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Heads-Up Leadership … leading a customer revolution

by Peter Fisk

“Business is ultimately about people, not about brands or buildings, products or messages. And that’s why I can tell so much from the leader of a business. I see him or her on television, maybe even meet them in person, and it is their style, their attitude, their passion, as well as their words, that tell me so much about the business that they lead. Do I want to support this kind of business or not? Am I proud to be their customer or not? Would I be happy to recommend them to my friends?

Some leaders are anonymous, corporate workers, introverted and internally focused, probably obsessed with their balance sheets. Others have a vision. They talk about how they want to make life better for me, they share their ambitions for the future, they speak up for me, and they communicate their commitment and energy. They are open and friendly, they want to know what I think, and care if something goes wrong. Their passion becomes infectious not only in their own people, but in people like me, their customers too”.

Track 6.1: Inspiring people

Leaders inspire people to “come to the edge”, and to launch themselves into a near world, to take a new perspective, to embrace a new way of working. They inspire followers.

Leaders are “heads up” people. Managers are “heads down” people.

Heads up people are able to describe a more compelling vision for the business because they see the world from the outside in, rather than the inside out. They can bring it to life in practical terms, and sell the benefits to each person. They demonstrate what it takes through their own attitudes and actions. They are prepared to make commitments and sacrifices, to let go of the old ways.

Leaders inspire followers.

When Steve Jobs walks to the stage at MacWorld each year, the whole technology sector holds its breath – his legions of employees, partners and distributors wait in expectation
– his masses of adoring fans, customers and commentators watch in awe. He leads his business, he leads his industry, and he leads his market too.

The role of a leader in a customer business is internal and external.

In a successful customer business, customers want the business to succeed, they want to be part of the journey, to participate and share, and even define themselves by. They look to the business leaders for inspiration and direction, confidence and confirmation, just like employees do.

In fact a leader must be a leader and manager, executive and entrepreneur. Look at the most successful CEOs of today and you immediately see these collective traits. From Ray Davies to Jeff Immelt, Alan Lafley to Genentech’s Arthur Levinson, Meg Whitman at eBay and Xerox’s Anne Mulcahy – great leaders and managers, entrepreneurial and successful, at the top of the world’s largest and most successful companies:

Heads down Heads up

Inside out
Leading by control
Managing the steady-state
Ensuring consistency
Reserved and controlling
Cautious and corporate
Overseeing work
Managing hierarchically
Process and tasks
Doing what always done
Enforcing regulations
Products and transactions
Evaluating past performance
Generating more sales

Outside in
Leading by inspiration
Managing sustained growth
Catalyst of change
Passionate and energising
Open and personal
Doing work
Facilitating communities
Knowledge and innovation
Embracing ideas from outside
Reinventing the rules
People and relationships
Supporting future performance
Creating extraordinary value

Ray Davis has transformed the fortunes of Umpqua Bank from a little lost bank for lumberjacks, with only 6 branches deep in the Oregon’s Umpqua Valley, to what they self confidently describe as “the world’s greatest bank”.

Phil Dourado, editor of eCustomerServiceWorld.com, summarised some of the “secrets” that have made Davis, and his bank so successful”. He identified 10 personal traits

  • Never-ending discipline. Leaders need to realize that growth is not a project, not a quick fix. You must have the discipline to realize you never have it made.
  • Have positive passion. Be relentless about your vision. Know what you stand for. We call ourselves ‘The World’s Greatest bank.’ It helps us stand out with our
    customers. But, more than that, it creates positive passion within the company.
  • Snap the rubber band syndrome. Each of us has a rubber band attached to our backside, connected to tradition. Keep snapping it.
  • Support your people, and hold ‘em accountable. Leaders have many roles. But, support and accountability are essential, and they go hand in hand.
  • Give them the power. In the past, the leader was the guy with the answers. Today, you have to empower the people closest to the action to come up with their own answers.
  • Rise above the battlefield. Leaders need to rise above the battlefield to give yourself a strategic view.
  • Explain your movie. Leaders cannot delegate the job of explaining their vision for the company – what I call the ‘movie that’s playing in my head’.
  • Be real. If you can’t be yourself, you can’t lead. It’s as simple as that.
  • Be there. Maintaining a culture is like raising a teenager. You’re constantly checking in. “What are you doing?” “Where are you going?” “Who are you hanging around with?”
  • Keep your balance. Leading for growth is a highwire act, and there are many dimensions to keeping your balance.

Umpqua Bank is a phenomenal place, more of a coffee shop than a bank, and a bit of Ritz Carlton and Facebook thrown in. There are no barred screens between you and the cashier, just a concierge desks, and leather sofas, funky music and cappuccinos. This is a bank that sells merchandising, caps and t-shirts, because customers are so proud of their bank.

Dourado also identified 10 collective traits of organisations like Umpua, where leadership is customer-centric and thereby more effective operationally and commercially too:

  • Know what business you are really in. Umpqua bank really started taking off when we realized we were in the retail business, not just the banking business, and started learning from great retailers like Nordstrom.
  • What’s going on behind your back. Having the right strategy is meaningless unless you can execute it flawlessly on the ground. You need systems in place to inspect the execution of strategy at the lowest level.
  • Who do you want on your bus? Jim Collins in his book Good to Great says a leader must get the right people on the bus, I think that is exactly right. But, you need to be clear on how are the right people.
  • Keep your Board strong and informed. Companies can’t move fast if the executive team has to drag the Board of directors along with it.
  • Intangibles matter most. In a service business like ours, the metrics that matter most measure intangibles.
  • Find the revolution before it finds you. Revolutions are going on all the time in consumer preferences, in technology, in marketing, and in other areas. We do a number of things at Umpqua to find those revolutions before they overwhelm us.
  • Your brand is you. People don’t like faceless bureaucracies. They like real people, real personalities. We’ve achieved remarkable success by being true to ourselves. Some people say we are corny, but it’s who we are – and people respond.
  • Serve the Customer. Our Universal Associates program ensures that each associate in our stores is trained to handle any task a customer requires. This sharply sets us apart from the competition. What are you doing to set you apart?
  • Put design into everything you do. Design encompasses much more than just the physical layout of stores or products. When design is used effectively, it brings every aspect of your business into alignment so that everything reinforces and supports everything else.
  • Remember who you are. The biggest danger in relentless growth is that your very growth will undermine the qualities that created that growth in the first place. You’ve also got to know what not to change – what to maintain if you want to stay on track.

Management and leadership are the “yin and yang” of large organisations. Whilst management is more heads down, focus and control, leadership is heads up, vision and connections. Leaders provide the inspiring vision that make people want to follow them. They pull rather than push, they engage and energise people, in a higher purpose, an inspiring vision, in seeing what is possible.

As individuals, leaders are the first to anticipate and respond to change – proactively and effectively – flexible and adaptive, open to alternatives, and willing to take risks. They are change agents, rather than managing the status quo. And they don’t just propose change, the make it happen. In many ways, therefore entrepreneurs are the right people to lead organisations.

Managers and leaders are not different people, but as complementary attributes of the same person. Whilst more senior managers will focus more on leadership aspects, they still need to provide focus and control. And whilst nobody is likely to have the perfect

mix of all attributes, teams should be built so that they appreciate the differences that each member brings, and the collective strengths in combining those talents.

Insight 42: Eczacibasi

“Are you a driver or passenger?”

That was the challenge from Dr Erdal Karamercan to his team of senior managers. He is the CEO of one of Turkey’s largest conglomerates, Eczacibasi Group, and seeking to bring a new focus, a new culture and new success to the family-owned business.

The business was founded in 1942 by Dr Nejat Eczacibasi whose father had been given the name “Eczacibasi” meaning chief pharmacist by the government of the time. Nejat began by manufacturing vitamin D is his Istanbul laboratory, and gradually established the brand in every Turkish home.

The company’s heritage and ambitions are reflected in its mission “to be a pioneer of modern, high quality and healthy lifestyles”.

Eczacibasi works towards this goal, now with a diverse group of businesses, from bathrooms and kitchens to hair gels and condoms, digital technologies and welding materials. At the same time, it makes significant contributions to its local communities, through education and welfare support, sponsorship of culture and the arts, public policy and scientific research, and women’s sports and founder of Istanbul’s leading modern art museum. Ethics and responsibility are important to the business, and can sometimes even put it at a disadvantage in markets where not everybody plays by the rules.

The business is perhaps best known for its VitrA brand, a leading player in bathrooms and tiles around the world. It is also a major exporter of tissue paper, electronic smart cards and financial services. The two major business areas are

  • Consumer products, embracing 33 brands, from Egos hair gel to OK condoms, Selpak tissues to licensed brands such as Nivea and Schwarzkopf. They succeed in particular through their strong distribution networks, forming close relationships with leading retail chains, but also personal relationships with smaller shops, like hairdressers.
  • Building products, from industrial raw materials, including some of the world’s finest clays and feldspars, through to welding electrodes, they address the construction boom locally and beyond. Alongside VitrA, the business recently acquired a number of German brands – Burgbad, a luxury bathroom furniture business, and tile makers Engers and Villeroy & Boch Fliesen.

However the generic pharmaceutical business is no longer part of the group, having been sold to Zentiva in 2007. Selling the family business was a bold move by Karamercan who had recently been promoted to CEO and set about bringing a more commercial discipline to the management of the business.

He embraced “value-based management” as a core principle for delivering performance, focusing his efforts on the activities and investments that would create the best future streams of economic profit (the real profit of a business, after taking into account the cost of capital, that is the minimum expected returns to shareholders).

Karamercan set a goal to double the “value” of the business every five years. This didn’t mean just focusing on maximising existing revenues, but working out which markets and sectors would be capable of delivering most profits in the future.

With the rapid emergence of new biomedicines and nanotechnologies, he recognised that a traditional pharma business was living on borrowed time, and decided to sell whilst it still had a reasonable value, rather than wait until it was worth little. The business was shocked, but listened to his logic.

They were even more amazed when he started to spend the cash on property development, a booming sector now in Istanbul. On the site of Nejat’s old factory, he built Kanyon, an extravagant new shopping mall that housed everything from Agent Provocateur to Harvey Nichols, and went on to win awards at the 2008 World Retail Congress. He built a skyscraper office and apartment block alongside it, which included the new head office of the group, with many other property development projects likely to follow.

It was an icon of transformation, a model for the future, recognition internally that change was inevitable as customers and technologies evolve, and a symbol externally that Eczacibasi was modern and innovative, ready for growth in local and international markets.

Karamercan had succeeded in doubling the value of his business in four years, and immediately declared his intent to do the same again. This time, of course, it would be harder. However he realised that corporate strategy and structural change was not enough, acquisitions helped but organic growth was important too.

He needed his people to change. He needed them to be drivers, and no longer passengers.

They had lived a relatively steady and protected life in their separate business units, serving local markets and following the rules. Now, he needed more from his people. He needed them to sense and respond to the changing needs of customers, to build stronger brands, to take an international rather than Turkish perspective, to embrace new partnerships and ideas, to work together across the business units, to connect ideas and create better ones, to challenge the structures and conventions of their markets, and to drive innovation and profitable growth in every part of the business.

An example of this new creativity, was the recruitment of international designers like Ross Lovegrove and Matteo Thun to add style and desirability to VitrA’s bathroom ranges, and the addition of İntema kitchen and accessories, Burgbad’s furniture, and V&B’s prestigious tiles in order to turn products into richer lifestyle concepts and customer solutions.

Karamercan is also a great storyteller. He reminded people of his own career as an engineer who loved technologies, the intricate details of products, and how to make them better. That all changed when he took the bold step to learn about marketing. His attitude to business changed – he discovered the world of customers, the challenge of competitiveness, the need for deeper insights and stronger differentiation, the role of communication and distribution, and the power of brands.

He now urges every one of his people to follow the same path, to think opportunities rather than capabilities, to be driven by customers rather than products.

Today, Eczacibasi is a fast-growing international business, still located in Istanbul, but with customers and businesses flourishing around the world. At the beginning of 2008 the group had 42 companies with around 9900 employees delivering a net turnover of $3.2billion.

Track 6.2: The new business leader

Ritz Carlton’s Horst Schulze says that leaders should “put their egos in their pockets”. Leaders don’t do the real work, he claims, that’s what his people do – his job is to support them.

“At every new hotel, I give the introductory session myself. I’ve done 45 hotels so far. From the busboy to the housekeepers to the room service chefs, I line up the new hires and say to them on important question: who’s more important to this hotel, you or me?” He then tells them that it’s them. He argues that if he doesn’t go to work on Monday morning, nobody knows. Nobody cares. But if they don’t turn up, the food doesn’t get served, the beds don’t get made. “You are far more important than me” he claims.

Marcus Buckingham co-author of “First Break all the Rules” argues that business leaders drive business by defining the ways of working around them, the culture of their business. Speaking at the recent European Customer Service World conference he said “all culture is local, companies don’t have one culture, but many driven by local ways of working in each location or department”. He therefore believes that there are as many cultures in a business as there are managers. At the same time, he argues, “people don’t quit businesses, they quit managers.”

Asked what makes a great manager, he argues that it’s somebody who “is able to turn one person’s talent in a unique contribution to business performance”. However he warns that this is not necessarily about being soft or trying to be nice. “They challenge and push you, they’re your harshest critic but they never stop believing in your talent, they may even have fired you, but because they believe it’s the right thing for you.” The most important thing you need to do as a manager, he suggests, is “to find out what is unique about each person and capitalise on it”.

The successful business leader of the 21st century, in big companies and small, share some common characteristics – combining the passion and directness of the entrepreneur, with the rigour and discipline of the corporate executive. They personify these characteristics:

  • Communicator of vision: articulating a clear and inspiring direction for the business, living the values and personality of the brand, engaging all stakeholders in active dialogues. Externally they will be ambassadors of the brand – engaging stakeholders, partners, and the human face of the business to the media
  • Connector of people: bringing the best people and best ideas together – internally as well as from other companies and specialists – to generate bigger and better ideas and solutions. They will focus on building great teams, the right people in the right jobs for today, and planning for future succession.
  • Catalyst of change: constantly seeking new possibilities, challenging the business to think differently, to be more innovative and effective, faster and with more impact. This might be in the form of provocative ideas and disruptive challenges, prepared to play devil’s advocate rather than being a rule-maker
  • Coach of high performance: working with and supporting all levels across the organisation, in their boardrooms and shop floors, and even with peers in other companies. The leader adds their own specialist skills to the business – their brains, technical knowledge, previous experiences, insights and instincts.
  • Conscience of business: deciding what is right and wrong, considering the big picture of the company and its role, and how it can help create a better world. Championing business ethics and corporate responsibility, cultural diversity equal opportunities, staying true to the business purpose and brand values.

Observe the way Richard Branson lights the fire in his people, by encouraging them to challenge the status quo, to have a bit more fun, and make life just a little bit better for all the people who both work for him and buy his products. Look at the way Jeff Immelt dives into GE meetings be they about future dreaming, technical innovation or collaborating with customers on specific solutions, like a juggler he makes new connections, helps people see things differently, and to have the confidence to dream.

Insight 43: P&G

AJ Lafley is in the midst of engineering a remarkable turnaround. The first thing Lafley (Alan is his first name) told his managers when he unexpectedly stepped up to the CEO job in 2000 was just what they wanted to hear: Focus on what you do well — selling the company’s major brands such as Crest, Tide and Pampers — instead of trying to develop the next big innovation.

Now, old staples of the P&G stable have done so well that they are again the envy of the industry. So is the company’s share price, which climbed 58%, to $92 a share in the six years since Lafley started, while the overall stock market has declined 32%. Profits are almost $6 billion on sales of $44 billion, having outgrown most rivals for the past five years.

Maybe softly-spoken Lafley was the antidote P&G needed after 18 months of Dirk Jager, the previous CEO who had flown into Cincinatti from the Netherlands on a mission to shake up the company. He stuck up “Old World, New World” posters, asking people which world they were in. The share price plummeted. He rammed through an agenda of change, and whilst he was absolutely right that the business need a new, and much more external culture, he ripped apart everything that P&G’s insular culture was built on, and alienated almost everyone. Instead of pushing P&G to excel, his torrent of slogans and initiatives almost brought the company to its knees.

Lafley, in his 23rd year at P&G wasn’t supposed to be a radical change agent, he was supposed to bring some stability back to the business. Having spent his early years managing Tide, a decade running the Japanese business, he had recently returned to head up North American operations. He recognized the need for change, the need for more speed and agility, a deeper understanding of consumers, and a more radical approach to innovation. But he also understood that P&Gers – some of the best trained, brightest managers in the world would only embrace such change in a P&G way.

On taking up the job, Lafley pushed through Jager’s agenda even faster and more radically than his predecessor had dared hope. However he did it in a way that engaged

people, that built on what they had spent their careers doing, that offered hope and personal gain, rather than despair and pain.

In his short time in charge, P&G has not only experienced transformation internally, but has absorbed some of its largest competitors too – buying Clairol for $5 billion in 2001, followed by Wella $7 billion, and Gillette for a huge $54 billion in 2005. He has replaced at least half of his most senior managers top 30 officers, and cut 10,000 jobs. However this is just the beginning. If one unguarded memo is believed, 25,000 more jobs could soon go, based on the idea of turning P&G into a virtual brand-owning company, with marketing as a its core business, and most other activities – from innovation to manufacturing – done in partnership with others.

Lafley’s rallying call is incredibly simple, almost embarrassingly so, as he reminds people in meeting after meeting that “the consumer is the boss”. With this phrase he is turning P&G inside out – or more precisely, outside in.

Symbolically he tore down the walls of the executive offices, including his own. He moved people about, for example seating marketing and finance people together to drive faster, more collaborative, more commercial, much customer-driven ways of working. He spent hours, himself, talking to real consumers in their homes around the world – about how they live, how they cook, how they clean. When his managers came to him with an idea, he was ready to respond with a consumer’s mindset.

He is a listener and sponge, and when he communicates, he does it in very simple “Sesame Street” terms, but people love him, because they believe he is trying to do the right thing. He only ever writes one page memos, and most meetings are scheduled for 20 or 30 minutes, rather than conventional one hour. He brought in Meg Whitman, CEO of eBay as a non-executive director, and hung out with GE’s new CEO, Jeff Immelt, and himself joining GE’s board.

Innovation, in particular, has come under the microscope. Despite battalions of scientists and engineers, P&G hadn’t delivered a real innovation in decades, despite millions of dotcom-style dollars being pumped into internal ventures. When they tried to innovate, it was always based on a technically-advanced product offer, rather than something consumers actually wanted.

He insisted that at least 50% of new products should come from outside, compared to 10% at the time. This would require a seismic culture change, and putting your future in the hands of others would be risky too. The new “connect and develop” approach is about collaboration, with partners who have specialist skills, P&G doesn’t, and with consumers.

Lafley’s own eyes were opened to the need for change when he worked in Asia. P&G was a minnow compared to the might of Unilever and Nestle in that market. Brand names long on American heritage and short on real difference just did not sell. Indeed what sold in the American market was never likely to excite the Indian consumer, as even the likes of Coca Cola have found the hard way. P&G lacked insight, relevance, differentiation, and creativity. Performance was respectable, but not sustainable.

Changing a huge, global business is not easy. He recognized that he couldn’t do everything. He quickly focused his change agenda on “the core” business – the select few markets, categories, brands and capabilities that defined the business. Core meant being a global leader, leading economics, high growth and strong cashflow. Other areas would have to wait, telling them to “just keep doing a great job”.

He was clear and direct with people – “These are our core business – fabric care, baby care, feminine care and hair care” and “Everything is non-core”. He wanted to unclutter the thinking.

Whilst his approach was hands-on in the early years, he has increasingly stepped back to become more of a coach and facilitator. He wants his manages to learn to make their own choices – to embrace his passion and focus in their own ways, as he can’t possibly manage everything. However he demands a strategy from every team – including a “to do” and “not to do” list – and every decision must be based on a sound consumer insight, not just some manipulated financial projection.

He regularly reminds people of the their enduring purpose: “to improve the everyday lives of people around the world with P&G brands and products that deliver better performance, quality and value”. He points out that this has not changed, nor has the values and principles of the business.

One thing Lafley has carefully avoided is setting out a vision statement. He doesn’t believe it is necessary, that the purpose of the business is clear and that is sufficient, and otherwise it is about the consumer not the business. He calls it managing from the “future back” – his eyes and ears on today’s world, and his back to the future, believing that the consumer is his best navigator.

Today 42% of P&G products have an extrernally sourced component, whilst revenues grew by 8% in 2007 to $78 billion, and profits climbed at twice that rate to $11billion. It seems that P&G, with the customer as its leader, is doing very well.

Track 6.3: The customer champion

Who is the “chief customer officer” in a business?

Is it a sales and marketing task, or a customer service task? Should it be a new role, like finance and talent, managing a fundamental resource that runs horizontally through the business? Or should it be everybody’s challenge, in the same way that innovation and corporate responsibilty are part of everybody’s job description?

Everybody should be a customer champion. Customers are why we do business, they are what the whole business process and structure is centred around, and emotionally it is the need to serve them that engages and energises employees.

A “customer champion” is a leader who

  • Immerses themselves deeply and personally in the customers world
  • Collates and disseminates customer insights across the business
  • Focuses the business on the right, compelling value propositions
  • Constantly seeks to innovate in ways that improve customer solutions
  • Encourages people to work together to deliver a seamless experience
  • Is flexible and responsive to the needs and aspirations of individuals
  • Treats employees fairly and individually, in the same way as customers
  • Focuses on attracting, retaining and growing the best customers
  • Measures their performance using customer and financial metrics
  • Inspires their teams, peers and bosses to do the same

A customer champion thinks, works and succeeds from the outside in. They fight for the customer in boardroom or team meetings when everybody else is talking numbers or processes. They bring the customer voice to the table and argue passionately on their behalf.

The CEO must be the customer champion.

In a customer-centric business, if there are departments and levels of managers who have a customer mindset, but the ultimate leaders have their heads stuck in their spreadsheets, then the business will not succeed. If some are aligned around customers, and others aligned around products, technology or finance, then their will be conflict. Or at least a less good experience for the customer.

The CEO can uniquely bring a customer vision to life. He or she does this not just internally, but externally too – for customers, for partners, for media, for analysts, for investors.

They, more than anybody else, reflect the personality of the brand, the attitude of the organisation, the conscience of all its people. They speak to the news media, they introduce the brochures and shows, they are brought in to woo the key accounts.

The enlightened CEO can be the driving force of a customer revolution.

Imagine if these were some of the ways you did business – encouraged, or sometimes insisted upon, by a customer-thinking CEO:

  • Annual reports started with a review of customer activities and performance
  • Performance reports starting with customer impact, and then financial impact
  • Investor relations briefings started with customer rather than financial news
  • Board meetings discussing the source of money, rather than just counting it
  • Customer representatives on the governance board or executive committee
  • Performance targets based on both customer and financial success
  • Investors basing market valuations of the future profit streams from customers
  • Profitability measured by customer segment not by product category
  • Recruitment based on customer-thinking attitudes, and other skills secondary
  • Sitting in meetings reminding people to think from a customer perspective
  • Demanding not just a business case, but a customer case for doing new things
  • Too busy for management meetings, need to be out meeting more customers

Of course its not just the CEO who must think this way – revolutions usually start with the people, not a lone individual. But if they are a good leader, who inspires others to follow, then it’s a good place to start transforming the business around customers.

Business leaders become customer leaders too.

 

Extract from “Customer Genius” by Peter Fisk

Peter Fisk is a global branding, marketing and innovation expert. He is founder and CEO of the Genius Works, the accelerated innovation firm. In 2013 he entered the Thinkers 50 Guru Radar, recognising the world’s best new business thinkers. He is a strategic consultant, inspiring keynote speaker, and best-selling author of six books including Creative Genius, People Planet Profit, and Gamechangers to be published in 2014.

Email: moc.k1513099156sifre1513099156tep@k1513099156sifre1513099156tep1513099156

New book: www.Gamechangers.pro

More information: www.theGeniusWorks.com

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