Wednesday, July 18, 2018

Corporate Culture and the Bottom Line

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Is there a linkage between corporate culture and the bottom line?

In a nutshell... yes. Corporate culture is linked to so many business decisions and business outcomes. You might be surprised!

Today's post is a follow-on to last week's post, A Fish Rots from the Head Down, in which I wrote about the need for company leadership to model the behaviors they want to see from their employees in order to transform, inspire, and drive the company's intended culture.

Culture is such an important part of any business. It really is the foundation upon which the business happens, i.e., fails or succeeds. And there's some academic research that supports this stance.

I recently stumbled upon some culture research done by Duke University's Fuqua School of Business a couple years ago. The findings are quite interesting, as they uncovered the link between culture and both business successes and business failures. If you'd like to read the details of this research, there are two papers: Corporate Culture: Evidence from the Field and Corporate Culture: The Interview Evidence.

I'll focus on the latter, which was based on both surveys of 1,348 CEOs and CFOs and in-depth interviews with executives representing 20% of the U.S. equity market capitalization. Questions addressed in this paper included:
  1. What is corporate culture?
  2. How important is corporate culture?
  3. What mechanisms underlie the creation and effectiveness of corporate culture? How do other formal institutions (e.g., governance or compensation) reinforce or work against culture?
  4. Do companies think their culture is effective and if not, what deters firms from having an effective corporate culture?
  5. Are the upside benefits of an effective culture greater than the downside costs of ineffective culture?
  6. What aspects of business performance does corporate culture affect? Does culture impact firm value, productivity, corporate risk-taking, growth, M&A, financial and tax reporting, whether employees take a long-run view, and/or corporate ethics?
  7. How can corporate culture be measured?
The answers to these questions are fascinating and really support everything we (at least, I) tend to believe and write/talk about when it comes to corporate culture and how critical it is to a business.

Some interesting findings from this research include:
  • Most executives would walk away from an M&A deal if the target acquisition is not aligned culturally with their existing cultures; others would require a heavy discount on the purchase price.
  • Culture is set by the CEO.
  • The Board doesn't drive culture but can influence it through their choice of a CEO.
  • Executives agree that for a culture to be effective, the values must be backed up by behaviors and norms.
  • Culture is a top-three value driver of the business and one of the most-important forces behind value creation.
  • An effective culture improves the company's value and profitability through:
    • fostering creativity and encouraging productivity
    • higher risk tolerance
    • mitigating myopic behavior
    • creativity and innovation
  • Effective cultures (a culture that promotes employee behaviors that drive successful execution of the company's strategies) happen when the company walks the talk and lives the values.
  • An ineffective culture (does not promote those behaviors and might even work against the right behaviors) increases the chances that employees will act unethically or illegally. 
  • Few executives agreed that their culture is where it ought to be.
    • Why not? Leadership needs to invest more time to develop the culture.
  • Ways to measure the culture include:
    • conference call transcripts/analyst calls
    • employee age, tenure, and turnover
    • external communications by the company
    • portrayal of the CEO in the press
    • understanding the circumstances around a CEO change
    • employee opinions, e.g., Glassdoor
    • assessments of whether the culture is aligned with the needs of the business
    • evaluation of internal communication patterns
    • management actions
These are just some of the highlights from this research. There is so much great information in both of these reports; I'd recommend taking the time to download and read both of them. I don't think you'll be disappointed in what you learn! You might even learn a new word - at least, I did: shibboleth: a custom, tradition, value, norm, etc. that is no longer important. Do you have any of these in your organization?

I used to believe that culture was "soft" and had little bearing on our bottom line. What I believe today is that our culture has everything to do with our bottom line, now and into the future. -Vern Dosch, Author, Wired Differently

Thursday, July 12, 2018

A Fish Rots from the Head Down

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A fish rots from the head down - and so does your culture.

What does "a fish rots from the head down" mean? It means that the problem starts at the top, that the problems, failures, issues, toxicity, etc. in your organization - or any organization - start with the leadership team.

Senior leaders and executives: take a good, hard look at how you and your colleagues act, behave, make decisions, walk the walk/talk the talk, live the values, etc. How would you feel if your employees did what you just did? If you say, "Great!" Kudos to you. But if you scratch your head and think that what you do is fine because you lead a team or lead the company - but wouldn't want your employees to act the same way - you are wrong. Everyone in your company must live by the same standards, by the same values.

That's how cultures are purposely created. That's how cultures are sustained. That's how cultures are transformed.

Culture is like the wind. It is invisible; yet its effect can be seen and felt.
-Bryan Walker, Partner and Managing Director, IDEO

Leaders must model the behavior they want to see - this is where the real culture transformation begins. Because, metaphorically speaking, "What's good for the goose (leader) is good for the gander (employee)." In other words, if you, as a leader, want employees to act a certain way, then you must live the values, lead, model, and show them what the right or acceptable behavior is. And only then does culture become "how employees act when the CEO isn't looking." Because, let's face it, most of the time the CEO is not there, looking over an employee's shoulders. But if employees see that executives put themselves "above the law," forget it; that's a major culture fail.

If you're in the midst of transforming your business to a customer-focused/customer-centric culture, then employees look to you for what that means. It means that you'll...
  • create meeting agendas that always include customer experience and employee experience topics and metrics, customer and employee stories, etc.
  • walk around the office, talking to employees and asking them about their work days, their careers, their passions, their lives, their jobs, etc., ensuring they have everything they need to have a great experience, and letting them know how their work matters and that you care about them as humans (not just cogs in your wheel to success, as Bob Chapman notes)
  • motivate and inspire employees to do their best work - and to deliver the best for your customers 
  • empower employees
  • listen to employees and to customers - and act on their feedback 
  • communicate with employees openly and candidly - about the vision, the purpose, the mission, the strategy, the business, etc.
  • visit customers regularly to understand their experiences - and act on what you learn
  • field calls from customers and mystery shop your own phone lines to ensure that the customer experience is what you expect it to be
  • deliver regular company updates via email and/or video that always incorporate some mention of employees and customers, their importance to the business, great things they've done or are doing, and how the CX vision and strategy are moving forward
  • develop core values that support this customer-focused/customer-centric culture
  • talk about and live the core values, always!
  • recognize and reward employees for the behaviors that drive great customer experiences
  • ensure all employees know that they impact the customer and the customer experience (and how)
  • consider the impact of all decisions - yours and the ones that your employees make - on the customer and her experience
  • make decisions through a "people-first" lens 
  • and more!
Remember this: the things you talk about a lot are deemed important to employees, and employees realize the things you don't talk about are inconsequential.

Don't let your culture rot from the head down. If you, company leader, do these things, it sets the tone for your employees. They'll get it. They'll see that you mean business. But if you never do any of the things listed above, your employees won't believe that they - or your customers - are important or that there's any kind of transformation underway.

When employees have confidence in their leadership team and the mission they've undertaken to transform the business, they buy in, they believe, and they align with you and with the goals of the transformation, of the organization.

When employees align with senior leaders and with the mission, when everyone is working together and focused on the same goals, then the real magic can happen.

Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing. -Brian Chesky, co-founder and CEO, Airbnb

Thursday, July 5, 2018

The Continuum of Data-Driven Success

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I originally wrote today's post for Logi Analytics. It appeared on their blog on December 14, 2017.

Data is just data until you do something with it, right?!

That statement has plagued companies for a long time. For a variety of reasons, not the least of which is that they just don’t know what to do with the data.

In December 2017, I hosted a webinar with Logi Analytics titled 5 Steps to Making Data Actionable, in which I shared tips on moving beyond data for the sake of data – and dashboards for the sake of dashboards – to recommending insights and outputs that drive action, I thought I’d share some details about one of the areas I covered during my presentation: how data-driven decisions and actions have evolved, particularly for customer experience professionals.

Customer experience professionals know that, in order to deliver a great experience, companies must listen to customers, link customer feedback to transactional (and other) data, and act on what they hear. There’s an old Gartner statistic that I still like to share because I believe it’s relevant to this day:

95% of companies collect customer feedback, yet only 10% use the feedback to improve, and only 5% tell customers what they are doing in response to what they heard.

This statistic is a good, high-level representation of how companies have matured or evolved (or haven’t) along the continuum of data-driven success.

Let’s take a closer look at that continuum. And let’s assume that Phase 0 is not listening or looking at data at all.

Phase 1 (Feedback) is where we see companies in the primitive stages of understanding the importance of data, i.e., they know they need to listen to their customers, oftentimes because everyone else is doing it. But that’s all they do; they check the box to say, “We listen.” And they’re paralyzed by the reams of data that exist within their systems.

In Phase 2 (Metrics), companies pick up their next bad habit when it comes to customer listening and understanding: they focus on a metric, on making their number, on moving the needle on the score. Doing that, instead of using data to improve the customer experience, is not really progress, and it’s not really a good thing. When you focus on the metric, you reward the behaviors that move the number, not on those that deliver a better experience. those (former, not latter) behaviors are often bad behaviors.

The next level in the data-driven success continuum is Phase 3 (Insights). Now we’re starting to make some progress. Companies at this level are interpreting the data, digging for insights, and telling the story of the data. They are making some data-driven improvements, mainly tactical at this point.

In Phase 4 (Outcomes), companies realize they cannot just make improvements without linking the findings and the work to be done to operational metrics and business outcomes. They realize they’ll make greater progress and get the resources (human, capital, and more) if they can show that “if we do X, it will impact Y.”

And finally, in Phase 5 (Innovation), we see some real progress! Companies us the data, the insights, and the linkages to make some real, significant, strategic improvements: they use the data to develop new products that solve problems for customers and help them do some job, and they redesign the customer experience to better meet customers’ expectations.

The important component along each phase is, obviously, the data and what is done with the data. Critical to that is the way the data is presented to the one who consumes it and needs to do something with it. There’s definitely an evolution in analysis and reporting, as well, as companies mature along the continuum. The output goes from basic descriptive statistics to metrics and trends to insights and stories to ROI and financial linkages to predictive and prescriptive recommendations that retain customers.

Consider these things when you’re developing reports and dashboards for customer experience professionals or for those who need to consume customer data in order to improve the experience. The data needs to be presented in a way that’s actionable; more specifically, it needs to tell the user exactly what needs to be done, why, and what the impact of making the change will be.

There are two goals when presenting data: convey your story and establish credibility. -Edward Tufte

Wednesday, June 27, 2018

CX Journey™ Musings: Golden Rule or Platinum Rule?

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Here's another age-old debate... gold or platinum?

Personally, I prefer platinum.

Oh wait. What are we talking about? LOL.

Rules. I'm talking about rules.

I still prefer platinum!

On the heels of my recent post about imagining that you're a human... I thought I'd take a look at which one, the Golden Rule or  the Platinum Rule, puts us into more-human and more-empathetic shoes.

You're probably well aware of both rules I'm referring to. The Golden Rule states that you should treat others the way that you would want to be treated, while the Platinum Rule shifts the focus a bit and says that you should treat others the way that they want to be treated.

I'm positive the Platinum Rule was created by a customer experience professional! While the Golden Rule ignores the feelings of others and assumes that we all want to be treated the same way, the Platinum Rule recognizes that we don't, that we want to be treated the way we want to be treated. It acknowledges that we all have different needs and want to be respected as individuals. It's quite the improvement to the Golden Rule. It's much more empathetic.

The Platinum Rule speaks to customer experience professionals. We are constantly preaching that companies need to be more empathetic and do a better job of understanding customers wants, needs, pain points, problems to solve, jobs to be done, and more... so that they can design the products and the experiences that customers want - or that solve customers problems and painpoints.

Put differently, I think the Golden Rule perpetuates inside-out thinking, while the Platinum Rule inspires outside-in thinking.

What's the best way to perpetuate the Platinum Rule? Three ways that I write and talk about all the time are:
  1. Listen. Don't just ask customers about the experience, listen, as well. There are a lot of different channels and ways for customers to tell you about their needs and desired outcomes and how well you are performing against their expectations. Understanding these expectations and identifying key drivers of a great customer experience are important outcomes of this exercise.
  2. Characterize. Research your customers. Identify the jobs they are trying to do. Compile key personas that represent the various types of prospects and customers that (might) buy from you or that use your products or services.
  3. Empathize. Walk in your customers' shoes to get a clear understanding of the steps they take to do whatever job it is they are trying to do with your organization.  Map their journeys to understand the current state of the experience.
These are all critical learning exercises. We walk away from each one with a lot of knowledge about customers wants, needs, problems to solve, etc. Use that information to live the Platinum Rule with your customers.

If you still think the Golden Rule is the better rule, consider this golden rule: He who has the gold makes the rules. Your customers hold the gold, and they will spend it elsewhere if you don't take the time to get to know them.

I've said it before: maybe it goes beyond those rules to just simply doing what's right. But does that mean we need to rely on common sense? And how common is common sense? Maybe that's the problem.

The golden rule for every business man is this: Put yourself in your customer’s place. – Orison Swett Marden


Wednesday, June 20, 2018

Journey Mapping Your Way to Better Customer Communications

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I originally wrote today's post for Zingle. It appeared on their blog on January 16, 2018.

Communication is important to any relationship, and it's no less important in the relationships that businesses have with their customers. When it comes to communicating, your company’s accessibility, availability, responsiveness, courtesy and professionalism, consistent voice, and consistent messaging go a long way toward building strong relationships and delivering a great experience for your customers.

Sadly, communications are often an overlooked piece of the customer experience and the overall customer experience strategy. And yet, like in any relationship, communications are often the point where the experience breaks down – or are the root cause for a breakdown.

How can we ensure that doesn’t happen?

Let me start by defining “customer experience,” and then I’ll answer that question. I like to start with this definition to ensure that we’re all on the same page.

Customer experience is (a) the sum of all the interactions that a customer has with a company over the course of the relationship and includes (b) the customer's feelings, emotions, and perceptions of the brand during the course of those interactions.

Customer experience is not customer service. The two are not one and the same. Customer service is just one of those interactions that I mention in my definition of customer experience. Need a better way to differentiate the two? Use Chris Zane’s definition: Customer service is what happens when the customer experience breaks down.

Now, back to the question I posed about ensuring that communications aren’t overlooked as part of the customer experience. How do we make sure they’re integrated into your customer experience strategy and design – and executed well? Simple. With journey maps.
What is a journey map? It’s an illustration made by walking in your customers’ shoes to capture their steps, their needs, and their perceptions for some interaction they have with your company, some journey they are taking to achieve a desired outcome. Journey mapping is a creative process that allows companies to understand – and then to redesign – the customer experience. The output is not just a pretty picture; once the map is developed, it is meant to be a catalyst for change.

Why journey mapping? It’s a learning process! When you map the customer steps for a specific journey, you will be jotting down every touch the customer has with your company, including any communications she receives from the company, as well as any contact she initiates. You’ll capture enough detail about the journey so that you can not only understand the experience but also identify where things are going well and where they’re not.

One of the goals of journey mapping is to identify key moments of truth, i.e., those make-or-break moments along the customer journey that need to be executed flawlessly in order to deliver a great customer experience. Oftentimes, communications are those moments of truth. And all too often, as I mentioned earlier, they are the reason the experience goes poorly.

What’s next? Critical to this whole exercise is that, once you’ve identified those moments of truth – particularly the ones that impact the experience negatively – you must quickly fix them.

In order to do that, you’ll want to undertake one more mapping exercise – this time, mapping the internal processes that facilitate and support those moments of truth. Process mapping is very different from journey mapping in that the focus is on what happens behind the scenes, what the company does to support the customer journey.

Process mapping is important because you can’t fix the customer’s experience if the backstage processes aren’t efficiently and effectively supporting it. Think about the tools, systems, and processes you have in place to support the customer experience today. Do they make sense? Do your employees have the resources and the know-how to execute flawlessly? Consider all of the areas where you’re communicating with customers. Are employees able to communicate clearly, consistently, and in a timely fashion in order to deliver a great customer experience? Are you communicating in the manner in which your customers prefer? And when they need you to?

I wouldn’t be surprised if your answers are “No.” Time to get to work! Start mapping your customer journeys – from the customer viewpoint. Don’t forget to consider various communication channels and sources. Identify where the journey breaks down. Take a look at your processes supporting these journeys. Fix what’s broken behind the scenes. Redesign the experience. And communicate the changes to your customers. Once again, communication is key.

To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others. -Tony Robbins