistently admirable. There are plentiful rumors and tales of Walt’s anti-semitism, despotic management style, mercurial temperament or politically insensitive transgressions. The Disney Studio was far from the happiest place on earth. Disney animators unionized after promises of profit sharing on the hugely profitable Snow White vaporized and Walt subsequently scooped up all the credit for the amazing artistic and technical achievement of the studio team. Even longtime friend Ub Iwerks had a trial separation from Walt for 4 years after being constantly shoved out of the spotlight (although he subsequently returned and spent most of his remaining career with Disney). Yes, Walt had a monumental ego. Yes, he was a glory-hound. And yes, he could be a tyrant to work for.

But that’s not how we remember Walt.

We remember his as a visionary, an artistic pioneer, a maker of magic and possibly the most powerful entertainment icon of the 20th Century. His presence was so powerful that the company foundered for years after his death, trying to guide themselves with the management mantra: What Would Walt Do?

You see, the way we remember things is substantially different that the way things actually are. The same is true for people. Eulogies never inventory the deceased’s many faults (because we all have many faults). They memorialize their strengths, their gifts and their accomplishments.

Leveling and Sharpening

In order to jam things into our long term memory, we take facts and distill them into an idealized version of reality. It’s called “Leveling” and “Sharpening”. We “level” out the mediocre, the mundane and details we just don’t agree with, basically eliminating them as unnecessary “noise” from our memory. Then, we “sharpen” the extraordinary, whether it be extraordinarily good or extraordinarily bad. Finally, we pick one or the other. We tend not store diametrically opposed opinions of things or people. It creates too much cognitive conflict. We either like things (or people) or dislike them. If we like them, we filter out the negatives and build up the positives. If we dislike them, we do the reverse.

It’s this human tendency that I talked about before in Daniel Kahnemann’s exploration of remembered happiness vs experiential happiness. We level and flatten our lives as well, forever storing an idealized (or demonized) version of what actually happened.

So, for me, although I’m aware of Walt’s faults, that’s not really part of my “image” of the man. I focus on his accomplishments and many gifts. And as I inventory them, I am comfortable in calling him one of my heroes. Walt’s achievements were, by any measure, extraordinary. Perhaps they would be beyond the reach of someone less driven, less egotistical or less tyrannical. Perhaps, perhaps not. But that’s not really for me to judge. What is important to me is that Walt achieved them.

And there is my final lesson from Disney. It’s the extraordinary that will be remembered. It’s when we reach beyond our limits that we determine what we’ll be remembered for. The mundane details of our lives will get lost in the retelling, along with our mistakes and faults, if we strive to achieve something remarkable.