What Makes a Company Great

I was at a very interesting meeting hosted by Brett Olinger and Susan Howington, founder, Power Connections on Dec. 16, 2015.   There were about a dozen high level executives around the table with titles ranging from VP to COO to CMO to CEO.  Susan got us together to talk about business issues and she asked a relatively simple question: What makes a company great? And the subordinate theme of what kind of company would you want to work for or build?

As a tech executive and one involved in the entrepreneurial eco-system in southern California, I would have imagined that I would hear about things such as the latest and greatest technology that captures people’s hearts and minds.  Or maybe I was hoping to hear about the great opportunities for career advancement or companies doing social good.

I did not hear of specific industries, technologies, functions, unique characteristics of the leaders or anything that you might glean from an employee survey.  Remember the ones commenting have been and are successful executives.   After listening intently – and contributing as well- I captured their thoughts into three areas:  Culture, Leadership, and Customer Focus.   And I have to admit that is probably the order of importance because to me, culture is a platform upon which to build and enact leadership and a customer philosophy.  As you read the following, just ask yourself about the companies for which you worked.  What made them good?  Why did you like coming to work?  What drove your passion?  What made these companies great for you?

Culture

Culture was the number one item.  Culture was a necessary but not sufficient condition for making a company great.  Think about Tony Hsieh of Zappos.  He has instilled a clear culture in that company that focuses on the customer.  Do what is right for the customer. Certainly his vision and bent is the customer.  But without a cultural underpinning, Zappos would not be as successful as it has been.

Culture is also unique to a company.  It is hard to duplicate and is normally set by the CEO.  Think about other companies that are successful and have a truly unique culture.  Think about Disney and the culture about Imagineering.  Think about Intel and the culture of innovation.  Think about 3M and their culture that they encourage people to invest their time on new ideas.  Without a culture of innovation and support for innovators, many companies may not achieve success.

We discussed other components of culture as well.  Those components included telling it like it is……. but respectfully and constructively.  (As an aside, I can certainly relate to this coming from Brooklyn, NY and have seen direct cultures like New York and oblique cultures like I have seen in the Mid-west.)  Another element was pushing employees to the next level, i.e. making them believe they can succeed and giving them opportunities to succeed.   In the process of encouraging people, the culture must also accept failure (fast failure is preferred) and must set up a reward system for those that are successful.

Culture is also critical as the underpinning of being customer focused.   Think about a company that is just focused on the bottom line versus a company that is trying to help a customer and wanting them to be happy.  Think about your experience with Zappos.  Or if you have web service or webhosting from 1and1, think about the great customer service you have received from them.  Was it easy to talk with the company and its reps?  When they talked with you did you believe that you were the only person in the world on their mind or did you feel that you were imposing by asking them a question?   We heard a story this morning about how Steve Wynn chose people to work for him.  Applicants were told to go to another part of the building and when they got there, Steve was sitting behind a desk, rose to greet the applicant and wanted to see their reaction.  If they were friendly and responsive, they were hired.  True?  I am not sure but it makes a good story.

Leadership

We all know that leadership is critical.  Leadership starts with the CEO and filters down to people in the organization.   The leader sets the culture.  When I was head of marketing at US Cellular, our founding CEO, Don Nelson, was a great leader.  He selected an eclectic group of people, set the objectives and measured results meticulously and religiously.  But what distinguished him was his willingness to listen to his people, set and change vision and set a clear direction for the company.  The result, during my tenure was that the company grew fourfold in revenue in only five years.

Think back to the CEOs and possibly mentors you have had in your career.  What has distinguished them?   This morning, the executives around the table believed that not only did the CEO establish and set the culture for the company, in essence being the chief culture officer, but also set a clear and compelling vision for the company.  As the Cheshire Cat said, “if you don’t know where you are going, any road will get you there.”  Leaders know where they are going.

Coupled with the vision is the ability to articulate the clarity and alignment of the messages across the entire company, and in my humble opinion, do it in a personal way.   As companies grow, become more complex, and are geographically disbursed, having a common vision and alignment of messages are critical to ensure everyone is marching in the same direction.   In this case organizations become both effective in generating profits (the end game for most) and efficient in doing so.

The group believed that a great company has a servant-leader.  A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. By focusing on people first, it empowers employees to be successful.  It also has a mentoring quality enabling employees to trust the leader such that when these employees are pushed to success by the leader, they trust that their best interests, and in turn the company’s, are aligned.    To be a true servant leader, two other elements must ring true.  The leader must be authentic and must be transparent.  There should be no hidden motive or ego at play.

 Customer Focus

As a businessman and marketing executive, I have written extensively and talked about customer focus.  The customer, the one who buys your company’s products and services, must be foremost in your mind.  Companies who are customer focused truly understand the behavioral drivers of the customer and why they buy your products and services.

The executives at our meeting believed that great companies connect with the customer.  These connections may come from a better user interface, or the way they train their front line people to interact with customers.    We bandied about the concept of Customer Experience Officer because customers, who are not happy, not satisfied, become disloyal.   And, all of us recognized that retention of customers is critical to a company’s success.  Further if you connect with the customer and relate to the customer, if a company makes a mistake there are positive “chits” that have accrued over time and forgiveness by the customer of any faux pas is normally granted.

Note that customer focus relies on a specific culture.  Again, think back to Zappos or think about any experience you have had at a retail store or an online store.  Systems are critical to help achieve customer focus but in reality it is the people, those front line sales people and customer support people that guarantee that the customer is important. Most of us go to Starbucks to get coffee.   Think about your experience.  They ask your name and if you visit the same store more than a few times, the baristas and others will get to know you.  How do you feel?  Pretty loyal I would assume.

Starbucks, Zappos, US Cellular and other companies have realized something very critical.  The people who interact with the customers ARE the brand.  Leadership sets the vision and a customer centric culture is established.  Yet customer focus is executed by the people.   All of us agreed that great companies are those that have this passion for the customer, exercised by supporting a customer first philosophy on the front line.

Going back to the original question posed by Susan Howington of What makes a company great, it comes down to three areas:  culture, leadership, and customer focus.   All three are interrelated.  In short, great companies balance the needs of customers, employees, and owners.  What companies would you want to work for?  What makes a company great in your mind?  Let’s continue the dialog.

For more thoughts and ideas, feel free to contact me at dfriedman@clevelpartners.net  or visit us at www.clevelpartners.net.  I will also guarantee that if you write or call me, I will pick up the phone and talk with you.  Why?  Because we, too, love our customers and we have implemented a culture in our company of helping and sharing.

Prioritizing for the Long Run

I was meeting with another executive the other day and we were talking about his new consulting business. And as we talked, we latched on to the subject of product prioritization because this was one of his focus areas. We thought that it would be nice to share a basic tool that clients can use to help them prioritize their projects, development efforts, marketing programs and other activities that generate revenue.

It seems relatively easy to prioritize. Make a list. Rank them. Determine how much money you have to spend. Draw a line. End of subject. Now, in a small owner controlled business, it is probably just that simple- or pretty close to it. The owner can make the decision and have people execute his plan. However when a company grows and you have several “chiefs,” prioritization is not that easy. There is both the hard decision of which projects to do and the equally difficult issues of ensuring every one of your teammates (from executive team all the way down to work groups) understands and executes the plan.

Let’s look at one way to prioritize projects with this emphasis on revenue producing ones. We hear this all the time. The CEO says: “we need to grow our top line. Get people together. Get ideas. And let’s discuss what we can implement.” Is there a relatively simple way to make the decision on which projects to do and if you wind up with resource constraints which projects will fall by the way side?

Decisions can be made based on fiat, whim, or gut feel. But this company is more egalitarian, like most well run companies. Let’s say the CEO convened his executive group. By asking certain questions, it was determined that there are four attributes that are important to the executive team: Market Strategy, Financial considerations, Strategic Fit, and Competitive positioning. Let’s further assume that for each of these attributes, one or more factors can be determined which support those attributes. For example under the attribute of Market Strategy, both market need and market size were important factors. Similarly, the executive team determined several elements which supported the attributes.
All in all, a total of 10 elements were specified. If a project were rated on each of these 10 elements the executive team would be able to determine the goodness of each project. (Side note: It is easier said than done that the executive team will have to agree to all these elements and attributes. There are reasons why it is difficult to quantify not the least of which is that such a system takes away the emotion and the “gut feel” for the decision.). Once these attributes are determined, a simple system can be developed to weight each of the 10 elements from 1 (low weight) to 3 (high weight). Second, each of the elements can be scored on a 1, 5, 9 scale which correlates with specific measures that can be quantified. Finally, a weighted score – combining the weights and score of each element- can be determined. All projects can therefore be measured against each other. See the attached for the basic tool:
Basic Project Prioritization Tool

Once each of the projects is scored, an ordinal ranking can be determined. The executive team can have several options to make their final selection including a) taking the projects in sequence until all funds are used up, b) dividing the projects into quartiles and quintiles and only considering those within the top two groups, c) using 80% of the funds designated to the top projects with the remaining 20% at the discretion of the CEO or other executive, or d) variations of the preceding three options.

Prioritization is inherently difficult but I have described a tool that can be used to help the decision process. It’s not perfect and it will not work for all organizations and executive teams. But the tool can also be used as a means to get alignment on what is important in picking projects/products and instill a discipline for the company which can increase the probability of success. The reason for this is that in reviewing the projects/products each of the attributes and elements should be reviewed at each stage gate or review point.

What other tools have you used to prioritize projects and products? Did you have one tool for everything? Or do you have different tools for cost reduction and revenue producing projects? Do you have a tool for prioritizing IT projects and a tool for marketing projects? How do you allocate funds among marketing, IT, finance, product, R&D activities? These questions need to be addressed by all executive teams. And the good thing about business is that the answers will differ among different companies and in different industries. And those different answers and execution of the plan will make some companies high fliers and others also-rans.

If you need some help in developing these types of analyses, please contact me.

David Friedman