On Purpose Read online

  As Angela Ahrendts, the former CEO of Burberry and now senior vice president of Apple, said:

  ‘There is always this balance between hard and soft strategies, investment and intuition, but if you have a greater purpose, it becomes relatively easy to make those calls.’

  Robert Stephens faced a similar dilemma to Innocent when he sold his Geek Squad to Best Buy. His sense of ‘greater purpose’, as Ahrendts put it, helped him to decide what to do, as he explains here:

  ‘It seems there’s always this paradox: either you’re small and you’re loved or you’re large and everybody hates you and you lose your soul.

  I thought, what about if you had a vision around growth and you really do care about the customer, why can’t you do both? So that was the goal I set when I sold the Geek Squad to Best Buy. I talked to other business founders and asked “Should I sell my company?” and they said, “No, you’ll hate it, you’ll quit the company.” But I decided to defy that advice. Just because you’re a founder doesn’t mean you can remain the CEO beyond a certain point, so I stayed with Best Buy to find out what makes a top company perform.

  ‘I’d go and sit in meetings – way too many meetings – and try to figure out, why are these meetings not really going anywhere, why aren’t they talking about what’s important? At first I assumed, “Well, they’re smarter than I am and I have a lot to learn.” Then after a while I came to believe something different. I don’t really think they have a compelling purpose here. There are just competing political priorities. So I stayed to make sure that Geek Squad didn’t die. I stayed 10 years and we expanded into the UK and went into China. People ask me if I regret doing it, and I say no, because there is not another Geek Squad out there. There’s no one else of our scale.’

  Purposeful leaders show the way

  One of the most important ways that people learn what a leader’s true motives are, is by what they see him or her do – not just say. This is a principle summed up by Carlos Ghosn, the CEO of Nissan, one of our featured case studies:

  ‘Don’t believe what I say; believe what I do.’

  Herb Kelleher, the former CEO of Southwest Airlines, a company that remains the ‘gold standard’ case study for customer-centricity, was also unusual in that he was famous for behaving in ways that were ‘on brand’. Herb used to fly as often as he could on his own planes or, if he wasn’t travelling, he would meet passengers when they were boarding or leaving the planes. He would share a joke with them or a drink but always he would be asking them about their experience, which helped him to understand how to improve it. Southwest Airlines featured Herb in many of their adverts: reinforcing their key messages, showing the connection of the leader to his customers and always with the company’s customary sense of humour.

  https://www.youtube.com/watch?v=HCoTlCEbJrc

  Leadership at Procter & Gamble, as you would expect of one of the world’s most successful consumer goods businesses, is religious about its purpose. When AG Laffley became its CEO in 2000, he faced a crisis. P&G had announced that it would not meet its profit target and the share price had tanked, falling by almost one-third in one day. When Laffley later discussed how he diagnosed the problems facing the company and turned the business around, a core theme was the importance of getting ‘up close and personal’ with consumers – a leadership behaviour that he himself demonstrated by visiting the homes of consumers and inviting them in to P&G laboratories and workshops. This is Laffley explaining those twin responsibilities in a Harvard Business Review article he wrote, entitled ‘What only a CEO can do’:

  P&G’s purpose is to touch and improve more consumers’ lives with more P&G brands and products every day. Of all our stakeholders, both outside and inside, the primary one is the consumer. Everybody knows that the customer is king; we knew this in 2000 as we know it today. But we were not acting on what we knew. That had become apparent to me in 1998, when, as executive vice president, I returned from an assignment in Asia, where we didn’t have reams of research data on consumers and markets. In China, for instance, we had no choice but to visit consumers where they lived and observe them where they shopped. Coming home to our global headquarters, in Cincinnati, I was struck as I walked the office halls by how many employees were glued to their computers and how much of each day people spent mired in internal meetings with other P&Gers. We were losing touch with consumers. We were not out in the competitive pressure cooker that is the marketplace. Too often we were working on initiatives consumers did not want and incurring costs that consumers should not have to pay for. Everywhere I go, I try to hammer home the simple message that the consumer is boss. We must win the consumer value equation every day at two critical moments of truth: first, when the consumer chooses a P&G product over all the others in the store; and second, when the consumer or a family member uses the product and it delivers a delightful and memorable experience – or not. Almost every trip I take includes in-home or in-store consumer visits. Virtually every P&G office and innovation centre has consumers working inside with employees. Our employees spend days living with lower-income consumers and working in neighbourhood stores. At our global headquarters we replaced dozens of paintings by local artists with photographs of everyday consumers around the world buying and using P&G brands. All these efforts keep the two moments of truth foremost in the minds of P&Gers as they work.

  Laffley retired as CEO in 2009, having doubled P&G’s sales to over $83 billion during his time there. Unfortunately, his chosen successor, Robert McDonald, endured a difficult time. The company struggled to address changing consumer trends towards value rather than premium products in a post global financial crisis world. McDonald stood down as CEO in 2013 and Laffley returned to replace him. In one of his first internal memos to all employees, Laffley reminded them of where true leadership lay: ‘the consumer is boss’, he wrote.

  Laffley’s words illustrate the importance of a leader doing ‘small things people notice’ such as replacing the office art with pictures of consumers, of visibly role-modelling behaviour by visiting consumers himself. He insisted that in-home visits with consumers be arranged for him in whatever city he visited. Executives at P&G realized that if the CEO could make time to visit consumers in their homes, so should they.

  What you believe in and what you demonstrate determine what kind of leader you are. In 2014, Howard Schultz, the CEO of Starbucks, was named one of the world’s great leaders. His face appeared on the cover of Time magazine, an iconic symbol of fame and achievement. Starbucks opens a new store somewhere in the world every 12 hours and serves around 44 million customers per week. But it was not for the sales growth or profits that Schultz was honoured; it was for his qualities as a leader. He was voted into a list of world leaders compiled by Fortune magazine that included Angela Merkel and was topped by Pope Francis! Schultz has championed an empathetic style of leadership that puts his people and his customers ahead of profits, since he first began steering Starbucks as an ‘experience’, not a coffee shop.

  Speaking about his leadership style, Schultz said the following:

  ‘The currency of leadership is transparency. There are moments where you have to share your soul and conscience with people and show them who you are and not be afraid of it.’

  Schultz wants his people to care passionately about each other and the customer, which is why he is so insistent on talking emotionally and showing empathy. He demonstrates the brand he wants customers to experience. It’s why he called his book Put Your Heart Into It. As we said earlier, though, even Starbucks was found wanting when it came to paying a fair share of taxes in the UK, as perceived by customers, which goes to show that purposeful brands have to achieve this delicate balance between doing the right thing for customers, for employees, for shareholders and for society at large. No easy task.

  Robert Stephens cites T-Mobile’s CEO as another example of a purposeful leader taking decisive action in line with a custome
r-driven purpose:

  ‘My favourite CEO in the world right now is John Legere of T-Mobile: irreverent, maverick, a rebel. Now, you can be a crazy guy, wearing the T-shirt and wearing the brand and, you know, that lasts for about 10 minutes, but why is he my favourite CEO? It’s because he seems to naturally, authentically blend enthusiasm for his job. Authentically he’s himself. He doesn’t have any social media handlers. He’s on Twitter. He’s one of the few CEOs who is on a major social media channel and is engaging.

  http://mashable.com/2015/02/17/john-legere-spoiled-ceos/

  ‘What he did is to simplify the data plans and policies for T-Mobile. He did what every carrier should have done, what every retailer should have done, and what Best Buy still hasn’t done, which is simplify the policies.

  ‘And not just because that’s a great headline, but because it actually saves money in the business, because if your policies are simpler, guess what? You need to spend less money on training. There’s less customer misunderstanding. If you have complex policies, the employees are probably going to make mistakes, so you’ve got to pay money to train them and write manuals, and you have to audit those people to make sure they’re doing it.

  ‘But John Legere comes in and says, “These data plans are too complex. Let’s simplify them.” Done. And that’s why if you’re in third or fourth place, you’ve got far more to contribute to the world than if you’re in first place, because you’ve got less to lose, so you should be taking more chances, you need to be even more bold as a challenger brand.’

  For an interesting LinkedIn article on Legere see: http://linkd.in/1Lf4fSg.

  Throughout the books we have written, we have featured the visible habits of leaders that show their true motivation. Here are just a few of them:

  Virgin: Richard Branson has reaffirmed his intention of being aboard the first Virgin Galactic passenger flight into space, despite the tragic accident in 2014.

  John Lewis: managers have particular responsibility for their ‘buddy stores’.

  Harley Davidson: managers must ride with their customers.

  Procter & Gamble: managers visit consumers in their own homes.

  Amazon: an empty chair is included in board meetings to represent the customer.

  JCB: Sir Anthony Bamford personally inspects the vehicles as they are coming off the production line, and orders adjustments according to customers’ needs.

  Carphone Warehouse: management sit not in the head office but in the Sales Support Centre.

  Umpqua Bank: CEO Ray Davis answers the phone just like every other employee with the words ‘Welcome to the world’s greatest bank’.

  Purposeful leadership is about behaving, not saying

  So what are the competencies that make leaders so effective in creating a purpose-driven organization?

  Think about a positive experience that you recently had with a company. Why was it positive? You probably felt that the person at the other end really cared about your concerns and had the power to do something about your situation. Most times, great customer experiences worth talking about are associated with ‘going the extra mile’.

  How can leaders within companies create cultures that support a purposeful brand and deliver great customer experiences?

  First and foremost a leader must create ‘a foundation of care’ according to Claudio Toyama, a leadership coach (and also a TED Fellows coach). Claudio explains this concept:

  Purposeful leaders create cultures where employees fully engage with the company, its purpose and its customers. Employees must FEEL like they matter and what they DO matters.

  Care creates commitments – and when employees care, they are committed to serving the customer in the best way they can. This, in turn, causes employees to act in ways that positively impact the customer experience.

  Southwest Airlines is an example of how care translates into great customer experience and decades of consistent profitability in an industry that has been hit by high oil prices, recessions and cut-throat competition. This US-based no-frills airline provides services that are efficient, safe and fun, and they have a reputation for going the extra mile to make the customer’s experience enjoyable.

  Care per se is not enough to create great customer experiences. Leaders and employees must also have the necessary skills and competencies to deliver great customer experiences that are on brand and on purpose.

  But building this kind of culture is not easy. There are certain essential competencies that leaders must demonstrate. The Leadership Circle® found two primary leadership domains: creative competencies and reactive tendencies:1

  Creative competencies – these include skills such as bringing out the best in others, leading with vision, behaving authentically, acting with integrity and courage, and focusing on ‘whole-system’ improvement and community welfare.

  Reactive tendencies – the self-limiting traits that emphasize caution over creating results, self-protection over productive engagement, and aggression over building alignment. These styles focus on gaining the approval of others, protecting oneself, and getting results through high-control tactics.

  Whilst the above may seem obvious (and similar concepts have been discussed at length in leadership books for years now), why is it that so many leaders are still driven by the reactive rather than the creative? And when the leader is reactive, the culture becomes reactive. Purpose doesn’t stand a chance.

  In our many years of experience of helping brands implement customer experience and driving purpose throughout the organization, we know the one thing that is guaranteed to see the initiative fail is lip-service leadership, ie leaders who ‘talk’ creative, but behave reactive.

  Organizations can however nurture great leaders by promoting and teaching the creative competencies and helping leaders let go of their reactive tendencies. But it starts with leaders opening themselves up to a ‘warts-and-all’ self-assessment and a readiness to embrace the idea of personal development. (So often leaders are the first to advocate a training solution for the management team and front line, but the last to accept that they themselves may need further skills development or training).

  A good first step is for the leader to take a leadership assessment and work with a mentor to gain a true understanding of their creative competencies and reactive tendencies – and how these impact the culture and delivery of the brand purpose and customer experience. This enables a very personalized and tailored approach to coaching the leader in the specific competencies that he or she needs to create a true ‘culture of care’ and a purpose-driven organization.

  Behavioural change does not happen overnight and must be constantly reinforced. For this reason, the third step is often executive coaching. Coaching helps the leader to get in touch with what he or she cares about, to see possibilities for action where he or she didn’t see them before and to get the support needed to implement changes.

  The leader as coach has become a popular theme in business. This does not mean that the leader has to be all ‘soft and cuddly’ or so consensual as to seem indecisive. It does mean that the primary job of a leader is to provide clear direction, to encourage his or her people to excel in pursuit of the purpose and to give those people ‘every chance to succeed and no excuse for failure’. That requires, as Claudio says, the ability to ‘listen’.

  Captains of ships have known through the ages that the way to navigate through dangerous waters is to have a clear course to steer – one that leads to the ultimate destination whilst avoiding immediate hazards. Unless ‘captains of industry’ have this same clarity of purpose they will find their organizations continually tossed about in the continuing turbulence ahead. Customer experience innovations that are disconnected from the brand purpose become mere marketing gimmicks. Nor can you navigate your business solely through your profit and loss account, NPS or any other metric, because they are essentially a record o
f where you have been. You also need a compass to know where you are headed too. That compass is your purpose and it is evident to consumers which brands have one and which do not.

  One industry where differentiating by creating meaningful experiences for customers is becoming increasingly important is hospitality, particularly the hotel sector. There are so many hotel brands all promising similar things that it is only by having a strong sense of purpose that leaders can begin to create a culture that drives a different kind of guest experience.

  A brand that is challenging the way that this sector operates and is doing so with a strong sense of purpose is citizenM. Founded by Rattan Chadha, it opened its first hotel in Amsterdam in 2008 and has since opened hotels in Rotterdam, London, New York, Paris and Glasgow. CitizenM’s purpose is to offer affordable luxury to its target customers, defined as ‘mobile citizens’. It is a great example of a brand driven by purpose that is winning a growing legion of fans. Here, Rattan explains how he had his insight into founding a purpose-driven brand and how he has been zealous in ensuring that the brand stays true to its purpose.