UPDATE ON EXECUTIVE PEAK SEMINARS

In partnership with an organizational development specialist (and former VP at Ogilvy & Mather) by the name of Sue Funkhouser, we spent six months developing and testing executive PEAK seminars. In the fall of 2008, we tested three beta seminars - one focusing on the employee experience, one on the customer experience, and one on creating a PEAK-performing organization by addressing the needs of all three key stakeholders (employees, customers, and investors). Executives from large and medium-sized established companies, start-ups, and non-profits from a wide range of industries convened for a day of thorough immersion in the PEAK principles. Participants walked away with customized strategies to move their key stakeholders up the Transformation Pyramid, giving them the competitive edge to differentiate themselves from their competitors and create deep loyalty within their constituencies.

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

Add comment December 16th, 2008

HOGS AT THE TROUGH

[originally posted Dec. 9, 2008 on The Huffington Post]

Once upon a time there was an old school, midwestern company that was in the business of manufacturing motor vehicles. That company was on the verge of bankruptcy in the early 80’s as it was getting pummeled by foreign competitors that were creating more stylish, less expensive, and lighter weight vehicles. But, this teetering company led by a CEO named Teerlink remade itself, went the IPO route in 1986, and grew their American market share from 15% (1982) to nearly 50%. In fact, this company — Harley Davidson — has such a profitable business model that it has provided investors with an annual rate of return that has come close to matching its fellow ‘86 IPOer, Microsoft.

What could the Big Three in Detroit learn from Milwaukee-based Harley-Davidson? If you’re going to purposefully transform an American icon, you’d better have transformational leadership. CEO Rich Teerlink forced Harley Davidson to become an entrepreneurial enterprise that saw a deeper mission in their role of building and selling motorcycles. He hired an organizational consultant, Lee Ozley, who was a disciple of legendary American psychologist Abraham Maslow, to help Harley Davison remake its approach to internal management. Gone was the command and control organizational hierarchy and in came Maslow’s Hierarchy of Needs with its goal of creating a workplace where everyone could aspire to their personal form of self-actualization. And, once they’d repaired themselves internally, they went HOG wild unleashing a customer enthusiasm that borders on evangelism. I know this self-actualization stuff may sound a little fluffy, but it’s a true story and no one would claim that Harley Davidson attracts New Age nuts.

There’s another American transportation company that was remade by a Maslow-following leader. When Gordon Bethune took over as the CEO of Continental Airlines in 1994, the company had suffered through ten CEO’s in ten years and was in last place on virtually every metric that defined the airline industry. Bethune believed that Continental couldn’t beat the outside competition until they started dealing with the competitive challenges within the organization that were leading to a dispirited and hyper-political corporate culture. Realizing that the number one determinant of airline customer satisfaction was on-time performance, the CEO and his team developed a program that attempted to move Continental from last place to being in the top five airlines. Bethune engaged his employees in this goal and pledged to give all 40,000 of their non-managers a $65 bonus for the first month they met this goal of getting in the top five. That’s quite a monthly investment ($2.5 million) for a company that was hemorrhaging cash.

Remarkably, within three months, Continental went from last to first in on-time performance and Bethune upped the ante by paying $100 per month each time the company came in first. Today, Continental is one of the best-run airlines in America. Bethune’s comment in his book From Worst to First is sage advice for the Big Three, “Keep Maslow’s Hierarchy of Needs in mind when you’re working on your business.”

As a CEO, I faced a similar struggle when my San Francisco Bay Area boutique hotel company, Joie de Vivre Hospitality, was struggling with making payroll back in the dot-com bust, 9/11 era earlier this decade. We produced our own version of Maslow mojo when, as the largest hotelier in the most vulnerable region in the country, we used Maslow’s Hierarchy of Needs to focus not just on the base needs of our employees, customers, and investors, but to imagine their higher needs and how we could deliver on those also. We asked ourselves how some other transformational companies — like Apple or Southwest Airlines or Fed Ex — would operate if they were in our position. Moving from just focusing on survival needs to addressing the success and transformational needs of our key constituencies led to us tripling our revenues in the five years after the dot-com meltdown.

So, how can Motown go Maslow? First, let’s recognize that the auto company leaders who got us into this mess are transactional, not transformational leaders (think of the difference between Hillary Clinton and Barack Obama). When change is what’s needed, look for change agents as leaders. So, if the government is going to bail these guys out, they better show the top leaders the door and bring in a refreshing set of new eyes, ears, brains, and hearts. Secondly, these new leaders need to create a revolution in the employee culture of these organizations. Impossible, you say? The unions will never allow that! Look at Southwest Airlines — they’re one of the most unionized airlines in the country yet they have a healthy culture that’s a model for any company. Harley Davidson and Continental are similarly unionized and so is a large portion of my company of 3,500 employees. Create some small wins that mean that the unions and their members can also profit from a turnaround and, in turn, get some essential concessions from the unions that will reduce the Big Three’s break-even point.

Lastly, Detroit, create a car that we can love. There was a time you did that very well. Whether it’s staking your full bet on green cars or remaking the idea of how you sold cars (there was a certain allegiance to Saturn at one time), take a lesson from Harley. They were getting outgunned by the Japanese, just as you have been by Toyota, Nissan, and Honda, but they reengaged their employees to create the kind of bikes that tapped into a deep emotional need of their customer. And here we are twenty years later, and I can’t think of any worldwide brand that has more logos tattooed on the bodies of their customers than Harley. GM, you know you got it right when you start seeing your “General Motors” tattooed on the scrawny bicep of a small town accountant who’s looking to be a little self-actualized by living in the halo of your brand.

Add comment December 10th, 2008

LESS BUSY-NESS ON SUNDAYS

 I don’t know about you, but there are certain Sundays when I can curl up like a cat with my Sunday NY Times, shot of adrenalin from Meet the Press, and then the zombie afternoon watching NFL Football….I need to install a flat-screen in my bathroom so I can do this in my favorite place: the deep-water bathtub. 

This Sunday’s Business section was meant for the Hall of Fame.  There was more valuable wisdom in the articles that graced those 14 pages than I learned during my two years at Stanford Business School.  First, I have to direct you to an article by a neuroeconomist (who knew such a profession existed?) that point blank proves something that my book, PEAK, hypothesizes: that fear is a de-motivator in the workplace.  At times like these when fear pervades, the number one sensible response for a leader is to lead people away from this contagious, pervasive emotion.  Dr. Berns says it best, “Fear prompts retreat.  It is the antipode of progress.  Just when we need new ideas most, everyone is seized up in fear, trying to prevent losing what we have left.”  http://www.nytimes.com/2008/12/07/jobs/07pre.html?_r=1&scp=1&sq=neuroeconomist&st=cse   

Then, there’s a thoughtful cover story on Best Buy, one of the lone survivors in the retail electronics world (with Circuit City, Sharper Image, Comp USA, and Tweeter all failing in the past year), which has succeeded due to savvy management, but also because of an enormous investment in their people.  I don’t know about you, but I’ve found Best Buy employees to be the best trained, the happiest, and the most helpful floor reps out there, and, that’s after having shopped the competition to make a major home entertainment system purchase this past month (doing my part to keep the economy going when national electronics sales dropped 22% in November).  To learn more about why Best Buy is succeeding, check out the article.  http://www.nytimes.com/2008/12/07/business/07best.html?scp=2&sq=best%20buy&st=cse 

On the other hand, the feature cover article in the NY Times Biz section focused on Apollo, a private equity firm that is truly struggling and is a poster child for the greedy investor that skims the profits of their portfolio companies only to find that these companies have been bled dry when the economy turns sour.  Warren Buffett is a great model for the long-term, legacy investor that I admire, but Leon Black of Apollo is a good cautionary tale of how an investor can capsize a business.  http://www.nytimes.com/2008/12/07/business/07leon.html?scp=2&sq=apollo&st=cse   

On page 3, there’s a great article called “Teamwork, the True Mother of Invention” which talks about how successful companies bake the innovation process into their culture and it’s a very collaborative process.  Based upon that premise, you might think that these companies are all about brainstorming, but this Silicon Valley thought leader suggests that brainstorming is passe and that there are many other ways to create an innovation culture.  http://www.nytimes.com/2008/12/07/business/07unbox.html?scp=55&sq=dec.%207,%202008&st=cse 

There were a few other articles that caught my eye, but these four were my favorites.  I’ve said for a long time that the greatest bargain that exists for consumers is a well-written newspaper and the NY Times proved that to me once again this weekend as this $5 purchase is much more affordable than a $50,000 MBA.  

Add comment December 8th, 2008

WHY AM I A MISSIONARY FOR THE PEAK MESSAGE?

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

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

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

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

1. Culture, when nurtured and leveraged by focusing on higher needs, acts as a key performance driver for any organization and leads to long-term, sustained profitability and market positioning.
2. Great organizations find ways to move their employees up that Job/Career/Calling pyramid such that their employees are more intrinsically motivated by what they do or what the organization does (it gives them Meaning) as opposed to externally motivated by the Compensation package or Recognition.
3. Customers typically become evangelists when a company gives them a transformational experience that has one or more of the following four characteristics:

·         it helped them meet their highest goals in a new way;
·         it gave them the ability to truly express themselves in a self-actualized kind of way;
·         it helped them feel like they were part of a bigger cause; and/or
·         it offered them something of real value they hadn’t even imagined.

4. An “investor” can be defined as anyone who invests time or money in a company or in an employee in the hope of receiving some kind of return.  Investors who feel they have an engaged and collaborative relationship with an organization are more confident and patient (and less likely to jump ship during difficult times) because they see the value of the long-term relationship.
5. Business has a tendency toward the tangible, but the PEAK principles are very focused on the intangibles at the top of the employee, customer, and investor pyramids.  So, it is essential to look for ways to measure the level of inspiration and engagement that an employee feels, the enthusiasm and evangelism that comes from a self-actualized customer, or the sense of pride of ownership or legacy that an investor feels when they’re putting their wallet where their heart is.  The good news is that business schools, consultants, and authors are evolving how these intangibles can be measured and benchmarked.

Some of my greatest pride during these beta seminars was seeing how these various companies made this material real for them.  One set of participants realized that they wanted to be transformational leaders, but that they were in a transactional industry.  But, before they got depressed, I encouraged them to look at how Goldman-Sachs, a PEAK-performing company, transcended the investment banking industry.  Take a look at the Musing on my website from last spring where I compared Goldman with Bear-Stearns.  Another company acknowledged that there were cultural and generational differences for employees in their company which meant that what created “Meaning” or “Recognition” for one employee could be very different than for another.  And, just as Prius and Whole Foods Market have come to realize that they have various customer market segments with different “unrecognized needs” at the top of the pyramid, one retailer that attended the seminar realized they needed to create three different customer pyramids - one for each of their three biggest types of customers.  One of our savvier participants realized that there’s almost a leap that needs to be made from the second level to the top level of each pyramid.  In other words, moving from Success to Transformation is where the real magic happens so any company that can create the conditions that allows that magic to occur is going to be a transformative organization.  And, one consistent learning that all participants had is that gravity takes its toll on these pyramids as there’s a certain fluidity to how humans move up and down the Hierarchy of Needs, no matter whether their role is as an employee, customer, or investor.

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

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

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

Add comment December 5th, 2008