If you want honesty, break some rules

We've all heard, or perhaps even told, the "organizational lie"; We're customer centric; everyone's performance is above average; we're the darling of our industry, coming up with one innovation after another. That last one was true of Advanced Cardiovascular Systems (ACS) in the past, but not when Ginger Graham took over as CEO. From that first moment in 1993, Graham chose to tell the truth about ACS's situation--that R&D was practically at war with product development, yields were down, and customers were disgruntled. And ever since, she's seen the benefits of exploding organizational lies. Truth telling is something that's hard to argue with but difficult to do. And, indeed, ACS instituted some radical practices to create its culture of honesty. Every senior manager was assigned a coach from the ranks who regularly solicited feedback from everyone, high and low, about the executive's performance. To get the truth, though, ACS executives learned that they had to offer it up themselves--the whole truth about the company's financial state, its problems, and its triumphs. When they did, they found that, in return, they could ask their employees for help in solving the problems, and passive complainers became active partners in the company's fortunes. ACS management spreads the word about the virtues of honesty through vivid stories of corporate history and quirky rituals. Every quarter, it holds companywide meetings in which the faults of top managers are examined--to keep them honest and tough enough to go on telling the truth. In fact, in the process of openly owning up to problems and jointly fixing them with employees, the entire company grew more powerful, nimble, and tough-minded, able to respond quickly to change, both internal and external.     

How to motivate your problem people

Managers who motivate with incentives and the power of their vision and passion succeed only in energizing employees who want to be motivated. So how do you motivate intractable employees--the ones who never do what you want and also take up all your time? According to Nigel Nicholson, you can't: Individuals must motivated themselves. Nicholson advocates a method that turns conventional approaches to motivation upside down. Instead of pushing solutions on problem employees, the manager should pull solutions out of them by creating circumstances in which the employees can channel their motivation toward achievable goals. That means addressing any obstacles-possibly even the manager's own demotivating style--that might be hindering the employees. The author's method demands that a manager take charge of a difficult situation and resolve it. An investment of time is required, but it will bring the manager to a resolution sooner than other means would. Using detailed examples, Nicholson walks the reader through his method, pointing out potential pitfalls along the way. First, the manager creates a rich picture of the problem person. Second, the manager exercises flexibility and reframes goals so that the employee can meet them. Third, in a carefully staged, face-to-face conversation, the manager meets with the problem employee on neutral ground. Whether a problem is solved or simply resolved, the payoffs from using this method extend beyond the specific employees who have been difficult to motivate. Besides increasing a manager's chances of motivation problem people, the method can inspire an entire team by signaling that the organization deals with difficult people rather than discarding them.     

Building a leadership brand

How do some firms produce a pipeline of consistently excellent managers? Instead of concentrating merely on strengthening the skills of individuals, these companies focus on building a broad organizational leadership capability. It's what Ulrich and Smallwood--cofounders of the RBL Group, a leadership development consultancy--call a leadership brand. Organizations with leadership brands take an "outside-in" approach to executive development. They begin with a clear statement of what they want to be known for by customers and then link it with a required set of management skills. The Lexus division of Toyota, for instance, translates its tagline--"The pursuit of perfection"--into an expectation that its leaders excel at managing quality processes. The slogan of Bon Secours Health System is "Good help to those in need." It demands that its managers balance business skills with compassion and caring. The outside-in approach helps firms build a reputation for high-quality leaders whom customers trust to deliver on the company's promises. In examining 150 companies with strong leadership capabilities, the authors found that the organizations follow five strategies. First, make sure managers master the basics of leadership--for example, setting strategy and grooming talent. Second, ensure that leaders internalize customers' high expectations. Third, incorporate customer feedback into evaluations of executives. Fourth, invest in programs that help managers hone the right skills, by tapping customers to participate in such programs. Finally, track the success of efforts to build leadership bench strength over the long-term. The result is outstanding management that persists even when individual executives leave. In fact, companies with the strongest leadership brands often become "leader feeders"--firms that regularly graduate leaders who go on to head other companies.     

The case of the hidden harassment

The past year has seen a growing public awareness of sexual harassment in the workplace. The question of what constitutes sexual harassment and how to recognize it has been debated in the news, the courts, and Congress. This HBR case study is less concerned with defining it than with examining what a manager should do about it. When Filmore Trust manager Jerry Tarkwell found out one of his employees was being sexually harassed on the job, he thought he knew exactly what to do. Following company policy, he immediately notified the bank's equal employment office. Then he called Jill McNair, the employee being harassed. Her response dumbfounded him. "You had no right to call EEO before talking to me," McNair said angrily. Do you have any idea what could happen to me and to my career if people find out about this?" Tarkwell didn't understand; McNair wasn't to blame. He believed the only person who should be worried was the harasser. Tarkwell tried to spell out the procedure for her. "All you have to do is write a letter and ..." McNair cut him off. "If this gets investigated by EEO, everyone in the building could be questioned. I'll probably get transferred, and then I won't have a chance at promotion. And who'd want to work with me? Every man in the company would be afraid I'd report him if he so much as opened a door for me."(ABSTRACT TRUNCATED AT 250 WORDS)     

Informal networks: the company behind the chart

A glance at an organizational chart can show who's the boss and who reports to whom. But this formal chart won't reveal which people confer on technical matters or discuss office politics over lunch. Much of the real work in any company gets done through this informal organization with its complex networks of relationships that cross functions and divisions. According to consultants David Krackhardt and Jeffrey Hanson, managers can harness the true power in their companies by diagramming three types of networks: the advice network, which reveals the people to whom others turn to get work done; the trust network, which uncovers who shares delicate information; and the communication network, which shows who talks about work-related matters. Using employee questionnaires, managers can generate network maps that will get to the root of many organizational problems. When a task force in a computer company, for example, was not achieving its goals, the CEO turned to network maps to find out why. He discovered that the task force leader was central in the advice network but marginal in the trust network. Task force members did not believe he would look out for their interests, so the CEO used the trust map to find someone to share responsibility for the group. And when a bank manager saw in the network map that there was little communication between tellers and supervisors, he looked for ways to foster interaction among employees of all levels. As companies continue to flatten and rely on teams, managers must rely less on their authority and more on understanding these informal networks. Managers who can use maps to identify, leverage, and revamp informal networks will have the key to success.     

A stake in the business

When Chris Sullivan and three friends opened the first Outback Steakhouse in March 1988, in Tampa, Florida, they were hoping it would be successful enough to spawn a few more and maybe some other kinds of restaurants as well. Since then, their chain of Australia-themed restaurants has grown to some 900 locations and counting-plus another 300 or so "concept" restaurants that operate from under Outback's corporate umbrella. Growth like that doesn't happen accidentally, Sullivan says, but it certainly wasn't part of the original plan. In this first-person account, Outback's chairman describes the organization's formula for growth and development, which is consciously rooted in the founders' belief in putting people first. They've created an organizational model in which field managers make most of the decisions, garner the rewards, and live with the consequences. Specifically, the founders believe that the most effective way to make customers happy is to first take care of the people who cook for them, serve them, and supervise operations at the restaurants. Outback servers have fewer tables to worry about than those at other restaurant chains; the cooks have bigger, cooler, better-equipped kitchens; and the supervisors work their way up the ranks toward an equity stake in the restaurant or region they run. There are no administrative layers between field managers and the executives at headquarters. Giving employees good working conditions and the chance to become owners has proved to be good business: Turnover among hourly employees is low, and Outback and its subsidiaries opened 120 restaurants last year, increasing sales by 20.1%. The company must grow in order to keep offering career opportunities to its workers; in turn, those opportunities ensure that Outbackers remain committed to making customers happy and the company successful.     

Lead for loyalty.

The greater the loyalty a company engenders among its customers, employees, suppliers, and shareholders, the greater the profits it reaps. Frederick Reichheld, a director emeritus of Bain & Company, offers advice on improving loyalty that is based on more than a decade of research. Primarily, he says, outstanding loyalty is the direct result of the decisions and practices of committed top executives with personal integrity. The "loyalty leader" companies--those with the most impressive loyalty credentials--are a diverse group, ranging from Vanguard and Northwestern Mutual to Chick-fil-A, Harley-Davidson, Intuit, and Enterprise Rent-A-Car. But beneath their surface variations lie six strikingly similar relationship strategies: 1. Preach what you practice. Executives must preach the importance of loyalty in clear, precise, powerful terms. 2. Play to win-win. It's not enough that your competitors lose; your partners must win. There's a clear connection, for instance, between a company's treatment of its employees and its attitude toward customers. 3. Be picky. A truly humble company knows it can satisfy only certain customers, and it goes all out to keep them happy. Careful selection of employees also plays an important role. 4. Keep it simple. Great leaders understand that they must simplify rules for decision making. 5. Reward the right results. Many companies reward employees who grab short-term profits and short-change those who build long-term value and customer loyalty. 6. Listen hard, talk straight. Long-term relationships require honest, two-way communication and learning. Exemplary leaders break through the cynicism of the times by showing they believe that an organization thrives when its partners and customers do.     

The four faces of mass customization

Virtually all executives today recognize the need to provide outstanding service to customers. Focusing on the customer, however, is both an imperative and a potential curse. In their desire to become customer driven, many companies have resorted to inventing new programs and procedures to meet every customer's request. But as customers and their needs grow increasingly diverse, such an approach has become a surefire way to add unnecessary cost and complexity to operations. Companies around the world have embraced mass customization in an attempt to avoid those pitfalls. Readily available information technology and flexible work processes permit them to customize goods or services for individual customers in high volumes at low cost. But many managers have discovered that mass customization itself can produce unnecessary cost and complexity. They are realizing that they did not examine thoroughly enough what kind of customization their customers would value before they plunged ahead. That is understandable. Until now, no framework has existed to help managers determine the type of customization they should pursue. James Gilmore and Joseph Pine provide managers with just such a framework. They have identified four distinct approaches to customization. When designing or redesigning a product, process, or business unit, managers should examine each approach for possible insights into how to serve their customers best. In some cases, a single approach will dominate the design. More often, however, managers will need a mix of some or all of the four approaches to serve their own particular set of customers.     

Why doesn't this HR department get any respect?

Since becoming managing partner of human resources at Loft Securities more than a year ago, Luke Robinson has tried everything he can think of to change his department's reputation as an administrative backwater. But he's swimming against the tide. Ever since the retirement of a charismatic CEO in 1995, the firm has suffered a slow bleed of good people. The new CEO doesn't have a flair for attracting and retaining talented people, and the HR department hasn't been able to pick up the slack. Robinson has done his best to turn things around. He's met with just about everyone, from senior executives to administrative assistants to external contacts. And, when he found out that recruiting wasn't Loft's only problem, he took a variety of concrete steps. Among other things, he established internal service standards and performance guarantees for his department. He created "listening posts" and implemented and "HR ambassador" program. And he drafted plans for a program to help educate all the company's employees about the role of HR--specifically, how it can contribute to creating and upholding the firm's strategy for success. But Robinson has run over some major speed bumps. Just before he joined the company, HR sullied its reputation by mishandling the investigation of a discrimination charge. And while on Robinson's watch, HR botched the issuance of year-end bonus checks for the managing directors and vice presidents. The frustrations are piling up, leading Robinson to entertain thoughts of bailing out. Five commentators on this fictional case study explain why he should avoid quitting and how he can help his department earn new respect.     

Spark innovation through empathic design

Companies are used to bringing in customers to participate in focus groups, usability laboratories, and market research surveys in order to help in the development of new products and services. And for improving products that customers know well, those tools are highly sophisticated. For example, knowledgeable customers are adept at identifying the specific scent of leather they expect in a luxury vehicle or at helping to tune the sound of a motorcycle engine to just the timbre that evokes feelings of power. But to go beyond improvements to the familiar, companies need to identify and meet needs that customers may not yet recognize. To accomplish that task, a set of techniques called empathic design can help. Rather than bring the customers to the company, empathic design calls for company representatives to watch customers using products and services in the context of their own environments. By doing so, managers can often identify unexpected uses for their products, just as the product manager of a cooking oil did when he observed a neighbor spraying the oil on the blades of a lawn mower to reduce grass buildup. They can also uncover problems that customers don't mention in surveys, as the president of Nissan Design did when he watched a couple struggling to remove the backseat of a competitor's minivan in order to transport a couch. The five-step process Dorothy Leonard and Jeffrey Rayport describe in detail is a relatively low-cost, low-risk way to identify customer needs, and it has the potential to redirect a company's existing technological capabilities toward entirely new businesses.     

Effective marketing for professional services

In many professions, the idea of marketing has traditionally been not only foreign but distasteful. After all, what doctor, lawyer, architect, or consultant worth his or her salt would even need to go out hustling business? While this view still holds considerable weight in many people's minds, it is gradually receding before the forces of economic reality. As more professions become overcrowded, competition for customers is sharpening. How should professionals go about drawing favorable attention to themselves? By first recognizing the special problems they face in marketing their services, argues the author. Among the obstacles he identifies are buyer uncertainty about obtaining professional services, the difficulties of distinguishing among firms, and the immeasurable benefits of advertising. Among his suggestions are that providers of these services concentrate on educating prospective customers about the opportunities and limitations of the services, team up with others who have desirable experience, and do marketing research to identify and then cater to customer desires.     

Nothing prepared me to manage AIDS

Articles and seminars about AIDS in the workplace are not adequate preparation for the genuine problems faced by actual managers in real organizations. There are no easy, win-win solutions to the impossible dilemmas AIDS presents, only various forms of damage control and, at best, more or less humane compromises. Gary Banas knows. Over a period of four years, two of his direct reports developed AIDS, and he watched them suffer through debility, slowly deteriorating performance, and eventual death. He also watched the gradual decline of their subordinates' productivity and morale. He found that, to different degrees, both men refused to acknowledge their illness and their decreasing organizational effectiveness. One of them resisted the author's efforts to give him an easier job at no loss in salary. Both insisted on confidentiality long after the rumor mill had identified their problem. In the course of these two consecutive ordeals, Banas discovered that AIDS patients fall into no single, neat category. AIDS is not an issue but a disease, and the people who get it are human beings first and victims second. He also learned that AIDS affects everyone around the sick individual and that almost every choice a manager makes will injure someone. Finally, he came to understand that while managers have an unequivocal obligation to treat AIDS-afflicted employees with compassion and respect, they have an equally unequivocal obligation to keep their organizations functioning. "Don't let anyone kid you," Banas warns. "When you confront AIDS in the workplace, you will face untenable choices that seem to pit your obligation to humanity against your obligation to your organization.(ABSTRACT TRUNCATED AT 250 WORDS)     

物流企业COSE及其驱动因子解析

孜孜以求顾客价值与竞争力的提升,不可停留在临渊羡鱼的层面,而应根植于顾客价值之驱动因素的剖析与培育。本文基于服务企业的特征,把服务员工顾客导向意识作为提升顾客价值的重要驱动因素,并在综合考虑工作意义、组织认同、报酬满意度、工作动机、心理受权、顾客导向技能等多阶因子的基础上,构建了服务员工顾客导向意识驱动模型。     

How we went digital without a strategy

Once you say what business you're in, you put your employees into a mental straitjacket and hand them a ready-made excuse for ignoring new opportunities. So rather than dictate his company's identity, Ricardo Semler--the majority owner of Semco in S?o Paulo, Brazil--lets his employees shape it through their individual efforts and interests. "I don't know what Semco is," he writes in this first-person account of his company's expansion from manufacturing to Internet services. "Nor do I want to know." Ten years ago, Semco employees who were selling cooling towers to owners of large commercial buildings heard customers complain about the high cost of maintaining the towers. The salespeople proposed a new business in cooling-tower maintenance, and the venture is now a $30 million property-management business. That initiative led to the creation, with Semco's support, of an on-line exchange to facilitate the management of commercial construction projects. The exchange is revolutionizing the construction process in Brazil and has become a springboard for further Web initiatives such as virtual trade shows. The author shares some of the lessons he has learned along the way: Forget about the top line. Never stop being a start-up. Don't be a nanny (treat your employees like adults). Let talent find its place. Make decisions quickly and openly when it comes to reviewing proposals for new businesses. And partner promiscuously: "Our partners," Semler says, "are as much a part of our company as our employees."     

The innovation catalysts

A few years ago the software development company Intuit realized that it needed a new approach to galvanizing customers. The company's Net Promoter Score was faltering, and customer recommendations of new products were especially disappointing. Intuit decided to hold a two-day, off-site meeting for the company's top 300 managers with a focus on the role of design in innovation. One of the days was dedicated to a program called Design for Delight. The centerpiece of the day was a PowerPoint presentation by Intuit founder Scott Cook, who realized midway through that he was no Steve Jobs: The managers listened dutifully, but there was little energy in the room. By contrast, a subsequent exercise in which the participants worked through a design challenge by creating prototypes, getting feedback, iterating, and refining, had them mesmerized. The eventual result was the creation of a team of nine design-thinking coaches--"innovation catalysts"--from across Intuit who were made available to help any work group create prototypes, run experiments, and learn from customers. The process includes a "painstorm" (to determine the customer's greatest pain point), a "soljam" (to generate and then winnow possible solutions), and a "code-jam" (to write code "good enough" to take to customers within two weeks). Design for Delight has enabled employees throughout Intuit to move from satisfying customers to delighting them.     

How I learned to let my workers lead

In 1980, Ralph Stayer owned a successful, growing sausage company that had him badly worried. Commitment was poor, motivation was lousy, the gap between performance and potential was enormous. Over the next five years, Stayer turned the company upside down, but only by turning himself upside down first. For years he had insisted on his own control, made all decisions, delegated nothing. But when he tried to picture what the company would have to look like to sell the most expensive sausage and still enjoy the biggest market share, he saw an organization whose employees took responsibility for their own work. After several false starts, he finally began in earnest by making himself give up much of his own authority. Stayer turned quality control over to the workers on the production line. Workers also began answering letters of complaint from customers. Rejects went from 5% to 0.5%. Employees thrived on their new responsibility and asked for more. Gradually, people on the shop floor took over personnel functions as well, followed by scheduling, budgeting, and capital improvements. Managers came to function more as coaches than as bosses. Stayer--a little to his own dismay--began to find himself superfluous. In mid-1985, the company faced a watershed decision--whether or not to accept a massive new order that would make huge demands on every employee and strain the company's capacities. Stayer asked the employees to make the decision. They accepted the challenge, and productivity, profits, and quality all rose dramatically. By the late 1980s, Stayer had reached his goal of working himself out of a job.     

Bob's meltdown

Annette Innella is just coming into the lunchroom at Concord Machines when Bob Dunn starts screaming at her. After throwing his lunch tray against the wall, he stomps out, leaving Annette stunned. Naturally, Annette, the new senior VP for knowledge management, is beside herself. She knows her proposal to establish a cross-functional knowledge management committee is progressive thinking for this oldline manufacturer, but Bob's reaction is totally over the line. If Bob stays, she goes--that's all there is to it. Bob is contrite, but he's under a lot of pressure. The general manager of the Services Group, he's just returned from a two-week trip around the globe to gear up his troops to beat revenue targets again, despite shrinking budgets and hiring freezes. And what does he see when he gets back? An e-mail from Annette requesting that two of his best people devote half their time to what he calls her "idiotic" Knowledge Protocols Group. He's carrying the company on his back, and she's throwing this nonsense at him. Graphics specialist Paula Chancellor is surprised. Sure, Bob's gruff, but his staff loves him, and he's the only one of the big shots who ever talks to her. But HR director Nathan Singer is incensed; Bob's never been a team player, Singer complains, and it's time he learned a lesson. CEO Jay Nguyen is in a bind. Bob is his top manager; he brings in all the money. And even though future revenues are going to have to come from somewhere else, Jay is not totally behind Annette's initiative in the current business climate. He can't afford to lose Bob. But if he reins in Annette, it will look like he's condoning Bob's outburst. What should he do? Four commentators offer advice in this fictional case study.     

The profitable art of service recovery

In services, mistakes are a fact of life. No matter how hard companies try, they can't prevent the occasional late flight or missed delivery. But they can learn to recover from them. Consider how Club Med-Cancun turned a service nightmare into a memorable experience. When a flight to Cancun left New York six hours late, made two unexpected stops, ran out of food, and had a rough landing, the vacationers on board were certain their holiday was ruined. But the Club Med manager greeted the travelers with food and music and chauffeured them back to the resort. In the end, the vacationers had a better time than if the flight had gone like clockwork. Service recovery starts with identifying the problem. The Bank of Maine in Portland pays customers $1 for writing a letter about the service they received. American Express uses an "800" number to solicit customer complaints. Once they've identified a problem, service companies must act fast. When Smith & Hawken realized that it was taking months to resolve customers' problems by mail, the company decided to use the phone instead. Most important, service companies should encourage frontline employees to deviate from the rules when necessary. Some companies use role playing to help employees develop the creative thinking needed to deal with unusual situations. Sonesta Hotels uses a game in which teams win points for coming up with good solutions to realistic problems. Also, employees must have the authority and responsibility to act on their beliefs-to make phone calls, credit accounts, or send flowers.(ABSTRACT TRUNCATED AT 250 WORDS)     

Zero defections: quality comes to services

Companies that want to improve their service quality should take a cue from manufacturing and focus on their own kind of scrap heap: customers who won't come back. Because that scrap heap can be every bit as costly as broken parts and misfit components, service company managers should strive to reduce it. They should aim for "zero defections"--keeping every customer they can profitably serve. As companies reduce customer defection rates, amazing things happen to their financials. Although the magnitude of the change varies by company and industry, the pattern holds: profits rise sharply. Reducing the defection rate just 5% generates 85% more profits in one bank's branch system, 50% more in an insurance brokerage, and 30% more in an auto-service chain. And when MBNA America, a Delaware-based credit card company, cut its 10% defection rate in half, profits rose a whopping 125%. But defection rates are not just a measure of service quality; they are also a guide for achieving it. By listening to the reasons why customers defect, managers learn exactly where the company is falling short and where to direct their resources. Staples, the stationery supplies retailer, uses feedback from customers to pinpoint products that are priced too high. That way, the company avoids expensive broad-brush promotions that pitch everything to everyone. Like any important change, managing for zero defections requires training and reinforcement. Great-West Life Assurance Company pays a 50% premium to group health-insurance brokers that hit customer-retention targets, and MBNA America gives bonuses to departments that hit theirs.