Tag Archives: Company culture

Putting On the Ritz: Building a Service Culture

Have you ever gone away from home on a business trip and left something important behind?  Imagine leaving your smart phone, or wallet, or last pair of eyeglasses.   To me, these would be more than a minor inconvenience – they would be a BIG deal.   Losing these would turn my world upside down (at least for a time).

To a five-year old leaving behind their ELMO doll while on vacation, this can be just as traumatic an experience.  In this case the girl, Ainsley Giorgio was on vacation with her family at the Amelia Island Ritz-Carlton hotel.

As reported in the Huffington Post, Ritz employee Nelson Quesada, found the doll after Ainsley and her family departed, and decided not just to return it, but to do so in the fabled Ritz Style.   Nelson decided to create a scrapbook showing various pictures documenting all the fun Elmo was having on his adventure since Ainsley left him behind.  In it, Elmo was pictured lounging by the pool, working out in the fitness center, waving to Ainsley (see photo), playing video games, and kicking back with a group of his other stuffed animal friends.

What an impact that must have had on this five-year old, as well as her parents!  When you get a WOW customer service experience right, you create an impression that could literally last a lifetime!    In addition to making a little girl feel elated, this makes good business sense, especially given the power of word-of-mouth sharing.  It also creates in the good deed doer a rush of biochemical reactions that scientists believe can reduce stress, improve one’s sense of well-being, and even improve your health and longevity!   (See the WebMD article below.)  Talk about the ultimate win-win.

What’s even more noteworthy to me is how little that action by Mr. Quesada cost his company (Perhaps 45 minutes of time, a few pages off the printer, and some postage).  In total less than $50.  If the telling of this story gets even one additional person to stay at the Ritz for just one night, they would have generated an additional $600-800 in revenue (after room, dinner breakfast and other likely charges).  Seems like a no-brainer doesn’t it?  Makes you wonder why more organizations don’t act in a Ritz-like way – especially the ones where a great customer experience is a strategic imperative.

Not Left to Chance.

At Ritz-Carlton, this service culture is not something left to chance. It is the by-product of their hiring, on boarding, culture-training, employee empowerment, and management behaviors.

Here are some of the ways the Ritz increases the likelihood that WOW service experiences are more common than in most other companies.

1)      You need to define what you stand for.   Delivering great customer service only can happen if people UNDERSTAND what it looks like.  You need to define it.   R-C has done this in a variety of ways in the Mission, their Credo, their Motto, a set of Service Values, and something called the Employee Promise.  These collectively explain what they are about, and what principles should dictate employee behaviors from the CEO down to the bellman.   (Some companies try instead to document desired actions in voluminous sets of policies and procedures.  That never works.  There are just too many unpredictable circumstances that present themselves.  What we want is employees who can instinctively act based on their understanding of core values.)

2)     Hire based on core talent, not job skills.   Many companies write job descriptions that detail the work skills needed for each position (e.g. knowledge of a particular software system).   What really matters is core behaviors or inclinations. These are not trainable, but job skills are.  At R-C, they have a list of 11 basic talents (like exactness, or relationship/engagement).  Each position in the company requires differing levels of each.  Someone in the accounting department may need lots of exactness (attention to detail) while a concierge needs more relationship/engagement skill.   Remember this maxim – Hire for talents, and then train for skills.

3)     Teach deliberately.   If certain behaviors matter to you, don’t leave them to chance.  Train your team around them.   R-C puts every new employee through a 21-day intense training program where they are taught the values and beliefs, their customer service model, how to manage a difficult guest and other items they have learned from experience will likely be encountered by employees in their jobs.

4)  Trust in your people.  Every R-C employee knows they have at their discretion $2,000 they can spend every day not just to satisfy but to WOW their guests.   If your first reaction to this is “how could they? Won’t people spend the money foolishly?” you don’t really get this.  Employees who are hired carefully, and trained well recognize it is THEIR company too, and they will spend money wisely and only when necessary (as physicians learned long ago about self-dosing of morphine by patients who typically use less when they are in control of the button).

5)    Measure it.  If you don’t measure where you stand, you can’t possibly know if you are getting better or worse.   (Did you ever play golf with someone who didn’t keep score?  If they didn’t it is because they either were ashamed of their game or didn’t care – and neither one of those is a good thing.)    R-C does random guest satisfaction surveys every month to track progress and stimulate discussions on what they could do better.

6)    Recognize it.   If you get the same rewards and recognition for delivering mediocre service as you do for providing WOW service, guess what’s likely to happen? The service quality will diminish.   We as bosses must be paying attention – trying to catch them in the act of doing it right.    When we see it, it is our golden opportunity to act.  Rewards need not be about cash.  Often a thank you or a “thumbs up” can accomplish the important goal of letting your people know their good work is noticed, and that they are appreciated.  Make it personal.

7)    Live it.  If it all stops at the end of employee orientation, then energy around what you claimed you believed in will wane.   Here is a video clip talking about something that R-C calls their line-up.  A daily meeting in every hotel across the planet where one of their 16 key culture elements is discussed for 15 minutes.  The meeting is mandatory.   At it, people share a WOW story of their own, or maybe brings up a situation they faced where they weren’t sure how to best handle it.  Everyone attends.    It is a chance to reinforce what matters.  Remember that WE (as bosses) are the CAP on service quality.   Our staff’s will not typically deliver better than they see from us.  When WE think it is important, they too will follow suit.

Other Resources:

The Science of Good Deeds: The ‘helper’s high’ could help you live a longer, healthier life, by WebMD

Lost Elmo Doll Goes on ‘Vacation’ at the Ritz Carlton, by the Huffington Post

Service the Ritz-Carlton Way, by Club Resources International

Put More WOW in Your Service, Brandt Silverman, Wiplfi Ltd

How Ritz-Carlton Maintains its Mystique, by Carmine Gallo , Bloomberg Business



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8 Lessons From Microsoft’s Malaise

In December 2000, Microsoft had a market capitalization of $510 billion, making it the world’s most valuable company. As of June 2012, it is No. 3, with a market cap of $249 billion. In December 2000, Apple had a market cap of $4.8 billion and didn’t even make the list.  As of this June, it is No. 1 in the world, with a market cap of $541 billion.  Today, Apple’s iPhone product line brings in more revenue itself than all of Microsoft.   No kidding.

(At left, a pensive Microsoft CEO, Steve Ballmer – perhaps contemplating his predicament at what was once the largest company on the planet – based on market cap anyway)

What an incredible reversal of fortunes.   How could Microsoft – once one of the coolest places to work – revolutionizing the entire world and breaking even IBM’s iron grasp on the computer industry seem to lose its way so dramatically?

In Vanity Fair’s article Microsoft’s Lost Decade, investigative reporter Kurt Eichenwald offers some insights.

Microsoft was once a lean, mean and hip enterprise led by young visionaries out to change the world.  Over the years (and not so many of them) they seem to have become slow, bureaucratic, arrogant and filled with backstabbing, silos, politics, petty disputes and passive aggression – everything the company founders hated.

Lesson 1 – Be careful about succession planning.   In 1980, the year IBM came to Microsoft to purchase their DOS operating system, the company revenues skyrocketed to stratospheric levels.   While founders Bill Gates and Paul Allen were passionate about their products and vision, they both recognized that they perhaps didn’t have the requisite skills to manage the growth.   While this was arguably a good thing, they turned to another ex-Harvard colleague, who was brilliant, but also loud, boisterous and hard driven, Steve Ballmer.   Gates made Ballmer his “right hand man.”  When he ultimately decided to step aside in 2000, even Allen was caught by surprise as he never saw Ballmer as Bill’s successor.    He sensed Ballmer was not right for the job since he was a finance guy, and dealmaker who did not have a solid grasp on the product and technology side of the business.   And, the executive culture at the company took a decided turn.

Lesson 2 – Even smart people have blinders.   By 1997, Microsoft had a 10-year head start on the world in developing a new product – an electronic device that allowed people to download books magazines and other written content.   While Gates “green lighted” the project, he didn’t like the initial prototype because it didn’t seem “Windows like.”    This led to delays and redesigns.  The e-book development was ultimately transferred from R&D to the operating software unit responsible for meeting quarterly profit goals and their focus was quickly shifted to supporting software products.   So despite their multi-year head start, Microsoft would not be first to market, allowing Amazon and Apple to reap billions of dollars in revenues and profits.

Lesson 3 – Old paradigms can drag you down wrong paths   Once Gates communicated he didn’t like the operator interface, it signaled a pattern of thinking within the company.   Windows was designed to enter information via a keyboard rather than a touch-screen interface.   The initial e-book design within Microsoft was more iPad-like.  But, the Windows and Office operating units were able to dictate the new product development agenda and the Microsoft Reader product ultimately introduced – left most customers “cold” and was a considerable flop.   Microsoft was already beginning to stifle innovation.

Lesson 4 – When old meets new it is not so good.  In the early days of Microsoft, the company grew and stock prices soared.  Microsoft made not only software, but made millionaires as well – relying on a rich program that granted stock options to employees. After Ballmer took over from Gates, the stock price bubble had burst.   The old timers (many millionaires) were now working alongside new employees (millionaire “wannabes”).  When the millionaires came to work talking about the new Bentleys they had just purchased, the younger employees began to resent the disparity, creating an environment of us-vs-them which built mistrust and caused unhealthy internal politics to expand exponentially. In the early days people saw they would achieve wealth by inventing exciting new products.  But today, people see that the only way to wealth is just like it is at General Motors or IBM . . . through promotions.  The bureaucratization of Microsoft was now well under way.

Lesson 5 – When financial engineering replaces real engineering, you are in trouble.  As the tech bubble burst, and stock price woes intensified, it was natural that company execs began focusing more on managing financial results.   More meetings were created, committees were established to approve things (like what to spend money on) and people began worrying about budgets more than they did about product innovation.   This always creates a short-term focus.   When the attention turns to cost cutting and budget management, the market has a way of passing you by (especially in a marketplace where the pace of change is great.)  Microsoft initially has a lead on some of their key competitors in the smart phone business with their Windows CE operating system.  But like in the case of the Microsoft e-book reader, this too was squandered – all due to the crushing weight of Microsoft’s burgeoning bureaucracy.

Lesson 6 – The generation gap can impact every company.  Many of Microsoft’s middle (and upper level) managers were initially recruited in their 20s during the 1980s.   Today they are in their late 40s and higher.   As the millennial generation started to swarm into the junior ranks, they saw a different world of consumer behaviors than their bosses did.  As happens at many companies, the suggestions of the younger generation were brushed aside by the older generation managers who seemed out of touch with the market – adding to the resentment and feelings of frustration.   Case in point – Microsoft’s MSN Messenger product was introduced as a competitor to AOL’s AIM product – a pre-cursor to the social media phenomenon we now know as Facebook.  As was the case with Microsoft Reader and Windows CE, the MSN Messenger product lacked many of the features that younger users coveted.  Microsoft managers – said one company software developer –  “just didn’t get it.”

Lesson 7 – Don’t steal management concepts from others that don’t fit your culture.   One of the more controversial inventions of GE’s Jack Welch was the dreaded ABC system where all managers were forced to grade their subordinates on a bell curve.  So no matter how good they were, you had to classify 10% as under-performing “C players.”  While this may have worked for Welch, when introduced at Microsoft, it was immediately despised by the masses, furthering a culture of internal competition that one exec called “management by character assassination.”  Another software development manager recalled “People [would] openly sabotage other people’s efforts. One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the [employee] rankings.”

Lesson 8 – Don’t get mad or try to get even.  As the bureaucracy issues became more prevalent, a lot of talented people were being lured away to other companies like Google – the emerging new “cool” place to work.   When one of Ballmer’s key technical specialists told him he was leaving for Google, Ballmer reportedly had a meltdown throwing a chair and threatening to “bury” Google.  This passion for revenge apparently motivated the development of BING, Microsoft’s third less than stellar entry in to the search market, which one engineer described as being developed by a bloated team that was not focused on innovating new features, but bringing out something fast to gain market share and hurt Google.   Reports are that Microsoft has so far lost $6 billion on the search venture.  While Microsoft has gained market share, it has done so by displacing other Yahoo search customers.   Google has also been gaining share.

It is hard to know where Microsoft will turn next, or if Mr. Ballmer will be able to turn things around.   But the main point for us all is that all companies everywhere are potentially governed by the same laws of human behavior and company culture.  Thinking you are immune is the first big mistake.

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What Workers Want in 2012!

Employee engagement is a pretty hot topic these days among HR professionals.  It should be.   More and more young people (Gen Y workers) are aware of how some of the more innovative companies like Google, Zappos, Netflix, IDEO and others treat their employees, not only with perks, but more flexibility, more empowerment, more trust, and more of a chance to have an impact on something big.

Even if the job seekers you are recruiting to your business know your company isn’t Google, when the gap between your organizational environment and the ones millennials idolize becomes too large, you are at a disadvantage when seeking to attract the best possible talent.

More and more companies are starting to realize this.  Studies have tied employee engagement to both satisfaction and productivity and companies realize that keeping employees satisfied is a key to high performance.  Employers eagerly pursue making one of the coveted “100 best places to work” lists, and today, more than 25 percent of Fortune 200 companies have dedicated budget to maintain their rank on such lists.  (See other related references below).

If you aren’t already working on this, you may be falling farther behind.

I came across this report from an organization called netimpact, called What Workers Want in 2012.    The study reveals a number of important factors that Boomers (or even many Gen X-ers) may not be too aware of or focused on.   What is interesting about this study is that they interviewed two groups – people who were already employed, and students just leaving college entering the workforce.   When you see significant differences between these two groups, then one might conclude there is a generational shift about to occur.   As employers shouldn’t we be designing our organizations around these emerging workers?  In just the blink of an eye, they will be swelling our employee ranks – and also becoming our customers.

Anyway, here are some interesting points you may not have on your radar screen:

  •  People Want Their Job to Make a Difference Many people are saying now that having a job that makes an impact on the world is an important life goal. In fact, graduating students say it is more important than having children, a prestigious career, wealth, or a leadership position — ranking only below financial security and marriage!

Interestingly, in spite of the current weak economy, students remain somewhat idealistic and optimistic.  When asked the question “Do you believe you will be able to make a difference through your job? 38 percent said emphatically YES within 5 years, and another 28 percent said YES in 6 years or longer.  (Wouldn’t it be great if we didn’t disappoint them?)

It might be time to look at your company brand and mission statement.  Do they evoke a call to action around some noble purpose?   Wal-mart’s mission talks about “helping people save money – SO THEY CAN LIVE BETTER LIVES.”   Disney calls upon its people to “Design and deliver the Disney experience CREATING HAPPINESS FOR FAMILIES EVERYWHERE,” and Pharma company AMGEN says they are in the business of “CURING CANCER.”   How does yours stack-up?

And What’s More . . .

  •  Money is far less important for this emerging group of workers.   When asked the question “All other things being equal, I would take a 15% pay cut . . .”   45% said they would…for a job that makes a social or environmental impact; and 58% said they would…to work for an organization with values like my own.   It is interesting to reflect on how we might help prospective employees understand our own company values, and it may make a big impact if they felt you were asking them during interviews about THEIR values.   (If this were done with sincerity, it just might give you an advantage. . .)
  • There is a gender difference in how people see the importance of having job with high impact.  Women consistently express a stronger desire for jobs with impact than men:  Sixty percent of employed women say that working for a company that prioritizes social and environmental responsibility is very important to them, compared to 38 percent of men.  Thirty percent of working women say they would take a pay cut for a job that makes an impact, compared to 19 percent of men. Female students are more likely to want a job with a company that prioritizes corporate responsibility than male students (60 percent and 40 percent, respectively).

There are clearly other factors that define millennials, and the kind of workplace they seek to have.  (See The Millennials Speak Up, and  The Millennials are Coming.)  But, today’s discussion about connecting work to life purpose is an interesting one worth careful consideration.

So where do you start?  Well, one suggestion is that you KNOW your company values (not just the ones on the website, but the ones your people feel really characterize how we behave at work).   Think about how to communicate, celebrate and reinforce them.   Incorporate this into your interview process.   Next, think about how to re-frame your corporate mission (sense of purpose) in a way that more positively makes a connection between what you do and why it matters.   How do you communicate this and connect people’s day jobs to it?

Here is an example of a short video clip that tries to do this for employees of Google.

Other Related References

Towers Watson, “The Power of Three: Taking Engagement to New Heights.”

John Sullivan, “Assess Your Employment Brand Using an Audit Checklist.”

Corporate Leadership Council, “Driving Performance and Retention Through Employee Engagement.”

KPMG International Survey of Corporate Responsibility Reporting 2011.

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Leadership and Culture – Lessons From Goldman Sachs

The Financial System meltdown in 2009 thrust this nation into a deep recession from which only now there are slight glimmers of the light from economic recovery.  Many people lost their homes as housing prices reached lows never imagined, unemployment passed double-digit levels, and many older Americans had their confidence shaken as their once secure retirements were no longer seeming a reality.

Some of the most trusted names on Wall Street, including AIG, Citibank, Lehman Brothers and others were called into question.  Reading the final report of the National Commission on the Causes of the Financial and Economic Crisis in the United States is more than a little distressing.  The warning signs were there, but were ignored both on Wall Street and in Washington.   And why? Greed.  The prospect of making massive amounts of money selling toxic mortgages to people who had no business buying them . . . that’s what was behind this.   Greed on the part of the investment bankers who made massive bonuses, and on the part of consumers who scrambled to buy loans that were “too good to be true” . . . that’s what was behind it.

While it seems that there is plenty of blame to go around, we all saw the stunning consequences of this excess–and we’ve all learned from the experience, right?  Maybe not.

In March, one senior executive at Goldman Sachs stunned (me at least) with his Op Ed piece in the NY Times called Why I Am Leaving Goldman Sachs  Greg Smith became so disgusted by what he was seeing in the company he worked at for 12 years that he took the unprecedented step to publish this open letter to put world on notice about why he couldn’t take it any longer. (Mr. Smith was responsible for the U.S./Americas equity derivatives business in Europe for GS).  I believe this letter is significant and we should pay close attention to it.

Smith joined Goldman first as an intern from Stanford, and then as a full-time employee in 2001 working in New York, and then London.  Like many MBAs he was ambitious, driven, bright and excited about building a career.  But he lived through the first wave of crisis, and until recently stayed with GS until he concluded that nothing has changed in the way the company works since the meltdown.  Here are some of his observations.

“The environment now is as toxic and destructive as I have ever seen it.” The interests of the client continue to be sidelined in the way the firm operates and thinks about making money.  He says that the firm has veered so far from where it was when he joined them out of college that he can no longer identify with its evolving culture and values.  When he came, Smith saw the culture as a key strength of the company, rooted in humility, teamwork, integrity and an intense focus on doing right by its clients.  No longer, he says.   That culture is what made GS a trusted partner of clients everywhere for 143 years. Now there is virtually no support for the notion of advising clients to do what is best for them, if it reduces GS revenues.

“I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”  Smith suggests that GS CEO Lloyd C. Blankfein, and president, Gary D. Cohn, lost hold of the firm’s culture on their watch.   We all know that is important to make money.   However, that alone is not what I would call a “noble purpose”.   People identify with that and it guides us to make decisions about HOW we will conduct our business.  When Disney says its purpose is to “provide happiness to families everywhere”, AMGEN talks about “curing cancer” as its mission, or even Wal-Mart says it seeks to “help ordinary people save money so they can live better lives”, the presumption is that doing THESE things well actually will cause the revenues to happen.  It is a matter of faith.  When money is the only thing that drives decisions, I think you set yourself up to face many risks.

“The firm changed the way it thought about leadership.”  Smith goes on to say that when he first joined Goldman Sachs, leadership was about setting a good example and doing the right things.  Somehow this was lost.   The reason was primarily due to the fact that the company started to promote only those people who generated the most revenue for the firm.   People pay attention to who we promote and demote.  They pay attention to what we pay attention to as leaders.  In the case of Goldman, Smith describes that you get to the top by persuading clients to buy products GS wants to dump because they no longer saw profit potential for themselves, or making large trades (on which the company would earn large fees, or push products to produce more transactions and fees regardless of how good the products were.)

“[We no longer ask] questions about how we can help clients.”  Sales and other meetings at Goldman were all focused on how to generate more revenues and profits. Period. Any company that loses its focus on serving client needs should not be rewarded with business.  Sooner or later clients figure out that you are not in their corner.   Smith recounts that it is notable that the most common question asked of him by junior analysts (presumably the future leaders of the company) is “how much did we earn from that client?”   So it seems that when you take even good moral people and immerse them in any environment, they will reflect the values that surround them.  That’s how they see they can get promoted.  The culture thus perpetuates itself.

What is Smith’s prescription (somewhat of a plea to the GS Board)?

1)      Make the customer the central focus of the business (as it once was)

2)      Weed out the morally bankrupt – no matter what

3)      Build a culture based on values that drive different behaviors

I don’t know whether this brash act of a young executive will simply be gone in the blink of an eye.   I wonder how many of us would demonstrate his courage to make this kind of bold statement in the NY Times?  Where is the line over which you wouldn’t cross?   At what point would you say no, or tender your resignation?

As for Goldman, I wonder what it takes for the Board and executive leadership to take notice.   This is a company that was sued by the SEC for Fraud.   When its executives were paraded to testify before Congress, they were generally adamant about their high moral and ethical standards.

There is evidence of growing public mistrust.  As reported by Nelson Schwartz, “the percentage of people who have little or no faith in the fairness of investment companies rose to 41 percent in 2011 from 26 percent in 2008, according to Yankelovich Monitor 2011.  Only credit card companies, corporate chief executives, the federal government and lawyers fared worse.

When I graduated from Dartmouth’s Tuck School of business, half of my classmates accepted positions on Wall Street. We all thought it was an exciting and honorable career choice.  I saw one article recently suggesting that before the last financial melt-down, 47% of Harvard MBA grads pursued careers in the financial sector.  By 2011, that number had dropped to 29%. Similar trends are being experienced elsewhere in the Ivies.  While that says something about our newest graduates… what does it say about the guardians of our financial future?

Other related articles:

A Public Exit From Goldman Sachs Hits at a Wounded Wall Street

Goldman Sachs Responds

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Avoiding the “Bone Yard” of Business

When I went to engineering school, on my very first day I was told I had to pay $50 for a slide rule.  [The HP 35E pocket electronic scientific calculator was not invented until 1972 (my sophomore year) and sold at a price of $395 when initially introduced.  It used “Reverse Polish Notation “RPN” and this may explain why I liked it.   OK, yes. . . I am a dinosaur].

When I protested at having to pay the $50 for my Keuffel and Esser (K&E) slide rule, the arrogant upper classman behind the counter commented “quit complaining . . . you will be able to use this for the rest of your life!”

K&E was a proud company founded by German immigrants in 1867 and was among the pre-eminent producers of fine engineering and surveying tools and calculating instruments.   The company grew successfully, building a global reputation.  K&E’s were prized possessions of engineers the world over.   In 1967, Keuffel & Esser, commissioned a “study of the future”. The report predicted that, by the year 2067, Americans would live in domed cities and watch three-dimensional television. Unfortunately for the company, the report failed to predict that slide rules would be obsolete in less than ten years.  But by the time HP introduced its 35E, the death knell of K&E was sounded.  It hung on until 1982 when it finally filed for Chapter 11 bankruptcy protection.

Why did they fail?  Were there no warning signs?

–          The first transistor was invented by Bell Labs in 1947

–          IBM introduced the first transistorized calculator in 1954 (it cost $80,000)

–          The first transistorized desktop calculator was introduced by Friden in 1963 (it cost $2,200 – By the way, ever hear of Friden?)

–          The first electronic pocket calculators using integrated circuits were introduced in 1971 costing as little as $400.

Why didn’t K&E see it coming?   What prevented them from reinventing themselves?

The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. This figure is based on most surveys of corporate births and deaths. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or were broken to pieces.

What distinguishes those that survive and thrive, from those that end up in the bone-yard of corporate existence?

IBM’s CEO, Sam Palmisano, delivered a speech recently at Columbia Business School on the 100th anniversary of its existence.    The firm, initially led by the legendary Thomas J. Watson, arguably invented the computing business, and today, IBM’s market cap is larger than Microsoft’s.  A synopsis of the event is reported on in the NY Times article I.B.M.’s Chief on Corporate Longevity and Leadership, by Steve Lohr.

So what was in IBM’s DNA that enabled it to undergo amazing transformations that would ultimately cause it to abandon all of the initial product technologies upon which it was founded – [I.B.M. started out making clocks, scales, punched card tabulators, and cheese slicers (“the world’s fastest at the time,” notes Palmisano.)]

Palmisano argues that too many are so inward-focused, they are locked into an “emotional commitment with the past” that constrains the way they think about their business.   They tend to be committed to their products, RATHER THAN TO CORE PRINCIPLES.  For IBM these were:

–          satisfying customer needs

–          building long-term relationships and

–          pursuing breakthrough innovations

Choosing core principles and values wisely seems pretty important.   When these core principles in fact, ARE STRATEGIC and are what drives our actions as an organization… they have enduring power.

Here is a link to some other recent Palmisano Speeches:

Here is a video link of Sam talking on this topic at Webster University.


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Job interview tip: Consider first, the BIG questions.

Hiring good people is always a challenge.  According to HR firm Watson Wyatt, even the best organizations there have a success rate in new hiring of about 60% (not much better than flipping a coin).

I think one of the big reasons this statistic is so low, is that when we interview in many companies, people focus on the wrong things.  We tend to look at someone’s qualifications – like where they went to school, their major, their areas of technical competence, and some of their accomplishments.   These are easy areas to probe, I suppose, because they are kind of factual. These are also the kinds of interview questions we all expect, and for which we can easily prepare answers.

If you think about the bad hires you made – they typically are not so because they lacked the above-listed attributes.  We fire people over shortcomings in character – things like having a poor work ethic, a lack of EQ skills, a poisoning negative attitude, ethical issues, or the inability to work collaboratively.  Such are things that seldom came up in any job interview I went to.

Assessing an individual’s values or character is, to be sure, much harder. But, if you think about it, you CAN develop interview techniques or questions that reveal a lot about someone’s character.

I remember interviewing a young engineer for my company, and I gave him a scenario where he uncovered that one of our products had a design flaw that could be potentially harmful to users.  “But”, I told him, “If we suspend production, we would likely incur the anger of the customer and cause serious harmful financial consequences.”  So, I asked him what he would do.

His reply was that he would do “whatever his boss told him was best for the company”.   I knew instantly that he lacked the strength of character I was looking for and the interview ended.

The key is to know what you are looking for before you walk into the interview, rather than going in expecting to talk with someone and deciding at the end, if you “liked” that individual.

In his column The Corner Office, New York Times columnist Adam Bryant interviews CEOs from various industries and shares some of their wisdom.   In one of his columns, called Job Interviews: Lead With 2 Big Questions, he interviews Andy Lansing, president and chief executive of Levy Restaurants.  Levy operates a dozen successful Chicago area eateries that bill themselves as: “We are a family of passionate restaurateurs.”

Sometimes I love to read about the innovative (and simple) ideas developed by small company entrepreneurs.  As you read Lansing’s interview, consider carefully his interviewing approach.  He says that for him, it comes down to two key questions – Are you nice?; and Do you have passion?

When talking about the question “Are you nice?” here is what Lansing has to say:

“It’s a question that you don’t prepare for and you’re not used to answering. And quite honestly, who is ever going to say no — nobody is. So I let them talk for a little bit about it as they try to figure out why I am asking that question.”

I love these kind of questions since because they are not expected, the interviewee isn’t likely to know what “right answer” you are looking for – so their reaction is likely to be raw, and revealing.  These two questions (nice and passion) also make sense for Lansing because they are central to his company culture and brand.  They are what matters for him.

So next time you are in hiring mode, think about the traits that most matter for you in your organization.  Start there, and get around to the normal questions later — if at all.

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Filed under Leading, Managing Teams

GOOGLE’S Innovation Secrets (It’s not about the perks)

One of the companies we like to talk about in our leadership programs at Xavier when we speak about the importance of culture is Google.   Many of you know of the legendary perks and employee benefits that this Silicon Valley search engine giant lavishes upon their workforce (called Googlers).

Here is 3 minute video on how Oprah showcased Google when they were selected by Fortune Magazine as the Best Place to Work in America.

Since my son works there, I have had the chance to speak with him and tour the Googleplex for myself.  I can tell you that the video does not do the place justice.

When people across the planet think about creating an innovation culture, Google almost always comes to the top of mind.  But what makes the culture work?  Is it the gourmet food, the massages, on-site free health care, the workout facilities that make the difference?

Or, could it be the lengths they go through to hire only the best people?  Google receives over one million resumes per year for about 5000 –ish positions.  I guess they can afford to be choosy.  But there is more to it – the GAT (the Google Aptitude Test), for example, was developed by the company and it makes SAT’s and GMAT’s seem like child’s play.    The test helps them measure one’s creative thinking and problem solving skills – attributes that they feel identify the kind of “geeks” that are just perfect for the kinds of work done at the company.

Or, perhaps it has to do with the overall rigor of the hiring process.  People have been known to go through as many as 14 separate sets of interviews before being hired.   (You might be able fool an interviewer once, but it gets much harder when they get 14 tries to peel back the onion).

Or, perhaps it is the fact that they trust their people.  So much, in fact, that they allow Googlers to spend one full day per week working on ANY project of their choosing they feel would best benefit the company.  Google refers to this as their 20% time, and many of their product innovations have come from these creative explorations by their employees.

In a recent article in Google’s Think Quarterly e-magazine Google senior VP of People Operations, Laszlo Bock shares his view of where the “Magic” comes from in his piece Passion, not Perks.

In Bock’s view, the perks, while awesome, have little to do with their success.   He says it really comes down to three main points.


“We spend more time working than we do on almost any other activity in our lives.  People want that time to mean something” says Bock.   According to the company website, Google describes its mission as “to organize the world’s information and make it universally accessible and useful”.  This seems to many of their employees as being less about making money and more about making the world better place.  My son told me about one of the more interesting applications for the new Google + product – creating “hangouts” where home-bound physically impaired people could engage with others through web conferences.  As I heard him talk about it, I could distinctly sense a high level of personal pride and satisfaction about how he gets to work on something so much more than yet another social networking site.  This one is being used for something important.  I would suggest to you that new Google Chrome TV commercials are focusing on the same idea proclaiming “the Web is what you make of it.”


In IT, the idea of Open Architecture is one that I’m sure many of you have heard.  Google seems to work very hard to be open with its employees.   They host a weekly information session where Google founders Larry Page and Sergey Brin share information with all employees, and invite questions.   According to Bock, virtually no topic is off-limits.   Eric Schmidt has been known to share board packets with employees.  They seem to genuinely want their employees to have access, and to know as much as possible about what’s going on and where they are heading.    They trust that their employees will keep the information confidential.  I have found this to be so in conversations with my son about his company where he has more than once told me “I don’t think I can really talk with you about that”. When you give trust TO someone, and you have chosen well, they will live up to your expectation.


This one should be obvious, but many leadership program participants we encounter would not say their voices are really heard within their organizations.  Google has been innovative in trying to figure out how to listen to its employees (which gets increasingly hard as the company gets larger and more geographically dispersed).   Here are some of the means they use to listen, recognizing that good ideas can come from many different places in different ways:

  • TGIF (the weekly information session with Sergey and Larry
  • various sites and listservs
  • Google+ conversations (of course)
  • the Google Universal Ticketing Systems (‘GUTS’ – which is a way to file issues about anything, and is then reviewed for patterns or problems, similar to New York City’s 311 line)
  •  ‘FixIts’ (24-hour sprints where they drop everything and focus 100 percent of our energy on solving a specific problem), and
  • a wide range of surveys

Giving information openly and inviting many voices does not necessarily mean that Google is a democracy.  They do have a hierarchy and specific people have to make final decisions.  If you think about it, we don’t always expect to get things our way, but it feels a lot better when we feel our opinions were seriously considered.

All of these things could be done by any company.  And, for the most part all three of these are (more or less) free.    Sure the perks would be nice to have.   But they don’t really make the difference.


Filed under Innovation, Leading