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|In: Industry Commentary|Last Updated:

Dear Car Companies,

I won’t be filling out your satisfaction surveys today.

It isn’t that I don’t want you to know whether or not I’m satisfied, and why. Car Company #1, I’d love to explain that your service department did a fine job taking care of my car, and even washed and waxed it while I waited, and that I didn’t mind all that much having had to wait an extra few minutes because the guy who was supposed to tell me my car was ready got stuck on a phone call.

Car Company #2, I’d be happy to explain that your salesman did his best, but needed more training on your new models … and that the training you did give him about making sure we knew how to handle the car’s nifty electronics resulted in his taking more of our time than we really would have liked.

But I can’t. Your sales representative (CC2) and service representative (CC1) explained the rules to me clearly: Either I give them a perfect score, or you give them a failing grade.

Why would I participate in a sham like this?

Look, there are four “metrics fallacies” — four ways using metrics can make a business worse. You must employ an army of analysts. Haven’t any of them explained these to you?

I usually charge good money for this, but just this once I’ll explain them to you for nothing, if you promise to pay attention. The fallacies:

  • Measuring things wrong.
  • Measuring the wrong things, whether you measure them right or wrong.
  • Failing to measure something important.
  • Extending your metrics to individual employees.

You botched #4. But then, a lot of companies botch #4 because a lot of business executives seem to assume that if something goes wrong, it must be someone’s fault.

I guess it’s good they’re measuring all cases, not just the problem ones, because that implies they’re also assuming that if something goes well, someone must deserve the credit.

But they botch it because (I guess) they think their employees are so dim they can’t figure out how to game the metrics to their advantage … like, for example, letting customers know that anything less than a perfect score will land them in a world of hurt.

Here’s a hint: If they are that dim, you’re hiring dim employees, which is a seriously bad idea, especially for the employees you’re putting in front of your customers.

Don’t get me wrong. It isn’t that I think you shouldn’t pay attention to how your employees are doing. Quite the opposite.

The employees you decide to hire — how you choose them, how you train them, how you do your best to keep them, motivate them, and promote the best of them — they’re the single most important determinant of your success. I’m confident of this because I’ve watched outstanding employees succeed in spite of bad processes, substandard tools, and execrable managers, just as I’ve watched disgruntled employees get mediocre results in spite of having the best process designs and tools at their disposal (I didn’t add “great managers” because if they had great managers they wouldn’t have been disgruntled).

What you have to understand is that metrics don’t report root causes. They report symptoms. Unless, that is, you have a predefined list of potential root causes and monitor them all.

But that isn’t what your customer satisfaction survey is doing. The poor schmuck in the service department you’ve asked me to evaluate didn’t do anything wrong. He was stuck, having to choose which of two customers he had to dissatisfy — the one on the phone or me. Why would I give you any ammunition to shoot him with, when the problem, assuming this counts as a problem, was that you had the same person answering the phone and dealing with in-person customers?

And why would I give you ammunition to shoot the salesman with, when the problem was with your sales training program?

Tell you what. Why don’t you send me a new survey? This one would assess my satisfaction with your customer satisfaction assessment process. I’d be happy to fill it out. You could use the results as the ammunition you need to shoot yourself.

Okay, that was mean. It’s just that I’ve written books about this, I’ve given speeches about this, and (now pay attention — this is important) I consult about this, which means that if you had been paying attention, you wouldn’t have made this mistake and my bank balance would be higher.

It’s an outcome that’s known in some circles as a “win/win.”

Sincerely,

 

Robert Lewis

President, IT Catalysts, Inc.

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|In: Industry Commentary|Last Updated:

Ron Erickson, CEO of the Holiday Companies, explained, “This is why we’re in business.”

The context: Erickson was returning to the United States from Canada in a private jet. A useful privilege when you travel that way is avoiding long customs lines by re-entering the U.S. in such places as Fargo, North Dakota instead of a larger airport.

A potential inconvenience, though, is that if the local customs and immigration agent takes an interest in you, there’s no line to keep moving. So it was that the agent in question entered the jet and asked, “Are you Mr. Ronald Erickson?”

Not knowing where the conversation was going, Erickson answered briefly and in the affirmative. Nonetheless, the official continued his inquiry.

Except it wasn’t an inquiry. It was a sincere and effusive thank-you, to Erickson, for opening a Holiday Station Store in the area, telling him how much difference it had made for a lot of people.

A Holiday Station Store might not seem all that important, but to this guy it had become the place to take his son Sunday mornings to get pancakes, and to a lot of other people in the Fargo area, it was a place to go, get coffee, chat, and buy gasoline. In these and a dozen other small ways, the Holiday Companies had made a big difference in the community.

Which is why Erickson told the story to a meeting of his top store managers, who heard him explain, “This is why we’re in business.”

It’s worth noting that Erickson is a shrewd businessman, not a touchy-feely sort. He has no interest in the limelight but a lot of interest in the arcana of the petroleum industry.

The Holiday Companies is a keep-the-joint-running kind of enterprise — it started as a single grocery store in a small Wisconsin town and wins by being better than anyone else at the fundamentals: Choosing the right locations, optimizing its merchandise mix, keeping its operating costs under control, and hedging fuel costs to maximize margins.

And it innovates, constantly refreshing the whole concept of what convenience stores should be and how they should be run.

So when Erickson didn’t say that the point is to maximize profits — it’s to make a difference in the communities it serves — he wasn’t just grandstanding. He was explaining that this is how the Holiday Companies stays profitable.

Speaking of retail, my wife was shopping at a JCPenney not too long ago, when, after just a bit of small talk, a sales associate provided quite a sophisticated account of new CEO Ron Johnson’s ambitious and controversial strategy to redefine and reposition the chain, reducing the number of coupons, promotions, sales, and other special events that meant nobody ever entered a JCPenney otherwise.

Johnson, the sales associate explained, had decided that relying on an endless stream of gimmicks instead of solid merchandising was, in the end, a losing strategy, so he had to try something bold and different.

We have two CEOs, with very different styles and facing very different situations, who understand that being smart is never enough to lead a large organization. Not by itself.

Making sure everyone is smart about what matters. Making sure that everyone understands what you’re trying to accomplish, and why you chose a particular path … that’s what makes the difference between leading people and dragging them along.

Johnson probably faces the tougher situation. JCPenney has to redefine its customer’s expectations. That isn’t an instantaneous process, as Netflix found out last year, even if your strategy is the right one … and nobody ever knows if it’s the right one until hindsight has had a chance to replace foresight. Meanwhile, you’ll inevitably disappoint your customers in the short term. Which is why every sales clerk needs to understand why.

But Erickson faces the trickier challenge, because “Yes, of course we want strong profits — that’s why I want every employee focused on making a difference in our customers’ lives and communities, not on just making a buck. And no, this doesn’t mean you get an unlimited budget for it,” is a pretty subtle message.

Subtle, but smart, because for most people most of the time, knowing they’re making a difference is a lot more energizing than knowing they’re making one more dollar for the company.

Your take-home: If you hold a leadership position, think through how you help employees connect the dots between what they do and something that matters.

It helps, of course, if the company you work in does something that matters. Which it probably does, even if the company’s top executives have lost sight of it … something that, sadly, happens far too often.

And if it doesn’t do something that matters, I have a question:

Why are you working there?

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