How are you engaging your customers?

To create satisfied customers doesn’t really make you successful anymore – apart from creating value you also need to engage your customer to grow your revenue.

Customers are not just looking for the same product or service they have only cheaper or with an extra feature – they are looking for something radically useful or something that creates meaning for them.

Every market matures and in every mature market the product/service looks more and more alike. It will be based on the same technology made on the same factory or delivered after the same principles. Not much room for differentiation other than price that shrinks the pie for all market players. All products will eventually satisfy customers but not necessarily engage them.

To engage customers you will need to go beyond the product or service itself. It is not about what you do, it is about why you do it and how you do it.

 "Always start with why" Simon Sinek

Customer engagement is an emotional relation between the customer and one or more actors associated with the company. It is certainly possible to create an emotional relationship between a customer and a product/service brand as is seen with luxury items and cars; however this is not possible in most markets.

Relationship with the product itself

When products and services become more alike it becomes more important how it is made and what the overall purpose of the producing company is. It is not anymore about transactional selling but more about a relationship and eventually being part of a movement.

Relationship with the company

Customers don’t buy from you just because you want a lot of money but they might want to buy from you if your company is trying to support society or making the world a better place. The low priority of CSR in many companies, will not work in the future. It does not inspire customers or employees. The new hyper growth companies predominantly from the US, all has a strong purpose in the centre of their activity. Google, Apple, Tesla, Facebook and similar are not in the business just to make money – they want to make a difference also. This engages not only employees but also customers.

Relationship with touch points

The rise of the internet and social media has made many companies forget that their employees are vital in creating engagement with customers. Unfortunately only 13% of all employees worldwide are engaged and hence capable of creating customer engagement. The service aspect has also been neglected even though there is a higher probability in creating an engaged customer through a service issue than there is through a normal successful delivery.

The massive advertising on social media that looks the same as the old newspaper advertising can create awareness but is not successful in creating engagement. Most companies miss the point of having their senior managers’ active on social media (Only 28% of CEO has social media accounts). CEO’s have an opportunity to engage in conversations about purpose and sustainable production that can catapult engagement. Leaders like Tim Cook (Apple), Elon Musk (Tesla) Eric Schmidt (Google) are all very active in engaging both customers and employees.

Relationship with other stakeholders

The most important consumer buying decisions are heavily impacted by people close to the consumer and different interest groups. You cannot ignore Greenpeace, Amnesty international or trade unions anymore. The company need to include all stakeholders into their strategy formation and make it transparent. A transparent company does not need to hide behind a brand.

The link between Employee and Customer engagement

Gallup has shown that there is a strong relationship from Employee Engagement over customer engagement to financial results. Companies that manage to engage both customers and employees have 240% better results on performance related parameters.

"Companies that engage both customers and employees have 240% better results on performance parameters." Gallup

Are you running your company like an old communist country?

It is generally accepted that the wall fell as a result of the actions of Regan and Gorbachev although it probably would have fallen anyway as a result of the systematic and serious failures that evolved inside the totalitarian system.

You would think that companies most often are managed by principles derived from capitalism and while this might be true there are a large number of companies that have adopted similar vices to those of the former communist countries in the world.

The question is if what is likely to have caused communism to fail is a good foundation for a long term sustainable strategy aimed at creating engagement with both employees and customers.

Test your company against the doctrines below and find out if you are facing obsolescence:

1. Power is concentrated on few hands

A significant issue of the communist countries was the limited number of people that had authority to make real decisions regarding resource allocation in strategic and operational situations. A culture of delegation assumes that the top leadership of the company are better qualified to make all decisions on the corporation’s behalf – in short they know better. This kind of “Politburo” structure fights empowerment like the body attacks a virus – the distribution of power that is at the core of empowerment is a sacrilegious concept that cannot even be discussed. A concentrated power structure isolates the leaders from the organisation and alienates the employees and the customers rather than engaging them. Organisations that successfully engage both employees and customers have 240% better performance according to Gallup.

2. Information access is limited and decision making processes are not transparent

A relic from the industrial age where information was key to competing it is now mainly used by poor managers to cement their power position. Very little information can be considered so proprietary it should be kept from employees. The social revolution is changing the way that information is used inside companies and it is also making it very difficult to keep decision making processes secret when all stakeholders have the possibility to instantly spread uncomfortable secrets immediately.

3. The leadership is not democratically elected.

In principle the board and though them the CEO should be (s)elected by a democratic process that operate by shareholders voting rights. In many companies this process is not as many shareholders don’t exercise their voting rights. The largest stock holders in the world are pension funds managed by professional managers, not by their true owners. This means that rather than owners voting for managers to take care of their best interest, it becomes a case of managers voting for other managers / with that the danger of managers acting in their own best interest rather than the owners. One of the signs of a “Politburo” is a board with members that has not changed for many years and always sides with the CEO.

4. The company has a lack of purpose

If you have a mission of becoming the “Very best company in the x industry” you are probably not the most purpose driven company in the world. Instead you are likely to have a focus on serving “shareholders”, which sounds a lot better that senior management serving themselves. It is important to have a strong purpose that can attract and engage employees, customers and other stakeholders if you don’t want to compete on price alone. If your leadership team are defenders of status quo – they are likely to be a Poliburo:  The society for the preservation of senior management.

5. Doctrine based thinking

The only argument for concentrating power on a few hands is the assumption that they no best and are best equipped to manage the company. When this becomes the case there is no real reason for seeking information or advice outside the power structure. As people are isolated from the real world doctrine based group think starts to kick in. Decisions are based on assumptions that might have been true once but never gets revalidated. It is particularly dangerous if it gets combined with short term financial results that can give the illusion that all is well. Short term results can be made by stealing from long term results.

6.  Strategies that benefit few

If a politburo structure enters a company so does entitlement. As the power circle constantly reinforces their own importance the companys strategy turns to serving the few that matters. In strategy creation the interest of other stakeholders will start to be underserved to give to the few. Starving customers and employees can create short term results and with that the illusion of success. When CEO’s make more than 500 times the pay of ordinary workers, it is a sign that the company has started to serve the few. These strategies are rarely sustainable in the long haul.

7. Central planning structure

The Politburo owns all the money and need to concentrate resource allocation and planning to a central point. The focus turns from investing in new equipment, people and in new business opportunities to a focus on efficiency. More effective P&L or Balance sheet control of business units is replaced with a micromanaged central structure where everybody has to make endless request to just get the minimum for the business survival. It is a great way of starving the business at the same time as being able to blame the individual units of not contributing.

8. Policies are designed to limit people, not enable them

The bureaucracy shows its face once the company’s policies turns from guiding the people to starting to control and limit them. Policies will move from enabling everybody to be a mean to only protect the company interest and money. When the health and safety policy that should be designed to protect the employee turns into a 50 page legal document that describes what will happen to an employee that does not follow the rules – then you know you have turned into an old communist country.

9. Staff functions transform into secret police

When policies change to protect the company, a similar change can take place in the staff functions. Originally designed to support the business with financial, people, legal and IS support the staff functions start to control, check and report behaviour that can be deemed dangerous to status quo. They start to resemble the security police in the old communist states. This has a significant impact on employee engagement and instead of seeking new ways of doing things and creating value, employees gets trained into low profile, low risk behaviour. Don’t spend any money, do make any requests and don’t challenge status quo.

10. Lack of engagement kills productivity, initiative and innovation

When employees understand that they are not encouraged or rewarded for taking initiative, learning and experimentation stops. Productivity growth will start to decline compared to high engagement organisations although it can be hidden by the results created though starving the company. With the concentration of information, a focus on low risk behaviour and low employee engagement – innovation will stop. Innovation can only happen if people are allowed to challenge status quo and the doctrines of the corporation – this is one of the key reasons the old communist countries did not survive.

If your company share some of the characteristics of an old communist country it might be a reason to start looking for healthier doctrines that enable employees and engage customers. 

You cannot run a 21^st century company based on 20^th century management principles.

The Fastest and Cheapest leadership step you will ever take.

Have you ever had a leader that had a completely different self-image to what others saw? Leaders like this are normally not very effective as they have no idea of the impact they have on others nor do they seek feedback to verify or try to change this impact. 

A key step in your personal leadership development is to get to know yourself - as in truly know yourself. This is not easy as you might not like what you see or not understand the impact you have on other people. This is however and important step and the foundation of personal growth.

“You cannot learn, what you think you know”

The best and simplest action for creating self-awareness is to ask the people you spend time with for feedback. This is also one of the foundations of the Johari Window.

"Simple does not mean easy."

The Johari Window

The two American psychologists, Joseph Luft and Harry Ingham developed a tool to help people create self-awareness. Although developed in the 50’s the Johari window is still a very effective tool for leaders and individuals to create self-awareness.

The top of the Johari window illustrates what is known to others can be divided into two areas: What you also know yourself and what others know you don’t know yourself. If you are willing to explore this area and create a frame of “Giving Feedback” you can gain some extremely valuable insight into how your attitudes, feelings and behaviours impact other people. You can then decide what change you want to make to yourself to create a different impact.

Creating a frame of “Feedback”

Normally we stay away from difficult conversations with people as we are concerned with the way it might create trouble for us later. We co create a conspiracy not to touch certain topics, that might create uncomfortable situation. We “hold the fort” or “we do not rock the boat”. The topics we are not willing to deal with stay in the room as huge elephants we pretend to ignore: We have created group think. 
To be able to benefit from feedback, it is first necessary to create a “Frame of feedback”, an environment where it is ok to speak the truth. Rather than just seek feedback yourself, you should do it as a workgroup or as a peer team, where everybody opens up.

1. Feedback as a concept

The first step is to have a conversation around feedback itself as a concept. The following sentences can help the conversation:
- People have the right intent but create the wrong impact. 
- Giving feedback is aimed at helping not criticising. 
- Robust relationships can handle feedback.
- Don’t make loyalty more important than the truth, then you have created a conspiracy
- If your friendship is not strong enough to handle the truth it is not a real friendship.
- Feedback is not true or false – it is an opinion
- Feedback gives clarity

2. The context and commitments

The second step is to discuss the context, common goal and commitments of the team that will open up for feedback. We live with each other not based on the feedback we give but on the commitments we make. The feedback will be given in support of the common commitment.

3. Rules of engagement

3rd step is to set the rules: What is acceptable, confidentiality, care and commitment. It is important to be deliberate of getting permission from everybody. Don’t create a room of criticism, create a room of support, honesty and camaraderie.

4. Rounds of feedback

4th step is do rounds where each participant receives feedback from colleagues, managers or employees as appropriate. It is important not to defend yourself against feedback – it is not about right or wrong, it is an opinion. We are not judging people; we are helping them understanding their impact

Do not respond to the feedback, just receive it and let it sink in – it could take weeks before you are ready to process it. You should thing of the person that gives feedback as somebody that cares about you enough to tell the truth. You have to be willing to interrogate your impact.

5. Use the feedback

Once you have had time to assimilate the feedback it is time to do the work. It is important to remember that it is not about right or wrong, it is about what impact you have on people. If you receive value from the exercise there are two more elements of the Johari window to go explore.

(This article is based on the wonderful work of Hendre D. Coetzee – may he soon write a book to enlighten us all.)

Why corporations love delegation and are scared of Empowerment

Not only does empowerment of employees take the load of the task away from managers, it also takes the load of the decision away, making the role of the manager much easier. The time the manager does not have to be in the operation, she can work on the operation – improving it.

Having more decision power closer to the customers and the employees create a more agile organisation that can respond to rapid or local changes without HQ being awake.

Decision power and responsibility is a powerful motivator that significantly increases Employee Engagement and through that increases customer engagement and financial results.

Most employees also tend to grow capabilities faster when trusted with decisions rather than being locked in a training room for mandatory compliance training. So how come many companies don’t really deploy empowerment?

So why don’t organisations embrace Empowerment?

Many organisations now see themselves as values based. This should in principle means less rules and higher ability for the individual contributor to have responsibility and decision power over what they do. Often in the same companies there are more rules than ever, often camouflaged as a need to meet governance, compliance or to lower corporate risk. Many of these rules are created to protect the organisation against potential actions of the individual employee - a strange concept indeed. 

Decisions are concentrated around a few select senior managers and delegation trickles down the organisation in a way that often is counterproductive to what individuals and departments are trying to achieve.

In these organisations it looks like control and hierarchy is more important than making the company great and able to create value. There are powerful forces that make it so, as senior management is always benefitting from status quo.

Their operating logic dictates that highly paid individuals knows best and needs to decide. While this might be true it completely disarms the organisation and lowers the engagement of the entire organisation. This can become a threat for the survival of the organisation. People without engagement stay and get their pay check but they are not motivated and do not contribute.

The direct manager

When divine decision does not create the intended greatness the spotlight is on the middle manager responsible for the implementation close to the employees. Creating an environment that punishes only increases the middle managers need for control and somebody to direct the blame to.

At the same time, it has become so popular to coach that managers call everything they do and have always done for coaching. Reality is that most managers are still coaching for compliance: Trying to manipulate the employee into what the corporation thinks is the right behaviour.

Delegation is a great tool if it is more important to stay in power than to create a great company and all stakeholders should analyse if their company has a delegating or an empowering culture. This is likely to determine their fate.

Seek companies with an Empowered Culture

The 11 questions that will tell you if your behaviour is collaborative

From the industrial age of business the concept of coordination has ruled the way people work together. Driven by directive and a singular focus on return to the ownership structure it is not based on trust or on team work, but often focused on a narrow short term cost based goal.

In the more modern knowledge area cooperation started to become more important. Although still a directed mandate it requires a higher degree of personal investment and motivation from the individuals participating. However cooperation still works inside the frames established by the operating logic of the company.

Neither works well when innovation or disruption are needed, which is why collaboration has emerged in the recent years. Collaboration is driven by mulutal self interest and requires a high level of trust and commitment for each party. It requires highly engaged people that are willing to challenge authority and status quo to unlock new value to the benefit of all parties.

These 11 questions will give you an idea if you are currenlty working in a collaborative way:

1. Are you unselfish and do not pull rank
2. Are you Inspirational and positive
3. Are you Committed to the team and the challenge
4. Are you Curios and have an open mind
5. Do you Participate but do not dominate
6. Do You Build trust and create a safe environment
7. Are you adaptable – not Dominant
8. Are you honest but with respect and tact
9. Do you Listen with the aim to understand
10. Do you Respect other persons and their views and ideas
11. Are you focused on Value Creation not value extraction

Are you still involved in skilled based recruitment?

For many years through the industrial and knowledge age, skills have been imperative when recruiting people. Are they capable of operating the right machine or be part of the right department. However work is changing and people are now entering corporations with a job title that are not likely to survive many years – we don’t even know what will be needed a few years from now. Marketing has gone from paper and television to online and mobile at a blistering pace rendering the entire skill base obsolete. The same thing is happening in sales, where customers has access to more information than the salespeople and are capable of identifying the best deal without even calling.

“Companies are running 21st-century businesses with 20th-century workplace practices and programs.” Towers Watson

Need for specific skills are changing at a rapid pace.

If the obsolescence of skills is accelerating, it does not make sense to hire for skills alone anymore. A better way is to combine skills with attitudes and behaviours when recruiting. Define the attitudes you want in your company – they are likely to interact with your values and culture and the basic belief system your company is based on. They should also be the first evaluation process that existing and new people are evaluated against as attitudes are hard to change. A very imortant point is that the attitude of an employee is going to decide if your culture and operating logic is able to create engagement - a key element of motivation.

"Getting an employee with the right skills is not the same as getting a motivated employee"

Secondly it is needed to look defining the behaviours you want. On LinkedIn it is possible to get a good idea of behaviours of a candidate that can be explored through the interview phase. Even though you would like certain behaviours it is more important to look for the potential of behaviour you would like to have in your company as behaviours can be coached.

Skills should really have the last priority and you need to be looking for the potential to acquire the necessary skills and the ability to acquire future skills. Whatever you are looking for right now is going to be obsolete faster than you can believe.

Pulling it all together will help you identify your high performance A Players that exhibit the desired Attitudes, Behaviours and Skills you are looking for. B Players that have the potential to become A Players and finally C Players that does not have the potential.

Using the 3 Gate process will ensure that you get the right potential people into your organisation but not that they are motivated and engaged. Engagement is an emotional relationship between the employee and the company that the company is responsible for creating. It is not a characteristic of the employee.

"With high levels of engagement, firms can see revenue growth 2.5 times that of their peers and a 40 percent reduction in expensive staff turnover" HayGroup