Practical Eloquence Blog

Ka-ching!

I came across an article yesterday in Bloomberg Business Week that was very disturbing in its implications. The title is Proof That It Pays to Be America’s Most-Hated Companies. Its key message is that measures of the American Customer Satisfaction Index have virtually no correlation to stock market returns (at least for 2013, the only year shown). In fact, a regression line actually shows a very slight negative correlation.

“The companies you hate are making plenty of money. In fact, the scorned tend to perform better than the companies you like.”

The implication, of course, is that treating customers poorly is not bad business, and might even be smart business because of the money they save on luxuries such as good service, responsiveness, and actually being nice to people.

I would like to think the implications of the data are wrong. With only one year’s worth of data, it’s possible; maybe 2013 was an anomaly. Maybe it only applies to B2C companies. Maybe the old saying about any publicity is good publicity is true, and the companies everyone complains about are the most well-known, so everyone buys their shares. Maybe they provide superior value to customers in other ways, so they can get away with not being nice. I don’t know; I’m sure readers of this can suggest other explanations.

I have to admit that this article jolted me a little bit, because one of my most cherished principles and key themes of this blog, is the crucial importance of customer focus and treating them right.

But another side of me was actually pleased to get the information. It’s healthy to have your most cherished ideas challenged occasionally, and to get a reminder that the world is not as simple as we try to make it. It keeps us from locking in to rigid certainties that stop growth and learning. It preserves a touch of skepticism and humility. It reinforces the fact that in persuasion, there are no absolutes.

If nothing ever surprises you or challenges your thinking, you either know everything there is to know, or you’ve simply stopped looking.

What do you do when you encounter contradictory information?

• Ignore it?
• Attack it?
• Think about it?

On a slightly related note, I’ve been writing about entrepreneurs and intrapreneurs recently. They succeed precisely because they challenge conventional wisdom.

It’s going to take a special mindset to raise this one

The previous article about the intrapreneurial mindset focused on the thought processes that sales intrapreneurs use to generate insights for identifying new value, for their customers and for the companies they work for. But, as I also hinted in that article, insights are usually only a very small part of the successful intrapreneurial equation; they are just the stakes that allow you to play at the table.

When you consider your own experience, that makes sense. Often our response to seeing an innovation is not “why didn’t I think of that?”, but “they stole my idea!”

Good ideas are a dime a dozen. If your mind is like mine, you have a mental junk drawer filled with good ideas that never saw the light of day, because you thought of them once and never did anything with them.

A more empirical estimate of the relative value of the new idea is given in Daniel Isenberg’s excellent book about entrepreneurs, Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value. He cites the formula that pharmaceutical company Actavis uses to reward employees for innovation: one point for a good idea, ten for planning it, and one hundred for implementing it successfully.

Seeing the value is the easy part—creating and capturing the value is by far the hardest.

Although Isenberg’s book is about entrepreneurs, many of the same dynamics apply to intrapreneurs.[1] The paradox of valuable ideas is that they are almost inevitably seen as bad ideas at the beginning. Why is that?

• The current situation is the product of good thinking and careful decisions by many smart people, so if the idea had any merit at all, it would have been proposed already.
• When a subordinate proposes a new idea, he or she may be implying that they’re smarter than the boss.
• If the status quo is working, new ideas are seen as a threat. Why fix what isn’t broken?
• Anything that distracts from the salesperson’s main job of “selling what’s in the bag” is a bad thing.

Good ideas are like ugly babies—only their parents love them. So if their parents want their babies to grow up into successful and productive adults, they are going to need more to their mindset than just creativity.

Risk tolerant

Let’s be clear about one thing up front: intrapreneurs do not face risks as high as those faced by entrepreneurs, because they have the corporate safety net below them. But they still face considerable risk for the reasons discussed above. They risk their productivity, their customer relationships, and their jobs. The kind of opposition they face generally discourages most employees, but intrapreneurs may be more willing to take risks because of their self-confidence and sense of accountability.

Self-confident

They have tremendous self-confidence, sometimes to the point of insubordination, which allows them to have the temerity to think they may actually know better than anyone else, and gives them the guts to speak up in defense of their point of view. They are not great respecters of the chain of command, which can make them unpopular and difficult to manage.

Accountable

Not-my-job is not in their vocabulary. The successful ones I’ve seen take a larger view of their roles than their job descriptions call for. They do whatever it takes, accepting responsibility for results, for their customers and for their company. They think like owners of the business, and owners of the relationship.

Loyal

The key ingredient that separates intrapreneurs from entrepreneurs is that they are extremely loyal to their employers, sometimes irrationally so. I don’t have outside evidence on this, but my own observations are that they are usually lifers who joined their companies right out of school and rose through the ranks. That loyalty is their saving grace and the reason for putting up with them, because without it they might easily leave to pursue their idea independently, or side too much with their customers when interests clash.