Archive for the ‘Conscious Capitalism’ Category

Why Am I a Missionary for the PEAK Message?

One of the most common questions I’ve heard in the past couple of years is, “How can you be both a President/CEO of a fast-growing company and an author/speaker at the same time?” Well, first of all, whether you’re a candidate running for President, an athlete training for the Ironman, or a mother who’s birthing a baby, to an outsider, it can often look as if you are under significant duress when you’re pursuing your calling. Yet, those who are called by what they do have a high pain threshold and couldn’t imagine living their life in any different manner, as there’s a depth of internal inspiration that comes from pursuing their calling. The reality is that some of these high functioning states of being are not necessarily sustainable over the long haul, and I recognize that I can’t juggle these two demanding roles forever. I feel very fortunate that in the past couple of weeks, I’ve been able to elevate a 14-year veteran of Joie de Vivre, Ingrid Summerfield, into the President’s role. This is good for her, the company, and my desire to continue to spend time writing and speaking beyond the fifty hours per week I put into my role as CEO.

I am passionate about the PEAK message partly because I see it is so essential today. There’s a certain logic in seeing that Capitalism 1.0 is broken and it’s time for a paradigm shift to Capitalism 2.0, which recognizes that: (a) what’s most valuable is what’s intangible, and (b) companies that focus on the enduring higher needs of their stakeholders create a model for long-term success. The best way I can describe this is that twenty years ago 80% of the cost of a laptop computer was in the tangible hardware that surrounded the software. Today, that has flipped such that 80% or more of the cost is in the intangible software inside the machine. Some of the greatest assets a company has – its brand, its culture, its relationships and the loyalty people feel toward it, its intellectual property and ability to innovate – don’t appear anywhere on its tangible balance sheet. What I learned during the post-dot-com, post-9/11 downturn was that focusing on these intangible higher needs – even though they may be harder to measure – is the secret to success, especially in a time when everyone is rushing to the lowest common denominator.

Since I am only one man and want to get the PEAK message and principles out into world, I spent the last six months developing and testing corporate seminars with my colleague, Sue Funkhouser (who is an organizational development specialist and former VP at Ogilvy & Mather). This fall, we conducted three beta executive seminars for PEAK with a wide variety of companies represented at each. These companies ran the gamut from large organizations like Merrill Lynch, Kaiser Permanente, and Adobe Systems, to start-ups, non-profits, and mid-sized companies that were looking to incorporate the principles of PEAK into their business model. One of the seminars focused on the employee experience, one on the customer experience, and the final one focused on how to create a PEAK-performing organization by addressing the higher needs of all three key stakeholders: the employee, the customer, and the investor.

Someone recently asked me, “What are the 5 most resonant insights that came out of these beta seminars?” Well, one that was particularly fascinating to me is that a stalwart financial giant could share a table with an up and coming sex toy retailer and find commonality in ways to create customer peak experiences. There were more similarities between these various organizations than one might guess and, clearly, at the heart of each is the idea that each of us – whether we’re in the role of employee, customer, investor, boss, vendor, donor, community member or whatever – has a Hierarchy of Needs that can be properly characterized by the progression from Survival needs (where most of us are currently focused) to Success needs to Transformation needs. And, those organizations that are able to move their constituencies up that Transformation Pyramid clearly have the greatest potential for differentiating themselves from their competitors and creating deep loyalty within their constituencies. But, beyond that foundational principle, I would outline the following 5 most valuable insights that participants took from these seminars:

Culture, when nurtured and leveraged by focusing on higher needs, acts as a key performance driver for any organization and leads to long-term, sustained profitability and market positioning.
Great organizations find ways to move their employees up that Job/Career/Calling pyramid such that their employees are more intrinsically motivated by what they do or what the organization does (it gives them Meaning) as opposed to externally motivated by the Compensation package or Recognition.
Customers typically become evangelists when a company gives them a transformational experience that has one or more of the following four characteristics:
· it helped them meet their highest goals in a new way;
· it gave them the ability to truly express themselves in a self-actualized kind of way;
· it helped them feel like they were part of a bigger cause; and/or
· it offered them something of real value they hadn’t even imagined.

An “investor” can be defined as anyone who invests time or money in a company or in an employee in the hope of receiving some kind of return. Investors who feel they have an engaged and collaborative relationship with an organization are more confident and patient (and less likely to jump ship during difficult times) because they see the value of the long-term relationship.
Business has a tendency toward the tangible, but the PEAK principles are very focused on the intangibles at the top of the employee, customer, and investor pyramids. So, it is essential to look for ways to measure the level of inspiration and engagement that an employee feels, the enthusiasm and evangelism that comes from a self-actualized customer, or the sense of pride of ownership or legacy that an investor feels when they’re putting their wallet where their heart is. The good news is that business schools, consultants, and authors are evolving how these intangibles can be measured and benchmarked.
Some of my greatest pride during these beta seminars was seeing how these various companies made this material real for them. One set of participants realized that they wanted to be transformational leaders, but that they were in a transactional industry. But, before they got depressed, I encouraged them to look at how Goldman-Sachs, a PEAK-performing company, transcended the investment banking industry. Take a look at the Musing on my website from last spring where I compared Goldman with Bear-Stearns. Another company acknowledged that there were cultural and generational differences for employees in their company which meant that what created “Meaning” or “Recognition” for one employee could be very different than for another. And, just as Prius and Whole Foods Market have come to realize that they have various customer market segments with different “unrecognized needs” at the top of the pyramid, one retailer that attended the seminar realized they needed to create three different customer pyramids – one for each of their three biggest types of customers. One of our savvier participants realized that there’s almost a leap that needs to be made from the second level to the top level of each pyramid. In other words, moving from Success to Transformation is where the real magic happens so any company that can create the conditions that allows that magic to occur is going to be a transformative organization. And, one consistent learning that all participants had is that gravity takes its toll on these pyramids as there’s a certain fluidity to how humans move up and down the Hierarchy of Needs, no matter whether their role is as an employee, customer, or investor.

Now, we’re moving forward to revise these all-day seminars so that they can be applied to organizations who’ve asked us to come in and help them apply the principles of PEAK. We will be launching PEAK seminars toward the end of this winter and, on occasion, will once again do a multiple-company seminar as we did with these beta tests this fall. If you have some interest in learning more about this or if you know an individual or organization that has expressed some intrigue into how they can live the principles of PEAK, please feel free to email me or Sue (sue@pinwheelperformance.com).

The most poignant conversations I had at these seminars related to how PEAK can help any organization deal with the natural fear that arises during economic turmoil. A recession breeds fear and fear drives employees, customers, and investors to the bottom of the pyramid. That’s why this is such a topical and valuable model right now. I learned so much during the last downturn and saw that managing toward the higher needs is what helped JDV grow from a $70 million company (annual revenues) that was facing extinction to being a $250 million company just a few years later. There’s no doubt that this economy is once again testing us and all of you, but having a common language within your organization that helps your employees and executives focus on what can differentiate you will help assure that your company and culture can thrive even amidst these external challenges.

Keep checking in with my Musings on www.chipconley.com as I’ll continue to spout what I’m learning along the way.

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How Entrepreneurs Use the Pyramid

Recently, I did a half-day workshop for 130 Houston entrepreneurs focused on how to use Maslow’s Hierarchy of Needs pyramid in the context of a fast-growing business (see the YouTube summary video below).  In difficult economic times, people and businesses tend to de-evolve to the bottom of the pyramid as we get fixated on our Survival needs.  What’s fascinating – and what really captures the spirit behind my story in PEAK – is those companies that use a recession as a means of truly differentiating themselves from their competition, whether that’s by finding alternative means of saving money so that the boss doesn’t have to cancel the employee holiday party or finding other ways to save money so that a business doesn’t have to nickel and dime its core customers or considering new, relationship-driven approaches to delivering the message of how the company will maximize net income for its investors.  Those companies that create deep loyalty with their core constituencies – employees, customers, and investors – create a sustainable advantage that becomes even more apparent during a downturn. 

In seeing how these Houston entrepreneurs used my PEAK pyramids to address their individual business models, I was struck by the fact that many of them realized that the shape of the pyramid could be used as a great learning tool for the people in their company.  Quite often, many of us get excited about the self-actualizing qualities at the peak of the pyramid – which is where differentiation is most prevalent – but if we forget about how we address our foundational needs, we won’t have built a sustainable business model.  Many of these entrepreneurs were talking about how they had to cut costs, but that the way they cut their costs said a lot about what’s important in their company.  Some business leaders realize that the fastest way to save money is to cut payroll and the fastest way to cut payroll is to layoff a certain percentage of your workforce.  I don’t want to suggest that layoffs shouldn’t be considered, but I do want to pose the question: are there other ways to cut your costs that won’t potentially debilitate the company from moving up the pyramid (as cycles of layoffs can lead to a workforce that is holding its breath).  Could you do a 10% cut of payroll throughout the company as a means of building solidarity?  Could you do a wage freeze or a hiring freeze – both of which can lead to sizable payroll reductions with time?  Have you considered looking at how you can organize more efficiently?  Do your employees truly get value out of their benefits programs or are there ways to cut costs there while also tailoring the benefits more to exactly what the employees are looking for? 

In sum, Warren Buffett once said, “It’s only when the tide is out that you see who is swimming naked.”  A recession is like the tide going out.  And, being an entrepreneur with bloated expenses during a time when revenues are dropping is like being caught on the beach without your bathing suit.  But, before you do something rash to cut your costs, consider the long-term consequences of your actions and know that culture is your ultimate weapon to compete effectively.  Founder of Southwest Airlines Herb Kelleher (one of the heroes of many entrepreneurs) said, “There is one key to profitability and stability in a boom or bust economy: employee morale.” 
http://www.youtube.com/watch?v=MtPoXjxqpAk    

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