As I write this, Carlos Slim Helú is the second richest man in the World, according to Forbes, following Bill Gates by a ‘mere’ $2 billion dollars. Carlos was number one in 2010 and 2011. Everyone knows how Bill made his fortune, as the founder of Microsoft, and much has been written about him. But what drives Carlos Slim’s success, and what are the strategies that make his companies so successful seem to be more of a mystery.
When companies struggle, they usually blame increased competition and unfavorable economic conditions. Carlos Slim seems to thrive on downturns and recessions.
Slim’s business portfolio, under the holding company Grupo Carso, is much more diversified: it includes real estate, retail, telecom, mining, financial services, tobacco, aluminum, tires, copper, insurance, restaurants, oil and gas, paper, hotels, and more.
People in Mexico say you can’t live a day of your life without somehow giving money to Slim’s empire. He has also made significant investments in the US. In 1997, Carlos purchased 3% of Apple for $17 a share. He has made significant investments in Saks and the New York Times and in business that have gone south like Prodigy and CompUSA.
Carlos is 75 but he has been very aware of technology advances and has positioned his companies to take most advantage of them: “Technology is going to transform people’s lives and society everywhere in the world. My main task is to understand what’s going on and try to see where we can fit in.” Continue reading “10 Business Lessons from Carlos Slim”
In most organizations, high performance individuals are promoted to managers, ignoring the fact that a great individual contributor is not necessarily going to become a great manager. But if even if they could become one, it is rare for newly promoted managers to get people management training. In this post I share my management philosophy, which I have been perfecting over the last few decades.
Manager or Leader? It is not the same.
The terms management and leadership are incorrectly used interchangeably. In essence they are very different concepts that require different skills. In fact, few people excel at both.
Leadership is about having a vision and the ability to rally people and resources to create a better future. Management is about sincerely caring for a team of people, empowering them, and making them productive and successful.
In my experience, the main reason why people want to become a leaders or a manager is a desire for career advancement and a higher salary. This is unfortunate, not because there is anything wrong with being career oriented, but because they are not being driven by the right motivation. Promotions and salary increases should not be goals, but consequences of effective execution, leadership, and a good people management track record. Continue reading “Flip the Org Chart – 5 Qualities of Great Managers”
What if we have been following ideas that have made the wrong conclusions?
The Halo Effect is an aura that surrounds companies, people and strategies that are successful. Once a person or a company achieves a certain status, the halo effect will touch everything they do. This often leads many to the conclusion that it was the company culture, or their leadership, or their personal traits and values, or their customer obsession that made them successful.
In this book, Phil Rosenzweig debunks Good to Great, In Search of Excellence and other classic business books and research reports. These publications and their conclusions fall in the trap of one or many delusions. Following these conclusions as proven formulas carries the risk of disastrous effects.
Let’s look at the nine Delusions and the real driver for high performance in organizations.
1 – The Delusion of The Halo Effect
Many of the things experts think contribute to high company performance are often attributions based on performance. Many studies like Fortune’s Great Places to Work studies multiply the halo effect. Often a great company culture is a result of success. We think as successful companies as innovative. We think about CEOs as powerful leaders.
2 – The Delusion of Correlation and Causation
The author points to many examples: Bain and Co claims their customers outperform the market 4 to 1. The assumption is that hiring Bain caused high performance. We need to consider the possibility that companies who are outperforming the market have the time and the money to hire Bain.
I grew up in a place known as the ‘City of Eternal Spring’ where homes don’t have A/C or heating and where trees are green year round.
Maybe that’s why I have a special appreciation for the beauty of the fall foliage. It also made me think why trees get rid of their leaves this time of the year.
The leaves are beautiful, and perfectly fine. It’s not like the tree does not want them or that it feels it would be better off without them. The tree probably invested resources, energy and maybe effort in creating the leaves. So why drop them?
It’s getting ready for the hard times. Mother nature has made trees smart enough to know tough times are coming and while the tree wants to keep the leaves, it must get rid of them to focus maximum energy and protection on its core. The tree is smart enough to know it cannot support its core and the leaves, and that if it tries to do that it would probably die. So the leaves go. Could we consider this wise and courageous?
How many things in life, or in marketing are very nice, we want them – but like leaves in winter, create a distraction of resources and energy that we cannot afford?
When people talk about focus, often we hear the things they plan to do. Those with a more pragmatic approach know focus is about the things you will stop doing.
If you don’t have a list of things you will stop doing, you are not really focused.
If you don’t have a list of customers and markets you will not serve, you can’t say you are focused.
If you don’t have a list of marketing tactics you won’t pursue in 2014, you are not focused.
If you don’t have a list of the projects or tasks that would be nice to do but you won’t, you are not focused.
It’s hard to let go. A few months ago I realized I would not be able to keep my responsibilities of my job, my family, this blog and my new photography blog. Like the tree that lets go of a beautiful leave, I had to make a decision to stop working on posts for my photography blog. Sometimes I catch myself with ideas for a good post, but then I remember I can’t do all, and I have to move on and focus on the important things in my life.
It takes discipline. It’s hard. A few years ago I heard ‘The most important thing is that the most important thing remains the most important thing.It is not only a tongue-twister, it is a very wise saying – an important one.
As we start making plans for the next year – for your business, your marketing plan or your personal life – what leaves will you drop this year?
What drives business success? What is the one thing any business can do to increase its chances of surviving, thriving and growing?
We are always looking for a single thing that can give us success, the ephemeral silver bullet. It’s called the delusion of the single explanation (read more about this one and 8 other delusions here). In business, like in most cases, it is always a combination of factors that results in success. Strategy is probably at the top of the list. Other factors include execution, passion, culture, and some may even say luck (timing is usually a better description).
While I believe Strategy is the #1 factor, I was looking for a formula to create a strategy that could be applied broadly, to almost every business, of any size and industry, to increase its chances of success. I think I found it.
The Formula for Business Success
Long time ago, probably in the early 90s I saw a magazine ad for Lotus (I believe) which had a central message designed to make small business owners feel empowered. The headline read:
Give Customers What they Want, Make Money, Repeat
Since, it stuck in my mind because of its simplicity and power. I am sure most people read it and thought “d’uh! – of course!’. Some of the most powerful concepts in business and in life are hidden behind simple phrases like this one. Often we fail at the basics. Often we get distracted by complex stuff and ignore the basics. My college professor used to say “Marketing is common sense, which is the least common of all senses. Never underestimate the Power of Simplicity.
Why is this simple customer so powerful? Let’s break it apart:
Give Customers what They want – offers four insights:
Giving customers what they want is very different than giving customers what you sell. This means you must change your marketing and your entire organization around customer needs, not around your products.
Third, it means you need to decide who is your customer. It is very hard for a business to try to satisfy every kind of imaginable customer. You need to understand market segment,s buying behaviors and the type of customer you are better suited to serve. You can start with simple terms – do you want to serve a quality oriented customer, a price conscious customer or one that values full service?
Fourth, the ‘Give’ talks about the delivery model. I think about it as understanding how your customer wants to consume your product. What format, what pricing model, what packaging, what place, etc.
Make Money – This is about having a fundamental understanding of your business metric. Understanding your cost to acquire a customer, your fixed and variable costs, cash flow, profitability, margin, cost of capital – start with the basics. If you talk to owners of small businesses, you may be surprised how many have no clue about many of these metrics. The same can be said of product managers, marketers, and even large companies. Remember the dot com bust? The focus on making money also means your business must be market driven, not technology or buzzword driven. Another no-brainer that is often the cause of business failure.
Repeat – This is a key part. It talks about building the culture, the processes and the company around these basic principles. Listening to customers once is not good. Looking at your balance sheet every now and then is not good management. These need to be habits. Even more than that, they need to be made core of the way you think about your business – as an entrepreneur, as a CEO or as a product marketer in a large company.
I hope this formula can help you and your business, or at least re-think your overall strategy.
I recently finished a great book by Marcus Buckingham: The One Thing you Need to Know. The author is better known for his work on Strengths-based success, but this is an excellent book that any manager or leader should read. One of the key concepts in the book are differences between managers and leaders.
Managers are all about PEOPLE. Their job is to align team strengths with the needs of the organization, to care for people, to show them he or she has their career in mind, to give them direction and resources and to cover their back. Managers are individualizers.
A Great Manager is a catalyst that turns people’s talent into performance that is aligned with company goals. A great manager demonstrates he or she sincerely cares about the team, making employees believe their success is the manager’s primary goal. Great managers get satisfaction from the small improvements in growth they see in the people they manage.
Leaders are all about VISION. They have an ability to visualize a better future so clearly and they are so passionate about it, they can’t help but do everything they can to make that future a reality. Their vision and passion make people follow them independently of their position in the org.
Great Leaders rally people to a better future. Great leaders are restless for change, impatient for progress and deeply dissatisfied with the status quo. The possibility of a better future burns them and propels them. Great leaders see the future so vividly they have no choice but to do everything in their power to make this future real. Great leaders are curious, bold and confident, and they have a great sense of optimism.
How to become a great Leader? Sorry but what makes a great leader cannot be learned. You either have it or you don’t. Leaders are born. Leaders need, however, a fully realistic assessment of the difficulty of the challenge ahead and they need to bring an unrealistically optimistic belief in the ability to overcome it.
How to become a great Manager? Marcus offers a very accurate set of recommendations. Interestingly, the discussion starts by defining the fundamental human needs: a modern version of Maslow’s pyramid, in a way. These fundamental needs stem from fundamental human fears. They are:
Fear of death – Need for security
Fear of strangers and outsiders– Need for community
Fear of the future and uncertainty – Need for clarity
Fear of chaos – Need for authority and classification, order
Fear of insignificance – Need for respect
What do these needs have to do with management? These fundamental human needs apply to humans at all times, including work. A manager that is aware and understands the fundamental human needs of his or her employees will find the following management guidelines as very useful:
Provide clear expectations and goals to your team
Show recognition and praise for the accomplishments of your team, big and small
Demonstrate to your team you sincerely care about them as individuals
A good team requires interdependency: it cannot be a group of individual players
Marcus defines three things every good manager needs to know about each team member:
1. Their strengths and weaknesses
2. Their triggers and hot buttons
3. Their individual style of learning: analyzer, watcher or doer.
You can be a great manager and a great leader. If you are interested, a good first step would be to read this book.
Social Listening has empowered organizations to listen to customers and respond in real time, primarily on Twitter. Here is an example where Southwest Airlines (from back in 2008) responded to a customer who had a bad experience. The mere act of listening to customers and showing some empathy can turn a very unhappy customer around.
A few weeks ago an industry expert shared his experience with a bank. He was having some trouble, called customer service and after becoming frustrated with the nonsense policies for the bank, suggested to tell his thousands of followers on Twitter about the experience with the bank. This story, and further discussion via twitter, led to a couple of thoughts:
Maybe, the people who demand better service via extortion, threatening to tell their followers about the bad experience, are using a form of blackmail. I know it is the new world of social. Just think about this before you do it.
In most cases, this influence is overstated. As I stated in a previous post, popularity is not influence. Further, If a user with 5,000 followers tweets a bad experience with a brand, only a fraction of those 5,000 people will read the tweet. Even if 50 people read the tweet it is bad, I am only stating that not all 5,000 will be exposed to the tweet.
In any case, it would be unfair if people with more followers received better customer service. If this is the inevitable future, we should all create dummy Twitter accounts and use unorthodox (but common) methods to get a large number of followers so that we can get decent service.
Brands should realize twitter is simply a form of customer service. The teams monitoring twitter (or Facebook) for customer service issues and responding to those issues are not that different to the teams with a headset responding to the same type of problems for the same customers via phone or email.
Brands should therefore have consistent customer service policies that apply equally to situations independently of what channels you choose to connect with the company or how popular you are. Imagine if I called an 800 number to complain and told them I have 2,000 people in my Rolodex threatening to call all of them if they don’t help me.
Brands should be smart enough so that it does not take a social media crisis (á la United Breaks Guitars or a Comcast Technician Sleeping on My Couch) to fix basic customer service policies and pay attention to what their customers want. Delivering great products and great service is the way to become a great company. Solving customer issues won’t get you there.
Brands should encourage customers to address their concerns, problems and feedback via a private support channels such as email, online chat or phone. Using your Facebook wall as your customer service center does not help anyone but your competition. Other channels are much more efficient at providing customer service, for example, with clear connection to your customer transaction record, no 140 character limit. Just today Fortune published an excellent piece titled “Can I help you? On Twitter, the answer is no” that compares actual experiences on twitter vs. phone vs web for top retailers.
If you think about it, your team that is helping customers via twitter should not be part of the social media team in marketing, maybe this function lives in customer service, in the cal center, where customers can get a consistent experience across interaction points.
If you are a social media marketer, I am not suggesting you move to the customer service department. Instead I am suggesting you consider your career path. As Jeremiah points out, Social Media Strategists are at a critical point where they can either become the ‘social media help desk’ or customer engagement marketers.
Last month 1 to 1 magazine published my article “The 10 rules of Customer Centricity” that talked about how customer centricity needs to be a company strategy, not a motto for the marketing team. My last post about Why I joined Bazaarvoice talks about the Bazaarvoice culture and how it was a key factor for me to join this company. Again, culture should not be something that is done by HR, framed and then ignored – its central to a company’s strategy.
The book The Discipline of Market Leadersis one of my favorite books on strategy, I encourage you to read it. It makes the case for three central disciplines that define a company and its primary operating model and its product strategy. The book talks about three main disciplines: Customer intimacy (think Nordstrom), Product Leadership (think Apple) and Operational Excellence (think Dell or McDonald’s). Companies can’t do all three, they need to pick one and run with it.
Culture = Strategy
Company cultureis strategy. It defines your company. It defines who you hire. It defines what you value and reward as an organization. It defines how you create products and services. It defines who you are. It determines your success.
The Engineering Culture at Motorola
Motorola has been for many years one of the most innovative companies in the planet. While I was working there I had the opportunity to visit the Motorola Museum. I was amazed about the number of firsts: From the first car radio (did you know this is the origin of the name -as in Moto- Rola?), the first square TV to almost everything RF/radio related in the world including the system that provided communication to the Apollo XI Lunar Lander.
Then it hit me: Motorola had invented so many markets yet it had been unsuccessful in maintaining market leadership. The company invented the cell phone and by then it had secondary market positions both on the cell phone business as in the infrastructure side. The answer, for me, was the company culture.
An interesting fact: Motorola employees wore badges of different colors based on the number of patents under each employee’s belt. Engineers worked with pride with a silver or golden ID badge. People knew you had to be an engineer to be successful at the company. There were POPI (protecting our proprietary information) audits at every office ensuring nothing as trivial as an org chart or was left at your desk.
As much as Motorola excelled at creating products, it failed at bringing them to market. I saw tons of technologies that should have been successful like the Canopy broad-range internet access network. But most of these failed because marketing was not a core competency. The engineering -centric culture is killing the company. I really hope it can transform itself quickly enough and be a leader again.
The Product/Launch Culture at Microsoft
My four years at Microsoft were some of the most amazing of my career. Ultimately, I decided to leave because of culture. Everyone knows Microsoft hires type-A personalities. Many people know there is a performance grading curve for employees and that the performance measurement is exclusively focused on the fiscal year at hand.
All these factors result in a culture where there is no room – especially in a company this size- for long-term planning or for learning and optimizing a project. It is all about launching new stuff. From my first few weeks I was surprised by the number of emails that announced new things – new products, new initiatives, new marketing campaigns. There was no discussion about monitoring, learning, optimizing. Projects need runway to mature and become successful.
Marketers received a plaque with over a dozen slots for adding badges for each product they launched. I was part of the Visual Studio 2005 launch team. After the product was launched in November 2005, many people left the team starting with the GM. After all, they had a successful product launch under their belt. It was time to get promoted and move to another group. A former boss and one of the people I admire is John Smolucha who shared an analogy about the Columbia shuttle launching and immediately everyone in Houston command center going home. How would you feel if you were an astronaut? “Houston?….Houston?… we have a problem.” . This is how many projects felt at Microsoft.
A great example of this culture is Bing. Microsoft search engine became MSN Search which became Live Search and is now Bing Search – all over just a few years. Maybe next year a new GM will come on board and will re-launch it as something different.
The Culture at Bazaarvoice
It just makes sense: if you focus on making your employees happy, you will be able to attract (and retain) the best talent and everyone will be motivated to do their best job. Customer service experts know happy employees translate to happy customers. The rule applies equally to every area in the organization.
This is how Bazaarvoice defines its culture (from the website): “To us, culture is more than perks and free sodas. It’s the way we work with each other and create a place where people want to work every day, have the opportunity to rapidly innovate, and foster an environment that brings out our best.”. There are many blog posts about culture for you in the Bazaarblog.
In Brett’s words, “The importance of focusing on culture is greater than ever. I spend around 15% of my time focused on culture, and I believe it is largely responsible for our success as a company.”
As I was finishing this post, I read Behind the Cloud, Marc Benioff’s book about building Salesforce.com which reinforces this idea: “My summers at Apple had taught me that the secret to encouraging creativity and producing the best possible product was to keep people fulfilled and happy. I wanted the people who built salesforce.com to be inspired and feel valued. “ (Page 11).
Kip Tindell, CEO of The Container Store, recently said in an interview ” It was Milton Friedman who said, “the only reason a corporation exists is to maximize return for the shareholders.” Well, no. Not really. We actually put the employee first. We don’t even put the customer first. Now, you know we love our customers. But we put our employees first. We believe that if you put the employee first and take better care of them than anybody else, they will take care of the customer better than anybody else. And if those two are happy, if you have the happiest employees and customers around, ultimately your shareholders are very, very happy as well.”
I’ll end this post by summarizing on one point: Culture is not a task for HR or for a marketing VP. It must come down from the top and lived by everyone in the organization: your culture is your strategy.
I just read the abstract for a book called Managers, not MBAs which is focused on the concept that MBAs are being thought too much theory which is completely useless in a business where leadership and proven experience are the basis for performance. The book also claims top-school MBAs are arrogant and makes a case for top Harvard graduates who failed miserably in business. Furthermore, enrollment in the best schools is limited to students with high test scores instead of professionals with proven performance. The fundamental premise is that management is art and our education system focuses on theory.
It is true that in general, education is not evolving as quickly as businesses do. However, as long as companies keep hiring MBAs to high-paying high-profile jobs, the schools will continue to offer them, students will continue to pursue them as there is little incentive to change anything. I think some schools are trying to move in the right direction by introducing more case studies and role playing.
I still think there is a huge opportunity for innovation here for academic institutions and hiring departments in all sorts of companies.
Is your hiring department screening candidates based on the practical skills needed to do the job? Take a clue from The Apprentice: Donald Trump did not hire the top graduating students from a brand-name school nor he made his choice by a written test on management theory. Of course, that scenario would have produced poor rating in all likelihood. At the end, trump hired the person who performed best in real-life scenarios.
That’s why I found it so interesting to interview at Microsoft. The focus of the interview discussions are not based on what positions were held or what you studied. Interviewers present challenges that test problem solving, innovation, and other much more important, sometimes relatively subjective aptitudes. I think the fact that Microsoft is known for hiring smart people (except for me maybe) proves the point about the opportunity for companies to look at candidates in a new way.
Is there a market for a new kind of academic institutions, the Harvard of the 21st century?