The 70% – Part 2

EngagementHierarchyIn the Executive Coaching Workshop I co-lead with John Vercelli for Coaches Training Institute, we discuss early in the curriculum the pervasive epidemic of Bad Boss Syndrome.  It is jaw-dropping how many employees reflect on the lack of leadership and vision they receive from those who manage them, how starved they are for inspiration, and how little it takes to turn a bad day into a good day.  When you think about the study published recently by Gallup noting that 70% of employees are disengaged — and that too many of them hate their jobs — boss improvement is a good place to start.

Another good place to start is the Dead Brand Graveyard, where we also focus in the workshop.  Surely some brands die purposefully in mergers and consolidations, but my observation is that many more die because they break their promise to their customers, who simply move on.  In a world of virtually unlimited customer choice, when a company fails to innovate or repeatedly breaks a brand promise, the Dead Brand Graveyard is soon to cement a new tombstone.  For the employees who are part of the letdown, the lost promise, and ultimately the job loss that follows, demoralization is readily understood.  Remember, a lot of these employees came to their companies with hope and passion and energy and ideas.  They may have had the solutions to their company’s death sentence on their desktops.  Perhaps no one was listening.  That takes us right back to Bad Boss Land.  It’s an infinite loop.

Let’s pull these two concepts together — bad bosses and dying brands — and then think about the twelve Gallup questions which you can find in last week’s post, Part 1 of this inquiry.  None of the questions involve compensation.  They ask things like whether individuals have the opportunity to do what they do best, whether their supervisor cares about them or their advancement, whether the mission or purpose of their company is understood and they are part of something that matters, whether there is a commitment to quality in the workplace, and whether there are peers or leaders in the environment who are supportive.

Human stuff, huh?  HR mush?  Not the stuff of hard-won profit and loss?  Garbage!  If companies have it so right, why are brands evaporating from the landscape in record time?  Why are fully capitalized companies lasting half as long as the average human lifespan?  Creative destruction, you say, the natural course of things business?  Well, sure, I’ll give you that.  So is top management willing to say the whole Circle of Life is out of their hands and the survival of the enterprise is entirely up to market forces, to fate rather than strategy, to a competitor’s campaign rather than a driven response to galvanizing the single most important asset in the company’s inventory, the intellectual capital that is allowed to rest idle and fester?

That’s not very optimistic.  And yet, optimism is the spirit that drives opportunity, and opportunity is the backbone of capitalist enterprise.

Why do we so often get this so completely wrong?  Why would we let 70% of employees churn in the ranks, angry and sad and defeated?  Why would anyone allow a brand to go stale, to break a promise to a customer, to fail to reinvent itself when invention is the lifeblood of all revenue and profit growth?  Borders, Circuit City, Kodak, Polaroid, Palm — all once admired companies, all with revered brands — what do you suspect the internal opinions were of management as repositioning opportunities were missed and tired product performance spiraled downward?

Much has been written about short-term versus long-term financial incentives as value destroying tactics, particularly among senior management at the top of the compensation bell curve.  That is only part of the problem.  Certainly if you set a sales target for a commission based or stocky savvy executive, she or he will chase that goal aggressively, often with widespread collateral damage.  Yet is it the incentive that is the time bomb, or the misperception on the individual’s part of the fundamental rewards that may or may not be at hand?  To that end, I mentioned that the Gallup poll does not reference compensation.  I would be willing to bet Big Money that the disengagement factor cuts across every salary band in the spectrum.  It is my own observation that once you get past basic human needs being met — housing, food, safety, decent educational opportunities for the kids and maybe a family vacation now and again — there is no guarantee whatsoever that financial reward brings vast job satisfaction.  I have met as many or more unhappy wealthy people as I have in the middle class.  The tendency to focus on the wrong motivation is not exclusive to the underpaid or overpaid, and the failure to align truly rewarding incentives with human performance is almost always the difference between long brand life and flash in pan cash register rings.

When I hear that 70% of employees are disengaged, and when I see brands and companies dying in record time, I experience one story.  We try hard to focus the executive coaching mission on revitalizing the human potential in an organization, to bring the executive’s focus back to the brand promise, and to evangelize that set of values broadly among the members of a team as a rallying cry.

I see three major factors that matter in a job — what you do, who you do it for and with, and the compensation you receive for what you give.  If the first two mandates of that string aren’t met, it seems ludicrous to believe that compensation is going to make up for the loss.  And if the only thing that people are focusing on is compensation, what real chance does that company have at longevity?  A brand will not be reinvented because it needs to be more profitable; it will be the magnet of innovation because people care about it and bond together to transform it into something it currently is not because it matters.  From that investment of idealism will flow vast improvements in continuing profitability.

Short-term harvesting of any cash cow is possible — if you want to squeeze profits, go ahead and squeeze the people who are producing them.  At the moment 70% of those people are telling you they don’t like what they are doing or who they are doing it for.  Want to make the Big Money that lasts the long run?  The Gallup survey tells you in the questions alone where we’re leaving the Big Money on the table.  Start Thinking Different!

Bosses must learn to listen.  Employees need to teach their bosses to listen so they can be heard and emerge.  Coaching can be implicit or explicit, but it has to be obvious that letting ideas flow not only improves morale, it is vital to sustaining the enterprise.  Companies that last do so because they apply long-term strategies, both in terms of bolstering their brands and employee engagement.  Everyone can win — especially customers — if that’s the walk that leadership walks, leadership by example.  It does not happen accidentally, but by commitment, and constant reminder of core values that can be shared.

For me, it will always be People, Products, Profits — In That Order.

Brands In Memoriam 2012

Frequent readers of this blog know that I am obsessed with the concept of creative destruction, the intangible but daunting market force where an invention that is vital takes out that which has become defunct, and the nascent replaces the established. For those of you just stopping by, you will find any number of mentions of creative destruction as you page through my posts on innovation—it represents for me all that is true and real in deploying creativity to survive in business, perhaps best captured in the title of Andy Grove’s definitive book, “Only The Paranoid Survive.”

As a result of creative destruction, every year we add more once significant names to the Dead Brand Graveyard. Recent memory had us bid adieu to such iconic enterprises as Palm, Saab, Lehman Brothers, Zenith, Compaq, Borders, Circuit City, Ritz Camera, CompUSA, Mervyn’s, Friendster, Tower Records, Polaroid, and Kodak. I polled my network on Facebook for suggestions to include this year and got way more than I could include in a single blog post, many of which could be argued are still on the bubble; some have already quietly jumped the shark, others are still operating as near zombie brands, not yet coming to terms with their imminent vaporization. I invite those dear friends who offered their suggestions to include them in the comments below—as well as anyone else who can see what is certain to end badly—as internal politics and stagnating ideas cause those who should know better to obscure the mandate of leadership.

Here then are my top label farewells for the current calendar year:

Continental Airlines Logo Circa 1940sContinental Airlines: As a result of the merger between United and Continental, the marketing folks did the right thing and picked one brand to make it easier to find your tail logo on the runway. Was anything really lost if this was just a merger? Ask the people (like me) still stuck flying United—yeah, the customer experience did the impossible and took another plunge. If you aren’t 1K at this point in your frequent flyer status, melt down your Premier Card, there are so many top dogs in the system the rest of us matter not, kiss upgrades goodbye. Choice on routes? Funny how the routes and times keep getting de-duped. It’s ironic that an industry that flies you around in the sky at 500 mph and largely invented the modern loyalty program today can’t come up with more clever ways to achieve growth than eliminating its own competition—plus five extra inches of leg room, baggage checks, and those yummy inflight box lunches are now upsells. The parade of eliminated airline brands welcomes another, while customers fume with rising prices and deteriorating service. Hard to believe this is a path to long-term health and improved profits in a backbone industry our economy needs to thrive.

Fresh & Easy: This expansion into the USA didn’t go so well for UK grocery titan Tesco. Any ideas why? Been in one? Okay, that’s a good start. Here’s another—where was the segmentation analysis? Same prices and quality as the giant American supermarkets like Safeway, but a smaller footprint and thus fewer shelf offerings. Same footprint and attempted laid back environment as Whole Foods or Trader Joe’s, but no real upscale inventory warranting premium prices or nice people to kibitz with you at checkout. No meaningful differentiation to be found, and small parking lots, too. Ready made portions for young working professionals weren’t a home run in a market with as much choice and variety as ours. Head on competition with Wal-Mart—which can operate at scale near 3% net income while it’s strategically expanding in the grocery category—was a capital-intensive bet inclusive of acquiring real estate and building new stores, a tough play requiring far-ranging commitment and vision to warrant the pain. Without either, Tesco cut its losses and retreated.

Newsweek: This one is spiritually sad for us old school hard news and analysis junkies, except that I cannot remember when I last touched a copy of this magazine, even in a dentist’s office. Bought in 2010 from The Washington Post by audio magnate Sid Harman for $1 and assumption of the losses, ostensibly for sentimental reasons, it was then merged via IAC with The Daily Beast and put under the direction of star editor Tina Brown (there’s a cost saving measure, huh?). Circulation and ad rates for the print version of Newsweek never regained momentum sufficient to cover costs, so this year we heard announcement that the print edition is ceasing. Can Newsweek digital-only survive as a differentiated masthead next to The Daily Beast? Can you imagine a good reason to continue two separate editorial teams? Can you imagine the same editorial team producing two presumably different publications? Have you tried to sell display advertising lately for vertical online editorial products? And just what is a News-Weekly in the age of internet microsecond breaking info copy? At 79 years on the newsstands and in mailboxes, Newsweek had a good run, it just stopped evolving.

Hostess: It seems obvious to many that the sub-brands of 85-year-old Hostess will live on post the uber bankruptcy, and there will be some snack distributor out there continuing to put Twinkies, Ho-Hos, and Ding-Dongs on grocery store shelves everywhere (other than Fresh & Easy, see above). The master brand is likely to die with the corporate entity, as executive management was unable to make a deal with the labor union representing the workers who made the Twinkies, Ho-Hos, and Ding-Dongs. So 18,000 people lost their jobs because no deal could be reached between managers and workers? I don’t think that’s the whole story. Try a balance sheet too weak to support internal investment after emerging from a prior bankruptcy with private equity imposed debt and mounting unfunded pension obligations. The real culprit in my mind—you got it, thinner margins and declining market share due to lack of innovation. Hostess management—now asking for bonuses in liquidation—failed to bring relevant new products to market in a climate where obesity and diabetes became part of the vernacular. Wonder Bread may have been the greatest thing since… whatever came before it, but not in a world of seven grain all natural high fiber baked fresh daily, sliced thick and thin or not at all, your choice.

Blackberry: I am going out on a limb here, calling the magnificent former high-flier from Research in Motion dead even though launch of a new platform has been loaded into the cannons for ignition. Why do I say it’s gone with two new Blackberry’s rolling out as soon as next month? As noted in the Wall Street Journal last week, “Consulting firm IDC recently estimated that RIM’s share of the global smartphone market stands at 4.7%, down from 9.5% at this time last year and from more than 50% in 2009.” Sorry, but when a company has less than 10% of the market share it had three years ago, I am not sure how you could classify a recovery as anything more than a dangling lifeline. What went wrong? Ever try to use the Blackberry browser? There is no word in our language of which I am aware to adequately modify the word slow. With an extremely late to market touchscreen interface, where was the incentive for app developers to develop apps? Those of you who know me know my devotion to the thumb driven analog keyboard, but when I tossed it in for an iPhone 5, I knew the rest of the thumbers were coming too.

There were a number of brands suggested by my colleagues as sighted on death watch, but I’ll let those opinion makers chime in themselves and go out on their own limbs as I did with Blackberry. I have my suspicions about who might be on deck for next year’s list, but I will keep those sealed for now in a paper envelope so as not to publicly curse them or too soon embarrass myself for being wrong. Some in the soon to be gone circle I still like and am hoping for a comeback, though not many.

I think I may make this an annual feature. History would suggest I won’t have much trouble coming up with a list each year. Why chronicle the abdicated? Creative destruction is permanently embedded in our business culture, and even the greatest company can be gone in a single product cycle if customers aren’t understood to be our ultimate boss. With constraints on distribution forever less a moat and abundant technology a ceaseless path to increased consumer choice, business leadership requires nimble execution, unending responsiveness, and gracious humility to constantly win anew customer loyalty. It’s a lesson we all need front and center to do our jobs honestly and well: Innovate quickly or die.