Monday, June 23, 2008
I have been reading a terrific book on marketing using personality - Personality Not Included by Rohit Bhargava. The premise is that great brands develop a personality that is about individuals interacting with the customer, not just people in a faceless organization, and is very effective when you have a strong product that your employees and customers get excited about.
Obviously I am interested in this from FirstRain perspective but I have experienced a classic example in the last two weeks of how aggravating it can be when a company purports to been cosy with it's customers, but isn't.
My case study is Pret a Manger. On June 11th I got food poisoning from the local Pret near my NY office - on Madison near 41st. It was 24 hours of hell praying to the porcelain god. So, being a responsible citizen I contacted Pret through their web site to report it - I just wanted to make sure no one else got as sick as I did.
Cute site. Lots of first names, buddy type language. I filed my email complaint and the web site gave me a nice little message
For a start, thank you so much for letting us know there is a problem.
Janet and her team will have received your email and will be giving it top priority. If you've asked for a reply you'll get one. Our offices are manned 9 to 5 (UK time), Monday to Friday.
Whatever you've said will be added to the big weekly report that's passed round the office and the whole company. Clive, Julian and the rest of the directors pore over it every Monday.
Sounds good right? Then I get a form email:
Thank you so much for your email; we will be giving it top priority. Sorry about the horrid automated reply but we wanted to let you know that your email reached us. If you've asked for a response a more personal one will follow. Whatever you've said, it will be added to our weekly report which is passed round the whole company. Clive, Julian, and the rest of the directors pore over it every Monday.
Just to let you know our office are open 9.00-5.30 (UK time), Monday to Friday.
and so now I am thinking "I like this company, I wonder when they'll contact me and how good their customer response is and who are "Janet" and "Julian" - sounds like they care?"
Here's where the backlash comes in. I have heard nothing. Not a peep. Despite asking for a reply as soon as possible. That really annoys me and is a great example of what not-to-do when building customer loyalty.
Good customer relationships and experiences are all about setting expectations correctly so that you can meet and exceed them. Pret did more damage to their brand in my mind by presenting themselves as so approachable and customer friendly - and then not even contacting me - than if I had had a form response which said my feedback would go into a customer database and be integrated into their service over time.
I've sent in another complaint via their website today. But frankly I don't expect to hear from them - and this reconfirms to me that personality based marketing is powerful only if you follow through on the brand promise - oh, and I won't be eating there again.
Wednesday, June 18, 2008
More interesting reading on Lehman - following my previous post showing the overlay of blog posts on the decline of Lehman stock. New York magazine's article The Confidence Man on David Einhorn's shorting of Lehman is a fascinating read.
What's really refreshing about what Einhorn did at Greenlight Capital is that he did what he thought was morally right, at the same time as acting to make significant gains for his investors. He "outed" Lehman, refusing to be quiet and let them continue to obfuscate the risks in their business. And his actions are a classic example of how quality research combined with confidence make money.
Graphic courtesy of New York Magazine
Monday, June 16, 2008
I am spending today and tomorrow at an ISS accredited Director training course UC Berkeley Haas School of Business. This is part of my ongoing education as a CEO, a director of FirstRain and to make sure I stay current as a director of Rambus, and it's the type of education I need to do every couple of years.
And I expect to learn some, and be bored in some of it. But so far - at the first break - so good.
In addition to the usual ramp up topics like what a director's responsibilities are, the impact of Sarbannes Oxley, education from a law professor on agency costs and what they really mean, the area I found interesting was the discussion about why it is so important to care about CG: corporate governance (not computer generated).
In a nutshell the teaching professor, Dr Eric Talley, outlined four reasons to care
1. It's responsible organizational design (it's a key ingredient like any other process)
2. Value creation (there is direct evidence that "good" corporate governance correlates to improved financial performance and reduced litigation risk)
3. Others care (like institutional investors and the SEC so you'd better care as a director)
4. and finally RiskMetrics (formerly ISS) measures it with the CGQ - measuring the influential factors in corporate governance.
#2 makes the most sense to me and is the best reason to care. If you do a good job of setting up internal control processes it gives you the visibility you need to drive strategy and take the right risks to grow your business. The dominating responsibility of a director is to "maximize shareholder value" - it far outshadows the other responsibilities like requiring transparency, succession planning, strategy etc. - and so in my mind that makes the growth aspect of corporate governance the interesting one.
Saturday, June 7, 2008
I've written before about my compassion for the CEO's position - the need for continual optimism, the total loss of personal time - but I never expected the Wall Street Journal to understand.
Wedensday's blog post Mean Street: Spare a Prayer for the CEO by Evan Newmark posits that while some CEOs don't deserve your respect many do. From his own experience, and from watching other CEOs closely, Evan sees CEOs who are work obsessed, passionate about the success of their companies and bearing the burden personally of the jobs and futures they are responsible for.
As a "builder CEO" in Evan's lexicon, I can tell you the weight of responsibility is unrelenting. And it's responsibility to many constituencies: my employees who have trusted me with their careers while they are with me, my investors who have trusted me with millions of dollars, my family who have trusted me with their livelihood as I pursue my vision and my customers who effectively invest in early stage products on the trust that they'll help them be more effective today and will improve over time.
But then there are news items which muddy the public's view of the CEO. Yesterday's news about Henry Nicholas, former CEO of Broadcom, surrendering to the FBI was saddening. Broadcom was my customer and Nick was a legend for his driving personality and passion for Broadcom. I can't say whether any of their allegations are true - but I do remember needing a meeting with him to review a new product and it's potential impact on Broadcom design. The only time he'd give me to meet was 2am at his house. He offered me the choice of Opus ( a fabulous red wine) or coffee - I chose coffee much to his surprise and we made the pitch through the middle of the night, although we didn't make the sale. And I can tell you Nick is fun at weddings, but he got into the cross hairs of the Feds because of the option backdating issues at his company.
Back to the WSJ article - the comments following the post make revealing reading too. So much vitriol for CEOs, and for their pay. So little understanding of the pressures of the job.
I chair the compensation committee at a public company (Rambus) and see lots of research on CEO pay and what the market is. What I don't think the critics understand is how competitive the market is for good CEOs and what companies, and private equity firms, are willing to pay to get good talent. As a board you have a responsibility to ensure that you have a strong CEO for your company, but that you also pay a fair market rate with incentives which are aligned with the shareholders interests. But given the compensation market, and the shortage of good CEOs, it's a complex cash and stock puzzle to solve for what are often hard, thankless jobs.
Of course there are some egregious cases that make me gag, but the majority are paid fairly by thoughtful boards who are balancing the issues to keep good talent at the top.
So, at the end of the WSJ article and in response to the vitriolic comments, I'd change Evan's ending comment "Next time, Jim Cramer or some other talking head calls for the firing of another CEO, pause for a moment. To err is human, to forgive divine" to
"Next time, Jim Cramer or some other talking head calls for the firing of another CEO, pause for a moment - and suggest they be a CEO for 6 months and then ask them what they'd recommend".
Monday, June 2, 2008
I was inspired by the Fortune article in last week's issue - Team building in paradise. It tells the story of the 200 Seagate employees who, led by their CEO, Bill Watkins, will spend a week in an extreme Eco Seagate competition in New Zealand. His start to the pep rally says it all:
"Everyone here's going to die."
Yes, everyone in this room will die - at some point. But before then they'll face important choices about where to work, what to believe in. Choices, really, about change and ultimately happiness. "Are you doing what you want to do in your life? Or are you just blowing through?" Watkins continues. "I'm challenging your life right now. What would you do if you knew you couldn't fail? Would you take a trip around the world? Run a company? If you're not doing what you want, that's where I want you to go. This week is about you doing what you want to do for every week of the rest of your life."
Taking a team out of the office to work on a project or problem together almost always changes their relationship. I've taking a team camping, rented beach houses and of course done the requisite offsite meetings, but never something that was really physically challenging.
So, given that I and 12 of my employees are competing in the Aquabike in Sonoma this August, I found this article tapped right into the heart of what I am trying to do. And it's an experiment this year with just a small group of volunteers, but the principle is the same. If we're successful then maybe we can put some relay teams together next year and so get the non swimmers into the race. We're also putting the pit crew together now of FirstRain employees who will come up and support us through the race, so I expect we'll get more than half the company involved.
This makes my training more important than ever so I don't totally embarrass myself. Like much of my life, my training is feast or famine but this last week was a good week. I rode 122 miles and swam 1, following a week of London, New York, Denver and no training. Extreme in both directions!