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Recently I saw an article about how the fact that there are not many celebrity ceo’s left has had an impact on the publishing industry. Last big celebrity CEO was Jack Welch. There is still Bill Gates and you could possibly count Warren Buffet. But Jack Welch retired a number of years ago.  Whilst the current decline of the celebrity ceo has had a significant impact on the publishing industry the question of leadership is one which intrigues me.

Peter Drucker said “no institution can possibly survive if it needs geniuses or supermen to manage it”.

How could I argue with Peter Drucker. To me leadership is about creating the environment for everybody to succeed. It is not about being the celebrity to the world. The effective leader focuses on everybody else and not him or herself. They focus on what they can control which is the vision of the business, creating the environment to allow others to succeed, being decisive and being dedicated to delivering value to employees and customers.

Businesses with effective leaders are boring. They don’t grandstand. They want all their team to be engaged in creating and delivering value.

So the businesses with the most effective leaders are often growing and developing under our noses, quietly and efficiently without fanfare.

I would love to hear from you of businesses large and small who you believe are being effectively lead.

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At the moment the question of determining a correct and usable ROI of Leadership Development has been on my mind.

Worldwide organisations spend enormous amount of money and effort on Leadership Development. Are they getting a good return on their investment? Is it like the old adage about advertising - I know only half of the advertising works but I don’t know which half.

Just because leadership is an intangible item and thus leadership development is intangible this does not mean that its results can not be measured. But precisely how?

Firstly we need to start with what is “leadership.” There has been much written on this question however I would believe that it can be summarised in the following points:-

• creating an environment for everyone to succeed
• decisiveness
• setting the vision and formulating the environment to ensure execution of the strategic aims
• honesty
• dedication.

I realise that there are many other definitions but this will suffice as the starting point. From this point we need to examine the strategic aims of the business.  Once this has been clarified we can then determine the leadership challenges that are likely to be encountered in achieving this aims.

This is where leadership development then comes into the equation. However it would be incorrect to undertake leadership development without first considering the leadership challenges that the strategic aims create.

From this macro level we need to then determine the leadership objectives, challenges that we are desirous of seeing the people who are or have undertaken a program of leadership development meet. These could be the short-term outputs we are seeking from the development program.

Then we determine what the people or person who engaged in the leadership training can directly effect. It is no use measuring something that they only partially affect. It would be unfair, disheartening and generally counter productive.

Then we move towards determining the value driver and builders. With these mapped we can then determine the appropriate metrics.

These are my initial thoughts.  If you have any comments, thoughts or questions please leave them as I wish to come up with a solid approach to measuring the ROI of Leadership Development.

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It is imperative that businesses determine exactly who they want to serve, exactly what products or service they want to deliver. They must not try to be all things to all people. Previously on this post I gave the example of a niche product being the Savile Row Tailors. In this post I pass on some lessons from a company who has got it right. ( I have no inside information just a keen interest).

The company is Leica Camera AG.

Leica make beautiful cameras and if anyone wants to be generous I would love the new M9.

Lieca cameras are very expensive but they create an experience for enthusiast, artistic or professional photographers. They are made in Soims Germany and also a second location in Portugal.

They have focused on building the best lenses, the essential camera that serves a market. They employ about 100 people and last year turned over 156 million Euro. They are not an insignificant business that is focused on serving a particular customer with a specfic product. They are not trying to take on Canon & Nikon etc but rather they are creating a different product and charging a premium price. There are forums, user groups both online and offline the world over. These people get together to talk about the products and what they have been able to create with the product. This just reinforces the word of mouth marketing of the brand which adds to the premium price that can be charged for the products.

On Leica’s website they say the brand speaks for visual enjoyment and lasting value. Also state that their values are building the best lenses and focusing on the essential.  It is this point of “focus on the essential” which I wish to cover a little more.

To quote from their website

“In today’s market, many products attempt to attract buyers with countless features and unusual forms. Almost anything is possible. But it is often the things that appear simple which prove to be the most difficult to attain. For Leica, the focus is first and foremost on the needs of the user. Innovations are never ends in themselves but are always the result of countless discussions with and feedback from users. Leica products are designed from the ground up as tools for creating completely unique visual experiences - nothing more and nothing less. For this reason since the very first Leica, the focus during mechanical and optical development of mechanics and lenses has been on providing truly relevant functions. It is this focus on the essential that lies at the heart of the fascination inspired by the Leica brand. “

If only this was the focus of all businesses. Leica not only say this but deliver. They have the focus of their customers. Their customers are not all photographers. They are not trying to be everything to everybody. Focus on the needs of the customers you want to deal with. How can you focus on the essential in your business, with your product or service.

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Do you treat all customers equally? But not all customers are equal.

Even in businesses that have offered different service offering eg Platinum, Gold, Silver etc I still some blurring of the lines. In businesses where they don’t have these distinctions all customers get very similar treatment.

Why is this so? Why does it matter?

Treating all customers equally means that

• clients that are marginally profit are getting the same service as customers who are very profitable.

• we are not tailoring our service offering to the customers needs.

• we have not taken the time to understand the customers in detail

• there are not KPI’s in place to ensure that this behaviour would be detected.

• there are not adequate systems and procedures in place

We hear the blanket statement from business that we provide great, awesome, fantastic (some other adjective) customer service to all our customers. But unless they have taken the time to carefully select the customers they deal with and also have taken the time to understand in detail their customers then this statement would be of little use. Now I am not saying you give poor service to the marginal customers. I am saying that if you decide to keep them as clients then they need to be educated on what to expect and it can not be the same level of service as the very profitable, high referring advocates.

Remember not all customers are equal.

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To be effective KPI’s can not just be composed of financial metrics. Metrics derived from the financial statements have a place but they need to be complemented with other measures that are derived from a true understanding of what is important to the customer.

The financial statements are records of history. Thus financial metrics also reflect what has happened. They are not in any way predictive of what is to come. Financial measures have important uses including cashflow management, efficiency, productive use of resources.  But financial measure must not dominate the KPI’s as the focus will be distracted from delivering value to the customers.

We need to focus on what is success in the eye of the customer not just past profitability.

The first step in this process is to have a complete understanding of the customer and what they value. A business must invest the time and effort to be armed with the facts and data on the customer. From this the business needs to ask the customer and to observe their behaviour to get the understanding of what is important to the customer. Once this information is to hand then indicators that measure this value delivery can be designed and implemented.

The key measure of this post is not just have financial metrics as KPI’s.

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Recently Ingrid Cliff of Heart Harmony posted in her newsletter wrote about niche businesses and the success possible from pursuing a niche. Following on from this then saw an article in Business Week which detailed a conversation with a Savile Row Tailor.

Savile Row is famous for its independent tailors. These tailors provide a specialist product (bespoke suit) with precise customer service. Tailoring is a business which has had significant competition from a wide range of companies selling suits from off the rack companies, major brands eg Armani, to online businesses but Savile Row has survived and thrived. In the article Richard Anderson said how this conversation from the ready to wear market keeps them on their toes. They have to keep doing it better than them.  The other aspect of this conversation was that they have a deep relationship with their customers. Also they are willing to travel the world to their customers.

The lessons from this article was that a very successful way to compete is to find a specific niche and deliver a fantastic product with extreme customer service. (Simple) But really small businesses can’t be everything to everybody. But if you have a niche product or service you must deliver a great product / service. It can not be just a little better than what the general competition is. The bespokes suits tailored on Savile Row are exquisite. But the other important aspect is to have a deep relationship with your customers. In this way you will be more than just a provider of a product or service, you will be a valued friend of your customer.

Savile Row tailors are never going to have the mass market but their product is unparalleled and there is a sufficient market available for these tailors to have a great business.

So in summary find a niche, deliver a great product / service and have a deep relationship with your customers.

Flickr Photo - Mike_fleming

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Unfortunately performance measures or KPI’s can get a bad impression because the prevalence of some terrible KPI’s in many businesses. The phrase “what you can measure you can manage” which came originally out of a McKinsey strategy has been belittled by many. I am not saying that you can measure everything (that is for another post). The failure of KPI’s and perception that has been generated I believe has come about from poor implementation of performance measurement.

The reasons that business have poor KPI’s include:-

1. They do not exactly know what is success in the eye of the customer.  We must start with the customer to know what we should be focusing on measuring and tracking.
2. Lack of a complete understanding of the operational drivers of the business success.
3. Having KPI’s that are at odds with each other. For instance if there is a KPI on customer value delivered and then a KPI on employee productivity then there can be a tension as to which one is the most important.
4. Too many KPI’s. Some businesses I have encountered have had more than 50 KPI’s at senior management level. This just means that none of them will be focused on.
5. The design of the KPI has been delegated a low level person in the finance department. The KPI’s are too important not to designed by CFO or senior management.

I am sure that there are many other reasons why inappropriate performance measures end up being designed and implemented however these are five I have seen to0 often.

Your thoughts please.

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I love to hear of stories of great companies who have built a real brand. This is a brand that has a loyal customer base and when the brand is mentioned people can tell you stories (great stories) of this brand. Recently Peter Day of the BBC interviewed the CEO of WD-40.  Yes those distinctive blue and yellow cans with that spray we use to solve all sorts of problems.

As Peter stated in his notes - ” it starts off as a lubricant and then generates all kinds of other uses, most of which give the users the wonderful feeling that it’s their cleverness to spray on the WD–40, rather than the product’s versatility.”

Originally WD-40 was designed to stop space rockets corroding.  This formula was the 40th attempt to come up with a water dispersant.  However as some of the people who worked for the company started taking the product home it started to gain other markets.

There are a number of lessons that can be learnt from the business.

It has been a business significantly built on sampling. They give a sample to someone to try which has led people to purchase. From this word of mouth has done a lot of the business building.

But this word of mouth has been helped by the company. It you visit their website you will fine a fanclub and a page devoted to 2000 plus uses of the product. The 2000 plus uses are full of stories that people can tell each other, try out and otherwise create word of mouth marketing.WD40 ask people to continue to send in examples of how they use the product.They are fostering the word of mouth.They are creating a tribe around a spray can.

The brand has a promise of being able to solve all those little lubricant issues around the house or business. But more than that even keep squirrels from climbing a pole. Read some of the 2000 uses for some crazy examples.

Also it is interesting how little detail is important. The smell that comes with the spray is added. It is not necessary to make the product work. But the smell is important for us to remember the product.

WD40 really take the time to understand the customers need and how their products can help.

So the lessons in summary -

1. how are you fostering word of mouth
2. how can you allow your customers to sample your product or service
3. what little details can you do to your product or service that will leave a memory eg smell, touch etc
4. how can you really understand the customers needs better.

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