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.

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.

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?

Facebook, Amazon and the 4R’s of relationship marketing

When 2 former Bain consultants and one recently minted Harvard MBA started AIR MILES Canada, we knew a lot about the economics of customer loyalty and how to quickly understand and model the profit drivers of almost any business. We also knew almost nothing about database marketing other than a few buzzwords one of us picked up from a girlfriend.

One thing we knew for sure was that if we could build a broad based coalition of leading Canadian companies who committed to market the program to their customers, we would have the opportunity to create and utilize one of the world’s best marketing databases. All of our friends got that as well; and every one of them thought we would “make a ton of money selling the database.” What they didn’t get was our founding principal of not selling the “list” to businesses outside of the Sponsor coalition (i.e. the companies who paid for the points. We believed we could create the future of database marketing (although we didn’t have a clue as to how we were going to do that), but only if we developed a relationship with our Collectors built on trust.

Before long, we began to talk about the 4 R’s of Relationship Marketing and sketching this diagram on napkins and tablecloths around Toronto, Montreal and Calgary:

We described our thinking about building relationships like this:

1. If we recognized that when people showed their AIR MILES card at a retail Sponsor we were rewarding them for both their loyalty to the Sponsor’s business and the fact that they were sharing information with our company (by purchasing the good or service and identifying themselves as an AIR MILES Collector, they were telling us when and where they made the purchase, if they were responding to a targeted offer or coalition promotion, etc.), and…
2. If we respected the information Collectors shared with us – including demographic and shopping intention information millions shared with us in return for bonus miles – and didn’t sell or give that information to anyone outside of the AIR MILES coalition (and not even other Sponsors if so requested), and…
3. If we used the information to present relevant offers to Collectors based on their shopping habits, needs and interests (if a Collector was turned down for an AIR MILES Mastercard, we wouldn’t send them additional bonus offers to apply for one; if we knew there were only guys living in a household, we wouldn’t send them offers for women’s magazines; no car, no Goodyear offers, etc.), then…
4. We would create higher open, read and respond rates to both our basic offers as well as our targeted specific offers and bonuses, which would – in turn – give us the opportunity to reward both loyalty and the sharing of information.

If you think about this simple model, it doesn’t just apply to relationship marketing, but also to basic human relationships as well. If you begin to develop a relationship with someone and share something personal and confidential with them, that relationship will be short lived if they share it with others or otherwise don’t respect your confidence. Likewise, we tend to develop relationships with people we have at least something in common with – some point of relevance – be it kids, snowboarding or web 2.0. If these 2 elements are present, the potential for a relationship exits; without them, one probably won’t develop.

This model, along with a lot of other parts of the AIR MILES model, appears to have worked fairly well as the program now has over 70% (that’s 9 million) Canadian households as members. More pointedly, while I was CEO, we had open rates for our (snail mail) direct marketing programs of over 70%. Although AIR MILES doesn’t share specific data on email response rates, my understanding is that the company enjoys high open and click through rates for their email marketing programs.
Which brings me to Facebook, Amazon and Eons. Like Jeremiah and many others, I was amused to be served up a banner ad on Facebook last spring for “Thirty Plus and Single” when on the same page I clearly listed my status as “married.”

Facebook was clearly not getting the relevance part and I don’t need to go into all of the respect angles of Beacon. Business Week had a good article on the social networking sites’ challenges with developing advertising.

Like many, I use a separate email account for marketing emails. Last week, as I was cleaning them out, I found 2 other examples of online businesses not getting the 4 R’s from Eons and Amazon.
John Della Volpe, the founder of SocialSphere, always thought one of the challenges facing Eons was that many people over 50 aren’t really excited about standing up and telling everyone, or joining a social network for those over the hill. Do people really like to say, “Hey, I’m old?” Partially because I’m in the business, partially because I know Jeff through our work with Year Up, and partially because I was eligible (even before they lowered the age threshold) I joined Eons. But I never really got the value proposition. At least AARP’s mailings tell you right up front about discounts and other offers they bring. Not terribly hip, but getting a deal on anything will always be relevant to me.
So imagine how jazzed I was to open an email only to be greeted with an offer to “get pictures of your grandkids” or something like that. Surely, they have some way of knowing I am probably a couple of decades away from being a granddad. Not relevant and not the kind of email someone like me would open again.

Then Amazon, who has many features I dearly love and admire (Amazon prime may be the world’s best loyalty program – more on that in a future post) sends me an email with a recommendation to buy a case for the flip video I recently purchased.

So what’s wrong with that? Take a look at the user ratings – 2 STARS! This one stood out to me because I had already checked out the product and new it was a dud. Amazon served up the “people who bought this product also looked at these” content when I was purchasing the flip. After seeing the 2 stars and reading a couple of reviews (e.g. “This pouch is really cheaply made, hard to use, and not worth the money at all”), I didn’t bite.

Back to our core principle – building a relationship built on trust. As John Lederer, the longtime leader of Loblaws supermarkets often said, “the consumer has given us their trust to select products for them to be available in our stores.” Although Amazon sells many products through third party retailers and clearly lets you know they are not being sold by amazon.com, it’s one thing to sell products you have little control over and another thing completely to send an email to a highly active customer recommending a product other customers have given a 2-star rating. I have come to trust that Amazon will offer great products and extraordinary service. I have been less enamored with their recommendations and – given this latest example – am less even likely to look at their recommendations or open their emails.

The more time I spend in this space, the more I realize that on-line community builders and advertisers can learn a lot from those of us that also spent time in the traditional direct mail and loyalty space. In true web 2.0 fashion, combining the best of both models will create the most effective strategies.

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Tim Horton’s and Facebook – A Case Study of Lost Opportunity

this post was also posted on Social Sphere Strategies

For the past six months, we have been recommending to clients, potential clients and anyone unlucky enough to sit next to one of us at a dinner party that all businesses need to do the following:

1. Get smart – find a way to get senior executives aware of the philosophy and applications of Web 2.0, including how other leading businesses are beginning to use 2.0 to collaborate with employees, business partners and customers.
2. Look around and listen in – audit competitors’ web sites and the greater web to see if others in your industry have embraced Web 2.0 and what your customers and employees may be saying about your business on the web.
3. Authentically interact – if your brand is being discussed within an existing community, assign someone the responsibility of interacting with the community so your side of the story gets out.
4. Activate your stakeholder communities – we believe all businesses have at least an internal sphere opportunity to use Web 2.0 to proactively engage their employees in creating business value and most also have partner and customer opportunities.

We often get push back along the following lines, “I know all about Facebook, my kids spend all their time there. But that’s because they don’t have jobs and mortgages. There is no way they’ll be able to spend that kind of time on-line when they are adults. This whole thing is a fad.” To this we usually respond with a non Facebook Web 2.0 personal example. Mine is often around an experience I had recently trying to find after market running boards for my Lexus 400h SUV by looking for a user group on the manufacturer’s web site. When that attempt was unsuccessful, I went to Edmunds.com. Although I found a user group for my vehicle, it was sponsored by competing SUV ads. By not hosting a user community, Lexus had driven me to their competitors’ ads.

Last week, a better example of the importance of understanding and embracing Web 2.0 was reported in the National Post in an article about the Canadian coffee and donut chain Tim Horton’s, “Tim Horton’s employees lay down rules for cranky customers.”
Tim Horton’s is the “Dunkin Donuts of Canada.” Their stores are ubiquitous and the product a cultural phenomenon (Horton was a Canadian hockey star). A reporter for the National Post – a Canadian nationwide business paper – found over 500 Facebook groups related to Tim Horton’s and chose to focus on one with 3,400 members called Tim Hortons Rules of Ordering and More which features employees and former employees complaining about customers. The group is described as:
“This is for everyone who gets fed up with people who don’t know what they want, and for workers who have to put up with this everyday. If people would just listen to these rules when ordering the world will be a better place,”

The Post reported that the “80 rules or so spell out how to make your visit to Tim’s more efficient: ‘When you want a coffee with no sugar, do not say no sugar it sounds like your saying one sugar” or ‘If you don’t say you want anything in your coffee don’t expect to get anything in it, we can’t read your mind’ and ‘Stop telling us to stir it well there is no button on the cash register for that.’ ”

The article continued “But the coffee slingers are not the only ones airing their beefs on Facebook. Frustrated clients also have their support groups such as Tim Hortons Screws up my Order Every Time and Tim Hortons Service Sucks.”

Although the reporter focused the bulk of her article on the negative aspects of this particular group, she did report “But there is a silver lining for Tim Hortons employees. Many Facebook groups, like Addicted to Tim Hortons, are very positive and they seem to always have time for Tim Hortons.”

Apparently unaware of what was on Facebook, Tim Horton’s PR did not return reporters calls. It appears Tim Horton’s didn’t invest the resources to “listen in” to what was being said about their brand on the web.

Imagine how different this could have been if Tim Horton’s executives were (a) aware of what was being said about their brand on the web and (b) embraced an employee community.
If the company had been monitoring Facebook, they would have found that some of the largest groups are actually positive ones – Tim Horton’s for Our Troops – has 16, 965 members and encourages people to send gift certificates to members of the armed services. There are actually 3 “addicted to Tim Horton’s” groups which total over 15,000 members and “Tim Horton’s is like a religion to me” has over 1,900 members. The application “We Love Tim Horton’s!” described as “The best coffee ever! Fans of Timmys can now send Double Doubles, Tim Bits, Steeped Tea, Cruellers, Iced Cappucinos & lots more to your friends! For Canadian and US Coffee Lovers everywhere!” has over 84,000 daily users. Keep in mind that Tim Horton’s is largely a Canadian company and that there are roughly 1/10th as many Canadians as Americans, so you can multiply these numbers by 10 to get an idea of how large their Facebook following is.

Redirecting the reporter to these facts would probably been a better response that not returning her calls.

Although many will see the cost of this article as at least a minor PR challenge, we see a greater cost in the missed (but not necessarily lost) opportunity to have engaged the employee sphere to help address the very real problem of customers that can be hard to serve. The fact that so many of Tim Horton’s employee (and customers) have written about their experiences – both positive and negative – is a clear sign of a very engaged community. You need look no further than this week’s post from the group’s administrator:

I just want to let everyone know that just because I made the group certainly doesn’t mean I hate my job. Personally, I love my job. I like the people I work with and the regulars that come in every shift …If I wanted to disrespect my job would have made a group called “I hate my job, Tim Horton’s sucks” but I didn’t. … And yes, I still have my job there.”

Management could have asked employees to create funny videos explaining how to order more efficiently, done “best and worst” customer stories, etc. Employees and customers could have rated the stories. Product or customer bingo and Tim Horton’s trivia games could have been created and challenge matches forwarded to friends.

So, the questions for those of you who still think Facebook, blogs and wiki’s are for your kids or a fad that will surely fade are:

1) What’s being said about your company on the web?
2) Will you be ready to take a reporter’s call or unavailable for comment?

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