The Business Sensei

That’s Impossible!

Remember the old Bugs Bunny cartoons? There would be a sudden snowfall and Bugs would strap a pair of tennis rackets to his feet and voila: instant snowshoes. These amazing tennis snowshoes would let Bugs run effortlessly along the top of the snow. It’s one of those things that looks incredibly easy, until you actually try it. Then it turns out that while snowshoes do help, it’s not quite so smooth and effortless as Bugs Bunny might have you believe. In fact, what Bugs did was impossible, at least outside the world of cartoon logic.

Attending a jujitsu clinic a few years ago, I had the opportunity to take a class from a 75 jujitsu master, a seventh degree black belt. He effortlessly threw people fifty years younger and easily a hundred pounds heavier than he was. It was quite the impressive demonstration. When the rest of us tried to imitate his technique, we had somewhat less success than he did. It wasn’t long before we were dripping with sweat and gasping for breath.

“This is impossible!” exclaimed one person angrily. “It’s all a trick!”

Now, to be fair, when you’re late twenties and in top physical condition, it’s pretty upsetting to watch a skinny 75 year old effortlessly doing what you cannot do. It’s even more upsetting when he effortlessly does it to you. But was it impossible? It really does take a special kind of person to argue that something is impossible, especially after experiencing that something up close and personal.

Tom Watson, the founder of IBM, was famous for the loyalty he engendered in his employees. When an IBM salesman was badly injured in a car accident that killed his wife and young son, Watson was waiting in the man’s hospital room when he woke up. Watson wanted to make sure the man knew that everything that IBM could do for him, IBM was doing for him. When a train full of IBMers on their way to the World Fair went off the rails, Watson drove out to the middle of nowhere New York to organize the rescue efforts.

Dramatic as these incidents were, they had their real power because they emphasized something that was already there. Tom Watson built loyalty by building relationships. He traveled around the company, visiting people, talking with them, getting to know them. No matter what job you did, Watson was willing to speak with you. As the company grew bigger, he hired managers who could do the same thing. People at IBM knew one another; because they knew one another, they trusted one another; because they trusted one another, they were loyal to one another and to the company. In its heyday, IBM was known for its customer focus and the customer loyalty it built. That customer loyalty came from employee loyalty: dedicated, loyal employees care about the business and that creates dedicated, loyal customers.

I’ve been told by many CEOs that Watson’s approach is impossible today. It just won’t work. They don’t have enough time or they have more important things to do. People are different, times are different, the world is different. The explanations are sometimes long, sometimes short, always persuasive, and always wrong.

Building loyalty isn’t difficult, once you know what you’re doing, but it requires consistent, sustained effort. Watson demonstrated loyalty every chance he had, and he made sure that he had lots of chances. It’s taking the time to do it that derails so many would-be CEOs: they want instantaneous results or instant loyalty. Watson built loyalty so that it was there when he needed it. At Silver Key Systems, their CEO took Watson’s lessons seriously. He took the time to get to know his employees. He built connections and kept them going. Most importantly, he was always sincere when he asked someone about their bicycle race or congratulated an employee whose daughter had just landed a part in the school play. When Silver Key hit a bad economic period, employees stuck with the company and pulled it through. Today, it is a thriving business. You might even have recognized the CEO and the real name of the company by now.

Running along the top of the snow like Bug Bunny in snowshoes is impossible. However, with a little effort and practice, you can certainly learn to move pretty well in snowshoes. You can definitely move a lot faster and through much deeper snow than you can without them.

Learning to throw someone twice your size does take more effort and a good instructor, but that too is eminently possible. The guy who decided it was impossible didn’t learn it. The rest of us got the basic idea and are getting better at it the more we practice. You can’t even start, though, until you believe that it can be done.

Learning to inspire loyalty in your employees is neither as impossible as running on snow, nor as difficult as learning to throw a person. It is an eminently teachable skill. It does, however, require that you believe that it can be done and that it is worth doing.

Some people find the idea of snowshoeing lots of fun and are willing to make the effort to do it even they can’t pull a Bugs Bunny. Some people find the idea of being able to throw someone twice their size cool and exciting. Suffering the bumps and bruises of practice is worth it to them.

What is employee loyalty worth to you?

A Street Called “Brid Geout”

“Beep Beep!”

• The Roadrunner

 

Remember the classic Roadrunner cartoons? Each episode would feature Wile E. Coyote, rated one of the nastiest villains of all time, pursuing and attempting to eat the Roadrunner. Always imaginative, the Coyote used all manner of elaborate and complex devices to catch his prey. Sadly for the Coyote, the devices would either fail spectacularly or work perfectly but in ways that always came out badly for him. It was not unusual for the Acme speed skates, for example, to let the Coyote almost catch the Roadrunner, only to have the Roadrunner make a sharp left leaving the Coyote to go straight over the side of the cliff. Don’t worry, the Coyote was tough. He could fall thousands of feet and only injure his dignity.

Wile E. Coyote may be a villain, but he’s also someone who never, ever, gives up. He hits the bottom of that cliff, dusts himself off, and embarks on his next cunning plan to catch the Roadrunner. You have to hand it to the Coyote: no matter how many times he got blown up, fell off a cliff, run over, had boulders fall on him, or had his Acme products malfunction in countless other ways, he never hesitates, never doubts himself. Truly, the Coyote has a bias for action.

“A bias for action,” is, by an interesting coincidence, exactly how Zenefits CEO Parker Conrad described his company in a recent article titled, “Engineer asks Quora which job offer to take. CEO replies: not ours.”

According to this article, an engineer with job offers from Zenefits and Uber speculated on Quora about which company would be the best place to start his career. Apparently, the fact that the engineer wasn’t sure was just absolutely unreasonable in the mind of Parker Conrad, who rescinded the job offer. Conrad further stated that one of his company’s values is a “bias towards action,” and so when someone has doubts that’s a bad sign.

Now, let’s face it, too much doubt can be a problem. There is real truth to the saying that “he who hesitates is lost.” However, there is also something to be said for stopping to think and consider the consequences of an action. The Coyote might have benefitted from the occasional doubt; perhaps it would have helped him plan better, or at least consider buying his gadgets from someone other than Acme. Tom Watson, Sr., the founder of IBM was famous for, amongst other things, getting feedback from people. He knew everyone in the company and he listened to what they had to say. Conversely, when an emergency struck, he also knew how to jump into action: in one famous Tom Watson story, a train bringing IBMers to the World’s Fair derailed in the middle of the night. Watson got the phone call and was within an hour was out in the middle of Nowhere, New York, organizing the rescue effort.

There’s an important lesson here: in a real emergency, it’s time to act. Much of the time, though, pausing to think is not a bad idea. Even in an emergency, correct action is critical!

Another famous Watson story is that when the United States entered World War II, Watson seized the opportunity to provide high tech equipment to the government. No hesitation, not even for an instant. Of course, the reason he could act without hesitation is that he had been planning that action for a very long time. That was the moment that transformed IBM into a global powerhouse. The lesson: rapid, unhesitating, successful action is the result of extensive preparation. Of course, if you don’t mind dropping the word, “successful,” then you can also drop the extensive preparation. Wile E. Coyote is an expert at skipping the preparation step.

It may surprise Conrad, but most people do not expect that their first job will be their last job. Speculating about and exploring options is hardly a bad thing; would you rather someone accepted your offer while secretly wondering if they should have gone elsewhere, or that they satisfied their concerns and concluded you were the best choice? I suspect that most people would prefer the second. People who feel they are making the choice of their own free will are going to be much more loyal than those who are afraid to express their doubts and concerns. If your company is as good as you say it is, then they’ll stay and they’ll become your most ardent fans.

Again, there’s a lesson here: if your goal is to build loyalty, give people the space to convince themselves that you are the right choice for them. If they can’t express their doubts or if they feel pressured into making a decision, they won’t own their decision. When someone is thinking, “I only did it because…” then they already have one eye on the exit.

Beyond that, though, there is a difference between effective action and action for its own sake. Taking action is easy. Taking the right actions often requires planning and consideration. Indeed, one of the surest signs of a bad leader is someone who refuses to stop and consider alternatives or the possibility of failure. If you’re zipping down the road at high speed, it’s not such a bad idea to hesitate if the sign you just passed displayed the rather unusual street name, “Brid Geout.”

After reading countless articles that appeared in the days following the 2012 elections, we know that Mitt Romney truly believed he was going to win: he viewed it as inevitable. He even had the internal polls to prove it. Why was no one pushing back on those internal numbers and questioning their internal assumptions? And if someone was pushing back, why was no one listening? Teams work better when someone plays the role of “Devil’s Advocate,” asking the uncomfortable questions and pushing people to justify their assumptions. The Devil’s Advocate is only effective, though, if the leader is willing to be questioned and there exists sufficient trust on the team that members don’t believe they’ll be punished for bringing up unpleasant topics. A leader who appears to lash out or act impulsively, as Conrad certainly appeared to do by publically rescinding the job offer, is sending a very clear message that you cross him at your own peril. That is not exactly the best way to engender trust.

I would imagine, though, that Conrad viewed the engineer’s speculation as implicit criticism of Zenefits. Either that or he just could not stomach the idea that someone might turn down his company in favor of Uber. Better to just rescind the offer rather than face rejection. An attitude like that is bad enough in a low level manager or individual contributor, but it can be downright dangerous when it’s the CEO. Change it: fear and insecurity only lead to harmful, and avoidable, errors.

It takes confidence to make a job offer, and even more to accept the fact that you might be rejected by the candidate. A leader who is truly confident can accept the loss and move on; someone whose confidence is brittle, however, cannot. He needs to protect his ego. Say what you’d like about Wile E. Coyote, he isn’t afraid to fail. Failure is only a problem when nothing is learned from it. Properly done, the interviewing process can also be used to build the sort of excitement that will have a candidate eager to say yes. Unfortunately, it’ll be lot harder now for Zenefits to find out how they missed. That’s the real failure, not having a candidate express doubts.

In a very real sense, Parker Conrad did this unknown engineer a real favor. His actions say a great deal about his style of leadership and his company. It’s much better to find out that the CEO can’t handle criticism or lacks tolerance for questions before you’ve taken the job rather than after.

The engineer who posted the question got the best possible answer: a demonstration of what working for Zenefits would be like. It’s hard to do better than that.

Yahoo’s Pfizer Problem

What is Yahoo’s Pfizer problem? That may seem a bit of an odd question: Yahoo is, after all, a fallen titan of the Internet age. As companies go, Yahoo is barely old enough to drink. Pfizer, on the other hand, is, well, Pfizer: a 150 year old pharmaceutical giant quite possibly best known for giving the world Viagra. What is a “Pfizer problem” and what does it mean for Yahoo to have one? No, it has nothing to do with pharmaceuticals. Rather, it has everything to do with Hank McKinnell.

Hank McKinnell was the CEO of Pfizer from 2001-2006. This was, in retrospect, perhaps not Pfizer’s finest period: after five extremely disappointing years, Pfizer’s board forced McKinnell into retirement. This was quite the change from 2001 when they couldn’t stop shouting his praises. McKinnell, it seems, looked like a great leader in 2001. While looking like a leader may, in fact, be enough to make someone a leader, it isn’t enough to make them a good leader. That’s a bit more difficult.

Thus we come to Yahoo. From its lofty perch at the pinnacle of the Internet hierarchy in the late 1990s, Yahoo is now something of a has-been. Its search business eaten by Google, its marketplaces by eBay and Amazon.com, Yahoo is struggling. According to the NY Times article, “What Happened When Marissa Mayer Tried to be Steve Jobs,” Mayer, the current CEO, has so far failed to actually do more than make cosmetic changes. That’s not to say that she hasn’t managed to generate a great deal of sound and fury, but her actions have done little to actually turn the company around.

Like Hank McKinnell, Marissa Mayer looks like a great leader. To be clear, she’s brilliant and she was a fantastic engineer at Google. But being a CEO is not an engineering problem; it’s a people problem. A great leader does more than give lip-service to the concept that people are the company’s biggest asset; they live that ideal. Leaders build relationships, they form connections, and they act in ways that cause that web of relationships to spread throughout the company. Marissa Mayer, to much fanfare, eliminated Yahoo’s work-from-home policy, a decision which generated a great deal of smoke but only actually affected maybe 1% of the company. It was a distraction. However, since she also built her infant son a private nursery next to her office, it was a distraction that also served to sever, not build, relationships.

Exemplary leaders create commitment by enabling people to trust one another. Unfortunately, Yahoo adopted an employee rating process similar to Microsoft’s late and unlamented employee stacking method: team members who received high ratings got huge rewards, people at the bottom were fired. As the NY Times reported, top people at Yahoo did their best to never work together: it’s much easier to get a top rating when you surround yourself with weak players. The same thing happened at Microsoft. Furthermore, when the goal is to make sure someone else takes the fall, trust is hard to come by: at Microsoft, engineers sabotaged one another in a variety of subtle ways. Sometimes a leader gets lucky and manages to make an employee stacking system work for a time; that’s unfortunate, because then they often think it really is a good system, even after their luck runs out.

The leader is, rather obviously, the person at the top of the company hierarchy. That’s more than just a figure of speech: the CEO is in the position to see the furthest. The biggest difference between leaders and managers is scope: how far ahead can you look? Well, the CEO is the person whose job it is to look the furthest. Marissa Mayer likes to dive down into the depths of the code base: this may be a great activity for an engineer, but for the CEO of a multi-billion dollar company employing thousands of people? Details matter, and if you spend too much time on them, it’s easy to lose track of the big picture. However, a characteristic of human nature is that we like to do what we’re best at and when we aren’t sure what to do, we do the things we know how to do. In Marissa Mayer’s case, that appears to be focusing on code and data in the areas where she is most comfortable. She’s doing what she’s trained to do.

Hank McKinnell got booted out of the leadership role at Pfizer because he was doing immense damage and the reasons why he only looked like a leader were not particularly amenable to change. Marissa Mayer has a chance to actually become a great leader and make a difference… but only if she takes the time to learn the right skills to actually become a leader instead of merely looking like one.

Becoming a Loyalty Magnet

Originally published in American Business Magazine.

“I’m looking forward to seeing the results of our work when I return from my two week vacation in Hawaii.”

The coughing and sputtering sounds that broke the silence came from one of the vice presidents who had just choked on his coffee. He had apparently not been briefed on the content of the talk that Fred, the CEO, was giving.

The team was pushing hard to hit an aggressive product launch deadline. The CEO decided they needed a shot of inspiration, a few words of encouragement. He called a meeting in which he exhorted the team to work long hours, work weekends and give up time with their families in order to hit the deadline. Had it not been for his rather dramatic final sentence, his little speech would have been utterly unmemorable. As it was, however, it became the stuff of legend. By the time he returned from Hawaii, two people had quit. Within six months, half the company was gone. After a year, only the CEO’s footsteps echoed hollowly in the empty corridors and offices of what had once been a thriving company.

This, it may be argued, was not the way to build loyalty.

To be fair, it was not this isolated incident that led to the exodus. The Hawaiian vacation was merely the final straw, which, under other circumstances, might have been taken as a joke. While it’s certainly possible, albeit difficult, to lose employee loyalty in a heartbeat, building employee loyalty is a process. Depending on how well you’ve managed that process, your Hawaiian vacation might be the source of some good-natured grumbling or it might be the death knell for your company. Context is everything. As for your customers, well, if you haven’t managed to gain employee loyalty, you can forget about customer loyalty.

So what is this process? In today’s environment of tight budgets and limited raises, what can be done to keep your employees coming back? It’s not as hard as you may think.

To begin with, though, let’s debunk that popular myth that employees had better be loyal because there’s nowhere else for them to go in this economy. If your business is in a profitable niche, then you can bet that other businesses will join you there. Nothing attracts competition like the scent of money. During the last recession, I had a senior manager boast to me that he’d just scoffed at an employee who asked for a raise. “I laughed at him and told him he should be grateful that he has a job!”

A short time later, that employee had a new job with a significantly higher rate of pay. If he’d received a raise, he wouldn’t even have been looking. That manager’s department, meanwhile, was set back six months by the loss of that employee.

Sure, it’s a lousy economy, and sure, it’s hard to find a job. However, those companies that are hiring like nothing better than to lure employees away from their competitors. Indeed, foolish though it may be (see the article, Who Betrays One Master ), a great many companies will only hire those who are already employed somewhere else. Never assume that your employees have nowhere to go.

The first step to building employee loyalty is to give them something to be loyal to. If that’s their paycheck, then all you’ve done is hire a bunch of mercenaries. That’s fine, until someone offers them more money. If you don’t want mercenaries, though, start by getting people excited. What is your company doing? Why does anyone care? Why should they care? Why should your customers care? It doesn’t matter whether you’re a high-tech startup, an accounting firm or a landscaper. If you can’t clearly and succinctly state the value that you are bringing and get people excited about providing that value, you’re in trouble. Recognize that your message doesn’t have to appeal to everyone. Rather, it only needs to appeal to the people you want to hire and, eventually, to those whom you’d like to turn into your clients.

Crafting an exciting message isn’t always easy, but the benefits are worth it. Most of us want to take pride in our work. The more vividly we can see ourselves providing value, the more motivated and loyal we are. Similarly, when clients receive value from a company that isn’t afraid to stand up and say, “This is who we are!” they also become more loyal. People like to support causes they believe in, so make sure your company is the company people want to spend money to support. This is something our friend Fred did well. His product was one his employees were initially extremely excited by and his customers couldn’t wait to get their hands on it. Unfortunately, that’s as far as Fred went.

Now that you’ve established the frame, if you will, the next step is to start filling in the details. Having an exciting message is only the beginning. You have to help your employees see how they fit into your corporate story. Remember, when it comes to stories, no one wants to be the bit part. Maybe everyone doesn’t want to be the hero, but virtually everyone does want to feel competent, important, valuable and useful. Exactly how you make this happen will vary somewhat from person to person, but here are some elements to focus on.

How many hats do employees wear? Some people thrive when given the opportunity to wear multiple hats on the job. Other people like to wear just one hat, but they wear it very, very well. Whether you need employees to do a variety of different things or one thing well, recognize that those alternatives often appeal to different people. When you get a match, you also get increased loyalty. When you give people the opportunity to experiment and potentially expand what they’re doing, you get even more loyalty— provided they don’t think they’ll be fired for failing. But not all experiments are successful. The best way to get employees to do more is to let them develop an area of strength and then try new things. If they succeed, great! If not, they can retreat to their area of strength and try again. Over time, you’ll end up with steadily more competent employees.

The more competent your employees feel, the more loyal they will be. By extension, the more competent and loyal your employees, the more satisfied, and hence more loyal, your customers. Fred got this one wrong on two counts: First, he rarely let anyone experiment to see if they could expand their duties. When he did, he focused on weakness instead of strength and had no tolerance for failure. The net result was that everyone swiftly became afraid to try anything new or volunteer to help out beyond the limits of their job lest it not go well.

Employees also want to feel as though they matter to the company. Can your employees see how their work contributes to the company? When I worked for IBM in the 1980s, I was a very small cog in a very large machine. Even my most successful project was a rounding error on Big Blue’s balance sheet. Fred’s company was considerably smaller and each person could see how their work fit in and mattered. Fred’s biggest mistake was that he didn’t take the time to recognize the work his employees were doing and remind them how much it mattered. Even so, the employees quit in inverse order to the importance of their contribution. Make sure everyone can see their contribution to the company and periodically thank them for it. The more visible and important their work, the more loyal your employees will be.

Part of feeling competent and important is being able to make your own decisions. While any given employee may only be able to make decisions in limited areas, nonetheless, it’s important to provide employees with the opportunity to make as many decisions as possible. Fred needed to be part of every decision, even the most trivial. Not only did this slow down progress, it also left the experts in the company mightily offended. If you’re going to go to the trouble and expense of hiring highly skilled people, make sure you let them make decisions on the best ways to exercise those skills. Create a framework, provide guidelines and structure, but give them some freedom. For example, you might give your customer support people the authority to provide refunds to any customer up to $100 (or $1,000 or $10,000 depending on the nature of your company and product/service). They’ll feel good because they’re getting to exercise their own judgment and help the customers. Then, the customers will be happy because their problem was resolved quickly. Once again, you’ve increased loyalty.

Finally, how will your employees know they’re doing the right thing? Let’s face it, no one wants to have to ask how well they’re doing and you really don’t want people bugging you all the time. That means they need to be able to see the fruits of their labors as part of the job. Developing feedback systems that keep you mostly out of the way is not an easy task, but it is a very worthwhile one. The easier it is for employees to get feedback on their progress, the more they’ll enjoy their work and the greater their loyalty. In addition, taking the time to talk to your employees one-on-one and let them know you see their efforts and appreciate them is very powerful. Back when IBM was a tiny, struggling company, a big part of Tom Watson’s secret to building loyalty was taking the time to meet everyone. Tom Watson, Jr., presiding over a significantly larger IBM, maintained the tradition.

If you take the time to get to know your employees, you also reap an additional benefit: When you know your employees as individuals, you can reward them as individuals. Rewarding someone at random because “I’ve seen your work and I just wanted to say thank you,” is a great way of increasing loyalty. Making that reward something the individual employee really values is even better. Fred could never bring himself to reward people. Instead, he always complained that their work wasn’t good enough and would find excuses not to give rewards he’d promised.

Loyalty is not something that just happens. It’s something that you build over time and put in the bank for the times when you need it. If it’s not there, a single wrong word can cost you your employees or your largest customer. If it’s there, well, you can accomplish almost anything. The choice is yours.