Three I Leadership

During the time I was CEO of The Loyalty Group, we grew from three entrepreneurs in a Toronto hotel room to over 600 employees when we sold the business to Alliance Data System (NYSE: ADS) in 1998.  Throughout this period, I thought a lot about both leadership and how to help our people develop the requisite skills to advance as far as they wanted to in their careers.

Nothing gives me greater pleasure that seeing those who worked with me do extremely well.  Two great examples are John Scullion and Brian Sinclair.  In 1993, I had to use all of my selling skills to convince John to leave the high profile corporate travel business Ryder Travel and join a company whose balance sheet looked similar to some now defunct Wall Street firms.  John is now President and COO of Alliance Data Systems, with a market cap of several billion dollars.  Brian Sinclair, whose first job out of college was an AIR MILES analyst, is now the Managing Director of Nectar, the wildly successful coalition loyalty program in the UK that recently sold to Aeroplan for $700MM.

After we visited Brian at his London offices last summer, my 12 year old daughter Jordan remarked, “You gave him his first job and now he has a better job than you!”  Although I thought about reminding her that the flexibility of my firm enabled our father-daughter trip to London, my wiser side prevailed and I responded, “That’s right, and nothing could make me happier than seeing people I hired doing really well.  That means I hired great people and hopefully they learned a few things from working with me.”

One of the things I came to understand about leadership and developing executive talent became what I call the “Three I’s of Leadership.”  I realized to build a successful high growth company while delivering on our cultural goal of “doing what others consider the impossible, while treating people with respect and having fun along the way,” we needed leaders with the following skills:

• Intellectual Leadership - Leaders who had both the raw brain power to identify opportunities and solve challenges and very deep skills in their specific areas of expertise.

• Implementational Leadership - Leaders who were not just “consulting smart.” Executives who could actually stop thinking, developing models and drawing 2 x 2 matricies and “land the helicopter, get the troops in the field and make things happen”, to quote a former client.
  

• Inspirational Leadership - Leaders who could get things done without making everyone who worked for them want to quit.

Over time, I found out two things about this model:

Three I Leadership can be, and usually is, a shared set of skills. Although no senior executive can have below threshold skills in any of the areas, many highly successful companies are lead by “Three I Leadership Teams.”  I first realized this through being involved in YPO (the Young President’s Organization) where I spent a lot of time with other Presidents of successful companies. My original belief was that successful CEO’s had to be “A” players in all three leadership skill sets, but I observed several who clearly were not what anyone would consider “motivate the troops inspirational” and others who were brilliant “idea machines,”  but needed someone to keep them from trying to implement every idea as soon as it burst into their heads.  All I observed were very smart, but not all would qualify for Mensa.

I soon realized that almost everyone had built a “Three I Team” around themselves by hiring direct reports that balanced and complimented their skill sets. There was the collaboration principle at work again.  Once I realized the importance of Three I Teams (and the stupidity of expecting every senior executive to be naturally gifted at all three), I started using the model to help my direct reports work on their weakest areas and to make sure we had Three I Teams leading all of our major groups and strategic initiatives.

I later began using the Three I model in recruiting and would ask candidates to distribute 100 points across the Three I’s to indicate their leadership strengths and weaknesses. One of the funniest reactions I received to this question came from an executive who had worked at American Express during the 90’s when Harvey Golub was CEO.  He responded something like, “That’s a great model.  Harvey is 60 intellectual, 40 implementational and 0 inspirational.” Then he became even more excited and said, “No, that’s not correct.  He is 60 intellectual, 60 implementational and negative 20 inspirational.”  Although the candidate was clearly exaggerating in jest, he was making my point exactly as Ken Chenault was Gulob’s number two at the time. I had the good fortune to spend time with Ken in the late 90’s as he had to personally approve American Express’s deal to  become an AIR MILES Sponsor.  Then and now, there may not be a better example of a “High I Inspirational” leader than Ken.

The model can apply to the leadership teams of organizations large and small. I recently thought about this model and how it applies to little league baseball coaches.  A coach needs to know the game of baseball, the complex rules, how to catch, hit, run and steal bases, etc.  Knowing how to play baseball is necessary, but insufficient. Someone on the coaching staff needs to know how to teach young kids to play baseball - how to learn the game and improve their skills. What drills are most effective in practice; how to spot a batting stance off balance or throwing motion without follow-through and how to make the subtle changes to correct these errors.  Finally, as all sports are partly mind games and baseball can be incredibly stressful for young athletes, at least one of the coaches has to be able to keep the kids fired up and have a vast vocabulary of positive things to say no matter what happens at the plate!

If this model makes sense to you, try it inside your own organization.  If it applies, consider building it into your professional development systems and recruiting strategies.  Collaborate by letting me know if it worked and what you have done to build upon it.

Don’t abuse your best customers Part II: Hertz #1 Club Case Study

My first job out of business school was with Bain & Company consulting.  I spent six years at Bain and during that period and my longest non-travel period was two weeks. One of the first things I did after starting at Bain was to join every frequent flyer program and several hotel rewards programs. Although I do not remember the exact date, I also joined the Hertz #1 Club as soon as it was launched.

One of the greatest benefits of the Hertz #1 Club is you can usually avoid standing in line at the rental counter and proceed directly to the lot where your car is waiting for you.  Although I perceive Hertz to be more expensive than Budget or Alamo, I made the mental value calculation that the ease of reserving (call the 800 # 1 number) and picking up the car is worth whatever premium I may be paying.  I have also been able to rent some great vehicles recently, notably the Ford Edge on my frequent trips to Pittsburgh.

Last weekend, I planned to fly from Boston to Pittsburgh, pick up a Hertz car, drive to Morgantown, WV for two days of board meetings, basketball and football games and then on to Charleston to visit my father for a few hours before flying back to Boston via Charlotte.  I was originally planning to start my journey Thursday by flying from Boston to NYC for the OMMA Advertising Networks conference and then to Pittsburgh Thursday night.  But the LGA-PIT flights were canceled Thursday night, so I flew back to Boston and took the Friday morning 6 AM BOS-PIT flight.

On the way to the airport in Boston, I remembered I had not changed my car reservation, so I called the Hertz #1 line and re-booked. While on the phone, I remembered seeing a recent Hertz ad claiming that you could “reserve the car you wanted” at many Hertz locations, so I asked about this.  The reservations agent read a list of vehicles available and said I could “request one.”  Although the Edge was not on the list, I selected a Pontiac G8.

When I arrived in Pittsburgh later that morning, I was surprised when the #1 agent told me I would be renting a Honda Accord and not a G8.  No problem, I thought, the new Honda’s look like great vehicles as well.

As I approached space D4 underneath the Pittsburgh airport, I realized the Accord was not the new model, but rather at least one model old.  I was even more surprised to find out that the car smelled like smoke and had cigarette burns on the seats and door fabric.  On the seat next to me was a “Pre-Rental Vehicle Inspection Form,” something I had never seen before in any rental car.  The form noted that there were “dents” and “scratches” on the front, driver and passenger side of the car.  To complete the picture, when I started the Accord the odometer read 34,000 miles, another first in my rental car experience.

So, as an ex-smoker extremely sensitive to the smell of cigarettes, I found myself driving to Morgantown with a raging headache in a smelly car that was out of alignment.  For 20 of the past 27 years (the exception being my time in Canada when I was 100% loyal to Tilden/National, our AIR MILES Sponsor) I have only rented Hertz cars. Hertz has the data to know this, yet they give me a vehicle that is worse than I would expect from the lowest cost car rental company, and charged me $100/day for the experience.  Maybe given my last minute change this was the only vehicle available that could be dropped in Charleston, but if that was the case, they could have and should have apologized in advance.

My next steps:

1. Check out Avis, National and or Budget “Number 1″ Programs
2. Wait a few days to see if anyone from Hertz is monitoring their customer’s comments on blogs like this.
3. Try to find Hertz CEO’s email address and see if he/she is interested in responding to this.
4. Do the same thing with the Hertz board.

Here’s the back of the envelope loyalty math.  Assume I rent 20 vehicles a year for another 20 years at an average price of $50 per rental.  That’s $20,000 in lost revenue from breaking the virtuous cycle of relationship marketing and not using the information Hertz has in its database to treat a valuable customer well.  Hertz blew it at step 1, they know I am a loyal customers and instead of rewarding me with an upgrade or other amenity, the insulted me by giving me a brand damaging vehicle. Let’s see how they attempt to recover, if at all.

Questions:

• What data do you have on your best customers that you are taking advantage of today?
• Are there similar examples of “best customer abuse” happening in your company?

Response from Dell

Just noticed this response from Dell manager. Bonus points for finding this new blog and post and for the very candid response on how Dell’s culture is still evolving to embrace customer and customer service collaboration. His comments:

Good points on social media in the enterprise as a whole. Thanks for the write-up. While we at Dell place social media as a top priority, clearly we have room to improve.
To be honest, even though we consider ourselves leaders in the PC business on social media, our “corporate culture” is still evolving. We implement changes based on what our customers tell us on IdeaStorm, Direct2Dell corporate blog, and our own Dell Community Forums constantly.
This is clearly an area where we have some work to do- getting front line tech, care, and sales agents steeped in social media concepts like ratings and reviews.
I thank you for pointing out our shortcomings in this area, and will make sure to pick up the “Read your own ratings and reviews” baton myself, and get the word out.

Don’t abuse your best customers Part I: Amazon Case Study

I have a love-hate relationship with Amazon.  Love their product selection, user reviews and especially the ease and price savings of Amazon Prime.  Hate the fact that for some reason Amazon refuses to use the data they have about their own customers in the most simplistic “pre-web 1.0″ ways.  We wrote about this in the white post “The 4 R’s,” but here’s an even better example.

I love the Amazon Kindle (e-newspaper, blog, magazine and book reader) so much that I recently sent my own glowing review of the product to everyone I know, something I had never done before, despite my genetic need to tell people about great products and services I encounter.  My wonderful wife bought me a Kindle for our August wedding anniversary and within days I had uploaded 5 newspapers, 10 blogs and 4 books. I am clearly one of Amazon’s better customers and even became an “Amazon Associate,” so when friends buy a Kindle after reading my review, Year Up, my favorite nonprofit, gets a 10% rebate.

Despite all of this data that Amazon has telling them I am a Kindle owner/maven, look what Amazon greets me with when I recently logged to their site:

Amazon is using perhaps their most valuable online real estate - their home page - to tell me what a Kindle is.

But wait, there’s more:

What happens when you don’t use the data you collected to recognize and reward (or at least don’t abuse) your best customers.

A few weeks after I received my beloved Kindle, I fell asleep reading it.  When I turned it on the next morning, the screen had several thin lines running across the top.  At certain points, the cumulative effect of the lines was to block out almost ½ inch of text.  Up until this point, I had good experiences with Kindle customer service: their number is easy to find; the service agents speak English well; and they had been able to answer several questions, including helping me find an AC adopter in NYC when I forgot mine on a recent trip.

So, I called Kindle service with high expectations.  I volunteered that I had fallen asleep with the device and most likely rolled over on it and damaged the screen.  I asked if there was a program to replace, repair or offer discounts to “clumsy customers.”  To my surprise, the agent responded:

“We have many customers who have slept on, stepped on and even dropped their Kindles in the bath tub.   Amazon used to have a program to replace damaged Kindle’s, but we are not running that right now.”

Somewhat stunned, I asked for clarification, asking something like;

“Are you saying that if I had broken my Kindle at another time earlier in the year, Amazon would have replaced it or at least offered a discount?

He confirmed this was the case, but went on to say:

“If you would like, I can have your name added to our email list and if we bring back that program, we will contact you.”

Only then did he ask for my email address, which could have and should have alerted him to the fact that I am heavy Kindle user and also spent over $10,000 on Amazon last year for business and family purchases.

So, despite having the data to identify me as a very good Amazon customer, the customer service agent was not instructed or trained to use that information to at least recognize and thank me for being a loyal customer.

Not only did Amazon fail to recognize me as a good customer, they added insult to injury by telling me that I had to spend another $350 to replace the Kindle, something other - and presumably less profitable customers - did not have to do, due entirely to the unfortunate timing of my clumsiness.

In the white post “Amazon, Facebook, Eons and the 4 R’s of Relationship Marketing,” we introduced the concept of the 4 R’s using a hand written version of this virtuous cycle:

We believe that companies who collect information about customer purchases through their direct sales businesses, reward programs, or “convenience” programs like Amazon Prime or Hertz Number 1 (see Part II) need to recognize that they are rewarding both the purchase of the good or service and the sharing of information by the customer to the business.

Customers are sharing information about what they buy and when they buy it.  We also believe that customers know businesses are collecting that information and will increasingly expect those companies to recognize and reward them for their loyalty.  At a minimum, they will expect to be treated as well as other, less profitable customers or will become highly susceptible to being poached by a competitor.

Questions:

• What data do you have on your best customers that you are taking advantage of today?
• Are there similar examples of “best customer abuse” happening in your company?

Are you “waking up dead people” or “killing a culture?”

One of the great byproducts of Web 2.0 is that I often hear from friends and colleagues I have lost touch with.  I am sure you too receive the “I found you on the internet, Facebook, Linked In, …” email from time to time, hopefully from people you actual want to talk to.

Last week I caught up with two friends - one who was on the Alliance Data Systems (ADS) deal team when they bought The Loyalty Group and later joined the team at US Loyalty/Jaz Rewards, the 2001 start up that attempted to develop a coalition loyalty program in the US.  The other was a dear friend from my freshman year at college whom I had not seen for almost 30 years.

Jim Sullivan, my former ADS colleague told me about his new business, Built to Lead, which as best as I can understand it, provides executive and organizational coaching to help  “build sustainable, high performance individuals, teams, and leaders in work and life.”  While I haven’t studied their web site, materials, exercizes and - most importantly - customer testimonials and case studies in sufficient detail to be able to recommend their services, I can tell you that Jim is very enthusiastic about Built to Lead.  I can also tell you that his elevator pitch/mission statement was one of the most break-through I have heard:

“we wake up dead people”

That one got my attention.  But it also got me thinking as Jim went on to talk about how many people are going through the motions at work, without anywhere near the passion they could have for their work and therefore likely under-performing on a daily basis.

A few nights later I had a wonderful dinner with my college friend.   She was working at a company that shall remain nameless, but it’s a fast growing retailer with over 800 outlets, a cool brand identity and  a name you would recognize.  She had read some of our writings about the importance of customer service and engaging “the employee sphere” in the creation of business value.  She went on to tell me about how her company’s culture was changing. Like most high growth businesses, the company found they needed larger space to accommodate their growing HQ staff and recently moved to a newer building.  A few things bothered her and most likely many other employees:

• No one asked the employees what they liked most about their current space or what they wanted in the new offices. (They may have had a cross functional team with representatives form various departments,  but there clearly was no attempt to use a blog, wiki, an online survey tool like Survey Monkey or even a good old fashioned email survey to get the broader employee community’s input.)

• The one thing that my friend thought everyone wanted was showers in the rest rooms, as the company is located in a part of the country where most people are highly active and fit and many either bike to work or go running or riding at lunch.  But no one asked what they wanted most and the employees arrived at the new office to find “huge new restrooms that could easily have accommodated a couple of showers”, but did not have even one.

• One of the things she liked best about the old office was they almost everyone in her group rode their mountain bikes to work and parked them besides their cubes.  Anyone with a new bike received notice from others and “user reviews” were requested. Within a few minutes, test drives were taken around the office.  It was a fun way for people to take a break and do a little bonding. It sounded like mountain bikes had become the new water cooler or - probably more accurate - the mostly pre-kid employees version of sharing baby pictures.  All this changed at the new office when they arrived on the first day and were told “no bikes allowed on the elevators or in the office floors.”  Big surprise and at least a small bummer for the bike loving employees.

So what’s happening here?  At Underwood Partners, we have been working to develop a graphic that illustrates our belief that:

…asking employees, business partners and customers to contribute in the enterprise value creation process sets in motion a virtuous cycle of engagement, collaboration and contributions. (see The Philosophy & Approach of Web 2.0.)

Here’s our latest version:

We would appreciate any comments, suggestions or references/links to a better graphic than this one.  To us the formula engagement + collaboration = contributions/results/impact is consistent with our core beliefs and representative of our experiences from leading companies.  Recognizing the the contribution and its impact on the business can turbo-charge the cycle by taking everything to a higher level.  The only thing we don’t like about this graphic is that the boxes should be getting bigger with each revolution, but our power point skills need some expert assistance to do so.

We also believe that a corresponding “downward cycle” can be created by not engaging employees in the business outside of their functional/departmental roles.  Part of the cost of non-engagement is the lost opportunity of the creative ideas that come from cross-functional engagement.  But as this small example illustrates, the failure to listen to employees desires and ideas can  be de-energizing to committed members of your team and turn the water cooler (or mountain biking) conversations away from “isn’t this a cool place to work” to “our culture is changing, and not in a good way.”

Given the ubiquity of low cost, easy to implement social media technology tools designed to engage your stakeholders in your business, there is no excuse for not doing so.

What actions or non-actions are you taking today that will either “wake up dead people” or begin to kill your culture?