Sending a Strong Message: Protecting Your Employees

In 1985, a film company facing financial pressure hired a new president. In an effort to cut costs, the president asked the two leaders of a division, Ed and Alvy, to conduct layoffs. Ed and Alvy resisted—eliminating employees would dilute the company’s value. The president issued an ultimatum: a list of names was due to him at nine o’clock the next morning.

When the president received the list, it contained two names: Ed and Alvy.

No layoffs were conducted, and a few months later Steve Jobs bought the division from Lucasfilm and started Pixar with Ed Catmull and Alvy Ray Smith.

Employees were grateful that “managers would put their own jobs on the line for the good of their teams,” marvels Stanford’s Robert Sutton, noting that even a quarter century later, this “still drives and inspires people at Pixar.”

Source: “Givers Take All: The Hidden Dimension of Corporate Culture” by Adam Grant | The McKinsey Quarterly

The Frozen Bird

A little bird was flying south for the winter. It was so cold the bird froze and fell to the ground into a large field. While he was lying there, a cow came by and dropped some dung on him. As the frozen bird lay there in the pile of cow dung, he began to realize how warm he was. The dung was actually thawing him out! He lay there all warm and happy, and soon began to sing for joy. A passing cat heard the bird singing and came to investigate. Following the sound, the cat discovered the bird under the pile of cow dung, promptly dug him out and ate him.

Moral of the story:
(1) Not everyone who shits on you is your enemy.
(2) Not everyone who gets you out of shit is your friend.
(3) And when you’re in deep shit, it’s smart to keep your mouth shut!

Original source: Unknown

The Beauty of Many Quick Pricing Experiments

When Gary Loveman joined Harrah’s Entertainment (now Caesars Entertainment) in 1998, the casino company priced its slot machines like everyone else in the gaming industry. Management presumed that decreasing payouts—essentially raising the price—would drive some customers to other casinos. A sensible assumption, perhaps, but Loveman—a quantitative type who left a professorship at Harvard Business School to join the company—wasn’t one to assume. He commissioned a study to determine how sensitive slot-machine players would be to a change in payouts.

The company discovered it could make very small adjustments in the frequency of payouts—making them just one-tenth of 1 percent less frequent—without customers even noticing. Harrah’s shareholders, however, would notice. In fact, as Loveman later put it, single insights like this can “ring the cash register literally thousands or millions of times” in a large business.

Just about every company has its slot machines—product areas in which it could get a major boost in profitability by optimizing its pricing strategy.

Source: The Allure of Pricing Predictively by Kenneth Dickman, Jeanne G. Harris and John G. Hanson | Accenture Outlook Journal

Putting Your Money Where Your Mouth is in Customer Service

About ten years ago, two weeks before Valentine’s Day, a female customer, whom we will call Sue, stopped into the store to buy a bike for her husband. Because she had gone all out to get the very best bike she could for her husband, she needed to pay us in increments. So, she put a deposit on the bike until she could save up the remaining $200 to pay it off. Wanting to surprise her husband on Valentine’s Day, Sue asked Greg, a Zane’s employee, if he could put the bike in the display window that evening after she had decorated the bike with some ribbon, balloons, and a sign she made that read, “Happy Valentine’s Day, Bob.” Greg, of course, said he was happy to help her pull off the surprise and that he would put the bike in the front window.

Sue planned to bring Bob by the store, along with a few co-workers who were in on the surprise, prior to their romantic dinner. She had been dropping hints along the way and couldn’t wait to see the expression on Bob’s face. Everything was in place, except that Greg had forgotten to put the bike in the display before heading out that day.

We arrived the next morning to an irate message from Sue. Realizing how serious a mistake we’d made, we knew we needed to go above and beyond the call to duty to turn this disaster into a positive experience for the local couple. We waved the remaining balance owed on the bike, tried to re-create a romantic evening at the best Italian restaurant in the area with no spending limit and we called up a gourmet coffee shop down the road to have an elaborate lunch delivered to Sue and her co-workers who had come out to see Bob’s excited expression the night before.

Obviously more concerned with rectifying our mistake than the budget to do so, we spent about $400 to correct our error and maintaining the integrity of our lifetime customer culture. Plus, considering that Sue and Bob could be worth $25,000 to Zane’s Cycles, it was well worth the investment, particularly because I don’t think Sue expected as much as we gave her. We provided more than she thought was reasonable, and as a result, we turned a terrible mistake into a positive experience for Sue, Bob and all of Sue’s co-workers.

The best part of the story, though, is that Greg—the employee who forgot to put the bike in the display—sent me an envelope in the mail with a $400 check enclosed to reimburse us for the cost of rebuilding the customer relationship and a letter apologizing for jeopardizing a prospective lifetime customer. Of course, I never cashed Greg’s check. I have it framed with the letter above my desk as a reminder that although we lost a few hundred dollars that day, it was worth every cent in two culture-reinforcing ways. We managed to save our relationship with the customer, and we had the great thrill of witnessing our employees take our principles to heart. To me, that was priceless.

Source: Reinventing the Wheel: Creating Lifetime Customers by Chris Zane | ChangeThis

What Should Be True

Some organizations and initiatives are so successful that a sort of folklore arises around them. John F. Kennedy is said to have asked a janitor scrubbing a floor at Cape Canaveral what he was doing and received the reply, “I’m working to put a man on the moon.” The story is probably apocryphal, as it’s also been attributed to architect Christopher Wren at St. Paul’s Cathedral in London. Legend or not, the point is that all great legends encapsulate what should be true. We think all workers should believe they are contributing to a worthwhile goal. If they don’t, is it their fault? Or is the burden on leaders to close that gap in the middle of their strategy, ensuring that their visions and goals are communicated in a way that can provide meaning to all they encounter?

Source: Turning Strategic Vision into Action: It’s a Mind Game by Simon Mezger and Maurice Violani | A.T. Kearney Executive Agenda, Volume XIII, Number 1, 2010

Would You Invest in Your Own Company?

The CEO of one company was determined that his employees understand the issues surrounding the company’s recent poor results and become fully engaged to help turn the company around. Here’s how he accomplished this.

The company held four brown bag lunch meetings over four weeks where employees could attend for free for one hour and hear from an outside professional about how to invest in the share market. Importantly, there was no obvious link between the meeting topic and the organization the employees worked for. At week three, they were analyzing annual reports and generally deciding whether they would invest in a particular company based on the information contained in the report. By the fourth week they were given another annual report and asked the same question, “would you invest in this company?” The answer was overwhelmingly no. And of course this last company was the one they all worked for, which brought them to the “Aha!” moment. Now the organization’s employees understood and were engaged and ready to become involved in turning the company around through teamwork and new initiatives.

Source: Are Your Communication Strategies Really Engaging Employees? by Marcia Xenitelis | LeaderValues, July 2011

The Importance of Self-Discipline

During the 1960s, psychologist Walter Mischel conducted “the marshmallow test” with four-year-olds in the preschool at Stanford University, to assess each preschooler’s ability to delay gratification. Each four-year-old was given one marshmallow. They were told that they could eat it immediately or, if they waited until the researcher returned in 20 minutes, they could have two marshmallows.

Some kids in the group just couldn’t wait. They gobbled down the marshmallow immediately. The rest struggled hard to resist eating it. They covered their eyes, talked to themselves, sang, played games, and even tried to go to sleep. The preschoolers who were able to wait were rewarded with two marshmallows when the researcher returned. Twelve to fourteen years later these same kids were reevaluated as teenagers.

The differences were astonishing. Those who had been able to control their impulses and delay gratification as four-year-olds, were more effective socially and personally. They had higher levels of assertiveness, self-confidence, trustworthiness, dependability, and ability to control stress. Their Scholastic Aptitude Test (SAT) scores were 210 points higher than the “instant gratification” group!

A key difference between successful people — leaders — and those who struggle to get by, is self-discipline. As Confucius wrote, “The nature of people is always the same; it is their habits that separate them.”

Source: Deepening Our Discipline by Jim Clemmer

Win-Win Negotiation Agreements

Take the classic fable of the two sisters, quarrelling over a single orange. The sisters, who focus too much on cooperating with one another, cooperatively agree to cut the orange in half – a compromise agreement. One sister uses the juice and throws the rind away; the other sister uses the rind and throws the juice away, and then they realize – too late – that both sisters would have been far better off by giving all the juice to one sister and all the rind to the other sister. This is what is meant by “win-win” negotiation agreements, which are described as outcomes that improve upon mutual settlement by identifying ways that both parties receive better outcomes than by simply compromising on the issues at hand.

Source: Why negotiation is the most popular business school course by Leigh Thompson and Geoffrey J Leonardelli

Staying on Top

A turkey was chatting with a bull. “I would love to be able to get to the top of that tree,” sighed the turkey, “but I haven’t got the energy.”

“Well, why don’t you nibble on some of my droppings?” replied the bull. “They’re packed with nutrients.”

The turkey pecked at a lump of dung, found it actually gave him enough strength to reach the lowest branch of the tree.

The next day, after eating some more dung, he reached the second branch.

Finally after a fourth night, he was proudly perched at the top of the tree.

Soon he was promptly spotted by a farmer, who shot the turkey out of the tree.

MANAGEMENT LESSON: Bull Shit might get you to the top, but it won’t keep you there.

Original Source: Rajat Khungar

Hey, You Got the Elephant

Recognition can be given in traditional ways—a complimentary e-mail, or a pat on the back for a job well done. But you can also get creative with it. One of my favorite examples is the one business consultant Alexander Kjerulf cites about a Danish car company that instituted “The Order of the Elephant.” The elephant is a two-foot-tall stuffed animal that any employee can give to another as a reward for doing something exemplary. The benefits come not just in the delivery and reception of well-earned praise, but afterwards as well. As Kjerulf explains, “other employees stopping by immediately notice the elephant and go, ‘Hey, you got the elephant. What’d you do?’, which of course means that the good stories and best practices get told and re-told many times.”

Source: The Happiness Work Ethic by Shawn Achor | ChangeThis, Jan. 19, 2011