TWO
The Business Code
At the heart of complexity lives simplicity.
Aligning a business, company, or team requires a clear and constant focus, continuous effort, and all the skills necessary to be a great leader today and tomorrow. Members of organizations and teams must be more engaged and committed than ever before. For this, they need as much information and development as their leaders do. Every member of every team or company has a role in ensuring that alignment exists.
Business has become ever more complex as the speed of change increases. Too often, we remain committed to old ideas and methods embedded in the last century's management thinking. The degree to which we've internally focused on the creation and maintenance of often-disconnected processes and systems adds to the misalignment of companies or teams.
The future seems increasingly unpredictable. Our sense of safety has eroded, and our expectations for stability are harder to fulfill. The promises of the past are vague remnants of motivations that are no longer credible and carry little influence in today's workplace. Many shifts in the workforce turned out to be greater than most people expected, thereby creating uncertainty.
Four generations are now part of an increasingly diverse workforce; they have differing perspectives and expectations. The global marketplace, once confined to geographic delineation, is melding and shifting. With it, a global workforce demands mobility and opportunity. The changing face of society is only outpaced by the changing face and increasing turnover in personnel.
Bookstores and the Internet offer endless products and streams of business ideas and approaches to leadership. The varieties and choices available for strategic implementation are mind boggling. If you add the availability of technology, information, and the speed of communication, it's easy to understand that the level of focus and commitment required to create and lead alignment can be overwhelming.
To confront this challenge, leaders need a systemic framework for understanding, assessing, and creating alignment. They and their teams and organizations require an approach that cuts through the complexity and eliminates the noise from multiple priorities, numerous initiatives, and the confusion of choices and options; an approach that provides a clear and simple roadmap to success.
The Business Code starts simply, letting us discover the richness of how business fulfills our needs. It allows us to connect the needs of the customer to our brand's intention as delivered through the products or services provided. Next, it connects the ways in which we lead and operate our businesses and shows how they can be aligned to become more effective and efficient.
There are four elements to this systemic approach: the customer, brand intention, culture and leadership (see Figure 2.1). The framework provides a measurable and observable means of articulating and aligning company culture to customer expectations. This particular alignment presents a significant challenge. For most leaders, their organization or team's culture is defined through values and beliefs, and then further interpreted by the individual. In meeting this challenge, the Business Code provides a comprehensive lens through which to view the patterns of behavior by which culture can be intentionally led. It provides a systemic approach to aligning internal behavior—how a company or team's members engage each other—to external behavior—how they engage the customer.
When the four elements of the Business Code are aligned, the result is the beauty of business. We can observe it and describe it intellectually. We can experience it and feel it emotionally. We can also see and feel when it is not present. When the components are aligned, the customer experiences satisfaction and trust. When there is misalignment, the customer experiences disappointment, anger, resentment, and mistrust. Similarly, the same experiences are apparent in teams and organizations, and inevitably influence the customer experience.
Figure 2.1 The Business Code
THE CUSTOMER
Jan Moore, an entrepreneur and good friend says, “Nothing happens until someone sells something. And nothing is sold until you have a customer to sell it to.” Jan's assessment has stood the test of time. Without customers, there is no business. Therefore, the first element of the Business Code is the customer.
A customer can be defined narrowly or broadly. Narrowly, a customer is the person who pays for your product or service. Broadly, a customer is any person who buys and receives or is affected by your product or service. Whichever definition you choose, a business requires customers—at least one. Too often, companies fail to clearly articulate and communicate who their customer is and what is at the center of that relationship.
One aspect of either description that is evident and doesn't change is that customers are people. In consumer markets that's obvious. In business-to-business markets and transactions, where the customer is another company or business, it's important to remember that the buying decisions are still made by people, whether it's one person or a group of people. In business-to-business selling, it is important to know who the decision makers are.
All customers make decisions based on a combination of logic and emotion. While we have an incredible ability to think logically, we act out of emotion. Beneath the surface are human desires, the root causes that motivate our actions. Understanding how these motivations affect a customer's decision to buy a particular product or service is at the core of creating customer satisfaction.
For example, a customer buying a car has many options. He may visit dealerships in search of the car of his dreams—a BMW or an Audi sports sedan or convertible. He not only wants to feel that he is accomplished enough to afford such a car—including the higher insurance rates and maintenance costs—he also wants to look and feel as if he can drive a car capable of fast acceleration. Emotionally, it's an important part of the image he wishes to present. He wants to test drive the available models to make sure they have an impressive sound system, the color is just right, and that he looks good in it. He expects to pay more to get what he wants, even if he has to order and wait for it. He has enough of a down payment to get into the car, yet is also considering a lease. He may be willing to make some compromises to get the car more quickly, yet is mindful not to let the allure of immediate gratification get in the way of getting it just right.
Another car shopper goes online and, rather than look for the car of his dreams, looks for something reliable at the best price. He visits sites that offer efficiency and effectiveness and allow him to make the fastest, most accurate comparisons. Relative to what he is willing to spend, he has a sizeable down payment and plans to pay the loan off as quickly as he can. While color and sound system may be considerations, they are not deal breakers. He is looking for the best price on a low-cost-of-ownership vehicle with high fuel efficiency and looks for an apples-to-apples comparison. He may be willing to make some compromises to get a car more quickly, yet getting the lowest price is foremost.
Both customers want to be satisfied with their choice. Each has clear criteria by which they define success. Each considers price and wants to get the most for his money. Yet their perspectives on what they're willing to spend and the value associated with it differ. One wants to look and feel good about being able to afford the car; the other wants to feel that he made the best choice of a car that fits his price. They take different routes to shopping and buying and have different approaches to how they will interact with the provider of their prospective cars. Each takes on similar yet different decisions, and each wants to feel satisfied with his experience. They may have similar ideas about what good customer service is, yet they have different expectations about the level of attention or knowledge they will receive from the seller. While they both may seek financing, they likely have different requirements.
Both customers are buying cars. We can readily see how they are alike. Relative to the particular car, each is shopping for a good deal and looking to get the most for his money. Each has requirements and criteria on which to base his decision. They are both motivated to shop and buy.
We can also see how they are different: They have different tastes, dissimilar styles, conflicting perspectives on value, and divergent buying habits. While they are both motivated, they are differently motivated. If we look more closely at each customer, we will likely find that the sources of their motivation, the desire each is fulfilling through the purchase of a car, are different.
In business, nothing is more important than understanding customer motivation. Although you may begin creating a new product or service without interfacing with a customer, you eventually find yourself seeing the customer at the core of your business. Even if you're like Steve Jobs, who believed that Apple would lead the customer, you still rely on customers for your success. The difference is how you go about it.
To know what the customer wants and how to deliver it, you have to understand what motivates their behavior. To know this, just look at yourself. We are all customers and are motivated by a basic set of needs. This is why you were able to identify with the two car buyers.
In the next chapter, we will explore what these motivations are and how to use them to better understand who customers are, why they act the way they do, and how to please them best. Alignment starts with the customer.
BRAND INTENTION
This next element of the Business Code depends on the first and is leveraged by our understanding of what motivates the customer. I call it brand intention. Brand intention is the thoughtful and deliberate delivery, through a product or service, of a promise to the customer.
Over the last several decades, we've devised many ways to define a brand, including market differentiator, value proposition, competitive advantage, mission, purpose, and value-add. Although brands were developed as symbols to distinguish one cattle owner's livestock from another's, it's used in business as a means to differentiate one provider's product or service through a name, trademark, or logo.
Brand statements typically represent promises and offers. How we receive them differs from how we experience intention. Promises are statements that are made. Intention is how the specific purpose is delivered. Intention is your perception of how well I deliver on my promise. It is the outcome of thoughtful and deliberate behavior.
Beyond a statement of promise, brand intention goes further. It answers the question, “Why is the customer spending their money with us and not our competitor?” It speaks not just to the promise; it also captures how customers experience the way the promise is delivered and their resulting level of trust. From a customer's perspective, brand intention reflects the quality of purposefulness through which the product or service is delivered.
Brand intention is so powerful because it fulfills a customer's desires and motivation. This is an important aspect of alignment. The brand intention tells the customer, at a conscious or subconscious level, that the need they are seeking to fill will be met. As we'll further explore in Chapter Four, each of the six distinct brand intentions connects to and delivers in response to an aspect of motivation. When an organization or team is aligned with its brand intention—to the promise and how it is delivered—the customer experiences it on an emotional level. This makes it a powerful source of competitive advantage.
CULTURE
The third element of the Business Code is culture, which for several very good reasons often presents some of the most challenging aspects of alignment. First, most leaders and the members of their teams and organizations struggle to define their culture. Second, most leaders are not trained or given the knowledge and skills to lead a culture effectively. As a result, they are left to teach themselves. Thus, most of their ability, in this critical aspect of leadership, is the result of trial and error.
Third, leaders tend to define their cultures by communicating its values and beliefs. While this is important, it's rarely articulated in a way that creates an understanding of how things should be done. This causes confusion and conflict over issues of role definition, power and influence, compensation and reward, decision-making, and the management of disagreements.
Culture defines how people treat one another, including the patterns and norms of behavior that members engage in at an individual and group level to achieve success. Culture defines acceptable and unacceptable behavior. When we talk about getting the right people on to the bus, culture describes what the bus looks like and how the people on it are expected to act. One aspect of great businesses is the alignment of internal behaviors to the external experience of the customer, and culture is the key influencer of how the customer is treated. When this alignment occurs, it creates incredible power.
This is the power conveyed by the alignment of Apple's culture to the experience of a customer visiting one of its over 400 worldwide retail locations. Apple places enormous emphasis on the expertise and competencies of its employees. Apple's culture emphasizes its capability to innovate and the degree to which its employees are expected to show their passion and expertise in everything they do. The company claims to be amazing and requires its retail sales employees to be analytical, tech savvy, and insightful. It demands that they learn, develop and inspire–that they be amazing.
These expectations are not lost on the customer. From the moment you walk into an Apple store, an employee, acting as an expert guide, asks why you are there and connects you with the person who has the knowledge to best help you. Behind each employee is a learning and development plan that is reviewed vigorously and which the employee must achieve to meet the expectations of the culture. The benefit results from advancing the employee's expertise and providing a positive customer experience. This is alignment. It is rare that the employee engaging a customer does not know how to answer the question or solve the problem, yet if they can't, they'll quickly connect you with someone who can.
A key aspect of the alignment of culture to brand intention and the customer is that how members of an organization or team behave toward one another is how the customer is treated. As an Apple employee, learning and developing is expected, and managers and employees are continuously engaged in that process. It is aligned to the approach they take with their customers. If an employee is not committed to this endeavor and is not willing to continuously learn and improve, they are not a good fit. Expertise and passion are requirements that are a part of the definition of the employee experience. They are also required aspects of the customer experience.
How learning and development is used within a culture is only one of many levers that influence the alignment of a culture and the experience of the customer. Chapter Eight provides other measurable and observable characteristics that will you help you better identify what is and is not aligned in your culture. It will also provide you with a set of strategies to better align your culture to your customer's expectations, increase your likelihood of success and your organization or team's performance results.
LEADERSHIP
The fourth element of the Business Code is leadership. Among a leader's many responsibilities, none is as powerful and integral to success as understanding culture. Therefore, the leader's behavior must be in alignment with the culture's expectations. Without this, it is virtually impossible to create and lead an aligned organization or team. As complex as the study of leadership is, the most straightforward definition of leadership is influencing others to act. Leaders are responsible for acting in a manner that clearly conveys how the intention of the business is implemented and ultimately how the customer is treated.
To influence culture, leaders primarily do three things. They role model acceptable behaviors, which define how individual and group success are achieved; they reinforce what is acceptable and unacceptable behavior; and they represent the reputation of the culture. As we'll explore in Chapter Ten, these basic aspects of aligned leadership are not to be taken lightly. The influence a leader has, formally and informally, can easily be undermined when a leader's behavior is misaligned.
Another aspect of a leader's influence that is often overlooked is how well aligned the leader's natural preference is to the strategies the group is undertaking. The way we behave comes from our psychological makeup and preferences. How we are wired directly impacts how we think strategically, as well as how we relate to the customer experience. This preference guides our beliefs about what, why, and how a product or service is offered and delivered to the customer.
The customer ultimately experiences the preferences of the leader. You don't have to look hard to find examples. Just consider Henry Ford, Oprah Winfrey, Bill Gates, Indra Nooyi, Richard Branson, Steve Jobs, Warren Buffet, Steve Wynn, Walt Disney, and Mark Zuckerberg. Each demonstrates their personal preference in how they lead, as well as the market strategies and brand intentions they pursue. For example, Howard Schultz, the CEO of Starbucks, believes that connecting to and caring for people is paramount to success. This not only extends to the strategies for how Starbucks engages its customers; it is also evident in the company's human resource strategies.
Schultz was born and raised in the Bronx, New York, where his family lived in a housing project. He often refers to his father, who struggled in low-paying jobs and had little money, no health insurance, and no workers’ compensation insurance when he got hurt on the job. In Starbucks, Schultz set out to build a company in which employees would be respected and well cared for. While the company's main goal was to serve a great cup of coffee and to connect and care for its customers, Schultz said he wanted to build a “company with a soul.”
Schultz's values and preferences resulted in a set of practices that are uncommon in retail businesses. Employees working at least 20 hours per week receive comprehensive health coverage for themselves and their families, as do unmarried couples. Along with stock option plans, employees are given a great deal of personal responsibility and treated with the respect that Schultz thought his father deserved and hadn't received. How employees are treated by supervisors and the benefits they receive result in high loyalty and lower turnover.
These innovations come from Schultz's life experience and personal preferences. They are evident in the company's strategies, including, in the early stages of the company's growth, never to franchise. This decision avoided any possible dilution of, or variations in, the company's culture and assured consistency in how both customers and employees are treated. In the case of Schultz and Starbucks, the alignment of a leader to the company's market strategy and culture is apparent. The influence of his leadership on the organization's performance is difficult to debate, and his reputation as a leader is undeniable. In 2011, he was named Fortune Magazine's Businessperson of the Year.
Aligned leadership is a key aspect of business success regardless of size. In a smaller company, the influence of the leader is more obvious and more easily observed and recognized. Just think about a small family business or partnership that employs only two or three people. Customers directly feel and experience the leader's influence in how they are treated and, subsequently, tie it to how the business and its leader are described.
As a company grows, the alignment of leadership becomes more challenging because different people in a variety of leadership positions bring their own perspectives, experiences, and personalities into the mix. Together, they have as great a role in consistently influencing everything from the customer experience to strategic implementation and the effects of role modeling and reinforcement of a company's culture as does the leader of a smaller business. Just as Howard Schultz sees the world through the lens of his experiences and preferences, so do the numerous leaders in a company the size of Starbucks.
Developing and teaching leaders how to lead in an aligned fashion and to act and make decisions aligned to the company's vision, strategy, and goals is one of the keys to success. After all, all eyes are on the leader, an aspect of leadership that can never be overlooked. It's not always about what a leader says, which undoubtedly is of great importance, it's about what a leader does.
Leadership is the fourth element of the Business Code. When joined with the elements of the customer, brand intention, and culture, leaders have incredible influence and often hold the key to alignment. As we'll explore in the next several chapters, a common thread that runs through the four elements of the Business Code is the shared human experience rooted in our motivations, emotions, and needs. While none of the four elements work without the others, teams and companies require aligned leadership to attain the highest levels of performance and success.
When the four elements of the Business Code come together, the power they create results in extraordinary performance.