We’re deep in doubt these days. I could create an alliteration that includes the words depression, doo-doo, and darn it in it, but I’ll just let a picture (or, more accurately, a viral video) tell the story. Take a look at this video which has just been posted on YouTube and is virally making its way around the world even though the customer message is specific to only Californians.
http://www.youtube.com/watch?v=aakVmfva6lg
Misery loves company, but it also needs a chuckle. How are you using empathetic humor (or even pathetic humor) as a means of building a relationship with your core customers during a time when fear pervades? How are you using “word of mouse” to get your message out there when your marketing dollars are thin? The natural tendency during a downturn is to hunker down, which usually means “eat your spinach and don’t complain.” Add some panache to your spinach – it’s the way your customers will remember you when all your competitors are soberly slashing prices.
November 25th, 2008
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!
November 14th, 2008
Recently, I did a half-day workshop for 130 Houston entrepreneurs focused on how to use Maslow’s Hierarchy of Needs pyramid in the context of a fast-growing business (see the YouTube summary video below). In difficult economic times, people and businesses tend to de-evolve to the bottom of the pyramid as we get fixated on our Survival needs. What’s fascinating – and what really captures the spirit behind my story in PEAK – is those companies that use a recession as a means of truly differentiating themselves from their competition, whether that’s by finding alternative means of saving money so that the boss doesn’t have to cancel the employee holiday party or finding other ways to save money so that a business doesn’t have to nickel and dime its core customers or considering new, relationship-driven approaches to delivering the message of how the company will maximize net income for its investors. Those companies that create deep loyalty with their core constituencies – employees, customers, and investors – create a sustainable advantage that becomes even more apparent during a downturn.
In seeing how these Houston entrepreneurs used my PEAK pyramids to address their individual business models, I was struck by the fact that many of them realized that the shape of the pyramid could be used as a great learning tool for the people in their company. Quite often, many of us get excited about the self-actualizing qualities at the peak of the pyramid – which is where differentiation is most prevalent – but if we forget about how we address our foundational needs, we won’t have built a sustainable business model. Many of these entrepreneurs were talking about how they had to cut costs, but that the way they cut their costs said a lot about what’s important in their company. Some business leaders realize that the fastest way to save money is to cut payroll and the fastest way to cut payroll is to layoff a certain percentage of your workforce. I don’t want to suggest that layoffs shouldn’t be considered, but I do want to pose the question: are there other ways to cut your costs that won’t potentially debilitate the company from moving up the pyramid (as cycles of layoffs can lead to a workforce that is holding its breath). Could you do a 10% cut of payroll throughout the company as a means of building solidarity? Could you do a wage freeze or a hiring freeze – both of which can lead to sizable payroll reductions with time? Have you considered looking at how you can organize more efficiently? Do your employees truly get value out of their benefits programs or are there ways to cut costs there while also tailoring the benefits more to exactly what the employees are looking for?
In sum, Warren Buffett once said, “It’s only when the tide is out that you see who is swimming naked.” A recession is like the tide going out. And, being an entrepreneur with bloated expenses during a time when revenues are dropping is like being caught on the beach without your bathing suit. But, before you do something rash to cut your costs, consider the long-term consequences of your actions and know that culture is your ultimate weapon to compete effectively. Founder of Southwest Airlines Herb Kelleher (one of the heroes of many entrepreneurs) said, “There is one key to profitability and stability in a boom or bust economy: employee morale.”
http://www.youtube.com/watch?v=MtPoXjxqpAk
November 3rd, 2008
