Meta-planning

As information comes to light about the Special Ops mission in Abbottabad, Pakistan, we’re reminded of the value of effective contingency planning. Military analysts will one day reconstruct the planning measures taken by the JSOC team, and we’ll learn how the project specialists succeeded despite the challenges.

For now we can only speculate about the risks and uncertainties facing the planners at key decision points. But we do know that the mission’s tactical planners had to consider two big questions at every juncture: What can go wrong here, and what do we do about it?

These aren’t the only questions the planners had to pursue. They have to question the intelligence they’re using and they have to examine their own assumptions. Guarding against groupthink is a first order consideration. These “meta-planning” aspects of the exercise are as vital as formulating the action plan itself.

Redundancy

That all of the SEAL commandos returned safely after intercepting their target — despite losing a chopper to a mechanical malfunction — shows the value of effective planning.

While the planners may not have envisioned the chopper being disabled quite the way that it was, their contingency measures called for a spare unit. Back-up choppers expanded the team’s capacity to respond to a range of potential threats.

The planners had, in fact, learned from the disastrous rescue attempt of U.S. hostages in Tehran in 1980 that was undermined by a helicopter accident. Learning from prior mistakes is essential in effective contingency planning.

Radar Love

Seasoned tacticians talk about keeping their “radar on” when planning risky operations. By that, they don’t mean being passively alert. They mean changing “frequencies” regularly to see what else might appear on their screen.  They mean an intuitive “feel” that experienced practitioners develop. Evidently, the planners of this mission kept their radar on.

This operation was surgical because of several factors: sound intelligence, planning and execution.When the details of this mission are finally unpacked, we’ll be able to take a closer look at what happened. For those of us interested in how practitioners can improve their planning of complicated, high-risk initiatives, this operation should make a splendid case study.

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Want more info for this subject?

• Former U.S. Director of National Intelligence, Dennis Blair, talks about the planning and execution of the mission with Charlie Rose. Here’s a recent post, Planning for Uncertainty, about a related tool, Scenario Planning.
• The problem of groupthink at the tactical planning level is explored in this paper (PDF) by Maj. Phillip M. Johnson of the School of Advanced Military Studies.

Addenda:

• President Obama discusses the mission, including his active role in the planning process, on 60 Minutes.
• What Happened that Night in Abbottabad, in the New Yorker.

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Using a longer lens

It’s been twenty years since the publication of Peter Schwartz’s insightful primer about scenario planning, The Art of the Long View. In the book, Schwartz makes a convincing case for using scenario planning in approaching strategic challenges of various kinds.

Schwartz, who led scenario planning efforts at Shell, Motorola, and Pacific Gas and Electric, concluded that the technique could be applied to handling the emergent complex threats that companies were confronting in the 90′s.

Since then, the world has grown radically more complex, more uncertain. Globalization and the Internet have woven together our institutions so that a crisis in one corner of the world can spread virally with far-reaching consequences.

Cascading consequences

We now live in a world where an unknown street vendor in an obscure Tunisian village sets himself on fire and a few weeks later the dictatorial regime in Egypt collapses. Those events triggered spiraling oil prices which boosted worldwide food and commodity prices with a cascade of far-reaching consequences.

While leaders can’t predict the next cataclysmic event, they must now contend with a wider range of plausible, discontinuous threats. Failure to do so can imperil their institutions.

In a world where traditional, linear thinking is inadequate, scenario planning is a platform for enabling problem solvers to explore the question: “Given what we know, and what we don’t know, what should we do now?”

That’s a significant question, but it’s not enough to simply ponder significant questions. Problem-solvers must also overcome the internal barriers – psychological as well as physical – which can paralyze organizations when the stakes are high. Scenario planning provides a context for examining assumptions and biases, and for avoiding the denial that ensues when facing existential threats.

Schwartz observes, “When decision-makers begin to look at the future, denial acts as an automatic shut-off valve: ‘I can’t consider that…’ A good scenario asks people to suspend their disbelief long enough to appreciate its impact.”

The Singapore Miracle

One of the more celebrated scenario planning cases is the Singapore story. That nation’s government first used the technique to help build its nascent entrepreneurial society in the 70’s and 80’s, and later to cope with a string of discontinuous shocks that threatened its economy including the Asian financial crisis of the 90’s.

Since then, Singapore has embedded the technique in its strategic planning efforts. Scenario thinking helped its leaders to recognize that in a region increasingly dominated by its giant neighbor, China, their nation must become an innovative technology hub. (Singapore’s mantra says it best: Anticipate change, stay relevant.) As a result, the government is investing $12 billion USD in technology R & D over five years — a 20% spending increase — to attract gifted engineers and entrepreneurs.

Lessons from the field

My own experience with scenario planning in a variety of settings has been overwhelmingly positive. It remains one of the more advanced tools in the strategic arsenal. My appreciation of the practice has only grown over time.

I’ve learned this: Convene the right problem-solvers under the right circumstances and they’ll reach a shared understanding, despite differences in perspective. Scenario planning helps organizations to recognize threats, opportunities and weak signals, and it often leads to practical solutions that everyone in the room can support.

When The Art of the Long View was published in ’91, scenario planning was deemed a novel technique for organizations facing rare and unusually complex issues. Today, most of our pressing challenges are laced with complexity — that’s our new reality.

If we’re going to prepare for what’s next, let’s bring in our sharpest minds and give them the tools to move the enterprise forward. I’m pleased to report that scenario planning is still the right tool for the job.

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As always, I’d appreciate hearing your views…

Want more info on this subject?

1. One of the more interesting critiques of Schwartz’s book is found in a video dialogue between Niall Ferguson and Schwartz
2. Here’s an insightful talk (video clip), The Singapore Miracle & Gov 2.0, by Peter Ho, Singapore’s former head of civil service, who explains his country’s work with scenario planning. Peter Schwartz is also featured
3. More on scenario planning is at Global Business Network (GBN), co-founded by Schwartz
4. Have a look at the World Economic Forum’s on-going scenario planning initiatives
5. Mats Lindgren’s ’09 book, Scenario Planning–The link between future and strategy
6. Bonus: An hour with Lee Kuan Yew, former PM-Singapore and author of ‘From Third World to First : The Singapore Story: 1965-2000′  on Charlie Rose (3/28/11)
7. Here’s a look at the Decision Support practice at my company, Osprey.

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As our society debates the need for more civil discourse, we’re underplaying the value of competing perspectives among our leaders. I’m a fan of rival leaders who can come together despite their differences to redefine their company’s mission.

For institutions grappling with deep change, there’s no better way to start than by assembling a coalition of leaders and entrusting them to set a new direction. When the stakes are high, a team of diverse, tough-minded leaders reaching a consensus can yield resoundingly productive results.

The process of reaching a consensus can often be unwieldy, even chaotic. But when stakeholders committed to a clear, common goal set aside their own narrow interests, breakthroughs do occur.

I’ve been called upon to participate in initiatives ranging from revamping an airline’s on-time performance to labor negotiations in which the company’s survival was in the balance.  I’ve learned that assembling the right people under the right circumstances can shift the thinking and reverse the course of a company.

Vision, purpose and a sense of urgency

One of the more brilliant minds on this subject is John P. Kotter of Harvard Business School. He coined the term ‘guiding coalition’ to refer to a cadre of leaders who share a common vision, clarity of purpose and an acute sense of urgency for taking action.

Why should a CEO assemble a guiding coalition when it’s much easier to merely impose change? Kotter thinks that one strong leader cannot make change happen alone. Instead, the chief executive ought to build a coalition of leaders who appreciate the enormity of the challenge and have the credibility to win over their harshest critics. A shared desire to transform the business can bind leaders who might otherwise compete uncompromisingly.

What can a team of rival leaders do that other practitioners can’t? Despite their differences, leaders as the stewards of the company bring a wider perspective and a longer lens view of the enterprise. They can arrive at a solution that is practical but which requires that the organization stretch to meet new demands. In the process, mutual commitment among the key players is strengthened.

In the clutch

It’s crucial to keep in mind that the conversation may, at times, get derailed. In pressure-filled situations, common ground seems to fade and intractable battles ensue.  Headstrong leaders can have a difficult time relinquishing their positions. In such moments, using a guiding coalition can seem like an incredibly bad idea.

However, under the tyranny of the clock and the pressure to produce, tough-minded leaders can demonstrate uncanny capacities for ingenuity, imagination and outright creativity. True leaders perform at their peak when the stakes are highest.

Witnessing a coalition of leaders fiercely committed to moving their enterprise forward is an unforgettable lesson in human nature.

***

As always, I’d appreciate your thoughts on this subject…

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Want more information?

John P. Kotter’s  ’08 book, A Sense of Urgency, is an excellent study on finding opportunity in crisis.

Putting this notion in a historical context, Doris Kearns Goodwin’ s book, Team of Rivals, profiles Abe Lincoln and the five key players he picked for his cabinet — four of whom contended for the 1860 Republican presidential nomination which Lincoln won. (A prior post on leadership references the book.).

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Turning the page…

Another interesting year is rapidly winding down. This year, I had the chance to work with many gifted business and tech leaders, but it was particularly satisfying collaborating with innovators in developing regions — the Sub-Sahara, the Middle East and South Asia.

It’s time for Western multinational companies — especially those in the customer-facing sectors — to enter developing markets where consumer-led growth is robust but capital and resources are in short supply.

Many Westerners have misconceptions about working in emerging markets. For example, they assume that the transfer of knowledge flows only in one direction — from us to them. But our clients in developing regions bring a keen understanding of their markets and what’s needed to elevate their businesses. We typically learn as much from them as they do from us.

Innovation Hothouses

Some of the most interesting business and technology breakthroughs are now coming from developing markets which have become hothouses of disruptive innovation. Behold the $2,500 car, the $25 business hotel room and the $25 mobile handset that provides service for just 2.5 cents a minute.

Developing innovators are finding novel ways for using mobile phones to perform vital functions like transferring money, paying bills, monitoring elections, diagnosing and treating illnesses, and buying and selling food. Each of these breakthroughs was created by inventive, driven entrepreneurs and engineers to improve the lives of consumers in their markets.

Those who aspire to work with innovators in developing regions must recognize the unique challenges that they face.  While conditions are generally improving, operators are often grappling with government red tape, dodgy distribution networks and difficulty securing credit. They demonstrate in quotidian ways how to overcome the kinds of constraints that would crush many Western enterprises.

Price of Admission

To contribute to and benefit from opportunities in emerging regions demands the wise use of capital, talent and resources. Understanding the market and culture are essential. Patience and perseverance are crucial.

Working in these markets also obliges us to give a portion of our time and resources to lend a helping hand where it’s needed the most. Whether that means donating digital equipment to bridge information gaps or mentoring a new generation of leaders, each of us can have a lasting impact.

Serving developing markets isn’t for everyone. For those who are fiercely determined to make a meaningful contribution on a global stage, the rewards outweigh the inconveniences.

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Want more?

I suggest a book, Winning in Emerging Markets, by two Harvard professors, Tarun Khanna and Krishna Palepu. They write, “Companies with ambitious emerging market growth strategies have no choice but to engage deeply with these economies – but the complex nature of these markets has made success elusive.”

Also have a look at McKinsey On Africa — a continent on the move, a “box-set” of essays and interviews about the opportunities and challenges in Africa.

In prior posts I’ve looked at how mobile phones are being used in emerging markets including in this tribute to Professor C. K. Prahalad who died earlier this year. His sage advice resonates. “Focus on becoming part of global citizenry. In exchange for the opportunity to participate everywhere/anywhere in the world you have the obligation to do something productive, which will improve the world.”

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A recent Ewing Marion Kauffman Foundation study revived the term “gazelle companies” to describe the young, rapidly-growing U.S.firms that are producing the majority of new jobs in the U.S.  The report recommends that policy-makers nurture Gazelles to stimulate job growth at a time when unemployment is high.

I’m interested in another class of companies—agile, well-run firms in emerging regions like the sub-Sahara. Like their Western counterparts, they’re creating a disproportionate number of jobs. But these young African companies are playing a more crucial role than gazelles do in driving market growth.

To belabor the metaphor, I call them Impalas, after the lean, swift gazelles indigenous to Africa. Impalas provide technology-enabled and outsourcing services to a growing number of multinational (MNC) service providers – mobiles, airlines and banks – in Johannesburg, Accra, and Nairobi, etc.  They share many of the characteristics of gazelles, but there are some notable differences.

Impalas make it possible for their MNC clients to devote more of their limited resources to building their core capabilities. For example, telecoms can concentrate on expanding their network infrastructures and building their brands while their resourceful Impala partners supply customer care and data services.

Business process outsourcers (BPOs) and large enterprises work together around the world—this practice is commonplace. Africa is different because it’s growing so rapidly. Only China’s consumer markets are growing more quickly.

Despite it’s rapid rise, the sub-Sahara’s growth trajectory is unsustainable because of  acute capability gaps in the region.  Companies are struggling to meet the needs of their customers. As African markets mature, Impalas are providing vital, high margin services like customer care, back-office support, and data analysis that require advanced technical and managerial talent.

Just as U.S. policymakers are advised to remove barriers to gazelles’ growth, African governments ought to lend a helping hand to Impalas which are creating jobs and raising standards of living for their citizens.

That’s been happening in economic hot spots like Botswana and Mauritius, but elsewhere on the continent, progressive economic policies are scarce.  Lack of access to capital and excessive regulatory burdens stifle young African companies.  Policymakers in Africa are missing a critical opportunity to move their economies forward at a time when the continent is poised for more growth.

There is an opportunity here for Western companies that can see and are willing to seize opportunities in Africa.  Partnering with Impalas on knowledge-exchange projects can be rewarding. Impalas benefit from acquiring tools and skills that Western companies have developed, and Western companies can become players in one of the most dynamic markets in the world.  Of course, it’s imperative to choose such opportunities wisely.

***

As always, I’d love to find out what you think about this subject…

Image courtesy of Daryona

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The term ‘gazelle’  was coined by David Birch of Cognetics (c. 2001) to describe a class of companies that “run fast and jump high.”

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One of the best things about my work is what my colleagues and I call the “hat trick”.  In sports like cricket and hockey, a hat trick is accomplishing a feat three times in a contest.  I’ll explain what a hat trick is in my world and why it’s thrilling to pull one off.

Our mission is to help clients enable their customers to enjoy richer, more satisfying service experiences.

A hat trick is when we not only help clients to better meet the needs of their target customers, but also enable them to increase customer loyalty and revenue. We do all this while also cutting service costs — sometimes up to 20%.  Almost every assignment offers hat trick potential.

Generally, companies recognize the benefits of improving their customer touch points. But behind the touch points, and where we concentrate, is an elaborate ecosystem of people and information distributed across the company’s organizational, geographic, and technological boundaries.

Systems perspective

‘Service system’ refers to the dynamic interplay of people and information used to control customer touch points.  I’m convinced that the service system is a company’s most powerful value-creation engine. High performing companies know that fine tuning service systems to meet the needs of target customers pays big dividends.  We help them figure out how to do it quickly and efficiently.

Our systems perspective enables us to see a client’s business processes holistically rather than merely focusing on particular components.

Systems thinking has been around for a long time, but many companies are built around managing functions — a model of operations management that has its roots in the manufacturing era. Think of an auto plant where each functional unit adds a new component to the chassis as it moves along the assembly line in a linear fashion.

But today’s service processes don’t function like assembly lines. Instead, they operate concurrently and interdependently, transcending traditional organizational boundaries.  Processes must not only operate together cohesively, they must also continually improve the way they function together.

The systems paradigm is universally applicable regardless of the company’s business model or size. It applies just as well to Fed-Ex and Amazon.com as it does to a family restaurant, though the scale and complexity of enterprise-grade service systems are obviously greater than those of smaller businesses.

In larger organizations, processes within the service system are like islands linked by bridges which are seldom joined in ways that are as simple or as seamless as they can be.  In many cases, service systems include processes that are handled by partners that sit outside organizational and even geographical boundaries.  That’s why it’s critical to see, and help others to see, the whole picture.

Four questions

How do we begin? To understand the structure and relationship of processes within a service system, we ask four basic questions:

1. What is being done?
2. Why is it being done?
3. Who is doing it?
4. How is it being done?

After asking stakeholders these questions and probing, we produce a visual map of the service system to enable stakeholders to see patterns in the value creation chain.

By depicting service systems visually, we can identify sources of untapped value and also spot activities that add little or no value. When the stakeholders see how processes work within a larger system, they can more readily see how people and information interact to create value.

It’s fascinating to watch a room full of stakeholders seeing a map of their service system for the first time.  Most “process owners” find it instructive to see how they fit into the overall value-creation process. The mapping exercise helps everyone determine the direction and scope of changes that lead to creating more value — improving customer experiences while saving money.

No two problems are alike. But it’s nearly always possible to reduce complexity, and the savings can fund targeted service improvements.

In the end, the company becomes more competitive and profitable, their target customers enjoy a better experience and, of course, my team and I are thrilled. What’s not to love about a hat trick?

***

As always, I’d appreciate learning your perspective on this subject.

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Want more info on this subject?

I recently re-read Peter Senge’s ’94 classic on systems thinking, The Fifth Discipline, and it’s remarkably applicable the challenges of our knowledge-based, global service economy.  It’s still one of the most influential books on the subject.

I’d also suggest a current (2010) book, Systems Thinking for Curious Managers, by Russ Ackoff (“the dean” of systems thinking).  I’d also recommend his insightful paper (PDF), On Why Few Organizations Adopt Systems Thinking.

Related:

I’d also suggest Roger Martin’s new book,  The Design of Business which cites case studies of design-oriented strategic transformations made at P&G, RIM, Cirque du Soldier, etc.

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Downtown Cape Coast, Ghana

Pulsating business scene

I spent the last couple weeks on assignment in Accra, Ghana. On this trip, I’ve seen more growth than any time since my company started working there in ’07. This is a period of unprecedented business activity and promising new projects within and beyond the mobile sector.  Meanwhile, new competitors from around the world are streaming in. This corner of Africa’s business scene is pulsating.

Astute businesses here are taking steps to preserve their client base and deepen relationships with their customers. We’re privileged to work with a new generation of African business leaders with the courage and determination to transform their offerings to meet the needs of an emerging class of consumers.

These are exciting times to work with African business leaders who take seriously their mandate for investing in new technologies and business practices.  We’re helping them gain competitive advantages by improving the service systems that support touch points, by adding new service channels, and by harvesting business intelligence, among other initiatives.

Building competitiveness

The most effective strategy for businesses to gain a competitive edge here is to understand and meet the customer needs better than their rivals.  Forward-thinking leaders here know that competing on service will help preserve their customer base and attract new customers even as the marketplace grows more crowded with aggressive new entrants.

Developing insights about customers’ preferences and purchasing drivers helps companies here achieve competitiveness as well as profitability.

It also creates jobs. Thriving regional businesses are Africa’s greatest engine of job creation and economic growth.  That’s why we’re committed to collaborating with leading African businesses, knowing that their success means more jobs and higher living standards across the region.

What it takes to work here

This question comes up frequently in my circles. I think Western companies operating here require a distinctive set of leadership and communication skills. Traditional business skills are necessary but not sufficient to address the complexity and scale of challenges on this continent.

But what’s needed for Western companies to operate effectively in this environment? We’ve explored this question with business leaders in various sectors as well as academics, entrepreneurs, and technology innovators.

Our conclusion is that it’s not enough to bring an open mind. We must be skillful listeners. That means checking our assumptions at the door and listening with the intention of gaining deeper insights about the market and, most importantly, the customer.  Deep collaboration with partners and clients is key.

Africa’s dynamism and complexity require going beyond merely tolerating ambiguity. Ambiguity, a ubiquitous feature here, must be embraced.  “Leaning into” uncertainty is critical to problem-solving in this market.

It’s critical to drop the need for control, otherwise it’s tough to handle the inherent ‘push-pull’ of a region that’s steeped in tradition while it grows so rapidly.

The ability to consider competing, often “fuzzy” options helps us work with stakeholders here to produce the imaginative, yet practical solutions that the region demands.

Finally, operating in the region requires extraordinary levels of patience and perseverance.  Change rarely happens in sweeping strokes here. Instead change occurs through “successive approximations”.  One step forward, two back but always moving ahead.  Patience — never my strongest card — is essential.  (Note: I’m working on it.)

People, Process and Technology – Redux

Succeeding here requires mastery in choreographing people, process and technology, and we help clients focus on all three dimensions — what we refer to as “service systems”.  Of the three, ‘people’ is the most critical and challenging to optimize.

Africa’s leading companies are now investing heavily in their people because they know, in the end, that this the only sustainable ‘differentiator’.

On this trip, I observed how one company in particular, a leading business process outsourcer and partner, transformed its organization into a high performance business by nurturing its talent.  It accomplished this feat by fostering competition among its teams while encouraging buy-in and autonomy among team members.

Watching their evolution over time has been both heartening and instructive. Today, I’d stack them up against any competitor in the world. This kind of innovative, customer-focused organization is poised to meet the needs of customers in any market.

Lessons from Africa

Like all prior trips to Africa, this one was a valuable learning experience on several levels.  I encountered a new generation of leaders and was impressed by their willingness to invest in becoming more competitive. The vitality of the continent’s nascent mobile-web industry is breathtaking.  Keep an eye on this exciting space…

I also learned more about my company on this journey. I’m reminded that what separates us from our peers is our passion for and commitment to producing substantial results for our clients and their customers across the sub-Sahara.  It’s energizing to work on a continent of one billion people whose economic growth is only surpassed by China, and I never forget what a rare opportunity it is.

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What do you think?  I’d appreciate hearing your perspective.

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Want more info on this subject?  You’re not alone.  There’s a plethora of books about conflicts and coups in Africa, but there are fewer resources about doing business on the continent.  I’ve previously recommended Paul Collier’s ’07 book, The Bottom Billion, which remains relevant.

In ’07, TED organized Africa: The Next Chapter, a series of talks which included the first TED conference held on the continent.  The series featured a stellar lineup of speakers on a range of topics about Africa.  Since then, TED has added new presentations about business development in Africa to the series, and  I heartily recommend it.

Here are some of my prior posts about the sub-Sahara.

I’d appreciate hearing your recommendations about resources on this topic.

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It’s a story about community and collaboration on a scale never seen before. -Lev Grossman, Time Magazine

The Urge to Connect

History shows that that when robust tools serve a powerful human drive, revolutionary changes occur. That’s happening now as social media enable people to satisfy their primal urge to connect with each another. Social media are ubiquitous, cheap, and accessible, and their widespread use is having a profound impact on business.

While the technology is grabbing the headlines, the more interesting story is how people around the world are using social media. They’re fulfilling their desire to connect with each other, forming communities in the process. The communities function like virtual beehives — amorphous, dynamic structures where members coalesce to share information.

Smart companies recognize the commercial value of communities. They treat community members more like stakeholders than consumers. Instead of broadcasting their messages at them, they engage followers in dialogue. In time, followers can be converted to evangelists.  In a hyper-connected world, evangelism carries messages fast and far, boosting the value of the brand.

Follow the Leaders…

I’ve lauded Zappos, Virgin America, and Comcast for their skillful community-building initiatives. Starbucks, WholeFoods, and BestBuy are also out in front with exemplary strategies. But, lately I’ve been impressed with JetBlue’s community-building strategy which can serve as a model for other companies.

The airline (@JetBlue) has been mastering the art of community-building on Twitter and, in the process, has grown its base of followers to almost 1.5 million.

Last August, the airline promoted its All-You-Can-Jet-Pass (for $599) to its community. To the company’s delight, the campaign went “viral” quickly, selling out earlier than expected after creating a buzz.

The campaign succeeded because JetBlue had already built a community of ardent followers where its message reverberated.  How did the company do it? The airline’s staff of rotating community managers engages followers in a manner reflective of the airline’s brand personality. Their tone is informal, conversational and hip — an attitude particularly suited for Twitter that traditional airlines can’t match.

The airline hasn’t been afraid to experiment in this space either. They’re learning about their community based on trying successive low-cost, low-risk campaigns.

To herald its new NYC-Barbados route, the airline announced a contest where participants take a photo in front of a New York landmark that incorporates both Barbados and JetBlue. The top 20 receive tickets to a concert featuring Rihanna, a popular Barbadian-American singer. JetBlue is counting on the community to spread the word.

So far, JetBlue’s social media strategy seems to be resonating with its followers. The size and influence of their community is substantial and growing rapidly. And, they’re harnessing the power of the hive.

Three Lessons from JetBlue

What can we learn from JetBlue’s success? Here are three things:

1) “Engage with” rather than “broadcast to” followers

2) Experiment to find out what works

3) Above all, stay focused on community-building

For me, social media stories always raise more questions: What can be done with new tools that couldn’t be done before? What else can we learn from leaders? And, how are they dealing with the new set of challenges that come with the territory?

One thing seems certain: for companies with the curiosity, imagination and the good sense to ease up on the reins-of-control, this is an interesting and promising space.

What do you think?  As always, I’d love to get your take on this post. What community-building “masters” would you cite and why?

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Want to learn more about this subject?

Read Clay Shirky’s book, Here Comes Everybody, about which he writes:  “… one of the things I most hope readers get out of it, is an excitement about how much experimentation is still possible, and how many new uses of our social tools are waiting to be invented.”

The book explores the broader context of communities including the sociological drivers. Here is a brief excerpt:

Human beings are social creatures—not occasionally or by accident but always. Sociability is one of our lives as both cause and effect. Society is not just the product of its individual members; it is also the product of its constituent groups.

The aggregate relations among individuals and groups, among individuals within groups, and among groups forms a network of astonishing complexity. We have always relied on group effort for survival; even before the invention of agriculture, hunting and gathering required coordinate work and division of labor. You can see an echo of our talent for sociability in the language we have for groups; like a real-world version of the mythical seventeen Eskimo words for snow, we use incredibly rich language in describing human association.

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Over the last few weeks, my colleagues and I presented value propositions to separate audiences in Europe, Africa and the Middle East. Clients in each of these markets face unique challenges and opportunities to be sure. Our offerings addressed their different needs, but our approach is fundamentally the same everywhere.

Our work consists of three steps:

1)      Develop a better understanding of customer needs by getting closer to customers and engaging them wherever possible,

2)      Use customer insights to continually improve offerings,

3)      Deliver a customer experience that’s better than the rest.

The good news is that these steps apply to clients everywhere, despite cultural variations. The not-so-good news is that succeeding with these steps is almost impossible unless there is substantial buy-in at the highest level in an organization.

We’ve learned that it doesn’t pay to work with companies that aren’t “customer-centric,” no matter how attractive the opportunity appears on paper.

Let me restate the lesson. If the person or team that sets the tone for the organization doesn’t see the inherent value of improving the customer experience, there is little that our interventions can do to move the performance needle.

Putting it another way: the organization’s “champions” must know, at the time that we’re presenting our value proposition, that it pays to improve their customer experience.

This is our “smell test”.  And, it’s crucial to run this test early in the conversation with a client—the earlier, the better. When we encounter a prospect who doesn’t pass the test, the smartest move is to politely step away from the table.

The  opportunity costs of  choosing inappropriate assignments can sink a company.  Our organization thrives when we concentrate on assignments that improve the way our clients relate to their customers.

Let me be clear. We’re not looking to avoid tackling difficult problems. Working though vexing challenges keep us sharp;  they give us the confidence to set our sights higher.  Looking back, partnering with the “right clients” to solve daunting challenges have been our most satisfying and beneficial assignments.

Who are the “right clients”?

For us, the “right clients” – whether they’re in Baltimore, Brisbane or Berlin – know they’re in the business of serving people.  Whether they’re airlines or retailers, they know that winning the hearts and minds of their customers is the true test of a market leader.

Once we recognize that a client accepts this principle, our mission is clear: help them out-perform the competition.

That’s what we do.

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As always, I’d love know what you think.  How does your company choose which opportunities to pursue and which ones to avoid?  Have you made exceptions to your selection criteria?  If so, how did that work?

Related:

Want to know more about Opportunity Costs?  www.investorwords.com offers this definition:

“The cost of passing up the next best choice when making a decision. For example, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose the asset could have been used for.

Opportunity cost analysis is an important part of a company’s decision-making processes, but is not treated as an actual cost in any financial statement.”

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“The formula is simple and it’s reduced to four words every kid in the world knows: Tell me a story. It’s that easy.” -Don Hewitt

Last week, Don Hewitt, founder and long-time producer of 60 Minutes, died.  He’ll be remembered, among other things, as an impresario who created one of TV’s most successful programs.  There’s a potent lesson for all of us in his “storyline”.

Hewitt’s vision and instincts culminated in a new, highly successful form of entertainment known as the “news magazine”. As important as that accomplishment is, his greatest feat may be his proving that story-telling is the key to success, not only in TV, but in every medium.  We, in business, have much to learn from Hewitt’s dogged pursuit of the story.

Before 60 Minutes came along in 1968, few people in the news business recognized, let alone harnessed, the power of story-telling to register with the audience.  “Hard news” was treated as serious and important, and it was distinct from lighter, but more popular programs.

Hewitt, aiming for high ratings, wanted to present news-based information that also resonated with viewers.  Like Shakespeare and Chekov, he understood that the shortest distance to an audience’s heart is through telling stories, especially about people.

On Sunday, 60 Minutes devoted its entire program to remembering and appreciating the man whose singular focus was “making the story better”.  It was an informative, touching tribute.  That program offers an object lesson for any of us who want to carry our message to a wider audience.

Making the Story Better

For 36 years, Hewitt ran 60 Minutes like an independent fiefdom within CBS. Every correspondent had his or her own producers who competed with one another to find and present material that mattered to viewers.  Hewitt pushed, cajoled, and corralled his staff to uncover, organize and present evocative stories.  And they did.

The correspondents didn’t focus on the issues; instead, they featured the people swept up by the issues. The most effective pieces involved people telling their own stories.

My favorite segments spotlight people convicted of crimes they didn’t commit.  Rather than merely recount what happened, the correspondents interview the subjects from their jail cells. They also talk with their family members, associates and accusers.  Each individual tells the story from their perspective. Over the course of the segment, a “narrative arc” emerges, and we, the audience, empathize with the subject. Typically, we want these hapless people vindicated.

That’s precisely the effect that Hewitt was determined to get.  He believed that well-crafted stories inspire audiences to feel differently and intensely — one way or another — about the subject. Turns out his beliefs are grounded in science.

Hard-wired for Stories

Stories are powerful because we’re “hard-wired” to respond to them. Psychologist Jerome Bruner said that kids as young as two years old, “understand the stories that their families tell them, and they start to tell their own stories, and in particular start to tell stories to themselves as part of their first efforts to make sense of their lives.”

Brain imaging now shows that people are highly stimulated when they experience a story.  In fact, individuals construct mental simulations as they experience and find meaning in stories.

We flock to films, theater, and novels because we respond deeply to their storyline.  The most successful fiction and non-fiction writers know this. Their stories answer the questions, “What happens to the hero, and why?”

To our detriment, many of us in business don’t fully appreciate the power of story-telling. Even our better reports — exacting and accurate — lack a storyline and fall short of capturing the reader’s imagination. Hence, we often fail to motivate the reader to take the action we desire.  Wasn’t our aim to move the reader to action?

Lots of books and blogs exhort us to tell stories. But, the story of Hewitt’s single-minded pursuit of telling the good story and the effect it has on audiences is far more persuasive. His story illustrates that it’s not enough to merely inform the audience to resonate. We ought to tell them a good story…

As always, I’d love to hear your views. What’s your story about story-telling?

_________________________________________

Want more information about story-telling?

Take a look at Seth Godin’s piece for Ode Magazine, “How to Tell a Great Story”. Or, read the book, Made to Stick- Why Some Ideas Survive and Others Die… by Chip and Dan Heath.

Don Hewitt’s 2002 autobiography is Tell Me a Story.  It begins: “New Rochelle, New York, could have passed for a small town and did when George M. Cohan wrote about it and sang about it in the 1906 musical.”

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It’s obvious that people like being shown appreciation, but there’s more to being appreciated than meets the eye. Social scientists say we’re hard-wired to respond powerfully to appreciation. In fact, the quest for acceptance and appreciation may be one of our stronger drivers.

When we’re validated by others, we’re inclined to bond with them. I call this the Validation Principle, and it’s one of the keys to building durable customer relationships.

Regardless of the product or service we’re offering, people are more likely to stick with our brand if we demonstrate genuine appreciation for them. The keyword here is ‘genuine’.

Emotionally intelligent business people have long understood and applied this principle. Now, social networks, like Twitter, make it possible for companies to show appreciation for their customers while also growing communities of loyal followers in the process.

Virgin America, JetBlue, and Comcast are examples of companies using Twitter to recognize customers for their loyalty.  One-by-one, big brands are jumping on the social media bandwagon.

I’m most impressed with how Zappos does it.  I started taking notice of Zappos after hearing their CEO, Tony Hsieh, at a recent conference.  He recognizes Twitter’s potential as a powerful customer engagement tool.

The company set up a Twitter micro site with a Beginners Guide to Twitter and a leader board where employees are ranked by their number of followers.

Zappos brings some natural advantages. For starters, a strong customer focus is embedded in the company’s DNA. Zappos chooses employees with strong relational skills, gives them the means for interaction, and provides thoughtful guidance without inhibiting their sense of expression.

However, Zappos’ most effective tool may be Hsieh’s own relational skills. Hsieh uses Twitter to “connect with” rather than “market to” his followers.  Through his modeling and encouragement, Zappos has mobilized 440 employees to show their love for Zappos’ customers using Twitter and other social media tools.

Unlike a lot of companies whose message is “Gee, look how cool we are”.  Zappos’ message is “Wow! Look how cool our customers are”.

The result? Zappos customers like being recognized for their loyalty. Many become evangelists who serve as Zappos’ de facto marketing force.

Zappos is a paradigm for how companies can use social networking to build loyal followers.  Other models for leveraging social media to boost customer loyalty are bound to emerge.  Which companies will find the most inventive ways to validate customers?

Twitter is a great channel for showing the people we serve that we appreciate them and that our success depends on it. As companies figure out how to use Twitter to validate their customers, they should discover that they have a powerful and cost-efficient customer loyalty tool at their disposal.

What do you think?  I’d love to hear your perspective.  Is it practical for companies to use social media to show their appreciation for customers?  If so, how would you recommend they go about it?

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Want more on this subject?

Read a related post on the role of relational competencies like empathy in business.

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During uncertain times like these, having a trustworthy brand is a strong competitive advantage. Yet few companies intentionally take steps to engender trust.  Organizations ought to instill trust in their brands with the same fervor that they pursue new business or cut costs.

How does trust figure into business relationships?

Social scientists believe that individuals connect deeply with people they trust.  Our desire to form bonds with those we trust is both universal and primal. Trust is necessary in forming all positive relationships, including business relationships. That affiliation extends to relationships with brands and their representatives.

One of the best definitions for trust doesn’t come from a social scientist but from mindfulness expert, Jon Kabat-Zinn. He says: Trust is a feeling of confidence or a conviction that things can unfold within a dependable framework that embodies order and integrity. That resonates because it applies to any setting. It works for any kind of interaction, human or machine, and it holds true for any industry or offering.

Customers look for order and integrity whether they’re talking to a company’s representative or interacting with its user interface. When customers find order and integrity, they’re likelier to form a relationship with the brand or company. Conversely, when order and integrity are missing from any touch points, the customer’s sense of trust is breached and it’s tough to restore.

Earlier this year, Edelman published its 10^th annual Barometer of Trust and found that trust in businesses in the U.S. and other developed economies has fallen sharply and is at its lowest level ever.  That comes as no surprise given the collapse of “cornerstone” institutions — banks, insurers, and manufacturers.

Meanwhile trusted brands like Apple, Toyota, Netflix, Virgin Group, and Zappos are outperforming their rivals.  They realize a “trust dividend” because their customers tend to spend more for their offerings, tell their friends about their experiences, and even overlook occasional gaps in their services.  It’s tough to quantify the “trust dividend,” but it’s worth a lot.

Instead of viewing trust as a powerful brand asset, many businesses engage in practices that undermine their trustworthiness. For example, companies — feeling the pressure to raise revenue — tend to exaggerate their claims, especially during tough economic cycles. Hype abounds when demand is low, but hype erodes trust.

In light of the growing trust gap, businesses are advised to step back and look at their offerings through their customers’ eyes.  Companies that fall short on trust ought to consider steps to improve their reliability.

Trust is earned over time by companies that take steps to instill reliability in their offerings.  It doesn’t happen quickly or easily, but the dividends can be substantial.

What can your company do to earn more trust?

Here are four steps:

– Focus on understanding and meeting customers’ preferences. Find out what your customers need, want and expect and be sure your offerings meet their preferences.  Convert your findings to actions at every touch point.

– Under-promise and over-deliver. Hype and “marketing-speak” undermine your brand’s trustworthiness. Dispense with the hype and fulfill your explicit and implicit brand promises.  Deliver work ahead of time. 

– Foster a culture of transparency. Building trust begins in the executive office but it must extend to the “shop floor” and to every customer-facing employee. Keep things as simple and straightforward as possible.  Open your books and let the sunshine in.  Let your customers and employees know what your company is doing.

– Make it easy for your customers and employees to share their honest feedback. Receiving candid feedback is like taking medicine. It’s hard to swallow but it helps the patient.  Let your stakeholders know that you value their honesty. Listen openly, validate their feedback, and take it to heart.

What do you think? Are your customer experiences fostering trust? How do the brands that you admire earn your trust? What steps do you take to engender trust? What are other key questions to consider regarding trust?

* Edelmen reported that perception of trust actually rose in “developing” economies, including Brazil, India, Russia, and China.

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Want more information on this subject?

The World Database of Trust by Harvey S. James, Jr., Ph.D features a variety of definitions, quotes and references about trust.

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You never know with these things when you’re trying something new what can happen. This is all experimental. ~Richard Branson

Over the years, there have been surprisingly few breakthroughs in the airline customer experience - until recently. Sir Richard Branson’s venture into the U.S. market, Virgin America, (VX) is redefining air travel by providing passengers with a fresh, distinctive on-board experience. The carrier is less than two years old but it’s quickly becoming a template for what’s possible in the future.

The choices VX is making demonstrate a “customer experience mindset” that’s all too rare in the industry. It’s evident that the VX team devoted their attention to passenger comfort and convenience. Features “baked in” to the customer experience include seats with power-outlets and USB ports. Cabins in their new A320s have soft mood lighting.

Healthy, appetizing meals designed by star-chef Luke Mangan show that the company knows what their customers prefer.  Features like these aren’t found on any domestic airline, let alone a low-cost one.

Last week, VX announced that its fleet is 100% WiFi-equipped (Gogo). They only have 28 planes, but they can boast that they’re the world’s first airline to reach that coveted milestone.

What’s most impressive is VX’s touch-screen, interactive entertainment system. The platform, known as Red, enables passengers to watch movies and live TV, play games, chat on-line with other passengers, and sample or even download MP3s from a massive digital library. Passengers can also use Red to order and pay for food and beverages which they receive “on-demand”.  For the digitally-inclined traveler, this is the way to fly.

Given the prohibitive cost of installing systems like Red on their existing fleets, it’s doubtful that any of the major network carriers will soon match VX’s “at-seat” amenities. But, the toughest feature for VX’s rivals to co-opt is its “customer experience mindset”.  These advantages could give the carrier a strong lead in the service innovation race for years to come if it stays healthy during this slowdown.

The airline serves only a handful of markets (New York, Boston, DC and the West Coast).  But, they’re big league markets where VX is attracting a cadre of loyal, well-heeled fans.  As an industry guy, I’m tipping my hat to Sir Richard Branson and VX’s San Francisco-based team for rethinking the in-flight experience, and for executing it well.

What do you think?  Have you sampled Virgin America?  I appreciate your perspective.

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Want more on this subject?

Richard Branson (Reuters, 6-2-09): “It’s unlikely all the big U.S. airlines will survive.”

Read Red Orbit’s piece (10-16-08), “Virgin America Wins Best Domestic Airline in Conde Nast Traveler’s (’08) Readers’ Choice Awards”.

Check out SimpliFlying’s series on Richard Branson and Virgin America.

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Paris Urban Pattern

I’ve recently noticed a subtle but perceptible attitude shift among Americans working in foreign markets. My overseas colleagues are noticing, too. American business people, they say, are displaying more thoughtfulness than usual. U.S. companies operating overseas seem less inclined to approach global business as though its epicenter is in New York or Palo Alto.

It’s too soon to call this a new Zeitgeist, but change is in the air. The global economic crisis, which has its roots in the U.S., may be partially responsible. I think the new vibe is also influenced by Washington’s new tone in its approach to global  affairs.  As an American doing business abroad, this is promising.

Historically, many American firms have approached business from a decidedly ethnocentric perspective–more so than many of our European rivals.  U.S. companies have missed opportunities as a result.

Things seem to be moving in a better direction now.

More Americans are coming to terms with the fact that global power is shifting away from America. It’s not that the U.S. is declining. Instead, other nations are rising. The U.S. is still a hothouse for science and technological innovation, but emerging markets are coming into their own.

We now find ourselves in a multi-polar world–one that Fareed Zakaria describes as the “Rise of the Rest“.  It’s a world where more people in other markets are well-informed and better-skilled than ever before. This is true in markets where living standards are considerably lower than ours.  The pool of business and technology talent in emerging markets is growing deeper every day. In my view, this isn’t a problem. It’s a golden opportunity, but one for which we have to prepare.

Globalization has created more homogeneous markets, but there are marked differences in the pace, etiquette and style of conducting business. These differences are more pronounced in emerging regions.  In any case, it’s immensely helpful to learn about the customs, behaviors and culture of markets where we’re doing business.  It starts by taking a considerate view of other cultures and appreciating what makes them unique. The most obvious benefit to this approach is that it helps build more durable business relationships and friendships.

How can greater respect and appreciation be demonstrated for colleagues in foreign markets?

I suggest five practices that we can undertake to improve the way we engage clients and colleagues in other cultures.  More enlightened business people working in foreign markets–including Americans–already use these practices:

1) Learn the language. At least learn enough to greet your clients but, ideally, strive for more. If your linguistic skills aren’t strong, at least how to how to greet, thank and toast your host in their native language. Go beyond merely learning “please” and “thank you”. Work on your pronunciation. Ideally, take language courses, download language lessons or–and this is my preference–hire a native-speaking tutor.

English is the language of global business, and it’s likely that your clients speak English. But, recognize that it’s often their second or third language. Never assume they understand your meaning.  Avoid slang or jargon. In any case, I suggest following up formal discussions with written summaries using direct, simple terms to recap key points.

2) Broaden the lens. Get as much contextual background information about the local culture as possible. It’s not only enriching, it helps you see your client’s challenges from their perspective. When I’m studying a new market, I gather market research as dictated by the project. But, I also try to learn about the region’s history and current affairs. I read as much as possible and talk to as many people from the region as I can before stepping foot in the market.

Learn about your client’s business culture, management practices and technology, but also get a feel for the “market context”. What’s the local business climate like? For example, many governments have recently privatized and deregulated  industries resulting in greater competition. Will such reforms continue in light of the economic downturn and, if so, how will they affect the problems you’re helping clients solve?

3) Be flexible. When booking client conferences, I observe their schedule. That means early morning, sometimes pre-dawn, conversations with clients who are 10 or more hours ahead of me. The upside is appreciative clients. (The downside, of course, is sleep deprivation.) It also means conferences on weekends with Middle Eastern clients whose days of rest are Thursday and Friday, or Friday and Saturday, and who observe different holidays. Flexibility is essential, but the rewards are substantial.

4) Integrate and collaborate. Happily, the days when a team of high-priced consultants flies into a region to fix problems for clients are over. Next generation collaboration tools like wikis are making it possible for distant, cross-cultural teams to integrate their skills and minimize project costs from start to finish. For example, our U.S. based technical team will work with a client’s process owners to develop solutions that neither team could produce on their own. Much of our team stays behind as the project unfolds. The result is a more cost-effective solution that is validated on a real-time basis by the client which also means fewer surprises.

5) Assume an attitude of humility and consideration. Approach assignments in other markets from the standpoint that the client knows what works best on the ground. Sometimes they need help seeing it from a different perspective, but their insights are valuable. My team lets foreign clients know at the start of an assignment that we recognize this fact.

An appreciative stance toward the client and their culture helps us build trust so we can move swiftly toward a more integrative solution.  A humbler, more considerate approach paves the way for a more enriching and successful assignment.

The global marketplace has undergone a seismic shift. Business people who bring a considerate attitude to their assignments in foreign markets will fare much better in a world that is now being defined and driven by talented, skillful people in those markets.

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Want more info on this subject? Read Newsweek editor Fareed Zakaria’s The Post-American World (W.W. Norton & Co., 2008).

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Let me be clear. It’s crucial to satisfy customers’ needs and preferences. It’s also vital to know how customers perceive your offering so you can pinpoint areas that need attention. But, C-SAT misses a critical piece of the puzzle. It doesn’t indicate customers’ intention to remain loyal to your brand. If they’re defecting, it doesn’t tell you why.

Studies show that customers can be reasonably satisfied with your offerings yet still switch away from your brand. In fact, they may be extolling your brand’s virtues even as they’re signing up with your rival. If they do intend to stay, C-SAT won’t tell you if they’re inclined to buy again. And, you can’t know if they’d prefer to get your service through a different channel. At best, C-SAT is a barometer of how customers perceive your brand based on their prior experiences with it.

Is Net Promoter Score the answer?

A newer metric, Net Promoter Score (NPS), is gaining steam. NPS is based on asking customers: “How likely is it that you’d recommend our brand to a friend?”  Depending on their answers, respondents are classified as “Promoters,” “Passives,” or “Detractors”.  But is NPS is any more predictive of customer behavior than C-SAT?

The answer is a resounding “maybe”. Whereas C-SAT tries to gauge the customers’ perceptions of experience, NPS measures their enthusiasm for your offering.  NPS takes aim at attitude which does tend to be more predictive of  behavior. But neither metric identifies the unique drivers that motivate customers to remain loyal and buy again so that you can take steps to influence their behavior.

Where these kinds of metrics create problems is that they give organizations a false sense of insightfulness.  Unfortunately, at a lot of companies, NPS has become the new C-SAT — a surrogate for customer insight. Like C-SAT, it’s relatively easy to collect and track over time. But many organizations are merely substituting a newer, shinier metric for the traditional, time-worn measure of service performance.  These businesses are being ill-served.

So, what’s the fix?

There’s no substitute for getting to know the people you serve. Enlightened companies engage in frank conversations  with a fair cross section of their customer base. They engage the people they’re serving as well as those they want to serve.  They talk with defectors as well as loyal customers. They ask purposeful, specific questions to understand customers’ attitude toward their offerings. And they listen intently.

Talking directly with customers is a golden opportunity if you make the most of it. Use every channel to foster genuine, two-way communications. Solicit and collect feedback before, during, and after the service experience. Make it easy for customers to respond. Ask specific questions and listen from the standpoint of  discovering new information.

Here’s a caveat: Recognize the limitations of customer feedback. For example, many people can’t readily explain their intentions, and many are prone to misrepresenting their perceptions. But these constraints don’t deter skillful  practioners from probing customers to learn what drives their loyalty and intention to repurchase.

Get involved.

Don’t rely solely on your customer-facing reps to gather feedback. Too many managers think they know what’s going on by perusing weekly feedback summaries. It’s vital to get personally involved, and to encourage your peers up and down the line to join you.

Surveys have their place if they’re well-crafted. Asking specific, purposeful questions in the proper sequence is key.  Comparing different surveys, using advanced techniques like conjoint analysis, can provide a dimension of information not available  through any single questionnaire. If you don’t have the know-how to do this, get sound 3^rd party advice.

Can you handle the truth? Engage in purposeful inquiry to uncover actionable insights — not to reinforce what you want to hear. Done properly, you’ll be amazed at what your customers know about your business that can guide you. My litmus test for inquiry is simple: If I’m not consistently discovering new things, I’m not doing it effectively or sufficiently.

Building relationships isn’t about achieving C-SAT or NPS scores. Talking with customers takes time and skill.  Purposeful inquiry requires more effort than tabulating survey scores. It’s worth it. If you’re genuinely interested in what drives your customers but rely solely on C-SAT or NPS scores as your basis for knowing, you’re probably paying a stiff penalty. Can you afford it?

_____________________

Want more on this subject?

My company, Osprey, specializes in helping global firms gain deeper insights about the people they serve. Our focus is on identifying loyalty and repurchase drivers. To read case studies or to get more info, please get in touch.  Let’s talk about your particular challenges and opportunities.

Suggested Reading:

Why Satisfied Customers Defect (’08 article) from Harvard Business Publishing.

Predictably Irrational: The Hidden Forces That Shape Our Decisions (’08 book) from HarperCollins.

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It is with the heart that one sees rightly; what is essential  is invisible to the eye. ~Antoine De Saint-Exupery, The Little Prince

Business stories about “empathy” are springing up again. BusinessWeek ran one (Empathy = Growth) last week.  Fast Company covers the subject periodically. Authors are urging readers to consider the merits of empathy despite the need to cut operating costs as demand for services declines. It makes sense for businesses to re-evaluate their customer relationships in this environment. I think empathy remains widely misunderstood and its role is undervalued in the business community.

Simply put, empathy is rooted in the capacity to see the world through the eyes of another person.  Empathy enables a provider of service to recognize the buyer’s feelings, needs, and wants in order to fulfill these drivers through various means.

I’m interested in a broad spectrum of “relational competencies,” including empathy, and how they are used in business. Skillful practitioners use these competencies to show their understanding, respect and appreciation for others.  These skills include self-awareness and various social competencies that enable the practitioner to listen to and validate customers which forms the basis of relationships.

I admit to a strong bias on this subject that stems from my work and research in this area: I’m convinced that an organization’s relational skills — meaning its collective capacity to engage customers — can be improved, and that it pays to do so.

Success depends on the company’s cultural climate among other factors. Leadership is essential. Organizations need robust, efficient service systems and analytical tools for gauging their performance. Traditional service training programs have been disappointing.  But research shows that effective learning solutions are helpful if they are properly designed, delivered and supported.

Why do so many companies struggle with this? Many suffer from a form of relational deficit disorder. They’re not facile with the “people” part of the business. They describe relational competencies as “soft skills,” implying that they aren’t essential — a message that undermines their relationship-building efforts.

Smart companies know better.  They recognize the link between relational skillfulness and customer retention, net promoter index, spend rates and other relationship metrics. They’re explicit and concrete about relational skills as a criterion for hiring, rewards and advancement.

Since its early days, Southwest Airlines’ approach has been “Hire for Attitude, Train for Skill”. The motto is now old hat. But the first time I heard that, it hit me like a sledgehammer:  Here was a company — a rival at the time — that could distill its talent management strategy in six words.

It’s no surprise that Southwest has flourished through every business cycle. During lean times, they grow stronger  than their rivals. They’ve run a tight ship, no doubt about it, but they do know how to relate to people. What’s amazing is that they operate 3,400 flights a day, yet they don’t let the noise of running an operation get in the way of serving the customer.  Their culture is “casual” and even “whimsical,” but there’s no doubt that it’s about the people.

It sounds cliché but forging stronger relationships is a winning strategy, and it works across industries and markets. It’s as true for the Belgian bank as it is for the UAE mobile operator, or the Singaporean airport. It applies to the South African resort, the British retailer, and the U.S. airline.  Relating to people is at the heart of what we do whether we sell handcrafted rugs in an Uzbeki bazaar or design luxury cars in a German high rise.

Observing service encounters around the world convinces me that people everywhere crave understanding, respect, and appreciation.  How people demonstrate that varies from place to place, but the need for feeling valued is deep-seated and universal.  If your company’s culture and infrastructure don’t support delivering your offerings with relational competency on a consistent basis, there’s work to be done.

Engaging people is necessary but not sufficient to delivering an exceptional customer experience.  Companies must deliver their products and services efficiently. Firms like Southwest Airlines that can balance relational competency with process rigor and execution have a powerful advantage over their rivals.

As more companies bring customers into the product and service design process, relational skills will become more coveted.  Collaboration with customers requires that we relate to people more skillfully.  The challenge in working with people shoulder-to-shoulder or across the globe is to understand and relate to them as we pursue common goals.  Tapping the power of collaboration requires high-level relational skillfulness.

As the world grows smaller, our ability to capacity to relate to others becomes a strategic advantage. Psychologist Daniel Goleman wrote, “The ever-pressing need to serve customers and clients well and to work smoothly and creatively with an ever more diverse range of people makes empathic capabilities all the more essential.”

Some organizations have a lot to learn about relational competency. What are the business implications? How can these skills be developed to retain customers and influence their behavior? No two companies face the same challenges and opportunities.  Firms are well served to re-evaluate their approach to relationships as demand for services declines.

As businesses focus on surviving in lean cycles, they tend to cut spending in areas that impact the customer — that’s understandable. The smart ones manage to find a balance between restructuring costs and building relational mastery. I’m betting on them to win.

_____________________

Want more on this subject?

For my money, the “go-to” resource on this subject remains Daniel Goleman. His ’98 book, Working with Emotional Intelligence (which followed his ground breaking work, Emotional Intelligence) looks at the skills people need to relate to others in the work place.  Goleman explains that emotional competencies are crucial to building successful relationships.  He supports his recommendations with findings from cognitive and behavioral research.  Goleman was among the first social scientists to discuss the correlation between emotional intelligence and success in the workplace.

Goleman offers an Emotional Competence Framework upon which his recommendations are based. His model is divided into two sections, personal competence and social competence is found below.

PERSONAL COMPETENCE

How we manage ourselves

Self awareness

Knowing one’s internal states, preferences, resources, and intuitions

• Emotional awareness: Recognizing one’s emotions and their effects
• Accurate self-assessment: Knowing one’s strengths and limits
• Self-confidence: A strong sense of one’s self worth and capabilities.

Self-regulation

Managing one’s internal states, impulses and resources

• Self-Control: Keeping disruptive emotions and impulses in check
• Trustworthiness: maintaining standards of honesty and integrity
• Conscientiousness: Taking responsibility for personal performance
• Adaptability: Flexibility in handling change

Innovation:  being comfortable with novel ideas, approaches, and new information

Motivation

Emotional tendencies that guide or facilitate reaching goals

• Achievement drive: striving to improve or meet the standard of excellence
• Commitment: Aligning with the goals of the group or organization
• Initiative: Readiness to act on opportunities
• Optimism: Persistence in pursuing goals despite obstacles and setbacks

SOCIAL COMPETENCE

These competencies determine how we handle relationships.

Empathy

Awareness of others’ feelings, needs, and concerns

• Understanding others: Sensing others’ feelings and perspectives, and taking an active interest in their concerns
• Developing others: Sensing others’ development needs and bolstering their abilities
• Service orientation: Anticipating, recognizing, and meeting customers’ needs
• Leveraging diversity: Cultivating opportunities through different kinds of people
• Political awareness: Reading a group’s emotional currents and power relationships

Social skills

Adeptness in inducing desirable responses in others

• Influence: Wielding effective tactics for persuasion
• Communication: Listening openly and sending convincing messages
• Conflict management: Negotiating and resolving disagreements
• Leadership: Inspiring and guiding individuals and groups
• Change catalyst: Initiating or managing change
• Building bonds: Nurturing instrumental relationships
• Collaboration and cooperation: Working with others toward shared goals
• Team capabilities: creating group synergy in pursuing collective goals

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