Chapter 16
Challenges Around Every Corner

Dissecting and Managing Diverse Organizational Issues

The difference between hearing and really listening can be as different as night and day. And in a business environment, not listening effectively to customers, employees, and peers can mean the difference between success and failure.

—Ken Johnson

Over the span of our careers, we all interface with individuals in a multitude of roles including those of customer, vendor, service provider, employee, management, strategic partner, investor, and perhaps even analyst. But whatever the roles assumed by the people we hope to influence, as the case studies in this book have proven, all people are emotional beings.

Although we’ve focused exclusively on sales and marketing challenges up to this point, the applications for emotional-trigger research are unlimited. Regardless of the complex issues confronting your company, this technique will expose the emotional triggers such issues arouse and serve as the basis for crafting a response. Each organization grapples with its own unique situation, but every organization shares a common need to prosper. Although circumstances vary, the common need to effectively address pressing business challenges is universally dependent upon a combination of nuanced insights and the right strategic solution.

In this chapter, we’ll turn our attention to four examples of how emotional-trigger research benefited companies seeking to:

1. Restore employee morale.

2. Enhance customer communications.

3. Strengthen vendor relationships.

4. Understand analyst expectations.

1. Restoring Employee Morale: A Promising Merger Gone Awry

Mergers usually begin with high hopes. Sadly, the reality often falls short of expectations. That was the case when two multibillion dollar companies merged their global operations. Millions were spent to launch the new enterprise. Customers were promised enhanced services, greater efficiencies, reduced costs, and more rapid turnaround times. Although these promises were being made, the company quietly scrambled behind the scenes to integrate two very different organizations. Employees were relocated from around the world to one consolidated regional operation. Inevitable disruptions occurred, but management’s primary focus remained on the external marketplace. Internal concerns were secondary to addressing customer needs.

As a consequence, too many public assurances were made before measures had been taken to guarantee these assurances could be honored. Soon, the company found itself swamped with one problem after another. Statements went out to customers incorrectly. Subsequent payments were applied to the wrong accounts. Tens of millions of dollars became trapped in a bureaucratic logjam. Rather than experiencing the anticipated efficiencies of scale, front line employees were devoting the majority of their day to correcting—or trying to correct—accounting discrepancies. They were inundated with problems they didn’t have the power to fix.

Morale plummeted. Turnover skyrocketed. New recruits hired to replace more seasoned employees were enmeshed in an atmosphere of frustration and inefficiency. All the while, millions and millions of dollars caught in accounting limbo continued to mount. Eventually the internal confusion could no longer be contained. As it began spilling over into the customer experience, the spate of grievances was putting long-term client relationships at risk. Faced with the loss of talented personnel, disgruntled customers, and unhappy employees, management turned to emotional-trigger research to understand the scope of the problems and what they had to do to solve them.

Emotional-trigger research revealed how management had completely misread the needs and perceptions of rank and file employees. The CEO had relied on one major communications blitz to announce the merger and detail all the associated benefits employees would realize. Pleased with the initial response, management turned their attention back to customer issues and assumed all the organizational pieces would naturally fall into place, ensuring the company’s success.

“Management failed to appreciate the extent to which front line personnel felt they had been ‘hung out to dry.’”

That never happened. Instead, employee enthusiasm was quickly replaced by feelings of resentment. Management failed to appreciate the extent to which front-line personnel felt they had been “hung out to dry.” Following the major communications launch, little attention was paid to the nuts-and-bolts details required for a smooth transition. Decisions had been made at the macro level without the input of associates charged with the actual implementation of those decisions. Senior executives, continually in the loop by virtue of their positions, forgot how little had been told to employees further down in the organization.

Front-line employees had never been given the tools they needed to perform their jobs, nor the information they needed to satisfy customers. They were demoralized by the lack of advance planning that had left them on their own to cope within the newly merged organization. Under enormous pressure to perform without an adequate support system in place, huge sums of money were incorrectly applied to thousands of major accounts. The lack of systems integration was a nightmare. Employees were overwhelmed by the sheer magnitude of the task ahead. Stress levels escalated daily as the number of accounting errors grew.

Employees realized some glitches and missteps were a normal part of any merger. That wasn’t what demoralized them. What demoralized them was the disregard for their needs and concerns that typified how the merger was handled. Neglecting to anticipate the need for aligning processes, procedures, and systems before the new company was “taken to market” was, in their words, inexcusable. Not only were they denied crucial systems support, but, through no fault of their own, and with no power to change the status quo, they became the brunt of customer anger. That’s why so many employees quit while others simply went through the motions.

Once emotional-trigger research exposed the extent to which employees had become alienated, a task force was quickly established to identify all the systems and operational problems. The task force reviewed the findings with senior management and prioritized a punch list. A separate team was then assigned to tackle each of the high priority problems and report on their progress weekly. Every department was required to conduct a weekly staff meeting to keep all employees in the loop. Notes of the meetings went to top management, who in turn acted on key issues and communicated back throughout the company, so employees would know they’d been heard and how their issues were being handled. In order to resolve key human-resource issues, outside professionals were retained to reconcile and explain benefits, prepare job descriptions, and conduct training programs. Finally, to say thank you and inject a renewed spirit of camaraderie into the organization, management threw a fabulous party that helped restore morale.

Emotional-trigger research crystallized an important lesson: companies don’t succeed unless their employees want them to! By saddling employees who formed the nucleus of the organization with all of the frustration, but none of the benefits, associated with the merger, management had nearly sabotaged their own success.

2. Enhancing Customer Communications: The Y2K Scare

At the end of the 20th century, the world was gripped by a scare known as Y2K. It was believed this calendar problem, the coming of the year 2000, posed a looming technological disaster to computer systems, threatening grave financial and infrastructure damage that could take years to repair. Hundreds of billions of dollars were at stake. Obscure speculations on the fringes of the information technology (IT) community seemed to swell overnight into a massive flood of concern, even panic. Would the world’s technology infrastructure shudder to a halt as millions of internal clocks failed to roll over to the year 2000? Would airplanes fall from the sky, automobile engines freeze, elevators lock between floors? Cooler heads eventually prevailed but a very real, very stubborn, very massive, problem did remain. The IT systems of millions of businesses weren’t equipped to handle the format of the new millennium’s year designations. The accounting, human resources, operations, scheduling, and communications networks—the lifeblood of the world’s businesses—could in fact be jeopardized. The implications were staggering.

A global computer company with a brilliant record of quality and technological innovation believed they had achieved a breakthrough solution that gave customers reliable tools for dealing with any disruptions early and completely. Confident they had technologically superior products, the company launched a global communications campaign to maximize their perceived advantage. Yet despite all their efforts, customers seemed lukewarm, even skeptical, about their Y2K compliance program. The computer company was concerned by the underwhelming reaction to their initiatives. Seeing customer satisfaction slipping and opportunities missed, they wanted a communications strategy that would educate customers, service providers, and the media on the advantages of their solution. Time was of the essence. A rock solid understanding was needed of the specific messages that would neutralize customer fears and, more importantly, create brand confidence to increase sales. In search of direction, management turned to emotional-trigger research. Information technology directors and Y2K coordinators across a wide range of industry sectors throughout the United States and Great Britain were interviewed. The findings were dramatic and troubling. Although the computer company firmly believed that its technology solution, verification processes, and product guarantees led the industry in meeting their customers’ needs, emotional-trigger research uncovered a very different state of affairs.

In stark contrast to the computer company’s “inside out view,” customers felt driven by factors outside their control. Barraged by shrill warnings from Y2K consultants and the media, they were frightened, angry, and discouraged. They felt the IT industry wasn’t taking their concerns seriously enough. They criticized the computer company for looking at only half of the problem, leaving them to their own devices to resolve the remaining challenges. IT experts said business as usual wasn’t enough. They were in a crisis situation, or so it seemed at the time. Year 2000 compliance was a gateway issue affecting the future of their companies. The “crisis” demanded strictly defined standards and compliance assurances. They weren’t getting that. Instead, the computer company was posting lists of Y2K-compliant products and technical specifications, telling customers this would address their issues, but customers thought the lists were unreliable. Many products weren’t included. Others, once listed, might disappear or later be revised without notification. IT directors questioned the benefit of replacing a defective product under warranty if fundamental operational problems could put them out of business.

“They criticized the computer company for only looking at half the problem, leaving them to their own devices to resolve the remaining challenges.”

Customers wanted dependable technology partners with whom they could collaborate to solve potential business-infrastructure problems of a historic scale. Far from experiencing a level of comfort and sense of partnership with the company, IT directors were anxious, dissatisfied, and even angry. As a result, brand loyalty that previously existed was being lost because IT directors believed the computer company was resistant to new information, slow to respond, and ill-informed about the real issues that concerned them most. This growing resentment negatively impacted purchase decisions. Even more ominously, customers were thinking aggressively about legal options should their systems malfunction, something the computer company had not addressed. Their customers wanted absolute guarantees. And, if the turn of the clock created an infrastructure failure, they would be looking for substantial punitive damages.

Emotional-trigger research pinpointed how the computer company’s communication plan had failed and provided the blueprint for a new strategy of integrated initiatives. Corporate messages were rewritten to emphasize the comprehensive nature of the support provided. These messages became part of a worldwide effort to introduce customers, dealers, and the press to the company’s innovative solutions. At the same time, the computer company began a proactive policy of partnership with customers. Equipped with new insights into the most pressing Y2K legal and operational issues, they provided information and procedures that dealt with their customers’ most serious concerns.

Together, strong message development, redirecting the focus of reseller support, establishing partnerships with major accounts, introducing protections from future legal liability, promoting the company’s exceptional technology expertise, identifying solutions for key customer issues, and rolling out a comprehensive awareness drive, positioned the computer company as the Y2K-industry leader. Once they successfully regained their customers’ loyalty, they dramatically exceeded sales goals for their proprietary solutions.

3. Strengthening Vendor Relationships: Supply Chain Disruptions

A major national retailer, historically the leader in their category, was struggling to overcome declining sales in the face of internal setbacks and their strongest competitor’s rapid climb. Stores and warehouses were clogged with excess inventory. Strapped for cash, funds to purchase new merchandise were limited. Desperate to jumpstart sales, management applied increasing pressure on their vendors in order to squeeze out every possible concession. The situation was growing more precarious by the day.

“…management was confident they had the upper hand.”

Nevertheless, management was confident they had the upper hand. A rash of industry consolidations had left many suppliers at the mercy of fewer, but more powerful, masters. Newly consolidated retail chains exacerbated a tenuous situation by exerting increased pressure on suppliers to lower their prices. As the retailer’s fortunes dwindled, some vendors had already gone out of business, while others had been forced to file for bankruptcy.

Many vendors needed this account to survive and went to considerable lengths to be supportive, but even they had limits. Faced with diminishing sales, late payments, punitive charges, and arbitrary add-on fees, several suppliers finally had enough. Spending more money than ever chasing after a shrinking account, their efforts were rewarded with new demands and larger financial penalties. In desperation, a number of vendors pulled the plug and stopped shipping merchandise. The threat of a supply-chain disruption had suddenly morphed into a full blown crisis. Without an uninterrupted flow of goods, the retailer had little chance of survival. At last, an already lopsided relationship crossed the line. Ongoing capitulation on financial matters had seriously eroded many manufacturers’ profits. Excessive demands accompanied by promises of additional business in the near future were no longer credible. Vendors felt abused.

Punitive charges assessed for non-compliance with purchase-order agreements topped the manufacturers’ list of grievances. These were especially galling, because, in most cases, the charges were arbitrary, unfair, or simply wrong. Suppliers were riled by management’s tactics, and their failure to address systemic problems that were at the root of compliance discrepancies. Vendors complained that countless problems occurred at both the front and back end of most transactions.

At the front end, vendors were maddened by the company’s flawed forecasting system that caused ongoing manufacturing and shipping complications. Referred to as a purchase projection, suppliers were expected to reserve manufacturing time and lock in production orders on the basis of these projections, but management wouldn’t commit to purchasing the quantities manufacturers were told to produce and reserve. Although widespread inaccuracies ensued, suppliers were expected to absorb all the costs. The retailer made the mistakes, the vendors paid for them. It was an impossible situation.

At the back end, the retailer’s compliance program specified when merchandise was to be delivered and set the minimum percentage of an order that had to be filled. If the terms were not met, vendors were penalized. Manufacturers agreed they should be held accountable for their commitments but were outraged over how the program was administered and considered it a form of extortion. It was a powder keg that had finally exploded. Shortcomings with the retailer’s distribution system caused most of the problems. For example, if an order was split on multiple trucks, the percentage of the order filled was based solely on the first truck, resulting in suppliers being assessed a fee. If a shipment utilized multiple delivery methods, only one method was counted and, once again, vendors were fined. Or, if the manufacturer’s trucks arrived at the specified time, but the retailer was unable to unload them, they were also charged a late fee.

Even when suppliers had the proper documentation it took months to resolve discrepancies. Worse still, the retailer benefited from the float on their money for months at a time, while the charges remained in dispute. Vendors already saddled with declining sales had to digest significant administrative expense just to document the retailer’s mistakes. These charges were seen as a thinly veiled subsidy to insulate management from their own self-inflicted problems. Manufacturers felt cheated out of their money.

Before vendor relationships could be strengthened and shipments resumed, management had to demonstrate a sincere desire to change the way they operated. The situation demanded a sweeping goodwill gesture. Because nothing would garner as much goodwill as the immediate suspension of the existing compliance program, that’s what management did. They conceded the current program was inequitable and promised to fix existing problems before imposing any further penalties. Vendors were thrilled. They never expected such swift and decisive action. This tangible evidence of change laid the foundation for the beginning of a genuine partnership, one that was mutually beneficial.

Emotional-trigger research revealed how powerless suppliers felt to affect the decisions that impacted their own companies and how mistreated they felt by the retailer. These insights led to a series of new initiatives designed to reverse course and reopen the supply chain. Systems and logistical operations between manufacturers and the retailer were aligned for compatibility. Discipline-to-discipline planning sessions led to improved coordination, enhanced efficiencies, and fewer compliance discrepancies. A vendor advisory panel was formed to address shared concerns. The efforts paid off. The company was praised for admitting their mistakes and listening to vendor concerns. Within a year, management won the trust of suppliers, who applauded the integrity and respect with which they were now being treated. Although vendors recognized the company still wrestled with many challenges, a real breakthrough had occurred. Manufacturers no long felt alienated. Confident that punitive measures were a thing of the past, previously disenfranchised suppliers resumed normal shipments.

4. Understanding Analyst Expectations: A Growth Company’s Underperforming Stock

Organizations seeking to raise capital or put their company up for sale are particularly fixated on the need to demonstrate stock appreciation. Facing such circumstances, many executives battling depressed stock valuations that seem at odds with market fundamentals have struggled to overcome the resistance of influential analysts. Sometimes, analysts hesitant to recommend a stock articulate clear-cut reasons. At other times, their reasons are an enigma. When those reasons are based on gut feelings, they may be less forthright or willing to confront management directly. That was the case with an entrepreneurial start-up that skyrocketed to become a leading provider of security software with a decade.

Recognized internationally as one of the top in their industry, the company’s sales were soaring. Their award-winning applications were distributed worldwide. New product introductions were consistently well received, and the customer base was expanding rapidly. Accomplishments aside, the stock price remained unchanged. Management turned to emotional-trigger research to find out why analysts refused to award them a “buy” recommendation.

Analysts readily acknowledged the demand for the company’s high-quality products. But they had gnawing reservations about top management and were uncomfortable sharing their personal reservations with them face-to-face. Similar to so many start-ups that are the brainchild of a brilliant visionary, that same visionary was now running the entire operation. Analysts were concerned by the dearth of business experience, management expertise, and real world pragmatism. They felt the organization, staffed with and headed by technology wizards full of enthusiasm but short on maturity and discipline, actually threatened the company’s long-term prospects. To them, it was a high-risk proposition. After the dot-com bubble burst a few years earlier, hundreds of analysts lost their jobs. The experience left survivors chastened. They were more cautious than before and less willing to go out on a limb.

“By happenstance, the company had inadvertently created a second, customized business model that wasn’t sustainable.”

The company’s reputation for customer service was viewed as a two-edged sword. Analysts worried that new products, created to meet specific market needs, were mismanaged. They referenced numerous instances when customers called to say they liked a particular product and went on to inquire about the possibility of a customized enhancement. The tech staff was always accommodating. Their standard response was “No problem. We can do that for you.” Then they proceeded to make a “one off” enhancement for that client only. The enhancements were never incorporated in the overall product specifications, nor was the marketplace made aware the enhancements even existed. Consequently, the company was the big loser. Failure to leverage these product improvements resulted in the loss of all the incremental revenue such improvements would generate. Worse still, the company ended up with products that had different value to different customers. By happenstance the company had inadvertently created a second, customized business model that wasn’t sustainable. In spite of the organization’s impressive sales growth, the absence of professional leadership or operational efficiencies made analysts very uneasy about recommending the company. Yet rather than confronting management directly, they skirted sensitive personnel concerns choosing to take a more passive approach. They simply declined to rate the stock as a “buy.”

Once the emotional triggers that prevented analysts from supporting the stock were uncovered, management realized they had been operating against their own interests. Eager to position the company for a lucrative sale, they took decisive action. A new CEO with proven business credentials was hired to run the organization. Operational efficiencies were put in place to ensure product enhancements were properly managed. Although innovation remained the organization’s hallmark, measures were implemented to leverage revenue opportunities. Slowly the analysts took notice. Their recommendations became bullish. Within a few years, the stock had risen to a level consistent with the company’s sales growth. Within five years, the company was sold for several hundred million dollars.

Emotional-Trigger Research: Limitless Possibilities

In the Introduction we began with the assertion that customers act on emotion, and throughout this book, including the case studies presented in this chapter, we have repeatedly illustrated the truth of that assertion. In almost any business encounter, emotion, not logic, drives behavior. Whether you’re interacting with customers, employees, vendors, members, donors, strategic partners, suppliers, investors, board members, or analysts, remember one thing: they’re all people, and people are, have always been, and will always continue to be emotional beings. Understanding what motivates them on a visceral level provides the critical insights you’ll need to solve complex problems and develop the right strategies for future success. In addition to the examples we’ve already shared, emotional-trigger research has proven effective at increasing memberships, framing Six Sigma initiatives, instituting process re-engineering, and restructuring internal organizations. The applications are truly limitless because, regardless of your challenge, the right solution will always depend upon your ability to establish an emotional connection with your target audience.