Monday, November 30, 2009

An Amazing Story of Employee Disengagement

I heard a story from someone the other day that was so amazing that it had to be repeated in this blog. The woman I was talking to had a friend whose husband travels a lot. He was on a US Airways flight. The flight was delayed and an announcement said that the flight crew was in a major traffic tie-up on the expressway to the airport. This gentleman decided to go on-line using his smart phone and see what information was on the local traffic reports. He found out that there were no traffic delays reported. The airline had announced incorrect information instead of telling customers the real story.

When this fellow arrived at his destination, he called US Airways to complain about what had happened. Now the story gets amazing... The response from customer service? "What do you expect from US Air"? The airline's own customer service was telling the man that he should not expect anything less than poor quality from the airline.

This is a story that anyone who flies, or is unlucky enough to fly US Airways, can understand. This is a miserable excuse for an airline. It has long ago given up any pretense to caring for its passengers. There are other airlines like that as well. I would put United as a close competitor to US Airways in the worst airline competition. It would be a tight race between these two giants.

I remember when USAir started an advertising campaign called "US Air Begins with You". It was an attempt to build customer relationships. It didn't last long. There was nothing behind it. Just fluff. When I heard it, I joked that it must mean that USAir begins with the letter "U", and that it was a play on words. Too bad they didn't use that campaign to transform their company.

What does this story really say about US Airways. Not only has it given up on its customers, but it also has given up with its own employees who are the face of the airline to its customers. One would think that they would want their front-line employees to be armed with rationale for every inconvenience. Yet, most of the airline employees have sided with the passengers. To paraphrase Bill Clinton.. they can feel our pain.

Note to companies. This is a miserable way to make a living. Stop doing what you obviously hate doing. Why be in business if you seem to hate it so much? The airlines have not made money in years. Why are they still putting us through hell? There are airlines that know how to run themselves and build customer loyalty. e.g, Southwest, British Air, Singapore, Porter, JetBlue. I sometimes think that making passengers unhappy is the only thing US Air, United and many of the other US carriers know how to do well.

Come On...Be a Tiger!!

Many golf fans like me are dismayed by Tiger Woods' recent car accident and hoping that he is okay. The brand and reputation management expert in me, however, is not enthralled by Tiger's response, or lack of it, to the situation.

Tiger is an individual and he has the right to his privacy. However, he has become a brand, both in his own right and in his ability to endorse other brands and provide them with equity, e,g, Nike and Accenture, among others. He is the first $1 billion a year pro athlete in terms of winnings and endorsements. He receives millions for simply showing up at tournaments and millions more for lending his name to projects.

When someone becomes a brand, he/she looses the ability to act as an individual. They take on larger, almost "corporate" responsibilities. His actions are his own and also reflect on other organizations.

I don't know what happened at Tiger's house that night that led him to jump in his car at 2:00am and back into a fire hydrant and tree. But, the speculation has become ridiculous. There are office pools with people betting on what happened. Some think he and his wife had a fight and he stormed out; others think he was cheating on his wife; others have other ideas. The sleazy media like the Enquirer and Star are running stories claiming he has been cheating on his wife and produced pictures of the alleged "other woman". I also understand that in the first 24-hours after the accident, there were more than 3,000 news stories written about the accident.

Tiger's silence just fuels those speculations more, giving them greater longevity and "legs". He needs to learn from David Letterman. If something happened, then tell us what happened and get it over with. We can all understand if he had a fight with his wife and stormed out. He's human. Maybe he was jet-lagged from his recent trip to China. Whatever the reason, or reason he can come up with, please say something.

I expected more of Tiger. I have always admired his talent and his philanthropic activities. All these begin to look manufactured in retrospect. When tested under fire, Tiger has failed the test that leaders must accept and brands are bound to accept--that they are larger than life and as a result have greater expectations on them.

Saturday, November 28, 2009

Live Your Brand; Grow Your Reputation

It seems amazing to me that so many people continue to talk about reputation as if it were something that we could build through communications alone. Reputation is primarily built through behavior, not through communications. We've heard the term "walk the talk". Companies that behave properly build their reputations more effectively than those who talk about it and do little to act appropriately.

Brand is the attributes, associations and symbols that we create that we want to be known for. Reputation is the "vote" by stakeholders that we are distinguished (differentiated in strategy terms) from our peers. How do we get from what we want to be to reputation? It is through our employees--they are the ones who connect the brand to stakeholders.

When we develop a positioning--the words that give our brand life; that explain why we should be favored over another offerings--we need to get employees engaged so that they are both willing and able to live the brand in their daily activities. One good way to do this is to develop an Employee Mantra, a simple, clear message that employees understand is their role in the positioning. It is tough to use the positioning by itself because it is focused on external stakeholders, and we ask way too much when we ask employees to understand how to translate the positioning. But, a good Mantra can do that. Like the concept of mantra in meditation, it is designed to provide focus when the "mind" wanders. So, when many people are telling employees different things, they can come back to their mantra to know what to do.

There is a famous story about someone who visited NASA and saw a janitor sweeping the floor. "What is your job"? the visitor asked. One would expect the answer to be that the person was a janitor. The answer, however was: "I keep this place clean so that we can put a man on the moon".

Consider how we could get all employees to translate their jobs to a final accomplishment that builds value for the organization. "What do I do that adds value?" is a great question for everyone in the organization. When we can find that connection and make it emotional, we have the real ability to engage employees in behaviors that will live the brand and grow reputation.

Friday, November 27, 2009

Stop Playing the Price Game

I am in Toronto visiting friends. Yesterday, I had a really interesting discussion with a fellow who imports household goods, spices, and other things. We were talking about value and brand over price. The gist of the discussion was that North Americans have become convinced that the only way to keep or attract new customers is through lowering price. This might bring in customers, but it also undermines the perceived value of the offering and undermines the brand.

The Wal-Mart impact is being felt in every sector of the economy. Many businesses look to Wal-Mart's success and conclude that they cannot succeed without having the lowest price. There are many ways to show value to the customer. Price is just one.

Consider that there is a continuum between high price, high differentiation and low price, commodity. These are the extremes of the continuum, not our only choices. Between these extremes we have many ways to show increased value--customer service, relationships, partnerships, etc.

It is a good thing to cut costs. But, that should be done to allow the firm to provide value in other ways. It should not be done so that price can be lowered. If it is, the margins are squeezed and the entire market become a war of attrition.

Let's consider Southwest Airlines or Porter Airlines (if you are not familiar with Porter, you should fly them to Toronto from one of the cities they fly from in the US--Chicago, Boston, Newark). Both airlines gained efficiencies by having only one type of place and flying only point-to-point. This means that all staff are qualified on all planes and they do not have to deal with hubs. This speeds flight arrivals and departures. But, at the same time, they used these cost efficiencies to create value differentiation--Porter actually pushes carts with free wine and provides food. Southwest does not charge for bags. These are things that drive up perceived value. But, they also do things that other airlines could do for free but do not--they smile, they act like they enjoy and appreciate having you on board. They make the experience enjoyable. This builds perceived value and increased loyalty.

We have to get control for companies back from the accountants and finance folks who think that everything comes down to price and start looking for ways to enhance perceived value. There are so many ways that companies can do it--it will enhance the brand and, if the entire organization is engaged, it also will grow the reputation.

Tuesday, November 17, 2009

Totes>Isotoner Sets High Standards for Customer Service

It is not often these days that one is totally shocked by a display of high customer service. I purchased a Totes (they use totes, lower case) umbrella last spring. It is guaranteed for life. At some point recently, one of the spokes of the umbrella broke. I followed the instructions I found on line to not take it back to a store, but rather to send it back to the company with $5.00 for return postage. A new or repaired item would then be sent.

Much to my amazement, I received a letter yesterday from one Helen Baur, Consumer Affairs, totes>isotoner. The letter indicated that "under your circumstances, we would certainly not expect you to pay this fee, having had the umbrella for such a short period of time". My $5.00 was enclosed.

Now, I should note that I did not have a receipt for the original purchase, so Totes was simply assuming from the model of my umbrella that I had purchased it recently.

I teach in a business school and we are always talking about customer service, or lack of it, and the return on investment that it brings or looses. totes>isotoner has gone beyond what I would have expected. I am absolutely impressed with their high consumer standards. They deserve my praise and my customer loyalty. I thought I would pass this on to others in hopes that my story will both inspire other companies to adopt similar standards, and for others in the market for umbrellas, gloves and other items by totes>isotoner, to consider totes>isotoner.

Saturday, November 7, 2009

Break Down the Silos Inside Companies

Companies continued to be siloed, depite the fact that this is counterproductive. Silos may be good ways to move information within an organization, but the infighting between silos in most companies gets in the way of real competitive advantage. Marketing, PR, advertising, sales, customer relations, etc. all remain in silos. Companies cannot afford this anymore, not only in terms of the costs of maintaining the silos and their inefficiencies, but also because it is ineffective in dealing with influencing customers and other stakeholders.

Silos create their own messages, their own organization, etc. They cost the company in many ways. Companies have customers, employees, investors, etc. Those are the important stakeholders for companies. Many companies, however, spend an enormous amount of time managing all the internal squabbles and turf wars rather than focusing on building value.

Look at the traditional value chain in text books. We have inbound logistics, outbound logistics, we have support functions, marketing, sales, etc. All of these are shown in vertical bands. Each is to work on their own activities and contribute to the value of the company. It has the right concept, but has been wrongly implemented in practice.

Some business strategists have been talking about "unbundling" the value chain. This is a means to turn the vertical silos into more horiziontal activities so that organizations inside the company work together toward common objectives. Marketing does not have domain over customers; the entire organization does. Finance is not responsibile for money; the entire organization should be financially oriented. We need stewards (experts) as the guides for each of these areas, but ownership should be done away with.

What if a company were to say the following? We have a number of stakeholders who create value for our company: employees, customers, investors, and others. We want a plan of how we can enhance customer value, investor value, employee value, etc. We do not want 3-4 plans from different functions, but rather one plan that is integrated and consistent. We will incentivize those who work collaboratively and penalize those who continue to want to hold onto their "sacred islands".

If CEOs demanded such an approach, the company would likely see people reaching out and working with others they have little or no incentive to work with currently. I tried a change like this within my piece of the pie at Nortel. Instead of having a VP of Advertising, the person became the VP of Customer Relations. It changed the nature of the activities from advertising to all of the things that were needed to enhance customer relations. It can work. What's stopping companies? What do other think about this?

Public Relations vs. Communications--Are We Still Debating Terms?

There are still many people who expend greats amount of enegy to attempting to argue why the term public relations should be used instead of communications. I have heard people claim that public relations is a higher-order than communications, i.e, communications is a sub-set of PR. I completely disagree.

Humans communicate, they do not public relate. The higher term is communications, that subsumes all activities such as PR, advertising, etc. It is a term that should replace promotion. Promotion, which in marketing is one of 4Ps, is a terrible term. It suggests an inside-out or push-type activity that does not have much utility in today's world. We communicate with one another.

Public relations is a totally misunderstood term and has so many wrong associations with it--press agent, events management, etc.--that I get tired of trying to define it. To spend a lot of time arguing for the proper definition of PR seems like a waste of time and energy, at least to me.

I have never been one to be concerned with definitions, because I found them constraining. I wanted to be engaged in things I considered important. If people called those PR or communications or marketing or advertising, it wasn't of great importance to me as long as I was engaged in activities I thought were meaningful to the larger enterprise. Power from my perspective is the ability to leverage influence, not run an organization called one thing or another.

I have never found marketing people getting hung up on what to call themselves. Marketing has been hurt by the misperception that it is about advertising or promotion. It is a strategic function. It also is wrongly classified by those on the PR or communications side as being focused only on selling something to a customer. That may be the case in many organizations, but that is not what marketing should be about.

The great philosopher Humpty Dumpty said: "words mean what I want them to mean, nothing more, nothing less". We all have definitions, some right, some wrong, in our heads. If we find that people we deal with have a wrong definition of a term, we can certainly spend most of our time explaining the proper use of the term, or we can adopt a different term that provides greater latitude of action and activity. I find the latter to be much more productive.

Thursday, November 5, 2009

Three Key Ratios for Reputation Management

I've been looking at a lot of reputation research lately. It seems to me that there are three key ratios that need to be measured and management to achieve reputation enhancement:

Ratio 1: The difference between what the organization wants to be known for and how it is perceived by key stakeholders vis-a-vis competition

Ratio 2: The difference between the attributes the organization wants to be known for and the importance of these attributes to key stakeholders

Ratio 3: The difference between expectations of stakeholders and the experience they believe they have with the organization

If organizations develop reserach that measures these three ratios and develop programs that address these ratios, they will be well on their way to enhancing their reputation.

Who Owns Reputation Management?

I was at a meeting in NY today sponsored by Echo Research. Because the meeting was primarily for communicators, it focused on issues related to reputation from the communications perspective. The argument was that communications should "own" reputation management within companies because it is the most suited discipline to do so. The rationale is that given social media, relationship management--a supposed PR expertise--is critical; and that communications looks at more stakeholders than any function other than the CEO.

I agree with the perspective that public relations is better suited to relationship management than is marketing and that it is a function with concern for many constituents. Still, I have problems with the concept of ownership of something as important to an organization as reputation. The equivalent would be to say that the CFO owns finances. He/she is the primary steward, but everyone in the organization owns responsibility for financial management.

Communications should be the catylst for reputation management, if they have the skill set to do so. However, this skill set needs to be more than a constant urging for social responsibility and "doing things right".

The leaders of reputation management will be those who first-and-foremost understand that the primary interest of a CEO is to build value for the organization. Reputation management does that, but I am not at all sure most communicators or most marketers understand what is meant by that. Communications often sees value as "doing good". Somehow these good things are supposed to translate into behavioral intent. Sometimes they do and sometimes they don't. Marketers suffer from wanting everything to have transactional monetary value--relationships take too long.

A blending of the two is what is needed. Reputation management leaders need to help the organization focus on those things that distinguish the organization in the eyes of key stakeholders to build value. When they do that they will be given the "keys to the kingdom" by the CEO.

Often the communications teams are focused on stakeholders other than those who make money for the company. One often hears "that might be good for customers and investors, but what will regulators or NGOs say?" These are good questions, but reputation is most imporatant with stakeholders who matter, not with those who don't.
Every organization has three key stakeholders who contribute to the company's financial success: employees, customers and investors. Other stakeholders can help or impede success and must be managed appropriately. So reputation management is really about making the company distinguised for the key stakeholders and good enough so that the organization is supported or not impeded in its objectives and activities.

It's time that marketing, communications, investor affairs and HR got together and understood that they are in this together and that common goals need to be worked on. Others need to be brought into the mix, but until the organization can work consistently toward common objectives and behaviors with its key stakeholders, reputation management will not work. CEOs shouldn't care who the catylst is for this. It just needs to happen and the leader is the person who "gets it".