Archive for the ‘Conscious Capitalism’ Category
“ALL I WANT FOR CHRISTMAS….” – MY FAVORITE BUSINESS BOOKS
One of the most frequent questions I get asked is “What are your favorite business books of all-time?” That’s a tough question to answer. It’s sort of like “What’s your favorite color?” The fact I like purple doesn’t mean I’m going to buy a purple business suit, nor does it mean that you’ll like purple either. So, for the sake of categorization, I’ve listed my favorite business books by theme with a little info on my favorite in the category and then a list of great also-rans. Given the time of year, you’re welcome to forward this list on to your friends and family as part of your wish list so that you can continue to be a business gladiator in 2011.
LEADERSHIP: James MacGregor Burns’ landmark Leadership outlines the difference between transactional and transformational leadership better than any book I’ve ever read.
Others: Leadership is an Art by Max Dupree; Tribal Leadership by Dave Logan, John King & Halee Fischer-Wright; On Leadership by John W. Gardner; Authentic Leadership by Bill George; Leading the Revolution by Gary Hamel.
PERSONAL MASTERY: Peter Drucker is the most prolific and persuasive business writer of all time and his classic The Effective Executive is a perfect gift for the young person entering the workplace or those of us who are a little older and want to brush up on our habits.
Others: Working with Emotional Intelligence by Daniel Goleman; How to Win Friends & Influence People by Dale Carnegie; Are You Ready to Succeed? by Srikumar S. Rao.
ENTREPRENEURSHIP/SMALL BUSINESS: I started my company in 1987 and Paul Hawken’s Growing a Business was my bible for understanding the similarities of planting a garden and growing a small business.
Others: The Great Game of Business by Jack Stack & Bo Burlingham; Small Giants by Bo Burlingham; Rules for Revolutionaries by Guy Kawasaki; The Monk and the Riddle by Randy Komisar.
PURPOSE/MEANING: Simon Sinek’s Start With Why has become a recent hit helping to remind us that life and business isn’t as much about the how or what, but it’s essentially about the “why.”
Others: Meaning Inc. by Gurnek Bains; The Hungry Spirit by Charles Handy; Man’s Search for Meaning by Viktor E. Frankl; Business as a Calling by Michael Novak.
CORPORATE CULTURE: Southwest Airlines has proven over 40 years to have the most resilient and evolved culture of any organization so it’s not surprising that The Southwest Airlines Way by Jody Gittell Hoffer would be my favorite in this category.
Others: Nuts by Kevin Freiberg & Jackie Freiberg; First Break All the Rules by Marcus Buckingham & Curt Coffman; The Service Profit Chain by James L. Heskett, W. Earl Sasser & Leonard A. Schlesinger.
CUSTOMERS/MARKETING: Here’s an offbeat psychological choice — Paco Underhill’s Why We Buy helps get inside the head of your customer to understand what makes people tick and how do we make decisions.
Others: The Experience Economy by B. Joseph Pine & James H. Gilmore; Made to Stick by Chip Heath & Dan Heath; A New Brand World by Scott Bedbury & Stephen Fenichell; Loyalty Rules by Frederick F. Reichheld; Selling the Invisible by Harry Beckwith; The Purple Cow by Seth Godin.
CONSCIOUS CAPITALISM: Firms of Endearment by Rajendra S. Sisodia, David B. Wolfe & Jagdish N. Sheth makes the most compelling argument I’ve read about why thinking systemically about your business and the broader stakeholders is both smart for business and good for the world.
Others: Good Business by Mihaly Csikszentmihalyi; Mid-Course Correction by Ray Anderson; The Ecology of Commerce by Paul Hawken; A Lapsed Anarchist’s Approach to Building a Great Business by Ari Weinzweig.
HAPPINESS: A few years ago, this wouldn’t have been a business category but it’s now the most popular genre of book and employee and customer happiness is on the lips of every CEO. Daniel Gilbert’s Stumbling on Happiness is about as good as they come — relevant to our personal lives as well as how we make people happy in business.
Others: Delivering Happiness by Tony Hsieh; Maslow on Management by Abraham H. Maslow; The How of Happiness by Sonja Lyubomirsky; Positivity by Barbara Fredrickson.
Happy Holidays to all of you!
CAN BUSINESS BE ENLIGHTENED?
[Originally posted Nov. 8, 2010 on the Huffington Post]
A half-century ago, few would have suggested that the world’s companies might have a bigger impact on the planet than would the various governments of the world. But, today, there’s no doubt that business — for better or often worse — impacts our lives in more and more profound ways, whether it’s how we communicate with each other in the digital age, whether we are surrounded by pollution, or how we look for global solutions to an ever more connected world. Consciousness and commerce need to feel less and less like an oxymoron.
Recently, I had the good fortune of leading a five-day global teleconference with nearly 14,000 registered listeners from more than 100 countries as 40 different worldwide business leaders and academics talked about how an enlightened business community can make a difference in the world. If you’re interested in learning more, all of the audio is free if you register here. This blog is meant to be a guide to the four key themes that arose from the varied speakers: Great companies have great purposes; Be conscious about your culture; Harvest leaders; and Think bigger than your company.
Someone once said, “our purpose in life is a life of purpose,” and this applies to companies also. One of our esteemed speakers said that the best companies think of themselves as “purpose maximizers” rather than “profit maximizers,” as with a noble and magnetic purpose you are more likely to create sustainable profits. Another suggested some great legacy companies like Hewlett-Packard became truly transformative when they moved from a place of thinking of how they can be the best in the world to being the best for the world. All of this brought me back to Peter Drucker‘s profound management question, “What business are you in?” That’s a question that every leader should ask their people. The first time you answer it, your answer will be obvious, but by the fifth time you repeat the question, it is likely that you will have uncovered your purpose or corporate essence and this is far more important than coming up with a catchy marketing slogan (which is how most companies try to prove to themselves and the world that they have a purpose).
Secondly, a common theme that many speakers suggested was that corporate culture is an essential part of company vitality. Zappos CEO Tony Hsieh surmised that a company’s culture is its brand in today’s more transparent world. And Monika Broecker, who founded the School of Personal Growth at Google, suggested that the best companies know that corporate training is just a disguise for personal development. An enlightened business recognizes that their internal eco-system is like a pond. Stagnant ponds smell and it’s hard for anything to live there. Healthy ponds have a flow of new water coming in and they create an environment where things grow. Ponds are also an apt metaphor for the ripples that are created when a stone is thrown. The most prevalent and contagious ripple in most companies today is the emotion of fear, yet a healthy culture dispels fear. So, if you want to inoculate your company against the debilitating effects of fear, invest in your culture.
Thirdly, everyone agreed that the leaders we breed today are different than the command and control generals of the past. We’re looking for conductors today who are more adept at the nuances of bringing out the best in an orchestra. If the most neglected fact in business is that we’re all human, it’s not surprising that emotional intelligence was outlined as the most important quality of leadership today. The ability to empathize and understand the other is progressively more important in this small world we live in. Authenticity, transparency, and humility were also qualities that emerging as more important for leadership in this century than the last. Anne Mulcahy‘s rein as CEO of Xerox, which she took over when it was very troubled, and her succession planning to help make Ursula Burns the new CEO a few years later shows the importance of healthy and effective leadership when a leader realizes their most essential task is to create the next round of leaders in their organization.
Finally, Richard Barrett suggested that companies are starting to realize that “a business is a wholly owned subsidiary of society, and society is a wholly owned subsidiary of the environment.” Social responsibility needs to be intrinsic within the mission of a truly conscious business and reflected in everything it does, rather than just grafted on for marketing purposes (which sometimes can be the case with Corporate Social Responsibility programs). Companies and leaders are role models — not just with the business community — but in the broader world. And, when any of us thinks of ourselves as a role model — whether that’s as a parent being observed by their kids or a leader under the microscope of their followers — it creates a natural stepping up of how we carry ourselves and what we expect from ourselves. If individual business leaders are willing to approach their work with this level of consciousness, we may actually experience a more enlightened business community with great collateral benefits to the world.
Enlightened Business Summit: 40 free recorded interviews with world luminaries to help your business thrive
If you missed any of the Enlightened Business Summit, it is not too late! You can still listen to all of the interviews…for free! Simply click here to register and gain access to all 40 recorded teleconference calls. Listen at your leisure and capture the inspiration!
Here’s what people said about the Enlightened Business Summit:
“WOW, my view of career, success and money has truly shifted”
“An amazing group of inspiring experts in the area of conscious business”
“Groundbreaking insights and inspiration for action…for the marathon of the 21st Century enlightened leadership”
“Synergy and co-creation leap from every session, giving us great hope for a thriving future”
I’m very excited that in a couple of weeks I will be emceeing one of the largest business teleseminars in history entitled the Enlightened Business Summit. I was asked to co-curate this five-day event (Oct. 25 to 29) all of which is free and accessed purely by your phone. I am thrilled with the line-up of speakers we’ve gathered from notable business leaders such as Tony Hsieh from Zappos, John Mackey from Whole Foods Market, Casey Sheahan from Patagonia, Shai Agassi from A Better Place, and George Zimmer from the Men’s Wearhouse to best-selling authors including Mihaly Czikszentmihalyi (Flow), Tim Ferriss (The Four-Hour Work Week), Marcia Wieder (Dreams are Whispers from the Soul), Keith Ferrazzi (Never Eat Alone), and Bill George (True North). I will be interviewing most of the 40 speakers, and participants will have the opportunity to ask questions during the calls. The teleconference format also allows for conversations among the thousands of participants during many of the sessions. For those who love the line-up but don’t have time, you can also register and then buy the recorded audio program. Toward the end of the summit, we will announce that I will be leading seven weeks of PEAK Leadership phone trainings starting on November 3 (and the first two weeks are free).
To learn more, please register at the Enlightened Business Summit website. I won’t see you there, but I certainly hope to hear you on one or more of the calls!
Having spent the past thirty-two years in the Silicon Valley/Bay Area region, I guess I’ve grown accustomed to start-ups wreaking havoc in mature industries. Hewlett-Packard, Apple, Google, Facebook….they all were launched within a 15-mile radius of my alma mater, Stanford University, and they went on to revolutionize not just their industry, but they changed our relationship with technology and, frankly, in Facebook’s case, our relationship with each other.
So, I’m not surprised that I’m fascinated with a little, almost-mythical country in the Himalayas that is revolutionizing how world leaders are looking at the definition of success. Like “The Mouse That Roared” (a popular book and film from the late 1950’s about an imaginary, bucolic country situated between France and Switzerland that becomes the admiration of modern society when it declares war on the United States), Bhutan is getting the kind of attention an off-off-Broadway play gets when you know it’s destined to be a hit. In 1972, the 17-year old King of Bhutan asked the blasphemous, “Why are we so focused on Gross Domestic Product? Why aren’t we more concerned with Gross National Happiness?” For nearly forty years now, Bhutan has been remaking their country based upon the premise that the ultimate public good a leader can provide his or her people isn’t material possessions, but instead it’s happiness or well-being.
This “beginner’s mind” idea has found fertile ground in the 21st century as more than forty countries are now studying their own GNH (Gross National Happiness). Nicolas Sarkozy recently announced what some are calling a “joie de vivre index” in France based upon an 18-month study of two Nobel economists who recommended that the largest countries of the world end their obsession with GDP and consider some new intangible metrics. In essence, they’re suggested that GDP – which focuses exclusively on tangible production and consumption – no longer should be our sole definition of global success especially at a time when 64% of the world’s GDP now comes from the intangible service industry. In other words, GDP measures outputs which might have made sense in a more mechanized, industrial era. But, given the knowledge era we now live in, measuring those inputs that influence the output is a more holistic method of evaluating whether we’re creating sustainable success.
This may seem abstract, but it’s extremely relevant to business leaders who have come to realize that a myopic focus on purely the bottom line can have the same effect as driving a car at full speed all the time without doing occasional maintenance and refueling. Here are three important lessons for business leaders to learn from Bhutan:
1. Leaders don’t create happiness for people. The Prime Minister of Bhutan told me his goal is “to create the conditions in which happiness can flourish.” Abe Maslow once suggested business leaders “can set up the conditions so that peak experiences are more likely, or one can perversely set up the conditions so that they are less likely.” Great leaders create healthy habitats. From that healthy habitat sprouts the outputs we’re looking for whether that’s happy citizens or a profitable business. Silicon Valley has an eco-system that is primed for innovation, but as many regions of the world have learned, you can’t easily replicate the intangibles that create such a cultural habitat. So, first, brainstorm with the leaders in your company about what cultural “conditions” would help your company flourish and what kinds of specific things you can do to create that habitat.
2. Leaders value and measure the intangible. The Bhutanese have created a science behind the art of happiness. They measure four pillars, nine key indicators, and seventy-two various metrics to help them understand whether they are creating fertile conditions for happiness. The Gallup organization has developed twelve questions that help leaders measure employee engagement like “at work, do you have the opportunity to do what you do best every day?” or “does the mission/purpose of your company make you feel your job is important?” (http://www.workforce.com/section/09/article/23/53/40.html). It’s time for leaders to distinguish between what they can easily count (“are you being paid enough?”) with what employees most value. The intangibles of mission and meaning are powerful fuel for knowledge-driven industries, so find ways to measure these vital inputs.
3. Leaders are willing to deviate from the norm. Most world leaders didn’t take notice when the teenage King of Bhutan asked his impertinent questions about GDP. Those that did notice chuckled and chalked this idea of GNH up to “Buddhist economics.” But, if you’re a small country or a small company, your best strategy to compete with the big boys is to find a niche and own it. In my case when I started my company twenty-three years ago with an inner city motel, I went after rock ‘n roll bands as our core customer, even though conventional hoteliers told me I was crazy to want these party animals. Yet, this target customer was perfectly suited to my funky motel and this was an untapped market (bands) that was growing and recession-proof. Similarly, it took thirty years for the world to embrace Bhutan’s approach to GNH, yet this “happiness niche” has turned out to be much larger than the King of Bhutan ever imagined. Find a niche, embrace it wholly even if it’s unconventional, and deliver on your promise better than any of your competitors.
[Originally posted Oct. 30, 2009 on the Huffington Post]
Unconscious Capitalism…we’ve witnessed that. Even Drunk Capitalism may sound more accurate than Conscious Capitalism. But, the truth is we can’t afford to have Capitalism be anything but Conscious given the stakes involved and the power wielded by the world of business. I’ve just come back from the second annual Conscious Capitalism conference in the hill country of Austin. This gathering of CEO’s, entrepreneurs, financiers, and academics gave me some encouragement that those handling the machinery of industry have come to realize that they can’t operate this delicate and powerful equipment while inebriated on short-term ambition and unconscious plundering.
What does it mean to be a conscious capitalist? Here’s my stab at a list of 5 basic rules (fueled by some of the discussions at the conference):
(1) Focus on the Long-Term. While short-term profits are the milk, smart investors and business execs understand that building a relationship with the cow is far more valuable in the long-term. Warren Buffett asks his CEO’s to operate their businesses as if they were never to be sold or merged for 100 years. And, the academic authors of “Firms of Endearment” have proven that long-term minded companies outperform the S&P 500 by eight times over a ten year period.
(2) Bow at the Altar of Purpose. An expansive Purpose that addresses the needs of a broad definition of stakeholders – employees, customers, vendors, the community, the environment, not just investors – provides an animating and attracting force for a company. Proctor & Gamble’s new CEO recently remade the company’s business plan so that it is purely focused on how P&G delivers on its Purpose to all of its broad definition of stakeholders. And, great companies from Southwest (“freedom to fly”) to Apple (“a bicycle for your brain”) have great Purposes that energize those who come into contact with them.
(3) Think of Business as a Practice. Few of us see businesspeople as “practicing” their craft like a doctor, lawyer, athlete, musician, or spiritual leader. But, this new generation of leaders at companies like Patagonia (which is now teaching Wal-Mart how to green their supply chain), Whole Foods Markets, and PepsiCo are approaching their work with a level of conscious practice that suggests that they understand there’s a systemic effect in the decisions they make. Kip Tindell, CEO of the Container Store, says that leaders need to understand the size of the “wake” they create based upon the decisions they make. Business leaders can no longer afford to take an unconscious “just do it” approach to how they make decisions.
(4) Redefine what Winning means. Life and business are all about where you pay your attention. MBA’s have been taught to “manage what you can measure,” but unfortunately, what’s most measurable in life and in business isn’t usually what’s most valuable (think Mastercard’s “Priceless” commercial). Conscious capitalists recognize that intangibles like brand value, culture, and intellectual property are making a mockery of the 500-year old tradition of the balance sheet where these valuable assets can’t be found as line items. The good news is that “valuing intangibles” has become the hottest topic on American business school campuses. Jack Welch’s traditional bottom-line definition of “Winning” has lost its luster.
(5) Leverage Loyalty. Leverage has been a dirty word this decade and we’ve even created new recessionary phrases like “America is de-levering herself” (that just sounds painful). Yet, the ultimate leverage in a downturn is loyalty. In today’s “word of mouse” era in which social media and Web 2.0 sites are the primary means that people use to tell their friends and colleagues about their favorite (or least favorite) products or companies, reputation and loyalty have become the primary sustainable competitive advantage for companies. Tech-savvy leaders like Tony Hsieh at Zappos (who has tens of thousands of followers on Twitter) have created an evangelical collection of customers that is leveraged into market share momentum.
We may be entering an era of Karmic Capitalism when business realizes what goes around, comes around. Let’s hope that the captains of industry realize that noblesse oblige (nobility is obligated) – a century’s old concept – should be applied to the business world. Since corporations are treated as if they are a body, they should also have some of the obligations of citizenry in terms of what they give back and contribute to the good of society. And, they should be held accountable for operating in this fashion.
[originally posted July 27, 2009 on the Huffington Post]
A is swallowing Z in a classic case of KC. Confused? In case you’re just coming back from vacation, Amazon is acquiring the online shoe and apparel retailer Zappos for something between $850 and $925 million, a very handsome sum considering the depth of the recession we’re in and how it’s affecting all retailers.
What makes this so interesting? If you don’t know much about Amazon or Zappos, take a look at this link which includes a truly unusual letter from Zappos CEO Tony Hsieh to his employees and an eight minute video from Amazon founder Jeff Bezos: http://blogs.zappos.com/ceoletter This isn’t just a case of some investment bankers convincing Jeff that this was a strategic purchase during a downturn. Jeff truly admires Zappos’ service culture and he’s in love with Tony Hsieh, a CEO who’s just as obsessed with the abstract concept of “happiness” as I am. When Tony was at the South by Southwest conference in Austin earlier this year, Jeff was in the front row taking notes. The fact that this is, by far, Amazon’s largest acquisition in its fourteen year history makes this all the more newsworthy.
So, what’s Amazon getting for nearly $1 billion. Like Amazon, Zappos is one of those dot-coms that survived the earlier part of this decade and grew to almost a billion dollars in annual sales. They’ve thrived in a segment of the online retail biz that Amazon hasn’t been able to crack: apparel. And, due partly to Zappos’ liberal shipping policies and partly to the company’s well-documented customer-centric approach to business, Zappos has evangelical customers and lots of marketplace momentum.
But, there’s something even more abstract at work here that comes through in Jeff Bezos’ video. Amazon is buying Zappos’ unique, positive-spirited culture and letting them remain as a truly independent entity. Tony Hsieh has built a company based upon the principles of “karmic capitalism.” He realizes the power of capitalism as a business model, but he thinks most companies are too focused on the short-term and that they need to take a “what goes around comes around” perspective on how the company treats its most important constituencies: its employees and customers. Jeff Bezos started Amazon with that same spirit and he can smell the intangible value in what Zappos has created in the marketplace.
I had the good fortune of spending a couple of hours with Tony at the TED Conference earlier this year. Many colleagues who’d visited Tony at Zappos’ headquarters in suburban Las Vegas had told me that my book, PEAK, was prominently displayed in their lobby and that Tony regularly quoted some of my Maslovian principles. Our initial meeting and follow-up conversations have given me great confidence that there’s a new generation of younger CEO’s who are dedicated to focusing on doing business in a new way, focused on the higher needs of their key stakeholders. Congrats to Tony and the Zappos team. They’ve proven that “karmic capitalism” isn’t just a catchy cliché, but it’s also a very effective means to run a business and cash out at an extremely impressive return on investment. Warren Buffett must be smiling!
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 (firstname.lastname@example.org).
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.
It’s amazing what kind of revelations you can have 30,000 feet in the air (that’s a true “peak” experience). Last week I had the pleasure of helping Whole Foods Market Founder and CEO John Mackey with his first annual Conscious Capitalism conference in the hill country outside Austin. This aspirational event brought together thoughtful CEO’s, academics, investors, and others who wanted to discourse on where Capitalism 2.0 should be going, especially given how broken it’s become this past year. I gave a speech on how to create peak experiences for your employees, customers, and investors and really enjoyed my time there. But, frankly, I was preoccupied and not sleeping well during this three day trip. The fact is this damn economy was messing with my peace of mind as there’s no doubt that the hotel and restaurant industry are feeling the heat from people’s discretionary choice to cutback on spending (in fact, travel and eating out were #1 and #2 in terms of what people expect to cut back on in 2009 with regards to their personal spending). So, rather than paying attention to all of the interesting conversations that were going on, I was wedded to my Blackberry and cell phone working out a bunch of challenging situations associated with our various businesses.
Then, I caught an early flight out of Austin to Dallas so that I could connect with a Southwest flight to St Louis where I was scheduled to make a speech. This added a little more disquiet to my brain as just three months ago I was scheduled to make two speeches in St Louis and I collapsed after the first one and had a bit of a health emergency. So, I was wondering if this Maslovian man was going to have a Pavlovian dog reaction to being back in St Louis. Amidst all this clutter in my brain, I had a “divine intervention.” As the flight was in midair, I saw this tall man – who looked just like the Gary Kelly I’d seen in the Southwest in-flight Spirit magazine – walking down the aisle handing out peanuts and chatting up the customers. When he got to me, I told him I needed to meet him in the back of the plane (which wasn’t difficult as we were sitting virtually next to each other in the back). For the next few minutes, the Chairman and CEO of Southwest Airlines and I had a much-needed conversation.
First off, when I’m giving speeches, there’s no company in the world (other than maybe Joie de Vivre) that I cite more often than Southwest in my speeches. Secondly, there was a photo of Southwest Founder and former CEO Herb Kelleher sitting behind my desk on the wall for 3 years during the depths of the dot-com debacle. I frequently asked myself, “What would Herb do?” when I was struggling with a decision. And, I often use Herb as an example in my speeches talking about how he hands out peanuts to customers when he flies his own airline. So, to have taken an earlier flight and been the witness of Herb’s successor handing out peanuts (I never got the pleasure of seeing Herb do that in person) told me that it was time for me to redirect my attention from the woes I was focusing on to the lesson I was supposed to learn. Gary Kelly told me about how the economy is pummeling the airline industry, but he said that Southwest is using its strong culture to weather the storm. For himself, he really appreciates passing out the peanuts on a flight and spending time with flight attendants and their customers. It reminds him why he got in this business in the first place.
So, just remember that fear drives people to their survival needs at the bottom of Maslow’s Hierarchy of Needs pyramid. You can spend all your time in that fear place – as I did at the Conscious Capitalism conference – or you can do your best to assure your survival needs are addressed and then pay your attention to the higher needs of your key stakeholders. In a downturn, peak performing companies differentiate themselves by addressing those higher needs and creating deeper loyalty with their employees, customers, and investors. I experienced that two nights ago at our JoyFest, an event we easily could have cancelled due to the economy. We invited our most avid Joie de Vivre cheerleaders (who are our most frequent customers as Joy of Life Club members) and our biggest corporate accounts and we had a love-a-thon at the deYoung Museum in Golden Gate Park where we got a private showing of the new Yves St Laurent art/fashion exhibit and then a sexy, upscale cocktail party up in the deYoung tower. As many of the 150 attendees said to me, they really appreciated how much we clearly appreciated them. As one person said to me (who has stayed in 14 different Joie de Vivre hotels), “What goes around, comes around. I’m going to go back and tell all my friends and business colleagues about JdV as during this recession, word of mouth is more important than ever.” Paying attention to your key stakeholders pays you back!
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.”
OK, it’s that time of year when we all become transactional. We overstuff our bellies on Thanksgiving Thursday and then overextend our credit on Black Friday when America’s malls remind us that capitalism is alive and kickin’ in the good old US of A. But, what if a retailer were to take a more transformational approach to their customers during this busy time of year? Or, what if you or I were to purchase experiences rather than possessions as a way of gifting our relatives and friends?
Abraham Maslow suggested that we all aspire to self-actualization in the course of our lifetime after we’ve had our base needs met. In my book PEAK, I suggested that peak-performing companies move beyond the transactional nature of most customer relationships at the bottom of the pyramid so they can address their customer’s higher needs (which are often unrecognized or unspoken by the customer). A great company creates peak experiences for their customers in a way that almost transforms them into a self-actualized customer.
I was reading the SF Chronicle today where I saw a Business page cover story on how Apple is remaking their already-successful retail stores. The first line of the article is “Not a cash register in sight.” Ron Johnson, who runs Apple’s retail stores worldwide (and is quoted in my book), tells the reporter, “We try to pattern the feeling to a five-star hotel. It’s not about selling. It’s about creating a place where you belong.” Apple’s “Genius Bars” (friendly technical support, especially for those self-actualized Apple customers who pay $99 annually as part of the Procare program which allows them one hour a week of extra training and attention) have been expanded. It’s almost like a hotel that came to realize they were making big bucks on their lobby bar so they decided to extend the bar. Well, at Apple, they’re dispensing wisdom, not cocktails, but they’re finding this relationship-driven approach to selling computers to be highly profitable. It’s a far cry from Radio Shack.
In fact, Apple has now banished the cash registers so that their “concierges” who help customers find their products can just whip out a portable scanner on the spot in order to facilitate the payment for the goods. Notice that the transaction is the last step of the process and is completely understated. Has this worked? You bet it has. Conventional wisdom in 2001 (when AppleHi ch opened their first stores), suggested computer retailing was passe as Dell’s “Direct” approach was going to take over the world and Gateway was going out of business. Yet, Apple became the fastest retailer of any kind to ever make it to $1 billion in sales. Now, they’re up to $4.2 billion annually just in retail sales.
So, how can you apply Maslow’s Hierarchy of Needs to your shopping habits this holiday season? First of all, just remember that most of us have way more stuff than we need and we have precious little storage space to “stuff” all this additional stuff we’re going to receive these next few weeks. Take a lesson from MasterCard – who frankly would appreciate it if we all bought billions of dollars of useless crap for each other – which reminded us that what’s most important in life is what’s “Priceless.” What’s priceless in our lives isn’t the material possessions, it’s the experiences and memories we create with our loved ones. The big gift I give the 11 members of my extended family each Christmas is an annual family vacation. Last year, it was an art-themed weekend in LA. This year, we’re going (along with an additional 3 family members) to the Ahwahnee Lodge in Yosemite where we’ll have a traditional white Christmas and experience the legendary Bracebridge 17th century English yuletide ceremony (which has been celebrated annually for 80 years at the Ahwahnee and has to be booked a year in advance).
If you want to create a transformational holiday experience – as opposed to the typical transactional approach – consider the following three questions: (a) what kind of unique experience can you create that your family or friends will remember for years? (b) what kind of gift can you give that will self-actualize your gift recipient (for example, how about donating $100 to a teenager’s favorite cause?)? or (c) what’s an educational experience you can gift someone that will boost their sense of esteem and will benefit them for years to come? In sum, as the feverish shopping season kicks into gear, consider a new approach to creating a more meaningful season of giving.