Posts Tagged ‘General Motors’

LONG-TERM VS. SHORT-TERM

September 30, 2009

Every news outlet reported today on GM’s announcement to kill another of their brands, Saturn.  It seemed by everything I’ve read that Penske buying Saturn was a “sure thing”, but seems they’ve had second thoughts.  Now the brand that pulled-off one of the marketing coups of the century, by turning a car recall into a party with their first “Saturn Homecoming”, is closing after 23-years in business.  Guess GM had to make the move, but doesn’t it make you wonder why they were running so much advertising for the brand knowing they could be scuttling it any minute?  That’s what free government money gets you.  No accountability!  Maybe we are seeing a little of that in our business too.

One of the lessons they teach in the military is to “Prioritize Long-Term Over Short-Term Goals”.  They preach the same lessons in most MBA programs I’m sure, although it would seem that the folks on Wall Streethave a little trouble keeping those straight.  Anyway as an example in LT. CMDR. Jon Cannon’s book, “Leadership Lessons of the Navy Seals”, he talks about tracking a dozen terrorists in a particular region of the world.  If the terrorists knew the Seals were watching, they would pull up stakes and move.  If you take out only one or just a few of them by moving too quickly, the troops risk of missing the others and giving them a chance to re-group.  The solution of course is to wait for the opportunity to take out all 12 terrorists simultaneously.

In our business today, we are seeing a lot of short-term versus long-term thinking and this is no way to succeed!  To go back to the military for a second, sure there are times when short-term is all you can think about.  Trying to survive in a fox hole surrounded by enemy troops during the Tet Offensive would probably be one of those times.  But once that enemy has been pushed back past a safe perimeter, it is time for a long-term plan to win the battle…then the war.  That was probably our problem in Vietnam, and now.  The U.S. didn’t understand the loses Ho Chi Minh was willing to take.  They didn’t really calculate how many years the Vietnamese people had been at war, how extensive their tunnels, supply lines and fortifications were.  Instead we just had what we believed was a long-term strategy, “Stop Communism”.   The American people really didn’t understand what that meant. 

Back in the day, record labels let artists take time to develop.  An act wasn’t expected to break until their third or fourth album.  Promoters, managers, and agents used to look at a band and say “in 10-years they will be playing arenas.”  Now we expect that by an artist’s second tour.  Jazz Fest, Coachella, Warped Tour, all great businesses that we admire.  All lost money for their first few years.  Sure we all get lucky sometimes as Tom Petty once said, but mapping out your long-term goals with those you work with will give everyone a sense of purpose and direction.  Bump in the road, you can change course but the long-term plan is still the mission.  There is nothing worse for moral than your team hearing about your company’s plans, directions, new products, etc, from someone other than you.  How many times lately have you heard from employees at certain companies, “what do I know, I only work here?”

Quarterly earnings are for chumps.  Sure leaders have to pay attention to them, especially at a publically held company.  But for a second think about the beginning of Jack Welch’s tenure at General Electric.  Forget whether you think he did a good job, whether he cooked the books, whatever.  At first, Welch was far from the shoe-in for the job.  Once he got the job, he was going to take GE in places it had never been before and at the same time sell-off parts of the company that made them who they were (such as small appliances).  Selling Wall Street on Welch’s long-term plans for GE wasn’t easy.  You can imagine the look on investor’s faces the first time they heard the words “GE Capital”.  Making investors and Wall Street believe in his long-term plan is exactly what Welch did.  He showed how with investment (we won’t call in sacrifice) in the future… and education to his team, the street, investors, the press, and anyone who would listen, the long-term goals of transforming GE could be achieved thereby making it more profitable for years to come.   

No reason why you can’t try that today.  Instead of the accounting person in your office asking for your yearly or quarterly numbers…how about a 5-year plan?  And not just the numbers, but how you plan on achieving those numbers?  When Michael Rapino first took over what is now Live Nation he spoke a lot about “value proposition”.  Michael told us how he was going to re-invest in the customer experience.  Then Wall Street and quarterly numbers got in the way and the new message became…”well everyone has at least one or two artists they want to see in a year”.  I don’t know about you, but the Value Proposition stuff sounds better to me. 

Speak with you soon…

Jim

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CUSTOMER SERVICE CHAMPS

February 24, 2009

First, did you all catch the Senate hearings today on the Live Nation / Ticketmaster merger?  It was weird seeing people you have known well for 20-years testifying on Capital Hill.  Thought Irving was…well Irving and handled himself well.  Seth Hurwitz did a really good job.  Well spoken, facts at the top of his head, he represented the independent promoters well.  Although most senators present seemed to be negative towards the merger, it will probably still pass scrutiny, so everyone keep moving forward. 

My friend Scott Perry who writes The New Music Tipsheet http://www.newmusictipsheet.com/ sent a note about the March 2nd issue of Business Week.  The cover has SPECIAL REPORT printed on the top.  The topic, “Extreme Customer Service, In A Tough Year, 25 Companies That Get It Right”.  So what can we learn from these companies?  Just looking through the list will probably give you some ideas.  I’ve added some fun facts from the Business Week article to help.

  1. Amazon –“Some 30 % of sales come from outside retailers who sell goods on Amazon.”  Although there is more to that paragraph, you can take a lot just from that one sentence. 
  2. USAA Insurance –“Financial services firm for military families handled 150,000 catastrophe claims in 2008, double its average, as events such as Hurricane Ike destroyed customers’ homes and autos.  Still, USAA retained 96% of customers”
  3. Jaguar – “…Jaguar’s field teams for customer service were recently ranked best in the auto industry by the Nation Automobile Dealers Assn.”
  4. Lexus “…awards cash each year – as much as $50,000 – to dealers who have the best new service ideas.”
  5. The Ritz-Carlton – “To lure corporate event planners worried about high-end confabs amid the recession, Ritz will donate 10% of corporate meeting fees to charity.”
  6. Publix Super Markets – “To ensure customers always find what they come looking for, upscale Florida-based grocer Publix adopted an “automated replenishment” system in 2008 for fresh items.  Scanners indicate when inventory levels are low, and software automatically orders replacements.”
  7. Zappos.com – “With no monitoring of call times and no scripts, call centers have so much power it’s critical to make sure they’re a cultural fit.  To do that, CEO Tony Hsieh offers new customer service agents $2000 to leave the company after an initial training period if the new hires don’t think they mesh with Zappos’ zany culture.”
  8. Hewlett-Packard – “In 2008, Hewlett-Packard opened eight new customer service centers worldwide, including two in the U.S.”
  9. T. Rowe Price – To meet the customer service questions that flooded the company following the start of the financial crisis, “the company tapped 300 employees who formerly worked the phones to help meet call demand.”
  10. Ace Hardware – “…rolled out new technology that analyzes past shopping patterns to tell store managers what time of day is quietest for tasks like shelving products and cleaning rest rooms.”
  11. Key Bank – “In the past year, the bank unveiled new online tools that give entrepreneurs many of the cash-management services long reserved for large companies…”
  12. Four Seasons Hotels & Resorts – “…is outsourcing laundry to third parties at some properties and combining some hotel management roles to help save labor costs.”
  13. Norstrom – “Nordsrom’s famous return policy lets customers return any item at any store…”
  14. Cadillac – “Despite General Motors’ cash crunch, Cadillac has not scalled back on guaranteeing loaner cars to customers while their cars are in the shop.”
  15. Amica Insurance – “…CEO Bob DiMuccio says what sets the company apart is decades of investment in the staff, which has a turnover rate of less than 7%.”
  16. Enterprise Rent-A-Car – “…management pay and promotion are directly related to a store’s service performance.”
  17. American Express – New compensation model for call center agents…”offer them incentives tied to satisfaction scores and the flexibility to trade shifts.”
  18. Trader Joe’s Supermarket – “Some 99% of employees work in the stores, and even CEO Dan Bane doesn’t have an assistant.”
  19. Jetblue Airways – “…Jetblue created the industry’s first Customer Bill of Right – which includes providing compensation for passengers affected by problems caused by the carrier.”
  20. Apple – “Last year the company posted the largest one-year increase ever in the University of Michigan’s closely watched American Customer Satisfaction Index.”  Can you say Genius Bar?
  21. Charles Schwab – “A push to reduce the number of steps it takes to open new accounts has helped to shorten some call times, freeing up reps to answer calls faster.”
  22. BMW – “Now BMW ties rewards to how well dealers look after dissatisfied customers.”
  23. True Value – The company is expanding its online survey capabilities.
  24. L.L. Bean – “A simplified software system for entering orders has greatly reduced the training time for new hires.” 
  25. JW Marriott – “… tried to improve service by cross-training employees such as administrative assistants, who have been taught to serve food at banquets.  That keeps service leves high without having to hire more staff.”

Here is the short list of what I took from the top 25.  Some are the same old themes you always hear from me… I’m sorry, but it’s what I see above.

  • Use technology to serve customers, employees and save money
  • Hire the right people
  • Train your employees properly
  • Provide generous compensation packages for employees tied to customer satisfaction, not just sales
  • Have a philanthropic side that matches your customers’ concerns
  • Don’t keep customers holding!  Have a person answer the phone, not a machine
  • Treat your customers like gold…because these days they are worth a lot more

Talk with you soon…

Jim

OPEN LETTER TO DETROIT

February 17, 2009

The top news story around the U.S. today was General Motors and Chrysler’s presentation of their turnaround plan, and the need for an additional $21.6 billion in federal loans.  Of course everyone knew the car companies were coming back to Capital Hill with their hand out.  The question is, are they really making the changes needed to be competitive? 

Based on the advertising the big three American auto companies have been running, change isn’t coming fast enough…even from Ford who hasn’t taken money yet.  Why would car companies talk about vehicles being sale priced but  then “exclude all hybrid models”?  These are the same vehicles they are supposed to be promoting!  Isn’t the idea to sell as many cars as possible?  Wouldn’t sale pricing the Ford Escape Hybrid make sense even if that model is selling well?  If you are Ford, don’t you want as many on the street as possible?

So here is the deal…The Agency Group Events & Entertainment (http://www.theagencygroupevents.com)  is producing “The Great American Food Festival” (working title) which brings together the best in classic American food and entertainment.   Hosted by Bobby Flay, guests will sample the best hot dogs, hamburgers, pizza, barbecue, and ice cream in America, while being entertained by celebrity chefs and great musicians.  The event will feature the best food and music in America, all together in one place for the first time ever.  Our inaugural event takes place on Saturday, June 13th at the Shoreline Amphitheatre outside San Francisco.  We are offering “Presenting Sponsorship” to Detroit at NO CHARGE!  That’s right, American Auto can sponsor the event by just “promoting it as a place for consumers to see first-hand the changes they are making.” 

Once we knock June 13th out of the park, count on a full-blown tour in 2010.  Detroit, it is yours strictly on barter…NO SPONSORSHIP FEE!

For more information, please call me at (310) 385-2800.

Thanks and talk with you soon…

Jim