When I began to think about my personal position on Corporate Social Responsibility, I favored a normative approach.  Who would not want to do the right thing for the betterment of humanity or the environment given the chance?  On the other side is the business case, which is doing what is right, while staying true to your core business.  It begged the question, why does a company really exist? 

A company cannot make a difference in society if it cannot fulfill its primary purpose, providing products or services, serving customers and making a profit.  In 1970, Milton Friedman, wrote if a company cannot achieve these basic objectives, they should not consider participating in a Corporate Social Responsibility role.  He indicated that management’s primary role is to ensure it maximizes the returns for the business and stakeholders.  Management is entrusted with the investments and resources to create profits consistently over time.  Fulfilling this basic business obligation contributes to the economic and welfare of society.  

Once a company demonstrates the basic objective of profit it can consider a Corporate Social Responsibility role.  The business case provides the opportunity to identify a Corporate Social Responsibility role that aligns with its culture, strategies, business and key stakeholders.  To illustrate, if GlaxoSmithKline, a pharmaceutical company, invested funds and resources in saving wild life, it could be viewed negatively, as it is not aligned with its core business.  It would be a nice thing to do, but it does not aligned to benefit key stakeholders (normative case).

The business case links the Corporate Social Responsibility to the business strategy.  It allows them to target specific investments, resources and budgets to their Corporate Social Responsibility initiative.  It creates alignment that is beneficial to the core business, while building stakeholder value, loyalty and brand awareness.

For example, Avon’s Corporate Social Responsibilities are focused on breast cancer, domestic violence and emergency relief. Assuming Avon has a good value proposition around its products and services, this will resonate with their primary customer, women.  This alignment creates brand recognition and customer loyalty based on their Corporate Social Responsibility.    

The business case allows the Corporate Social Responsibility to become part of the company culture.  Home Depot has done an excellent job of incorporating their Corporate Social Responsibility into its culture.  As an example, Home Depot donated a half million hours of community service and $11 million in rebuilding the regions impacted by Hurricanes, Katrina, Rita and Wilma. 

Teri Radosevich Community Relations

Doing what is right for the betterment of humanity and the environment is a worthy objective.  A company creating alignment will make an impact on business results, brand image, enhancing employees, customers and supplier relationships, while making a meaningful contribution to our world.  Check out my pal Teri Radosevich to see what we are doing at Avnet.

Posted under Leadership, Shareholder Value, Value Proposition

Great Leaders, Great Teachers

I had the pleasure of seeing and listening to coach Bill Belichick at a conference.  He is the head coach for the New England Patriots and has won 5 Super Bowls in his career.  Coach Belichick is the only head coach in NFL history to win three Super Bowls in four years. This is not a football story, rather his philosophy on coaching, which he referred to as teaching.  I thought I would share a few points that really made me think. 

First, his thought on change.  Change in his mind is “Focus on the Next One.”   Although winning many games and championships, he continues to have his team focus on what was coming up next.  Whatever the outcome, a win or loss, you have to move on.  No basking in the glory or dwelling on a loss for any extended time.  Keep moving as change is continuous.  In life, you have the choice to adjust or be overcome by change.

He said that they had two signs in their locker room; the first one read “Every battle is won before it starts”.  His point was that Preparation is the key to winning and being successful.  There is no substitute for being prepared.  Every member is critical and they must know what their job is and what is expected of them.  He went on to Accountability.  “Accountability proves or demonstrates that the individual is ready and executes the desired outcome of their role.

He followed that with Consistency.  Once a player knew his job and proved he could deliver the outcome, there had to be a minimum level of performance.  This was to ensure a clear understanding of the standard level of performance.  He spoke on Attitude next. Attitude he explained has nothing to do with ability.  Being mentally tough, prepared, working hard and putting the Team First is an attitude.  It was what he expected from everyone in the organization.  He said “there is no I in team, however there is an I in win, which translates into Individual Performance.  You can’t be successful without it.”  

Feedback is Critical for Performance Improvement

On Teaching:  When a play didn’t seem to be working he would review the following points.  Working with the Coach they would review two things.  Was the coach not teaching the play correctly?  If so, they would adjust for the desired outcome.  Or was the coach settling for lower performance?  If that was the case Bill would coach the coach to ensure that they maintained the expected outcome.  On the player side it was the same thing.  If the player was executing the play incorrectly the coach would teach the player until they performed at the expected level.  If the player understood, but knowingly did their own thing, they would not be playing much.    In either case if a coach or player was compromising the success of the team their time with New England was short.

He concluded with his final point which rings true for everything in life “We have two things, our name and our reputation.  You have to earn it everyday.”   By the way the second sign read “Penalties Lose Games”.  Life in the NFL sounds like life in business when it comes to leadership.

Posted under Employees, Leadership

Understanding Customer Requirements

According to Seldon & MacMillan (2006), “A successful customer R&D strategy requires that companies play both offense and defense. The offensive strategy is to establish a deep relationship with core customers, then extend the number of customers beyond the core, and finally stretch into new customer realms. The defensive strategy focuses on continually scanning for potential competitive disruptions”.  This is a logical and closed loop approach to ensure value for customers and sustain profitability for companies.

Seldon & Macmillan were focused on how to maximize returns of R&D investments.  They felt that current R&D was not meeting the expectations of the market and the expected returns on investment.  They observed that companies pursued innovation from an internal view.  Their recommendation was to center R&D development on the customer.  They created a process called customer-centric innovation or CCI.

The financial value of the CCI process is long term sustainable profitable growth and an increase in market capitalization.  R&D focuses on understanding customer requirements, which lead to building better long-term relationships, and developing and communicating meaningful value proposition.  Front line employees play a significant role in the development of the value proposition which leads to higher levels of employee and customer engagement.  As a result, the CCI process can create a competitive advantage.

With this in depth customer knowledge, the company can extend and innovate into adjacent and new customer segments.  A company takes its core capabilities and tailors the value proposition to attract similar customers.  For example, a company selling men’s clothing could also sell women’s clothes. A company can also add new customers, while enhancing its value proposition to existing customers.  To further the example, a company who sold only men’s and women’s clothing may decide to sell shoes.  With each extension the company creates new profit streams by adding new customers and capabilities.

Employees Make a Difference

Companies who use the CCI process can create a competitive advantage.  The model focuses on understanding customer requirements and delivering a superior value proposition.  Front line employees are organized around the customer.  This leads to higher levels of engagement from customers and employees.  The company expands into adjacent and new customer segments, which extends its value proposition to existing and new customers.   The results are sustained profitability, engaged customers and employees.

Posted under Business & Process Innovation, Customers, Employees, Value Proposition

We are Listening

I thought I would highlight a best practice regarding the collection of data from customers. I don’t know about you but I get many requests regarding a survey of some sort.  To motivate me to take a survey it needs to be relevant to me and my situation.   If you think about it, that is a commitment on my part to the company to give them feedback.  When I respond I can have two modes, I am very happy and want to let them know about it or I am unhappy and I am venting.  In either case, I would add suggestions to what they could do better after all they are asking for my feedback. 

What is important to know when taking a survey is what does the company do with the information they collect?  How will they react to positive or negative feedback?  How will I know if anything changed because of my feedback and that of others?  Of course there are many other questions that go through people’s mind, but these our important questions to address if you want folks to take a survey again.  Based on my experience there are three things that are key to communicating with customers regarding their participation in surveys:

1.  The invitation is more than a form letter.  Those are instantly deleted and ignored.  The invitation to a survey should be well thought out as these are your customers and when they open your invitation to participate this is a reflection of you.  Consider personalizing it and tell them what you are trying to do, the importance of their participation, what you are going to do with the information and how you will get back to them.  John Chambers of Cisco does a nice job of covering these points with his customers and adds the final touch of thank you.
2. I mentioned positive and negative comments.  In the positive comment situation a simple thank you is in order.  For the most part a person giving positive feedback is not looking for anything in return.  Send a thank you note from the CEO or Account Team to surprise to them.  Personalize it.  On the negative side, that should be considered a cry for help.  The customer was good enough to tell you something is wrong and that they are unhappy.  This is great news, as they are most likely voicing what others are thinking, but they took the time to give you the feedback.  Implement a response mechanism to respond to their feedback and connect with them quickly.  I can’t tell you how many times I have called folks in this situation. It gives you the opportunity to quickly and effectively turn the situation around.  This is a critical moment of truth.  If done effectively this set of customers will talk about you in a very positive way to others.
3. The last point is one that is the most over looked.  That is closing the loop with the customer after the survey has concluded.  You should start by thanking them for their participation.  This is very key if you want to do it again, which if you are customer centric you will.  Then provide them at a minimum with the following: 

• What did you learn from the customer survey?
• What are you going to do with the information you gathered?
• How will you keep your customers posted on your progress? 

The voice of the customer is a very valuable source of information.  The process you use is a differentiator.  Customers, as you know, get many opportunities to provide survey feedback everyday and they make the choice as to who.  As I looked at the three key points above, I think it’s fair to say Cisco understands pretty well after conducting their 18th annual survey.  I am not saying Cisco is perfect but they certainly care enough to ask how they can be better and that’s the opportunity to get closer to the ever evolving target of perfection. 

It is intuitive that customer feedback is essential to companies.  Cisco takes the initiative to take action as they connect people, process redesign and compensation to their focus of listening to the customers.  The voice of the customer is a horizontal integration to the foundation of a company.  The core aligns its value proposition, employees and processes with its current and future customers, so a company can achieve vertical and industry leading growth.

Posted under Business & Process Innovation, Customers, Employees, General, Leadership, Shareholder Value

All of us have a story about a buying experience that keeps us coming back for more.  There is something about the product, the price, the people and the overall buying experience that locks you in.  After all, buying something can be an emotional experience and the more positive it is the more likely you’ll do it again.

The key is creating an environment that keeps the customers coming back again, again and again.  That is why retention, repeat buying, referral and reputation are the long term opportunities in creating a great customer experience.  The total life value of a customer is extremely important as they become more committed (loyal) and profitable over time.

I would argue that the common denominator to long term customer relationships comes down to the culture/people that is selling or servicing your customers.  It validates that people buy (and continue to buy) from people they value, like and most importantly, trust.  That brings me to a recent trip I took to the Dallas area to visit our branch and three customers.

Christen, Dudley & Tammy

I had the pleasure to have a mini quarterly business review with Chuck who runs the Area.  Some folks can talk a good story about customers, but Chuck not only understands it, he lives it by using the information they collect and taking action.  I also met with Joan who runs Branch and Dudley is the Sales Manager.  It was easy to see that Chuck, Joan and Dudley were on the same page regarding their position and strategy with their customers and employees.  It was clear that Chuck and Joan were connecting the dots to enable their employees to achieve  outstanding support and service with their customers.

On the customer calls, I had a chance to see the account managers in action. It was clear to me that Christen and Tammy had developed key relationships with their customers.  What was most notable was the relationship and loyalty that was developed based on what they did and not what they said.  Time and time again the customers highlighted that their actions created a competitive advantage and that is the reason they don’t consider alternative sources.  Now don’t get me wrong, these customers were not pushovers by any means, they demanded value.  The key was the mutual trust and commitment that had been established between them and the account managers.

As part of my discussion with the customers I thought I would share with you a little about their companies, their view of value to their customers and their relationship with Avnet.  What was clear to me was their customer focus on providing value and long lasting relationships. 

Mao – What does your company do? 

NetPower Technologies develops and manufactures high-performance and cost competitive DC-DC power products in both standard and custom formats.  The company’s products are widely used in the network, communication, industrial, medical, military and automotive markets.

Mao - What words would your customers use to describe your company?

Engineering, Quality, Flexible & Accommodating

Mao - What are the key relationship points with Avnet? 

The people we deal with understand our business and meet their commitments to us.  We are doing more global business and Avnet has helped us make the connections. 

John – What does your company do? 

Enseo is a privately held corporation based in Richardson, Texas. Enseo is recognized as a leading provider of OEM solutions in Digital Signage, Hospitality, Digital Cinema, Stadiums and Arenas, Broadcast, Airline Seatback Entertainment and other highly specialized business verticals where digital media is required. 

John – What words would your customers use to describe your company? 

Engineering, Quality & Technical Support 

John – What are the key relationship points with Avnet?

Avnet listened to us when we had concerns regarding our relationship.  They made changes, invested in us and proved we were important to them to earn our business.  We have a partnership that is beneficial to both companies.  

Arnold - What does your company do? 

ESI (Estech Systems, Inc.) designs and manufactures business communications systems and components. ESI’s systems offer advanced technological design and ease-of-use, yet are very cost-competitive. The product line includes ESI Communications Servers, which support both digital and IP technologies in any desired combination. ESI’s business communications systems are sold through hundreds of factory-trained Certified Resellers. Founded in 1987, ESI is a rapidly growing, privately held corporation with headquarters in Plano, Texas. 

Arnold - What words would your customers use to describe your company?  

Engineering, Responsive, Reliability, Customer Service & Communities (The Company is focused on giving back to the community). 

Arnold - What are the key relationship points with Avnet?

We have a global relationship with Avnet.  We work together to enhance our supply chain as we manufacturer our products in Asia.  Avnet provides materials management that provides visibility and traceability to our products given the lead times we have.  We have a partnership that ensures we continue a high level of satisfaction for our customers, which is extremely important to us.

Buying is an emotional experience. However that emotional customer connection can be easily lost with one bad experience.  Customers want value and they want to do business with a company they can trust.  The secret to success is long term relationships that are built between a company’s employees and their customers.  The companies I visited understand that and based on what our employees are doing with them, I am confident we get it too. 

Special thanks to Mao, John and Arnold for sharing their thoughts with us and to Chuck, Joan, Dudley, Christen and Tami for the hospitality.

Posted under Customers, Employees