The Agile Scaleup

Aggie 100

"...keeping you great" Ten Minutes with the Growth Guy

HEADLINES:

Aggie 100 Celebration -- today (November 29) Miner Corporation is celebrating their naming to the Aggie 100 list -- here's a link to the video they produced to celebrate the win. I thought the invitation, party, and video were good models for those of you wanting to celebrate a "win."

Day 2 Summary of Key Points from the Growth Summit:

Paul Orlafea, Founder of Kinko's -- Ideas and Savings, these are the two most important things leaders of growth firms must have!! His advice: close your open door, stop doing email (assistants can handle most -- and inexpensively from India!), and get more think time. Paul is so right -- what is a great idea worth to your venture? Yet, are you taking enough time to come up with them or are emails and interruptions getting in the way. His one idea for creating custom calendars gave Kinko's a $30 product that only cost $3. As for savings, this is the war chest you need when opportunity surfaces. In an earlier Insight it was suggested you take 5% - 10% of revenue right off the top and put it in savings -- you likely won't miss it.

"Kiss the hands that ring the cash registers -- Happy Fingers, Happy Registers" -- I smile every time I picture Paul standing on stage kissing his hand and sharing, in his classic style, the importance of just being nice. If you're mean to your people, they will be mean to your customers. Period. And don't answer your people's questions, because then they'll keep asking you!! Again, it's not good to be so valuable or available! Just be happy and come up with ideas. You have to love Paul and his style -- so simple and elegant at the same time. It was a 45-minute learn and laugh fest -- thanks Paul!

Fred Reichheld, The Ultimate Question -- OK, this was the most surprising session for me. This guy has his research down pat -- he started by showing that companies that focus on and generate loyal customers have 2.5 times the growth rate, industry after industry (with concise examples). THE KEY is giving managers the METRICS and MUSCLE to garner the same attention to loyalty as one might give to productivity, quality, speed, etc. And the key metric is the Net Promoter Score (NPS), which is calculated by just asking the customer one question "would you enthusiastically recommend our company to a friend" -- and he was specific about using a 10 point scale vs. 5 point; how what you label the scale doesn't matter; how to use the results to calculate your NPS; and that the only other question you ever need to ask the customer is "and if you didn't give us an eight or better, may we call you to discuss?" -- that's it -- forget all the other questions you're asking customers (he means on your standard customer satisfaction survey!).

Good Profits vs. Bad Profits -- Reichheld also drove home how companies must differentiate good profits from bad profits. I'm living this situation right now in India as I write this Insight. I lost my passport on a Kingfisher Airlines flight (the JetBlue of India). The airline went out of its way to find my passport, searching the plane twice, calling other offices at 3am in the morning, etc -- and then tracking me down and getting me my passport -- not in time to make my flight, but I had my passport. They went to great time and expense to help me -- and they moved quickly -- I'll remember this. In turn, I go back to the high-end hotel where we hosted our workshop to book another room -- and where we spent a nice chunk of change earlier in the week. It's 4am, I'm going to turn around and leave at 10pm, so we're talking 18 hours -- yet, they charge me for two full days. I've already discussed with my India partner about avoiding using their properties in the future -- and he's the one that reminded me "these are bad profits" earned at the expense of treating customers badly. Where are you earning bad profits? (and where has Gazelles earned bad profits -- would love your candid feedback).

Frank Muehleman, Dell -- Customer and Employee Feedback -- you've heard me preach how important it is to FORMALLY gather customer and employee feedback on a daily and weekly basis. Well, Michael Dell is back doing this with a vengeance. Checkout IdeaStorm -- this is Dell's new "community" where customers can provide all kinds of feedback -- and since initiating six months ago, over 500,000 posts have been made. Dell has created a similar site for employees. And Michael started back up his Friday morning meeting where these suggestions are vetted. Muehleman's presentation about the 10 keys to web marketing also has us looking at all the up-sell paths on our website (which we have none!) -- it was a real wake-up call for my team. Muehleman also emphasized how websites are becoming more commonly structured, with navigation in the left hand column and various resources in the right hand column. Again, we're going to act on these ideas. (Dell, thanks for being the main sponsor of our Growth Summit).

Kaihan Krippendorf -- The Art of the Advantage -- there's a reason Microsoft and other major firms are buying up all of this ex-McKinsey's time -- he's brought real-world examples, tools, and processes to the famous 36 Strategems of eastern warfare. What struck me was the importance of programming your brain with these 36 strategems, which will happen naturally if you utilize them quarterly as part of your strategic planning process. Krippendorf pointed out that the difference between Master Chess players and Grand Master Chess players is that the Grand Masters have four times the number of chess move patterns at their disposal. They are not any further steps ahead, just able to bring up a broader range of countermoves. To help you visualize and use these stratagems, Krippendorf has made them available on an interactive DVD which includes a powerful "stratagem selector" that aids in choosing the right six stratagems (out of the 36) depending on the competitive situation facing you and your company.

"Declare your Core. Core Customers, Core Competencies, Core Values.
And Stick to them. Study them, Act on them, Measure how you are doing on them. And Really start focusing on developing Loyalty among your Core Customers. That's where the Growth is. And it can be measured." I borrowed this overall Growth Summit summary from Michael Synk, our Memphis coaching partner, who sent this along to me after the Summit -- nicely stated Michael.

Next Summits: Sales and Marketing Summit, April 22 -- 23, Orlando, FL; Growth Summit, October 21 -- 23 (likely Atlanta, GA); National Australian Growth Summit, February 18 -- 20, Sydney, Australia.

Beat Dow Jones

"...keeping you great" Ten Minutes with the Growth Guy

HEADLINES:

The top customer satisfaction companies beat the Dow Jones by 93%, S&P 500 by 201%, and NASDAQ by 335% (more on this below) -- Customer service is back as a hot topic. And THE thought leader on the subject is John Dijulius, author of Secret Service: Hidden Systems that Deliver Unforgettable Customer Service and the soon to be released (Spring 2008, Wiley) What’s the Secret? To Being a World-Class Customer Service Organization. What I like about John’s work is that it’s highly practical, specific, and implementable -- not a bunch of feel-good platitudes -- check out his video, Tom Peters endorsement, client list (Starbucks, GE, etc).

December 13, DC, Dijulius half-day workshop -- John Dijulius is going to produce an interactive DVD and you can be one of the audience participants -- an opportunity for you and your team to learn from Dijulius -- $99 vs. the normal $595 fee -- limited to 40 participants given the size of the studio (same place as the Medvec taping) -- first come, first serve. Go to this link to sign-up. Outline of workshop under DETAILS below.

Back to the study -- to give me a break the week of Thanksgiving (U.S.) I asked John Dijulius if I could share one of his latest weekly insights where he highlights Claes Fornell’s article entitled "Customer Satisfaction and Stock Prices: High Returns, Low Risk." Here’s his insight -- worth the three minutes to scan.

Is an investment in customer service really worth it?

In an article titled "Customer Satisfaction and Stock Prices: High Returns, Low Risk," author Claes Fornell uses the result of extensive research and studies to prove that an increase or decrease in customer satisfaction not only greatly impacts each individual organization, but also has a significant impact on the future health of the economy. Fornell is the director of the American Customer Satisfaction Index, a leading indicator of consumer behavior measuring the satisfaction of consumers across the U.S. Economy.
 
His findings are consistent with previous studies indicating firms that have higher customer satisfaction are more likely to enjoy both a higher volume and more stable net cash flow. Their study proved investing in the leading ACSI companies consistently outperformed the market by considerable margins.
 
THE SMOKING GUN
Several studies were used comparing the top ACSI companies against the market with regard to stock performance over a six-year period (1997 to 2003) where the stock market had both ups and downs. The results were astonishing. You may have known the importance and benefits of providing consistent superior customer service, but I doubt you realized how significant it really is!
 
The top customer satisfaction companies beat the Dow Jones by 93%, S&P 500 by 201%, and NASDAQ by 335%.
 
The results conclusively show that customer satisfaction pays off in up-markets and down-markets. When the stock market dropped in value, the stock prices of firms with highly satisfied customers seemed to have benefited from some degree of insulation.
 
No one can argue that these results are extraordinary. There are very few actions or strategies a business can take, if any at all, that can produce these kinds of financial results. This is proof that there is a significant return on investment in improving an organization's level of customer service. In the accounting world, the economic value of satisfied customers seems to be systematically undervalued even though these customers generate substantial net cash flow with low risk. Firms that do better than their competition in terms of satisfying customers (as measured by ACSI) generate superior returns at lower systematic risk.
 
It is conclusive that organizations that consistently deliver superior customer service generally enjoy repeat business, lower price elasticity, higher prices, more cross-selling opportunities, greater marketing efficiency, and a host of other things that usually lead to earnings growth. In addition, several research studies find that higher customer satisfaction has a positive impact on employee loyalty, cost competitiveness, profitable performance, and long-term growth.

Key Learnings from Growth Summit

"...keeping you great" Ten Minutes with the Growth Guy

HEADLINES:

BMW convertible purchased for Employees -- Brad Mullahy, President of Cary, NC-based Synaptis, sent me a note earlier this week "just thought I would share a recent article about our latest quarterly theme. After our visit to your Rockefeller Habits workshop in Atlanta we identified we had to build our contractor pool. We hit our goal (20 new contractors) and everyone is driving the (BMW) convertible." Brad purchased Synaptis in 2003 after revenues dropped in half from $9 million to less than $5 million and losing $50k/month. He's since turned it around, generating 20% plus profit margins, has doubled revenue again, and is driving the change with quarterly themes -- here's the article which discusses this turnaround and the latest theme where he purchased a BMW for the employees to drive -- congrats Brad!
 
FYI -- Calgary, Seattle, Atlanta, DC -- last Rockefeller Habits workshops for 2007  - great way to prepare for 2008. 

Lessons from the Growth Summit Day 1 -- I'm in India this week and was reminded by our Indian marketing partner, Knowledge Capital, that I've not yet provided a concise summary of the key lessons learned from the Growth Summit -- my bad -- so here they are -- useful as a review for those that attended but more critical for those who didn't -- here's a summary from Day 1 of Growth Summit -- Day 2 next week:

Robert Bloom -- Inside Advantage -- I already summarized his critical lessons a couple weeks ago -- his book "Inside Advantage"  is the finest "how to" book I've ever read.   Read it!

Geoffrey Moore -- Core vs. Context -- early in the genesis of your business, most of your activities were spent on the core of your business i.e. delivering a great differentiated product or service to the market. However, as you grow, you and your best people get sucked into spending your time on "context" activities i.e. making sure A/R is collected, dealing with employee turnover, etc. It was a wake-up call for my team. Our core is delivering highly PRACTICAL tools for growth firms. Moore's presentation has made my team focus on shedding/outsourcing more of the context activities (I hired an Indian assistant this week) and getting back to what has made us great. It's all about what you spend your week doing! The key book is Moore's "Dealing with Darwin."

Geoffrey Moore -- Five Types of Marketing Activity -- here's a link to Moore's "Marketing Matrix" -- this isn't in any of his books. It details the five types of marketing activities, how to measure them, who has accountability, types of campaigns, etc. -- this is powerful stuff. And he pointed out that mid-market growth firms should spend most of their time on the Product Marketing and Segment Marketing activities. This was a wake-up call, again, to my team. We have a tendency to spend most of our time on Field Marketing activities. You're going to see us make some adjustments to our priorities.

Robert Cialdini -- Influence, the Art of Persuasion -- this was THE finest presentation I've ever seen and the conference attendee ratings supported this!! My team is taking Cialdini's Six Principles of Persuasion (here's a link to the list on Wikipedia) and applying them to all our messaging. The biggest one for us was the importance of selling based on avoiding pain vs. gain i.e. what an amazing example when he showed the two different Bose radio ads. The one ad announced the "New" Bose radio. The second ad simply changed "New" to "Hear What You're Missing" and it increased sales 40%. It's the fear of loss that drives more decisions than the prospect of gain -- huge, huge lesson in influence. Get his book "Influence" and study it  -- and keep his summary card handy, for those that picked one up at the Growth Summit.

Cialdini two-day workshop -- this material was so powerful we're looking at hosting a two-day workshop with Cialdini's people -- let me know if you're interested in participating -- limited to 30 people -- my team wants two intense days to really apply his influence approaches -- price will be $995/person.

Steven Berlin Johnson -- Emergent Systems -- in essence, the four hottest "businesses" on the planet all use emergent systems theory to drive their success -- Google, My Space, Facebook, and Wikipedia. This means all us "old timers" had better catch on and catch on quickly. Again, my team is exploring specific ways we can make our websites and tools more emergent -- and you're going to see us using more emergent ideas in designing our future Summits i.e. we've heard you loudly -- there is going to be some built in time for you to interact with the other participants besides your own team. In essence, emergent systems create a platform driven by a handful of organizing rules and then the participants are free to create! Read Steven's book "Emergence."

Day 2 Summary next week!

Baja Racing

"...keeping you great" Ten minutes with the Growth Guy

HEADLINES:

30 Initiatives "Kakushin" theme for NationLink Wireless -- a Japanese management concept of radical productivity improvement, Andy Bailey, president of NationLink, sent me some photos of their Sumo wrestling celebration held in their parking lot on November 2. Celebrating over 30 productivity improvement initiatives for Q3, they are on course to exceed their 70% growth rate target for 2007. Initiatives included:

1. Implementing the TopGrading hiring program
2. Starting a new "weekly" sales-focused meeting in addition to our group huddle
3. Outsourcing our PR efforts rather than "struggling" with it ourselves
4. 100% use of our CRM sales opportunity program.
5. Implementing a DISC profiling program to tell us "why" people do what they do.
6. ID’ing and fixing the top three "time suckers" in our support group.
7. Making sure "every" person has two monitors and the fasted PC we could find.

3 days of wild off-road adventure driving starting in Cabo San Lucas, Mexico and ending in Loreto with highly seasoned Baja off-road driving experts, Wide Open Baja. Gazelles is partnering with Maverick Business Adventures to offer their first "Ultimate Baja Experience" -- limited to 26 CEOs and entrepreneurs, I think it’s important that business leaders play hard and work hard together (no, I’m not getting a free trip -- just thought this would be neat to promote since I’m always writing about such serious business stuff). The founder, Yanik Silver, is a serial entrepreneur and "adventure junkie" who knows how to plan an event -- Jan 29 - Feb 2 which includes an optional Super Bowl party. And you should see the specially equipped Baja racers you get to drive -- details under DETAILS below.

9 things to buy for the Billionaire on your holiday list -- Jonathan Lieberman, of Focalex fame (all of you who have attended a Rockefeller Habits workshop have seen his short "Fast and Furious" theme video), has a new firm called Deal Locker, which is a discount code and coupon sharing service for online shopping (hey, entrepreneurial firms are always looking for the best deals). Anyway, for fun he’s created this Billionaire gift list -- enjoy and start shopping early -- our economy needs it!!!

Celebrating the "Unknown Entrepreneur," -- the Private Company Index, a Gazelles partner, is doing a pitch to the national media aligned with Veteran's Day. Reporters are expressing interest, but we need your help. The concept -- Celebrating the "Unknown Entrepreneur"

• The entrepreneur who started a company, grew and sustained it for a while, but ultimately closed it (doesn’t mean it failed).
• The angle is that these entrepreneurs worked to launch a company that, for a time, provided jobs, innovative products/services, and stimulated local/regional economies.
• In a nutshell, leaders of these closed companies should be recognized for their collective contributions and paving the way for today's companies. We'd like to identify any entrepreneur CEOs who are currently running their second or third (or fourth +) business. Please let us know who you are!

Here's a link to recent article about lessons from failed companies.  We're not pitching this exact angle, but you can see that reporters are willing to write about it.

Perform or Perish

"...keeping you great" Ten Minutes with the Growth Guy

HEADLINES:

Perform or Perish -- this is the cover story of the current BusinessWeek issue (Nov 5) that mentions Geoff Smart's Topgrading methodology being used to assess CEOs of private-equity backed firms. It describes in the article the traits of those CEOs that succeed vs. those that tend to fail -- there's a big mess in the private equity markets -- here's a link -- NOTE: Geoff Smart is hosting his annual one-day Topgrading workshop Nov 6 in Denver -- and yes, its always in Denver, since that is where he lives -- and yes, just once/year (he's in huge demand). If you need to hire even one person in the next 12 months, get someone to this workshop -- those that bet big bucks on important hires trust their methodology, so no reason to use something inferior.

The Inside Advantage -- for over a decade I've been looking for this book -- a book that provides a simple process for nailing down the Sandbox and Brand Promise part of our One-Page Plan AND gives some practical insights into how to make this strategy "remarkable" -- a Seth Godin idea. Robert Bloom has done just this in his new book "The Inside Advantage: The Strategy That Unlocks the Hidden Growth in Your Business."  It is also one of the best written "how-to" books I've ever read.  Here's a link to getting the book on Amazon.

Southwest, BMW, Perrier, TGI Fridays -- and tanning salons and ball bearing manufacturers -- they have all built their growth strategies using Bob Bloom's process. A 73 year-young retired US Chairman and CEO of Publicis Group, it was in Bob's offices in Dallas that the first plans to launch Southwest Airlines were made -- and it was Bob's firm that created the "LUV" promotion.

"Who" is more than a demographic -- Bob's "Who, What, How, and Imaginable Acts" Growth Discovery Process keeps the strategy process simple, yet not so simple that it becomes meaningless. For instance, he's right in that most of us describe our customers insufficiently using simple demographic descriptions i.e. 25 -- 40 year old males; or chemical manufacturing firms in the Northeast. His methodology takes you beyond these simplistic approaches and provides real teeth for describing your customers, products/services, and the methods for communicating your value proposition. I've provided a detailed example under DETAILS below -- the one Bob shared at our Growth Summit in Vegas.

TIME Magazine's "Heroes of the Environment" features long time Gazelles' client Rory Stear, founder and Chairman of Freeplay Energy, and his lovely wife Kristine Pearson, founder of Freeplay Foundation. They manufacture and distribute the hand powered radios bringing education to remote parts of the planet (and to Home Depots near you!). They are truly making a difference in the world -- congrats Kristine and Rory. Here's a link to the story.

Top Five Fastest Growing PCI (Private Company Index) Firms Announced -- in partnership with Gazelles, Stephen Watkins, CEO of Entrex, announced the top five Q3 growth firms -- ABC Packaging Direct, Indigenous Designs, Kindermusik, NouvEON, and TicketCity.com -- here's a link to the winners -- and a place for you to sign-up your firm -- you simply report anonymously your revenue each month to be included in this Index that the media is recognizing as the definitive measure of private company performance in the economy -- we owe it to our world to let the markets know the importance of private firms in the economy -- sign-up now. And check out Stephen Watkins interview on Fox Business News on Monday.