December 22, 2014 by Ken Goldstein - 4 Comments

Everyday Innovation

You don’t have to be an entrepreneur to be an innovator. Becoming a startup CEO may not be your thing, but changing the world is always within your reach.

There is a frenzy of late among those longing to lead business startups, and that is exciting. Entrepreneurs are a special breed, and while the successful ones are rare, no one really knows who is going to be successful in advance. Naysayers will tell you what you can’t do, and only you can prove them wrong.

When we talk about innovation, that undoubtedly points to entrepreneurs, but I’d like to think it not exclusive to them. Innovation is a process where creativity is harnessed, often galvanized through the building of momentum and the sharing of a vision. Often a new project or the reinvention of a product type begins with very few people involved, perhaps only one. The idea is refined and vetted, resources are added, more people get onboard, a consensus around a feature set emerges, and eventually it comes to be owned by a team. If you’ve ever been a part of this kind of team, you know how invigorating the process can be.

A subset of this process is the highly competitive world of funded startup companies, and that is a different beast entirely. In a quite insightful op-ed in the Wall Street Journal about the trials and tribulations of Uber, Andy Kessler recently noted the sometimes seething nature of a startup CEO who makes it through the hurdle of significant investment in their ambitions to excavate a gold mine:

Hubris becomes an asset. Startup CEOs are always saying the goal is to “suck the oxygen out of the room” of their competitors. Success requires a certain bravado. That should be encouraged, but most entrepreneurs have no idea when to turn it off.

There’s nothing wrong with being competitive, embracing ambition, and wanting to do the impossible. Does the goal of that have to be the annihilation of those who currently populate a market segment? Maybe because it’s the holidays, I wonder how that thinking aligns with Give Peace a Chance, but I think you can change the world without an ethos of leveling good chunks of it.

It is important to our economy and financial well-being that new companies are constantly born, that creative destruction replaces old opportunities with new ones. It is also limiting to evaluate innovation on this metric alone. If the only creativity that receives our highest praise is the moonshot IPO or breathtaking acquisition multiple, perhaps we send a difficult message to our colleagues and children that commercial success is the most important success. Do we really believe that it is somehow less noble to be part of reinvention that is not about clubbing a competitor over the head and walking away with his or her bounty?

Much has been written around the concept of disruption, where traditional ways of doing things are derailed in almost unbelievably short periods of time. We saw it happen with music and video, where digital media disrupted the business model of selling and renting physical media. We’re seeing it happen with the news business, most recently evidenced at The New Republic, where the economics of professional journalism are colliding with the realities of recovering its cost. Disruptors are a very real force as author Clayton Christensen so clearly taught us in his landmark book The Innovator’s Dilemma, but is it an end unto itself? What if someone doesn’t want to be a war-declaring disruptor?

There are all kinds of ways to define admirable innovation. Truth be told, very few of us are going to draft a business plan and schlep from angel to venture to institutional investors with an all-or-nothing mentality. If that’s not you but you still feel a hunger to join the reinvention movement, here are seven concrete ways you can embrace innovation right now:

Give Yourself a Stealth Performance Review: Secretly write down exactly how you think you are doing at work. Be as candid as possible. Conclude with a set of recommendations for improvement. Pick one. Do it.
Ask Your Boss for a Problem: Walk in and say, “How can I take a burden off your back? Give me something on your to-do list that is important but you don’t have time to do. Let’s brainstorm it together.” Always remember that every problem is an opportunity.
Clarify Your Brand Promise: If you don’t know what your company stands for, ask someone in senior management for some evangelism around your company’s brand. Then look at the work you are doing every day. Does it align with the brand promise? If not, what tweaks can you make to your daily tasks to bring you personally more in line with your company’s expressed mission?
Help a Non-Profit: Find an organization near you whose values and mission you embrace. Contact someone there in a leadership capacity. Tell them you want to help and what skills you have to offer. Ask them what is on their plate that isn’t being addressed. Address it.
Fix Your Personal Budget: Develop a formal income statement for yourself or your family. Write down all sources of revenue and expenses. Look for areas where money is leaking out that needn’t be. Plug the holes. Get your credit under control. If you have longer-term needs, create a formal plan for getting there.
Get a Hobby: Right, you don’t have the time. Yet a hobby allows you to abstract so many of your daily thoughts and tie back that problem solving to your everyday responsibilities. Plant a garden, bake, follow a sports team, adopt a pet. Don’t think of it as a diversion, think of it as a commitment to lifelong learning and self-improvement. Push yourself to approach it slightly differently from those already doing it.
Coach a Friend: Look around your circle of acquaintances for someone who might be struggling a little. Offer to be a coach or mentor for the next six to twelve months. Ask nothing in return. I promise you the ideas that will emerge from your discussions will be as valuable to your personal growth as they are to the friend. Ideas and energy compound when shared. You may forget who is coaching whom.

Startups can be cool, but all innovation does not require a startup environment. Creativity is a process that leads to all kinds of new stuff, and it also exhausts dead ends around stuff not worth doing or not ready to be done. Instead of making a hollow new year’s resolution, pick a path to one of the above suggestions or come up with your own idea for reinventing the world around you. Everyday Innovation is there for the taking. Go make change happen, and I’ll see you at the starting gate!

November 24, 2014 by Ken Goldstein - 7 Comments

Dreaming and Doing

Some people focus on dreaming. Some focus on doing. The ones who find a way to bridge the gap make change happen. Every once in a while, as Steve Jobs would say, they put a dent in the universe.

Many people elicit feedback. A few of them take something away from that feedback and apply it to what they are dreaming and doing. Yet too many solicit the feedback and then bat it away, a check mark on their roadmap to convince themselves they are not building in isolation. They have no interest in taking their vision to another level if it means wandering a bit from a too rigidly determined path.

The combination of dreaming and doing creates the flint and steel of innovation. Without both the status quo rules.

The combination of listening and interpreting is what hones an idea and an action plan, shaping and molding it into a viable product.

Walt Disney said, “If you can dream it, you can do it.” For decades I’ve been trying to decipher what he really meant by this. What I do know is that this calling is aspirational. It is incredibly difficult to meet this challenge. Walt defines a promise, then delivers the promise. This has taught me that when I make a promise to customers, I must be fully committed to delivering on that promise. If I allow a gap to remain between dreaming and doing, the dream becomes cynical. Failure is okay if it’s part of the path of learning, but a cynical promise is never okay. That’s when words become hollow, and customers abandon a brand.

Recently on a cross-country flight I saw the movie Jobs. I don’t know if it’s a great movie, but it did remind me clearly of Steve’s near maniacal obsession with perfection, with making excellence a reality, with getting everything right. That’s a standard that will surely break the mediocre and inspire those who want to be inspired. He was a dreamer, he was a doer. In his own weird way, he was also a listener. You had to listen closely to hear where he was hearing, but Steve was always listening.

Walt Disney was always listening as well. He would sit in the center courtyard at Disneyland and listen to the people around him. He never stopped dreaming. He never stopped doing. He never stopped listening,

Over the past few years I have worked with several emerging companies, to help them craft and realize their articulated strategies. I have seen magnificent dreams get stuck either because they were too unformed to realize or because the dialogue around the table became stunted by poor interchange. When you travel a great deal and interact with a wide range of customers, you begin to see the difference between actual listening and pretending to listen. You also see the results—who is gaining ground and who is stuck at the table. In my observation, the people stuck at the table might still be dreaming instead of doing because they are not listening.

As a team grows, the voices on that team expand, none more important than the voice of the customer. Does that mean a powerful vision should be diluted into compromise so everyone’s voice is incorporated? Of course not! I have written about that many times before, secure in my belief that product development is not democratic. A big idea is almost always pure, and consensus is not the same as compromise. Yet I have also sat in the room when the small spark needed for bringing dreaming into doing was snuffed out time and again. No matter how many times it was said, it was not heard. Thick heads prevailed. The status quo ruled. An ordinary idea was dressed up as something extraordinary only to be exposed as counterfeit when stared down by paying customers.

The bigger the dream, the harder it is to get it right. Listening, editing, sifting through, and interpreting feedback is your path. That’s how you build engagement. That’s how you build momentum. That’s how you build loyalty.

Big dreams are rallying cries; small dreams are not. Incremental dreams do not put a dent in the universe. Dreams that overcome entrenched hierarchies fire up those around you and fire up your customers. The fire starts with a spark. The spark? Listening.

Business is pragmatic. Say what you are going to do and then do it, otherwise your brand promise will be empty and your customers will abandon you.

Dream big, but understand that once you share a dream, you must be committed to bringing it to life. That is a dream worth dreaming, worth fighting for, worth sacrificing for, worth celebrating. Hold people accountable for their role in the dream and cause them to own a share in its success. That is a much more worthy endeavor than just doing a job.

And listen.

The end of each year is a great time for personal reflection. What can you do next year that you weren’t able to do this year? Are you dreaming it or doing it? And as you embark on doing it, make a point of listening to those you need to hear. Then make the hard calls, just like Steve Jobs, just like Walt Disney.

October 20, 2014 by Ken Goldstein - 2 Comments

The Art of the Winback

Last month I wrote a post called How to Lose a Customer for Life for Ten Bucks. I received a lot of feedback, mostly private and positive, but some people didn’t understand my point. I have no interest in punishing a business that lets me down. I simply choose to redirect my business to someone who wants it more. I applaud entrepreneurs at every level, but first and foremost, my mantra of “People, Products, Profits—in that order” is not directed exclusively toward the People who run the business. It extends to the customers who are served by the business, the suppliers and partners who support the business, and even the investors who champion the business. The People part of business is unending, complex, fascinating, and a noble bedrock on which to establish competitive advantage.

Nowhere is this more true than in the discipline and practice of customer service. My key point in the tale of enforcing restaurant corkage as specified by company policy despite customer confusion was not that the restaurant owner had upset and lost me as a customer by not showing concern for my concern. It was that he had willingly tossed into the incinerator an opportunity to bond me as a customer forever, future cost of acquisition priced at zero.

This is the takeaway that matters: Any botched moment in a transaction is a moment of truth, a distinct fork in the road that will lead you to one of two places, separated or hitched. Mess-ups are good. Mess-ups are big-ticket fountains of light. A momentary instance of failure is the single best opportunity a business will ever have to connect with a customer’s conviction. Understanding that a boo-boo is not a lethal wound is as simple as knowing that almost anything gone wrong unintentionally and without malice opens the door to a celebrated winback.

When something goes wrong, you have a unique opportunity presented to you on a platter. This is opportunity you can’t create intentionally in good faith; it happens when things go astray in a way you hadn’t planned. When something goes boom, you can lose your customer or you can save your customer. They are likely both forever choices. You get to decide. You just have to make that decision on the spot, quickly and correctly.

The error can be your friend if the winback is always what you keep top of mind. Do it right, reach beyond the customer’s expectations, they’ll be back again and again. It works every time.

You just bought your child an ice cream cone from a local vendor in the park. Your child takes a bite and drops the cone on the ground, eyes already beginning to tear. The vendor can offer up a free replacement before you ask, or else charge you for another one. Of course the free one hurts his pocketbook. Which choice makes him the hero you always come back to find?

You arrive at your hotel room late at night and discover the bed is not made. You’re tired, perturbed, and frankly a bit shocked. You call down to the front desk, not exactly joyful. The attendant at the front desk sees no other rooms available on par with yours, leaving the options of sending up a housekeeper or upgrading you to a suite. It’s a busy time of year and the attendant is pretty sure he can sell the suite in the next hour at triple the discount price you paid. What’s the attendant’s best move?

You pick up a half-dozen shirts from the dry cleaner. Your favorite one has been returned with frayed cuffs. The owner has seen this shirt come through more than a few times, and everyone knows that laundering can be harsh on pressed cotton. You complain that this was your favorite shirt and you really hadn’t sent it to the cleaner that many times, although maybe you had. The owner can delete the cost of cleaning that shirt, offer not to charge you for that order, or offer you the replacement cost of the shirt. What will serve you and the owner best?

What is at stake here is nothing less than the lifetime value of your customer. In any one of these cases, the customer might refuse the act of good will and make due, but your kind offer is unlikely to be forgotten or undervalued. If the customer does take you up on your generosity, you might have invested in ten times or a hundred times the business. All three of these examples are real for me, not the exact circumstances, but close enough. As a result, I make a point of where I buy ice cream, which hotel chain I favor, and which dry cleaner gets my laundry bag every single week. Honestly, I can’t remember whether I took their offer or not, but I remember the point of failure, I remember the response attitude, and I now am as loyal a customer as I could ever be, way more so than if the failure had never occurred. The winback is that powerful. It makes bad into good, good into great, temporal into forever. No advertising can do that, no coupon can do that, no promotion can do that. Only a person can do that by making a smart choice that is authentic and heartfelt.

Are there awful customers who will take advantage of merchants and service providers? Of course there are. As I said in my prior article, the customer is not always right. Sometimes a truly miserable customer will force the point of failure to see what goodies will come, even lie about the unmade bed to sneak a free upgrade. Yes, there are good customers and there are bad customers. Decide which one you’re dealing with and act accordingly. My experience is that if you worry less about whether there is a charade before you and more about the immeasurable value of the winback opportunity, the bucket of winback business will fully offset the times you get beat for your graciousness.

Good business starts at the front lines, where those who interact with customers are meeting their true boss. All the small things we can do to make businesses better at any touchpoint can add longevity and prosperity to the enterprise. It’s that kind of creativity I most encourage when a winback is at hand.

Go on, get out there, and start winning ’em back! Reach way out. It’s worth the stretch.

____________

September 3, 2014 by Ken Goldstein - 10 Comments

How to Lose a Customer for Life for Ten Bucks

Steve Martin in his heyday had a funny routine called Let’s Get Small. Today I am going to ask you to do the opposite. I am going to ask you not to be small.

A while back I wrote an article called the The $20 Brand Bond, noting how Amazon locked in my loyalty by facilitating a modest refund in record time without asking me a single question. Now I am going to tell you the story from the other end, how a local brick-and-mortar company lost me forever for half that much.

This was the very definition of a no-brainer. My wife and I recently went to dinner at a neighborhood restaurant, which since it opened offered a no-corkage policy if you bought a bottle of wine at a shop a few doors down. We had done this several times and enjoyed the restaurant as well as spent a little more on wine, since there was no mark-up after retail. All was well with the village—until we walked in one Friday with a store-bought bottle stickered with the retail shop’s brand, only to be told while the waiter was uncorking it that the no-corkage fee no longer applied weekends but was now good weeknights only. I asked why the fellow at the wine shop hadn’t told me that since we had just been there and mentioned we needed the sticker for the restaurant to waive the corkage. The waiter said he had no idea why, but it was “out of his authority” and he would send over the owner.

This restaurant is about 1500 square feet, maybe 20 tables. The owner arrived a half-hour later. I told him the situation bothered me, that we had followed the routine only to be told after our bottle was open that corkage would apply because it was Friday. He responded, “Well, they should have told you at the wine shop. I’ll have to follow up with the owner there. He should tell his people that we changed this policy. I have to charge you $10 tonight.”

“You’re the owner,” I said. “You have to charge me $10? You have no leeway to make this one-time exception since we didn’t know you changed the rules?”

“We changed the policy so I am going to charge you,” said the owner, and he walked away.

We will never go back to that restaurant. I have told this story to perhaps 50 people around town. I am not naming the restaurant here out of loyalty to our community to prevent harm to our local businesses. Yet here you observe the destruction brought on a business by making the single most important mistake a business can make: not loving customers.

What’s interesting about this particular scenario is that we almost always order extra food when we don’t pay the restaurant for a bottle of wine, and we take home increased leftovers. We also tend to tip heavily and supplement the night’s bill so the restaurant doesn’t get beat on its own promotion. We understand the cost of customer acquisition and operating in a competitive environment. We understand you can change your policies anytime you like and rules are rules, no doubt to be fair and ensure continuity in the enterprise. We also understand that we have choices, we like great value more than we like a reduced bill, and we like to be treated kindly when we are guests in your house. You don’t have to do any of those things. Feel free to advertise, run Groupons, buy ads on Google, whatever you think gets us in the door. What gets us in the door fastest is getting us back in the door after we just had a swell experience. It doesn’t get any cheaper or easier than that.

When it comes to your customers, never think small. Your customers are your lifeblood. Without them your business is nothing. It takes years to acquire a customer base, and marketing is often your biggest intangible risk investment in a new business. You can lose a customer in an instant, and the potential damage to your reputation is unquantifiable. Yelp and OpenTable are only the beginning of your problem when you do a customer wrong. While bad reviews there are almost impossible to shed, they pale in comparison to the power of WOM: Word of Mouth. Casual conversation now travels at internet speed. Word of mouth escalates and compounds exponentially, but we are more predisposed to hear the bad over the good. It might take a dozen people telling you a place is good to try it. It might take only one to get you to avoid it all costs.

Is this just about small local businesses? I think not. Listen to the people around you talk about their cable companies, their phone carriers, their insurance companies. What’s their #1 complaint? Well, cost of course, getting gouged for mediocre products. And then? Customer service. They can’t get anyone on the line to help them. When they do get someone on the line they have little discretion to help them. These customers are held in place by a lack of choice—a situation that won’t last forever. When these neglected customers do have a choice—and they will—they will be gone, gone, gone!

Last week I attended a talk called The Rise of the Chief Customer Officer. I agreed with everything the speaker had to say about making customer service strategic and giving the Chief Customer Officer a seat at the table, except for one thing: I don’t think a CEO or an owner can afford to delegate this title; I think the CEO or owner has to be the Chief Customer Officer. If you want to show your employees what matters to you most, lead by example. Customers matter most. They pay for you to have a business. Contrary to an old cliché, they aren’t always right, but they do always matter. If you don’t woo them at every turn, they will vote with their feet. Or their mouths. Or their smartphone.

Thinking big means thinking long term. You don’t want one-off transactions; they are much too expensive. You want ongoing relationships, where customers return to you because you treat them like gold. Invest in relationships and the transactions will follow. Leave a few bucks on the table today for lifetime value that is unlimited.

Our local restaurateur got his ten bucks for the bottle of wine per his policy. Good for him. The next ten times we don’t walk into his cafe at $100 per seating costs him gross sales of $1000. The ten people who don’t come in because of word of mouth cost another $1000. Multiply by ten years of lost loyalty, that’s $20,000 of topline vaporized. You won’t need an MBA to calculate the negative ROI on that cold hard ten-spot in his pocket.

Still want that extra margin on a bottle of wine on tonight’s tab?