Leadership means Running Towards the Fire

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Courage is Being Scared to Death, but Saddling Up Anyway ~John Wayne

I’m a trained firefighter. Actually, I’m a U.S. Navy veteran who served on nuclear submarines which means I have been trained to fight fires. It’s probably no surprise that a fire on a submarine is one of the most dangerous things that could ever happen on board. Smoke can quickly fill compartments and asphyxiate sailors. The heat and flames can spread to weapons, volatile materials, and critical systems creating catastrophic damage. A fire can quickly destroy a submarine if not extinguished immediately. That’s why we were trained to ignore our natural instincts to move away from the fire and, instead, run towards the fire to put it out as quickly as possible.

Business is the same way. There are situations that can occur that, if not addressed immediately, can cause catastrophic damage. These might include a product failure, a customer complaint, a supplier quality issue, a change in the market landscape, new technology, an employee situation, or any number of challenges that businesses face each day. The problem is that people in businesses also have a natural tendency to move away from or ignore problems.

Take for example the recent announcement of the bankruptcy of Radio Shack. Joshua Brustein refers to it as a “slow-motion collapse” because the warning signs were all there but Radio Shack’s management team did little to attack the problems. They didn’t run towards the fire. The market had changed dramatically. Other companies, like Best Buy, were doing a better job solving technology issues for customers. Wal-Mart and other low-cost retailers now sold many of the components, wires, and connectors that only were available in the past from Radio Shack. Radio Shack became stuck in the past and reduced to only the last resort for customers who couldn’t get their problems solved somewhere else. As a result, stores were empty, employees sat idle, revenues fell, and their stock lost 99.6% of its value. On top of that, they hadn’t shown a profit in three years.

As leaders, we can’t allow this to happen to our businesses. It is critical we create a culture where leaders and employees run towards the fire. As firefighters, our teams must be trained to ignore their natural instincts to move away from or avoid problems. The future of our organizations may depend on it. There are three simple ways to create an organizational culture that attacks problems head-on:

Lead from the front. There are large problems facing your business that only you can solve: A major problem at a strategic customer, a change in the competitive landscape requiring a new strategy, a significant market shift, or a new technology introduction. Your employees will be looking to you to lead the effort to attack these issues with tenacity. How you respond to these challenges will set the tone for the rest of the organization.

Celebrate those that run to the fire. I tell my employees that, when it comes to priorities, they should always take care of the customer first. I have had the pleasure to receive dozen of calls and e-mails from customers who were extremely happy with how one our team members dealt with a problem. I always make a point to thank these employees personally and discuss it in staff meetings and town hall events. The employees who take a relentless approach to taking care of a problem before it gets out of control are to be celebrated.

Attack the fire while it’s still small. There is a universal truth about problems and fires. The longer it takes to attack them, the larger they get. Almost every significant issue that gets to senior management was a smaller problem that could have been resolved in the early stages. That’s one of the reasons I believe in having a strong set of Key Performance Indicators (KPIs) to measure the performance of the business in real time. Negative trends in price, margin, product mix, customer satisfaction, quality, or on-time delivery can be quickly identified and addressed before they get too large.

I should also make another point about firefighting. I have also witnessed another extreme in business leadership with organizations that lacked structure and stable processes, where its employees were always putting out fires. Most of the management team simply moved from crisis to crisis. This is an unhealthy organizational situation and this is not the kind of firefighting I am referring to. It is the leader’s job to build a stable, smooth running business. Having to run to a fire should be the exception not the rule.

Ignoring or moving away from the problems that face your business can have catastrophic effects. We can see it play out with the bankruptcy of Radio Shack. As leaders, it is our responsibility to create a culture where employees resolve issues quickly. We can do this by leading from the front, celebrating those employees who live these values, and attacking problems before they get out of control. We need to teach our employees to ignore their natural instincts and move towards flames. The future of our organizations may depend on it.

Learn more about how to be a more effective leader in my new book, I have the Watch: Becoming a Leader Worth Following.

3 Reasons why you should Love Customer Complaints

complaints

In a recent blog post by Rick Conlow about improving the customer experience, Rick points to four studies that show the benefits to be gained from improved customer satisfaction:
  • According to Harvard Business Review’s Employ­ee-Customer-Profit Chain, a 1.3% improvement in customer satisfaction scores results in a revenue increase of 0.5%.
  • The Profit Impact of Market Strategy’s database found that companies who lead in service have 12 times the profit­ability and 9% greater growth than poor service providers.
  • Bain & Co. found that a 12-point increase in the net-promoter score doubles a company’s growth rate.
  • A report by the American Customer Satisfaction Index proved that the leading companies consistently outperformed the market. Customer service leaders outper­formed the Dow by 93%, the Fortune 500 by 20% and the NASDAQ by 335%.

Rick states that one of the reasons why companies fail to take advantage of these benefits is that they are ignorant to what is really going on with the customer experience. Companies talk about the importance of customer service but make no serious attempt to understand and measure it. Surveys are a great tool but they have disadvantages as well. They are not done in real time and not all customers will give you accurate feedback.

A better tool and one that is available to all companies is the customer complaint. Complaints are provided in real time and provide a realistic view of the customer experience. Smart leaders, are learning to treat customer complaints like gold, using them to improve their business processes. If used correctly, complaints can be a valuable tool to help measure performance, solve systemic problems, and to create a customer focused culture.

Customer complaint data can help measure performance. A simple system to capture customer complaint data can provide valuable insight on how well an organization is performing. Are complaints trending up or down? How quickly are problems being solved? What products are creating the most complaints? Which type of customers are complaining the most? Reviewing complaint data on a regular basis will help companies better understand how their business is performing and where action is needed to make improvements.

Customer complaints can help solve systemic problems. Data from customer complaints can help identify underlying problems, common failure modes, and systemic issues affecting an organization. Over time, complaint data trends can reveal challenges companies didn’t know even existed. Simple trending and pareto analysis by product, by customer, by type of complaint, by department, or even by employee can help reveal these underlying problems. Seeing the data will help companies identify root causes and solve problems permanently.

Customer complaints can help foster a customer focused culture. When complaints are seen as a valuable source of critical business information instead of a problem, the culture begins to change. Making it a critical business priority to resolve complaints quickly and use the data to solve underlying problems immediately adds the “voice of the customer” to business processes. This culture can be further reinforced by communicating improvements and celebrating successes.

The benefits of improved customer satisfaction are significant and understanding the customer experience is critical. The customer complaint can be the most timely and accurate tool to help companies understand their customers and improve their performance.