Harvard’s #1 Strategy Guru: “The key decision to make your business excel”

Monday, December 3rd, 2012

Harvard’s #1 Strat­egy Guru: “The key deci­sion to make your busi­ness excel”

Mon­day, Octo­ber 29, 2012

by Dan Richards, Cli​entIn​sights​.ca

Com­pe­ti­tion has brought many once-dominant names to the brink of sur­vival– think Gen­eral Motors, Kodak, Sears and Xerox. There’s an impor­tant les­son here that advi­sors ignore at their peril.

“For your busi­ness to thrive, you shouldn’t com­pete to be the best. Rather, you should com­pete to be unique.”

That was the key mes­sage deliv­ered at a recent talk by Har­vard Busi­ness School’s Michael Porter. The author of 18 books on strat­egy and six-time win­ner of the award for best Har­vard Busi­ness Review arti­cle of the year, Porter is today’s undis­puted lead­ing voice on com­pet­i­tive strat­egy and positioning.

And he had an impor­tant mes­sage for finan­cial advisors.

The flaw with being the best

Porter began by address­ing the flaws with the goal of being the best, a notion pop­u­lar­ized by for­mer Gen­eral Elec­tric CEO Jack Welch, whose dic­tum was to exit any busi­ness in which GE couldn’t be num­ber one or two in mar­ket share.

Porter pre­sented a dif­fer­ent view. The notion that you have to be the best comes from the world of sports and war, where there is one win­ner. The prob­lem with that “win­ner take all” mind­set is that the field is lit­tered with the losers, with only one win­ner emerg­ing. The bat­tle to be the best also leads to a focus on oper­a­tional excel­lence, where busi­nesses strive to out-execute, doing the same things as their com­peti­tors, only better.

There are two big down­sides to this approach. First, given the grow­ing focus on indus­try “best prac­tices”, this can be a dif­fi­cult strat­egy to sus­tain over time. And sec­ond, focus on oper­a­tional effi­ciency alone can lead to a down­ward spi­ral of price com­pe­ti­tion as firms try to squeeze other entrants by cap­i­tal­iz­ing on their lower cost structure.

In Porter’s view, a bet­ter anal­ogy comes from the per­form­ing arts, where you can have many out­stand­ing enter­tain­ers and actors, each build­ing his or her own dis­tinct audi­ence. And by hav­ing mul­ti­ple per­form­ers thriv­ing, they expand the total audi­ence as a result.

And he pointed to retail­ing, where it’s pos­si­ble to have suc­cess­ful com­pa­nies as dif­fer­ent as Wal­mart and Costco on one hand and Tiffany’s and Coach on the other. The thing that suc­cess­ful retail­ers have in com­mon: They have homed in on a dis­tinct audience.

The prob­lem with IKEA

Porter used IKEA as an exam­ple, a com­pany on everyone’s list of retail suc­cess stories

But Porter hates IKEA – he hates the long drive to get to their stores, the huge park­ing lots, the unend­ing wind­ing trek inside the store with no abil­ity to cut it short, the lines to pay, the trek to get the fur­ni­ture home and then the has­sle of assem­bling it. If it was up to him, he would never set foot in IKEA again..

But when his daugh­ter was a uni­ver­sity stu­dent in Wash­ing­ton DC, she loved IKEA — when­ever he vis­ited her dur­ing his trips to Wash­ing­ton, she asked him to rent an SUV so that they could make an IKEA run for her apartment.

Porter’s point: IKEA isn’t con­cerned in the slight­est that he hates shop­ping there, because he’s not its tar­get con­sumer. What IKEA cares about is that it’s put together a unique value propo­si­tion that appeals intensely to his daugh­ter and her friends – because they’re the audi­ence it’s targeting.

“Are you Sears or are you Target?”

The advan­tages of hav­ing a nar­rowly tar­geted audi­ence are indis­putable. Think suc­cess­ful retail­ers: Unique niche play­ers are the first to come to mind — Apple Stores, H&M, Lul­ule­mon and Zara. Even within the realm of mass retail­ers, look at the suc­cess sto­ries of upscale entrants Bloom­ing­dales, Nord­strom, Tar­get and Neiman Mar­cus at one extreme and lower end retail­ers such as Win­ners and dol­lar store leader Dol­larama at the other. These each deliver a unique value propo­si­tion to a tar­geted audi­ence – and present a dra­matic con­trast to the strug­gles of Sears and JC Pen­ney in the U.S. and the Bay in Canada that cater to every­one and have strong appeal to no-one.

The prob­lem is that most advi­sors look much more like Sears than Tar­get — fail­ure to be unique is arguably the biggest thing hold­ing most advi­sors back. Indeed, when I ask advi­sors how they’d respond to a prospect’s ques­tion about what sets them apart, here are the most com­mon answers:

“com­mu­ni­ca­tion”

“ser­vice”

“our peo­ple”

“our focus on planning”

“putting clients first”

“a dis­ci­plined invest­ment approach”

“our con­ser­v­a­tive philosophy”

While all of these traits are impor­tant, the dif­fi­culty is that they fail to be dif­fer­en­ti­at­ing – if every­one uses the same words to describe how they work, nobody stands out.

What you do – or whom you do it for?

Note that all these answers focus on what advi­sors do rather than whom they do it for. Most advi­sors are gen­er­al­ists, deal­ing with busi­ness own­ers in the morn­ing, clients plan­ning retire­ment at lunch and retirees in the after­noon. That’s because this is how most advi­sors started in the busi­ness – try­ing to appeal to as broad a mar­ket as pos­si­ble and indis­crim­i­nately work­ing with any client who’d have them.

That may have made sense when advi­sors were start­ing out – but all too many advi­sors have failed to evolve, con­tin­u­ing to use the same approach as when they began. In fact today the pri­mary basis on which most suc­cess­ful advi­sors tar­get new clients is based on min­i­mum assets and price sen­si­tiv­ity, almost never by need. And by try­ing to serve every­one, advi­sors are unable to fine-tune their prac­tice to the spe­cific needs of any one unique group.

Three things hap­pen as a result:

1. Advi­sors fail to develop spe­cial­ized exper­tise and oper­a­tional effi­cien­cies that come from focus and that would allow them and their team to develop a unique, tar­geted value propo­si­tion in their marketplace.

2. Con­se­quently, they fail to serve any­one excep­tion­ally well – and end up with clear com­pet­i­tive differentiation

3. The out­come of which is that advi­sors strug­gle to charge a pre­mium price and are unable to build a strong rep­u­ta­tion and get word of mouth going for them, the most pow­er­ful form of mar­ket­ing there is.

Get­ting there from here

The chal­lenge with a focused, unique value propo­si­tion is that it entails mak­ing trade-offs; to serve one group excep­tion­ally well, you have to decide to de-emphasize other groups.

And Michael Porter pointed out that peo­ple resist mak­ing trade-offs: “Peo­ple hate to choose” he said “because in choos­ing, they focus on what they give up rather than on what they gain.”

Porter fin­ished by sum­ma­riz­ing the essence of suc­cess­ful strat­egy that results in supe­rior performance:

1. By nar­rowly defin­ing whom you work with and the needs you address, you can achieve com­pet­i­tive advan­tage within the group on which you’ve cho­sen to focus

2. As a result, you cre­ate supe­rior value for your tar­get customers

3. And you cap­ture some of that value for yourself

After Porter’s talk, I spoke to a Chairman’s Club pro­ducer at a bank owned firm who has a tra­di­tional gen­er­al­ist client base – but who espe­cially enjoys deal­ing with suc­cess­ful entre­pre­neurs and their mul­ti­ple hold­ing com­pa­nies as well as com­plex suc­ces­sion issues. That’s also where he feels that he pro­vides the clear­est, most con­crete value.

This advi­sor has no plans to aban­don the hard-won clients that cur­rently pay the bills. What he is look­ing at, how­ever, is a three year plan to shift the focus of the new clients he attracts to con­cen­trate on entre­pre­neurs. That deci­sion will shape the exper­tise he builds on his team, how he orga­nizes his prac­tice and where he focuses his net­work­ing efforts and mar­ket­ing investments.

You don’t get to hear Michael Porter every day – his talk was the keynote at an alumni day spon­sored by the MBA pro­gram at the Uni­ver­sity of Toronto, where I’ve taught for 20 years. Indeed, one of the other atten­dees told me he’d grad­u­ated from Har­vard Busi­ness School 15 years ago – and heard more from Porter in his 90 minute talk than he had in the entire two years doing his MBA.

The lim­ited oppor­tu­ni­ties to hear from today’s #1 thinker on strat­egy makes it all the more impor­tant that you pay seri­ous atten­tion to his mes­sage. If you’re frus­trated by the fail­ure of your busi­ness to excel, con­sider whether your prob­lem may be that you’ve fallen into the trap of putting too much focus on oper­a­tional effi­ciency and being the best — and whether you need to focus instead on being truly unique.

That’s the advice Michael Porter pro­vides to the large multi-national com­pa­nies that pay his mil­lion– dol­lar con­sult­ing fees – and chances are that’s the advice he’d give you as well.

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Tags: Analogy, Brink, Competitive Strategy, Dictum, Downward Spiral, Financial Advisors, General Electric, General Motors, Harvard Business Review, Harvard Business School, Losers, Michael Porter, Mindset, Operational Efficiency, Operational Excellence, Peril, Price Competition, Sears, Time Winner, World Of Sports
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Deliver Common Services in an Uncommon Manner

Wednesday, October 24th, 2012

by Anthony Lam, The Covenant Group
Although they may not real­ize it, the major­ity of com­pa­nies are actu­ally in the indus­try of client ser­vice — in com­par­i­son, their prod­uct offer­ings and sec­tors are minor details. The level of ser­vice that is offered in the forms of prod­uct qual­ity, pre­sen­ta­tion, avail­abil­ity and client sup­port is what usu­ally makes some­one choose to work with one orga­ni­za­tion over another. Essen­tially, the ser­vices and prod­ucts you offer mat­ter less than deliv­ery, which car­ries much more weight in a client’s deci­sion to begin or con­tinue doing busi­ness with you.This is a topic that gets a lot of atten­tion in the book Uncom­mon Ser­vice, co-authored by Anne Mor­riss, the Con­cire Lead­er­ship Insti­tute co-founder and chief knowl­edge offi­cer, and Frances Frei, a pro­fes­sor of ser­vice man­age­ment at Har­vard Busi­ness School. As they note, the way in which we serve each other plays a much big­ger role in push­ing the econ­omy for­ward than what we make.

I think this quote from Mor­riss and Frei sum­ma­rizes my point pretty well: “It’s easy to throw ser­vice into a mis­sion state­ment and peri­od­i­cally do what­ever it takes to make a cus­tomer happy … What’s hard is design­ing a ser­vice model that allows aver­age employ­ees — not just the excep­tional ones — to pro­duce ser­vice excel­lence as an every­day routine.”

Defy the sta­tus quo

How have you decided to make your ser­vices uncom­mon? Have you empha­sized the impor­tance of the client rela­tion­ship to every employee at every level of your orga­ni­za­tion? Sur­vey the ser­vice mod­els of your com­peti­tors, and seek out the gaps in their strate­gies that you can turn into your own strengths. Some com­pa­nies may be good at con­vert­ing prospects, but can­not retain clients because they fail to pro­vide sup­port after the ini­tial sale. Oth­ers deliver their ser­vices or prod­ucts in an imper­sonal man­ner, rely­ing on auto­mated mes­sages instead of deep­en­ing the con­nec­tion through per­son­al­ized emails, tele­phone calls and even in-person meetings.

Mor­riss and Frei warn against try­ing to be good at every­thing, since mas­ter­ing the art of ser­vice will mean you have to divert resources and ener­gies from other areas. (This is also a point that my col­league Matthew Asser made in a recent post, “Be More Effec­tive By Nar­row­ing Your Company’s Focus.”)

Think about the ways you can set your busi­ness apart from oth­ers and focus on a few areas where you can excel. Deter­mine the sta­tus quo for ser­vice deliv­ery in your indus­try, and then strive to break free from it.

Anthony Lam has spent more than 20 years hon­ing his cus­tomer rela­tion­ship man­age­ment skills. He has demon­strated his com­mit­ment to high-quality cus­tomer ser­vice in the retail, bank­ing and air­line indus­tries. Anthony is the Man­ager of Pro­gram Deliv­ery and Client Rela­tion­ships at The Covenant Group and coaches finan­cial advi­sors on client ser­vices through The Covenant Group’s finan­cial ser­vices train­ing.

Fol­low The Covenant Group

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Tags: Anthony Lam, Chief Knowledge Officer, Client Relationship, Co Founder, Common Services, Covenant Group, Everyday Routine, Harvard Business School, Leadership Institute, Minor Details, Morriss, Organization Survey, Product Offerings, Quality Presentation, Service Co, Service Excellence, Service Management, Service Model, Service Models, Uncommon Service
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Doubling the Chances of Being Excited Going into Work Tomorrow Morning

Wednesday, June 6th, 2012

Many of us have a love-hate rela­tion­ship with our Smartphone.

We love the fact that it makes us more effi­cient. We hate the extent to which it has con­trol over us.

But there’s a deeper, more fun­da­men­tal prob­lem at play here. There are grow­ing indi­ca­tions that for some peo­ple, Smartphone’s lead not only to dis­trac­tion but to burnout and reduced moti­va­tion. Ulti­mately, smart­phones can actu­ally reduce pro­duc­tiv­ity rather than increase it.

And it gets worse: A grow­ing num­ber of users’ rela­tion­ship with their smart­phone fits the clas­sic def­i­n­i­tion of addic­tion, caus­ing the same out­comes as addic­tion to alco­hol, drugs, gam­bling or food; obses­sive pre­oc­cu­pa­tion, con­tin­ued use despite neg­a­tive con­se­quences and denial. Extreme Smart­phone use meets another cri­te­rion for addic­tion; imme­di­ate grat­i­fi­ca­tion and short-term rewards, cou­pled with delayed neg­a­tive effects and long-term costs.

Hap­pily, there is a solu­tion. Recent research has unveiled a sim­ple strat­egy that allows users to enjoy the ben­e­fits of Smartphone’s while sig­nif­i­cantly reduc­ing the neg­a­tive effects.

Address­ing always-on fatigue:

Har­vard Busi­ness School fac­ulty mem­ber Leslie Per­row has stud­ied this issue at length. And in her recent book “Sleep­ing with Your Smart­phone: How to Break the 24–7 Habit and Change the Way You Work,” she describes a suc­cess­ful exper­i­ment to address the men­tal fatigue that accom­pa­nies an always-on psyche.

The research was con­ducted with high-powered con­sul­tants at strat­egy firm Boston Con­sult­ing Group, imple­ment­ing some­thing called PTO; Pre­dictable Time Off. The essence of PTO is to agree to after­noons or evenings com­pletely cut off from work and wire­less devices; pre­de­ter­mined black­out peri­ods when emails are nei­ther sent nor read and unin­ter­rupted time peri­ods that allow for greater focus.

Four years later, what started off with one team had spread to 900 teams in 30 coun­tries. The rea­son, quite sim­ply, is because what hap­pened to key atti­tudes among par­tic­i­pants in the PTO experiment:

As you think about your own sit­u­a­tion and that of your team, con­sider whether pre­dictable time off could func­tion for you in the same way that it did for Boston Con­sult­ing Group, both at work and at home. By imple­ment­ing this one sim­ple strat­egy, you could become hap­pier and more effec­tive in both your busi­ness and your per­sonal life.

And there’s another ben­e­fit also, you could avoid being viewed as a “hap­less zom­bie.” A phrase used in a very funny April arti­cle in the Wall Street Jour­nal on the impact of the no-smartphone rule at the US Mas­ters golf tour­na­ment. Here’s how the arti­cle began:

Nav­i­gat­ing a no-phone zone:

“Every­body knows that smart phones have inhaled civ­i­liza­tion; sure, there’s a cer­tain, breath­tak­ing level of con­ve­nience, and Bog­gle for the iPhone deserves a Nobel Prize, but it’s time to admit that we’re all incur­ably addicted, that we look like hap­less zom­bies peck­ing at them all day, and would prob­a­bly be at least 80% hap­pier if we drove to the near­est bridge and chucked it in the river. We’re los­ing our abil­ity to social­ize and even speak—phones ruin din­ners, meet­ings, wed­dings and even hon­ey­moons, to say noth­ing of the deadly cra­zies who break them out in the driver’s seat.”

“Phones have also sucked energy out of sport­ing events; you can’t go to a game with­out see­ing hun­dreds of fans with their faces buried in tiny screens, send­ing texts and Tweets and tak­ing hor­ri­ble pho­tos to prove on Face­book they’re actu­ally there.”

Here’s a link to the full Wall Street Jour­nal article:

http://​online​.wsj​.com/​a​r​t​i​c​l​e​/​S​B​1​0​0​0​1​4​2​4​0​5​2​7​0​2​3​0​3​3​0​2​5​0​4​5​7​7​3​2​5​8​1​2​1​4​2​6​5​2​9​9​8​.​h​tml

And click here for an arti­cle describ­ing the PTO research:

http://​blogs​.hbr​.org/​h​b​s​f​a​c​u​l​t​y​/​2​0​1​2​/​0​5​/​a​r​e​-​y​o​u​-​s​l​e​e​p​i​n​g​-​w​i​t​h​-​y​o​u​r​-​s​m​a​.​h​tml

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Tags: Afternoons, Alcohol Drugs, Blackout Periods, Boston Consulting Group, Burnout, Business School Faculty, Faculty Member, Fundamental Problem, Harvard Business School, Immediate Gratification, Mental Fatigue, Negative Consequences, Obsessive Preoccupation, Perrow, Smartphone, Strategy Firm, Term Rewards, Time Periods, Uninterrupted Time, Work Tomorrow
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The Decision that Drives Outstanding Success

Wednesday, February 22nd, 2012

Stand­out suc­cess is rare in every indus­try, includ­ing ours. Part of that is just the real­ity that by def­i­n­i­tion most com­pa­nies and most finan­cial advi­sors are aver­age performers.

But the prob­lem runs deeper than that relat­ing to human nature. Most busi­nesses and most finan­cial advi­sors start with huge drive and the will­ing­ness to take risks. As suc­cess comes and busi­nesses and finan­cial advi­sors become com­fort­able, how­ever they often lose that drive; as well as the appetite to take even mod­est and care­fully defined risks in their business.

A recent poll of busi­ness school pro­fes­sors pointed to Peter Drucker and Harvard’s Michael Porter as the most influ­en­tial thinkers on cor­po­rate strat­egy. Both Drucker and Porter have writ­ten about the ten­dency for suc­cess­ful busi­nesses to become com­pla­cent and resis­tant to change. I see this mir­rored in the reluc­tance by many advi­sors to move from the com­fort­able sta­tus quo and to make choices about more nar­rowly tar­get­ing resources and focus­ing their day.

The impor­tance of mak­ing choices

Most advi­sors start as gen­er­al­ists with an “all things to all peo­ple” approach. That strat­egy can cre­ate a base of clients and a level of suc­cess that will allow peo­ple to stay in the busi­ness; but at some point, most advi­sors using that approach hit a wall.

It’s at this point that I often hear from advi­sors, look­ing to sit down to talk about their sit­u­a­tion. Even when I sug­gest they con­sider evolv­ing their client focus towards a tighter direc­tion that has the poten­tial of dra­mat­i­cally accel­er­at­ing rev­enue and prof­itabil­ity, most advi­sors resist this change. Quite sim­ply, they pre­fer the secu­rity and com­fort of their cur­rent “all things to all peo­ple” approach to the uncer­tainty of chang­ing direc­tion for a more tar­geted busi­ness model.

The Har­vard Busi­ness School’s Michael Porter ranked today’s top author­ity on strat­egy has this to say: “Strat­egy is about mak­ing choices and trade-offs; it’s also about delib­er­ately choos­ing to be dif­fer­ent.” Mak­ing choices was also iden­ti­fied as a key to suc­cess by Peter Drucker, widely con­sid­ered the twen­ti­eth century’s lead­ing thinker on busi­ness strat­egy. Among his com­ments on the topic: “Effi­ciency is doing things right. Effec­tive­ness is doing the right things.”

The com­mon traits of top producers

In my years in the indus­try, I’ve spent time with many multi-million dol­lar pro­duc­ers. These highly suc­cess­ful advi­sors bring dif­fer­ent philoso­phies and approaches; attack dif­fer­ent client seg­ments and uti­lize a broad range of busi­ness mod­els. The one thing that most have in com­mon is an incred­i­bly high degree of focus in their business.

· In most cases they con­cen­trate on a well-defined client base. Whether retirees or busi­ness own­ers, physi­cians or retir­ing uni­ver­sity pro­fes­sors, CEOs or farm­ers; the most suc­cess­ful advi­sors typ­i­cally bring a sin­gu­lar focus on one or two clearly artic­u­lated niches. And often the most suc­cess­ful advi­sors focus on micro niches; I’ve seen advi­sors suc­cess­fully focus on snow­birds, divorced women and own­ers of Cana­dian Tire fran­chises and Toy­ota dealerships.

· Because they focus their busi­ness they can tai­lor it to the needs of their tar­get group in a way that a gen­er­al­ist advi­sor never could. They under­stand the issues and speak the lan­guage of their clients; as a result they become the “safe choice” among their client com­mu­nity and become more refer­able as a result.

· Their focused busi­ness model iden­ti­fies prospec­tive clients and builds vis­i­bil­ity among tar­get clients. If you’re tar­get­ing car deal­ers, it’s rel­a­tively easy to put together a list of prospects in your com­mu­nity and to iden­tify the asso­ci­a­tion they belong to and the pub­li­ca­tions they read.

· They have focused poli­cies and pro­ce­dures in place to deal with prospec­tive and exist­ing clients. They have a con­sis­tent process for get­ting in front of prospects. They also have clear min­i­mums on the clients they’ll accept and a well-articulated process for wel­com­ing new clients once they’ve signed on, and for how they com­mu­ni­cate with clients on an ongo­ing basis.

· They have a clear model on how they’ll run their busi­ness; includ­ing the role of fee based and man­aged money busi­ness, the for­mu­la­tion of invest­ment rec­om­men­da­tions and the role of finan­cial plans.

The reluc­tance to leave your com­fort zone

I’ve had many con­ver­sa­tions with advi­sors about chang­ing their busi­ness model or bring­ing greater focus to their busi­ness. While most acknowl­edge the poten­tial ben­e­fits of a more tightly tar­geted and bet­ter defined busi­ness, the major­ity is reluc­tant to make the leap. Quite sim­ply, the sta­tus quo is too com­fort­able for them to aban­don it.

A stand pat approach can work very well in a sta­tus quo world, but the real­ity is today’s world is any­thing but that. The road is lit­tered with once dom­i­nant com­pa­nies who have been left by the way­side (think about iconic brands like Polaroid and Kodak; or one time retail lead­ers such as JC Pen­ney or Mont­gomery Ward).

The dif­fi­culty was not that these com­pa­nies didn’t try to alter course; each of these com­pa­nies ulti­mately saw change com­ing and tried to adapt. The prob­lem was that they waited too late, only embrac­ing change when they were already in decline.

I’m not sug­gest­ing that suc­cess­ful advi­sors are going to go the way of Kodak and JC Pen­ney. Iner­tia is a pow­er­ful force and if you have an estab­lished client base that you are serv­ing well and evolve your busi­ness grad­u­ally over time, you can run a prof­itable busi­ness for many years to come; per­haps the bal­ance of your career. What you can’t typ­i­cally do with a tra­di­tional, gen­er­al­ist approach is to achieve dra­matic growth. Advi­sors with unfo­cused prac­tices tend to look very much alike. And if you look like every other advi­sor, dif­fer­en­ti­at­ing your­self, chal­leng­ing at the best of times, becomes almost impossible.

I sym­pa­thize with advi­sors who’ve spent 10, 15 or 20 years of hard work to build a suc­cess­ful busi­ness and com­fort­able lifestyle and don’t want to jeop­ar­dize it by mov­ing to a sig­nif­i­cantly dif­fer­ent model. The com­fort of the sta­tus quo is incred­i­bly seduc­tive. In my view, decid­ing to take an incre­men­tal, evo­lu­tion­ary approach to changes in your busi­ness so as to reduce risk and stress is an absolutely legit­i­mate choice; no dif­fer­ent from clients who want to avoid mar­ket volatil­ity by stay­ing on the sidelines.

But just as those clients shouldn’t then com­plain if their long term returns are lower than investors who took greater risk; advi­sors who take a low risk approach in their busi­ness shouldn’t com­plain if they’re not grow­ing as quickly as other advi­sors who have taken a more focused approach.

If you’d like more suc­cess, think about Michael Porter’s and Peter Drucker’s insights on how mak­ing choices dri­ves suc­cess­ful strat­egy. And con­sider whether you need to evolve your busi­ness to one that has a sharper focus and clearer direction.

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The question that predicts customer loyalty

Wednesday, February 8th, 2012

Recently, I attended a talk by Fred Reich­held, a long time part­ner with con­sult­ing firm Bain & Com­pany (the same firm where U.S. Pres­i­den­tial can­di­date Mitt Rom­ney got his pri­vate sec­tor expe­ri­ence after grad­u­at­ing from Har­vard Busi­ness School.)

Reich­held is one of the pio­neers in the area of pro­mot­ing cus­tomer sat­is­fac­tion and loy­alty as a core strat­egy to drive busi­ness growth. In 1996, he pub­lished The Loy­alty Effect, one of the first attempts to rig­or­ously quan­tify the finan­cial pay­off of sat­is­fied customers.

In 2003, he pub­lished an arti­cle in the Har­vard Busi­ness Review titled, “One num­ber you need to grow.” In that arti­cle, he intro­duced a sim­ple 12 word ques­tion and a result­ing mea­sure called The Net Pro­moter Score that cor­re­late with cus­tomer loy­alty and can focus orga­ni­za­tions on cre­at­ing higher lev­els of cus­tomer satisfaction.

12 words to mea­sure loyalty:

The Net Pro­moter Score starts with one sim­ple 12 word ques­tion that cus­tomers are asked to answer on a scale from 0 to 10. That question:

How likely are you to rec­om­mend us to a friend or colleague:

Cus­tomers are then put into three categories:

• Pro­mot­ers: (score 9–10) are loyal enthu­si­asts who will keep buy­ing and refer oth­ers, fuel­ing growth.
• Pas­sives: (score 7–8) are sat­is­fied but unen­thu­si­as­tic cus­tomers who are vul­ner­a­ble to com­pet­i­tive offerings.
• Detrac­tors: (score 0–6) are unhappy cus­tomers who can dam­age your brand and impede growth through neg­a­tive word-of-mouth.

The net pro­moter score is cal­cu­lated by tak­ing pro­mot­ers and sub­tract­ing detrac­tors; what are left is your net pro­mot­ers. So, if you have 30% of clients scor­ing you a 9–10 (your pro­mot­ers), 50% a 7–8 (your pas­sives) and 20% a 0–6 (your detrac­tors), your net pro­moter score is 10.

In the US, net pro­moter scores north of 70% have been attained by USAA in bank­ing, by Costco and by Apple. Other firms using the net pro­moter score met­ric to track sat­is­fac­tion include Charles Schwab, Ama­zon, Intuit (maker of Quicken), Gen­eral Elec­tric and Proc­ter and Gamble.

In a pre­sen­ta­tion at a con­fer­ence, a senior exec­u­tive of TD Canada Trust explained how they used the Net Pro­moter Score in the U.S. and Canada to shift from satisfaction-focus to loyalty-focus. With high sat­is­fac­tion scores it was hard to iden­tify issues and moti­vate employ­ees to improve. By mov­ing to a Net Pro­moter approach using will­ing­ness to rec­om­mend as the mea­sur­ing stick, they were able to uncover new issues and iden­tify the best prac­tices of top per­form­ing branches. TD is now rolling out Net Pro­moter through­out the bank to include all func­tions that impact cus­tomer service.

The research behind the Net Pro­moter Score metric:

Below is an excerpt from the Net Pro­moter Score web­site that pro­vides ratio­nale for NPS.

“To deter­mine a use­ful met­ric for gaug­ing cus­tomer loy­alty, Fred Reich­held did some­thing rarely under­taken with tra­di­tional cus­tomer sur­veys: match sur­vey responses from indi­vid­ual cus­tomers to their actual behav­ior, repeat pur­chase and refer­ral pat­terns over time.

“Work­ing with Dr. Laura Brooks of Sat­metrix, a research team tested numer­ous dif­fer­ent ques­tions to see which one(s) would be the best gauge of future repur­chase and refer­ral behav­ior. The test was admin­is­tered to thou­sands of cus­tomers recruited from pub­lic lists in six indus­tries: finan­cial ser­vices, cable and tele­phony, per­sonal com­put­ers, e-commerce, auto insur­ance, and inter­net ser­vice providers. The team obtained a pur­chase his­tory for each per­son and asked them to name spe­cific instances in which they had referred some­one else to the com­pany in question.

“The results allowed the team to deter­mine which loy­alty ques­tions had the strongest sta­tis­ti­cal cor­re­la­tion with repeat pur­chases and refer­rals. The team hoped they would find at least one ques­tion for each indus­try. They found some­thing more; one ques­tion was best for most indus­tries. “How likely is it that you would rec­om­mend [Com­pany X] to a friend or colleague?”

“Next, the team looked at rel­a­tive growth rates for com­peti­tors in a given indus­try. In the first quar­ter of 2001, Sat­metrix began track­ing the “would rec­om­mend” scores of a new uni­verse of cus­tomers; many thou­sands of them from more than 400 com­pa­nies, in more than a dozen indus­tries. In each sub­se­quent quar­ter they then gath­ered 10,000 to 15,000 responses to a very brief e-mail sur­vey that asked respon­dents (drawn again from pub­lic sources) to rate one or two com­pa­nies with which they were familiar.

“Where the team could obtain com­pa­ra­ble and reli­able revenue-growth data for a range of com­peti­tors, and where there were suf­fi­cient con­sumer responses the team plot­ted each firm’s NPS against the company’s rev­enue growth rate.

“The results were strik­ing. In most indus­tries this one sim­ple sta­tis­tic explained much of the vari­a­tion in rel­a­tive growth rates; that is, com­pa­nies with a bet­ter ratio of Pro­mot­ers to Detrac­tors tend to grow more rapidly than competitors.”

Imple­ment­ing this in your business:

In the ques­tion and answer period after his talk, Reich­held was asked about cat­e­gories like invest­ing or air­lines where there are extra­ne­ous events (mar­ket down­turns and snow­storms) that depress sat­is­fac­tion in the short term. In those cases, should com­pa­nies look at NPS scores rel­a­tive to their indus­try to gauge how they’re doing, rather than absolute benchmarks?

His answer was that this is emi­nently rea­son­able in the short term. He went on to say, how­ever, that indus­tries that chron­i­cally have low sat­is­fac­tion scores can be vul­ner­a­ble to new entrants. Even if your cus­tomers are less dis­sat­is­fied than your competition’s cus­tomers (or as the old expres­sion goes, “In the land of the blind, the one-eyed man is king”), this cre­ates an oppor­tu­nity for dra­mat­i­cally new busi­ness mod­els to shift the com­pet­i­tive land­scape. If you look at the col­lapse of tra­di­tional busi­ness mod­els (the legacy air­lines, the Big Three US auto man­u­fac­tur­ers), dis­sat­is­fac­tion was masked by the lack of alter­na­tives right until bet­ter alter­na­tives pre­sented themselves.

Reich­held also pointed out that you need to make it easy for cus­tomers to answer the Net Pro­moter ques­tions hon­estly. Ask some­one directly and their scores are higher than their real sat­is­fac­tion lev­els. That’s why suc­cess­ful com­pa­nies col­lect scores either through writ­ten or online sur­veys that go to third par­ties or by hav­ing some­one else call cus­tomers to get their scores; in the U.S., Charles Schwab branch man­agers fol­low up with cus­tomers to get their scores, talk about their expe­ri­ence and deter­mine how the advi­sors serv­ing them can improve.

In fact, fol­low­ing up with cus­tomers is key; Reich­held said that ask­ing cus­tomers for their opin­ion ini­tially cre­ates a boost in atti­tudes. After all, the per­son they’re doing busi­ness with is show­ing they care. If there is no fol­low up or indi­ca­tion that their opin­ion is being taken seri­ously, how­ever, that ini­tial boost quickly evaporates.

One final note: If you are going to fol­low up with clients to talk about their rat­ing on the “How likely would you be to rec­om­mend us” ques­tion, it’s impor­tant that you make it clear that your moti­va­tion is to find ways to bet­ter serve them, rather than to get refer­rals to friends and fam­ily. Even if refer­rals aren’t your moti­va­tion, you need to clar­ify this to engage clients in an hon­est and frank conversation.

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Tags: Amazon, Amp Company, Charles Schwab, Core Strategy, Costco, Customer Loyalty, Customer Satisfaction And Loyalty, Financial Payoff, Fred Reichheld, Harvard Business Review, Harvard Business School, Loyalty Effect, Negative Word, Net Promoter Score, One Of The Pioneers, Private Sector Experience, Time Partner, Unhappy Customers, Usaa, Word Question
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Breakthrough research from the Harvard Business Review — The #1 way to stay motivated

Wednesday, October 19th, 2011

Every Jan­u­ary, the Har­vard Busi­ness Review pub­lishes ten break­through ideas for the year ahead.

Num­ber one on this year’s list was new research on what really dri­ves moti­va­tion. That fac­tor: A clear sense that progress is being made.

In a multi-year study, researchers at the Har­vard Busi­ness School first asked 600 man­agers from dozens of dif­fer­ent com­pa­nies to rank the impact of five fac­tors that are nor­mally asso­ci­ated with moti­va­tion — recog­ni­tion, incen­tives, sup­port from man­agers and col­leagues, clear goals and a sense of mak­ing progress.

In this first phase of the study, recog­ni­tion for good work was ranked by man­agers as the most impor­tant fac­tor in motivation.

In the next stage,  hun­dreds of knowl­edge work­ers in a vari­ety of set­tings emailed 12,000 end of day diaries, rat­ing their moti­va­tion level and talk­ing about the kind of day they’d had. The researchers then dug deep to look at what these work­ers reported as hav­ing hap­pened each day, espe­cially on those days that respon­dents said were their “best days” and their “worst days.”

And the answer is.…..

The study showed that a sense of progress was the fac­tor most strongly cor­re­lated with a strong feel­ing of moti­va­tion.  Par­tic­u­larly inter­est­ing — out of the five options rated by man­agers before the study began as keep­ing peo­ple moti­vated , a sense of mak­ing progress was rated last

Here’s an excerpt from the Har­vard Busi­ness Review article:

“On days when work­ers have the sense they’re mak­ing head­way in their jobs or when they receive sup­port that helps them over­come obsta­cles, their emo­tions are most pos­i­tive and their drive to suc­ceed is at its peak. On days when they feel they are spin­ning their wheels or encoun­ter­ing road­blocks to mean­ing­ful accom­plish­ment, their moods and moti­va­tion are low­est.“

Here are the five fac­tors that appear to drive moti­va­tion the most, the events work­ers said they expe­ri­enced on their very best days:

Mak­ing progress                                           76%

Col­lab­o­ra­tion                                                53%

Orga­ni­za­tional  sup­port                                  43%

Inter­per­sonal sup­port 25%

Doing impor­tant work                                    19%

The researchers reported that neg­a­tive events gen­er­ally have a greater effect on peo­ples’ emo­tions, per­cep­tions and moti­va­tions than pos­i­tive ones. And the most promi­nent event on work­ers’ worst days was expe­ri­enc­ing a setback.

And here’s what the HBR arti­cle had to say about recognition:

“As for recog­ni­tion, diaries revealed that it does indeed moti­vate work­ers and lift their moods. So man­agers should cel­e­brate progress, even the incre­men­tal sort. But there will be noth­ing to rec­og­nize if peo­ple aren’t gen­uinely mov­ing for­ward — and as a prac­ti­cal mat­ter, recog­ni­tion can’t hap­pen every day. You can, how­ever, see that progress hap­pens every day.”

Impli­ca­tions

This research has some impor­tant impli­ca­tions on how we and the peo­ple we work with can main­tain moti­va­tion lev­els, even in the face of the inevitable frus­tra­tions we face each day.

When it comes to the peo­ple who work with us, the study’s authors advise man­agers to set clear goals and to be con­sis­tent in those goals, to give staff the resources they need and to be deci­sive in our deci­sion making.

There is another impli­ca­tion as well — and that’s to set aside the time each day to acknowl­edge the progress you’ve made, large or small.

This can be done by main­tain­ing a “progress jour­nal” on your com­puter — tak­ing three min­utes at the con­clu­sion of each day to write down the top five things you’ve achieved that day.

Another advi­sor pre­pares a list of things to do and clients to call at the begin­ning of each day — and draws a line through each with a yel­low magic marker as they’re done.  “I know it sounds silly” she says “but just see­ing those yel­low lines on that list of peo­ple to call gives me a bit of a boost.”

Along sim­i­lar lines, one suc­cess­ful advi­sor starts each day with a short meet­ing of his four per­son team. At the con­clu­sion of that meet­ing, every­one iden­ti­fies the three most impor­tant things they need to get done that day — even some­thing as sim­ple as call­ing an impor­tant client can be on the list, espe­cially if that call is over­due or is likely to be difficult.

The team mem­bers take turns mak­ing notes on those items — and five min­utes after the meet­ing ends, every­one gets an email high­light­ing the goals they set.  Next morning’s meet­ing starts with a review of how every­one did against those goals — and ends with peo­ple iden­ti­fy­ing their top three goals for the day ahead.

This advi­sor com­mented that two things have hap­pened since they began doing this.

First, they’ve all become more focused on get­ting those top three things done — no one wants to be embar­rassed the next morning.

And sec­ond, every­one walks away from that meet­ing more pos­i­tive and enthused — because even after a tough day in the mar­kets or dif­fi­cult client meet­ings, they can still feel good about the tan­gi­ble accom­plish­ments they can point to inthe last day.

The impli­ca­tions of this research are very clear. As you think about how you and your team main­tain moti­va­tion, by all means include recog­ni­tion and rewards in the mix .… but in the process, don’t neglect the most impor­tant moti­va­tor of all, a sense that clear progress is being made each and every day.

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Essential lessons from an Oscar winner

Tuesday, March 1st, 2011

Essen­tial lessons from an Oscar winner

Recently, I came across an arti­cle by British exec­u­tive coach Paul Ruther­ford, based on lessons from The King’s Speech, which swept the Oscars last night.

Ruther­ford began by refer­ring to the clas­sic book “The Trusted Advi­sor”, by Har­vard Busi­ness School pro­fes­sor David Mais­ter and con­sul­tants Charles Green and Robert Gal­ford. This book is viewed as the defin­i­tive work on how pro­fes­sional advi­sors – lawyers, accoun­tants, con­sul­tants, finan­cial advi­sors – can estab­lish and retain trust with clients.

He went on to write about how The King’s Speech made some of the advice in the book come alive for him, with the line:

Like lost car keys, learn­ing can turn up in the most unex­pected places.

I repeat the rest of Paul Rutherford’s arti­cle below, with his permission.

MOVIE MASTERCLASS

Geof­frey Rush plays Lionel Logue, the Aus­tralian speech ther­a­pist who helped Prince Bertie, the Duke of York (Colin Firth) — and sec­ond son of King George V — to over­come a debil­i­tat­ing stam­mer. To make mat­ters worse, his elder brother (David aka Edward VIII) abdi­cated the throne to marry a divorcee, and Bertie became King on the eve of WW2 – at the time when the coun­try needed a clear voice of leadership.

Like all great pieces of enter­tain­ment, it’s a movie that works on mul­ti­ple lev­els: It’s the story of a man try­ing to con­quer his dae­mons. It’s the por­trait of a leader strug­gling to step up to his role. It’s a study of class and social hier­ar­chy. It’s an essay on the impact of radio broad­cast­ing on pol­i­tics and society.

And it’s a mas­ter­class in becom­ing a trusted adviser.

1 “TRUSTED ADVISERS ARE CONSISTENT”

It is Bertie’s wife, Eliz­a­beth, who first approaches Lionel about treat­ing her hus­band. She does so under the pseu­do­nym of Mrs John­son. He is direct and to-the-point with her:

LIONEL: Where’s Mr Johnson?

ELIZABETH: He doesn’t know I’m here.

LIONEL: That’s not a promis­ing start

He tells her to have hubby ‘pop by’ to give his per­sonal his­tory. She says “you must come to us.”

LIONEL: Sorry, Mrs J, my game, my turf, my rules

ELIZABETH: And what if my hus­band were the Duke of York?

The penny drops for Lionel, but not his faith in his method and his suc­cess rate:

LIONEL: I can cure your hus­band. But for my method to work there must be trust and total equal­ity in the safety of my con­sul­ta­tion room. No exceptions.

It’s tes­ta­ment to Helena Bon­ham Carter’s per­for­mance that you can see the relief in her face. Here is an adviser that is dif­fer­ent, con­fi­dent and will not make excep­tions. Whether address­ing com­moner or roy­alty, he takes the same approach.

2 “BE NOT AFRAID. CREATING INTIMACY TAKES COURAGE.”

Obvi­ously, this could be a flag­ship Client for Lionel; in that era, the grav­i­ta­tional pull of def­er­ence would have been immense. But his method – his advice – is based upon a rela­tion­ship of equals, which he makes very clear to Bertie when they first meet.

LIONEL: I was told not to sit too close. I was also told, speak­ing to a Royal, one has to wait for the Royal to choose the subject.”

Clev­erly, Lionel is already chip­ping away at the pro­to­col; even Bertie acknowl­edges, with dif­fi­culty, that with him it could be a ‘rather long wait’. It’s a light moment before the inevitable con­flict arises as the Adviser tries to map out his ter­ri­tory, focus­ing on facts:

LIONEL: When did the defect start?

BERTIE: It’s always been that way.

LIONEL: I doubt that.

BERTIE: Don’t tell me! It’s my defect.

LIONEL: It’s my field. I assure you, no infant starts to speak with a stammer.

After set­ting out his stall – he is the expert – he goes on to pro­voke Bertie, because it breaks down bar­ri­ers and is part of the solu­tion; Bertie doesn’t stam­mer when he’s angry. It’s hardly likely to be part of a B2B Client engage­ment strat­egy, but it’s a mem­o­rable rein­force­ment of the need to be brave in the face of defen­sive aggression.

3 “ILLUSTRATE, DON’T TELL.”

After pro­vok­ing his poten­tial Client, Lionel sets him an exer­cise to record his voice (if you haven’t seen the film, I’ll spare you the details). The ses­sion ends fros­tily, with Bertie say­ing that the treat­ment is not for him.

How­ever, in a scene shortly after, Bertie lis­tens to the record­ing, and realises that Lionel’s meth­ods – or at least his approach – can yield results.

No one has told him this, it’s not on a tes­ti­mo­nial. He has first hand, per­sonal evi­dence of success.

4 “EARN THE RIGHT TO OFFER ADVICE”

When Bertie returns to trial Lionel’s meth­ods, the Royal cou­ple set out their terms:

BERTIE: Strictly busi­ness. No per­sonal nonsense.

ELIZABETH: I thought I’d made that very clear in our interview?

Lionel points out that the couple’s request will result in deal­ing with the issue at sur­face level, and is told that it will suf­fice. So rather than be pre­cious, he agrees to focus on breath­ing tech­niques, phys­i­cal exer­cise and tongue twisters. We know that it won’t address the core prob­lem, but this is Lionel’s first steps in form­ing the rela­tion­ship. He is earn­ing the right to go further.

5 “FOCUS ON THE CLIENT AS AN INDIVIDUAL, NOT AS SOMEONE WHO IS FILLING A ROLE.”

Halfway through the film, Bertie’s father (King George V) dies. When Client and Adviser meet soon after, the con­ver­sa­tion extends beyond the pre­scribed bound­aries. As is his duty, Bertie has been pre­sent­ing a for­mal face to the world, so he treats the meet­ing with Lionel as a form of release. Lionel learns much about his back­ground, his upbring­ing, his rela­tion­ship with his par­ents and his sib­lings – much of it the root causes of his impediment.

BERTIE: You know, Lionel, you’re the first ordi­nary Englishman…

LIONEL: Aus­tralian.

BERTIE: I’ve ever really spo­ken to.

Of course, the sub­text is that Lionel is the first per­son that Bertie has spo­ken to about these issues. Lionel has now reached the sta­tus of Trusted Adviser.

6 “BE SURE YOUR ADVICE IS BEING SOUGHT.”

The next time Bertie and Lionel meet, the prince is very angry with his elder brother. David is intent of mar­ry­ing Mrs Simp­son, a divorcee, so putting heart before duty. If it hap­pens, Bertie will become King.

BERTIE: I am not an alter­na­tive to my brother.

LIONEL: If you had to, you could out­shine David…

Lionel reaches out and gives Bertie a pat of com­fort on the shoul­der. Bertie pulls back in offended shock.

BERTIE: Don’t take lib­er­ties! That’s bor­der­ing on treason.

LIONEL: I’m just say­ing you could be King. You could do it!

BERTIE: That is treason.

They face each other, as though in combat.

LIONEL: I’m try­ing to get you to realise you need not be gov­erned by fear.

BERTIE: I’ve had enough of this.

LIONEL: What are you afraid of?

BERTIE: Your poi­so­nous words.

Bertie strides away, leav­ing Lionel to realise that he is no longer adviser to the man who is likely to be King.

It’s a bril­liant scene, both dra­mat­i­cally and as illus­tra­tion of a key point in Client inti­macy. No mat­ter how close the rela­tion­ship becomes, there will always be areas that are off lim­its. Here, advice should only be given when invited.

7 “WHEN YOU NEED HELP, ASK FOR IT.”

Events turn in the drama, lead­ing to a rec­on­cil­i­a­tion between Bertie and Lionel. This hap­pens at Lionel’s home, where he is vis­ited by the royal cou­ple while his wife is out play­ing bridge. Which is just as well, as Lionel has not told her of his ‘star’ Client.

Unfor­tu­nately, she returns home early, and finds Eliz­a­beth in the din­ning room. Bertie and Lionel are in the par­lour, in a scene that reveals the latter’s vulnerability:

BERTIE: Logue, we can’t stay here all day.

LIONEL: Yes we can.

BERTIE: Logue…

LIONEL: Look, I need to wait for the oppor­tune moment.

BERTIE: (real­is­ing) You’re being a coward!

LIONEL: You’re damn right.

Deci­sive, Bertie stands and throws open the door.

BERTIE: Get out there, man!

And so the adviser is advised.

8 “JUST BECAUSE THE CLIENT ASKS A QUESTION, DOESN’T MEAN IT’S THE RIGHT QUESTION TO ANSWER.”

Bertie’s coro­na­tion is the first major test of Lionel’s meth­ods. He attends the prepa­ra­tions at West­min­ster Abbey, and gets a very cold recep­tion from the Arch­bishop of Can­ter­bury, who takes an excep­tion to this antipodean out­sider. In the fol­low­ing scene, it’s obvi­ous that ‘the estab­lish­ment’ has done some dig­ging into Lionel’s past, which they have fed to Bertie.

BERTIE: True, you never called your­self ‘Doc­tor’. I did that for you. No diploma, no qual­i­fi­ca­tions. Just a great deal of nerve.

How does Lionel respond? By point­ing out that when he was devel­op­ing his meth­ods (to help shell-shocked sol­diers return­ing from the Great War) there was no train­ing. He admits that he has no piece of paper, but asks Bertie to focus on his track record of results, and what they have achieved together.

* * *

I’ll stop at this point rather than  spoil the end for those who haven’t yet seen The King’s Speech.

Mais­ter et al say of the trusted advi­sor role: “…  vir­tu­ally all issues, per­sonal and pro­fes­sional are open to dis­cus­sion and explo­ration. The trusted advi­sor is the per­son the client turns to when an issue first arises, often in times of great urgency: a cri­sis, a change, a tri­umph, or a defeat.”

For any of us hop­ing to build such a rela­tion­ship, there’s plenty to learn from Lionel Logue.
Writ­ten by Paul Ruther­ford, an Exec­u­tive Coach and Search Con­sul­tant based in the UK. Read more of his thoughts and obser­va­tions of busi­ness life at www​.paulruther​ford​.com

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Tags: Australian Speech, Coach Paul, Colin Firth, David Maister, Definitive Work, Duke Of York, Edward Viii, Elder Brother David, Executive Coach, Galford, Geoffrey Rush, Harvard Business School, Johnson Elizabeth, Mrs Johnson, Oscar Winner, Paul Rutherford, Prince Bertie, Professional Advisors, School Professor, Social Hierarchy, Speech Therapist
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A four step conversation to build confidence

Wednesday, May 12th, 2010

Last week, I talked to an advi­sor con­cerned that if he called clients too often, he might com­mu­ni­cate that he is truly alarmed by what’s going on and raise their anx­i­ety lev­els as a result.Consider advice on this topic from a recent inter­view with Rob Kaplan, for­mer Vice Chair of Gold­man Sachs and cur­rently a pro­fes­sor at the Har­vard Busi­ness School:

“Once you are in a cri­sis, you have to over-communicate. There is a ten­dency in human nature that if you are not sure what is hap­pen­ing and not sure what you should be doing, you under-communicate. You have to fight that. The role of the leader is to get out there and talk about what’s going on. If there are things you don’t know, just explain: “We don’t know. We don’t know what the future is going to be. We don’t know what the econ­omy is going to do. But here is what we do know and what we’re going to do.”

That’s good advice for lead­ers of orga­ni­za­tion — and equally good advice for advisors.

I’ve spent a lot of time talk­ing to investors since last fall. In the course of those con­ver­sa­tions, I haven’t run into a sin­gle case of clients who have been pan­icked because their advi­sors have been in too much con­tact — but have cer­tainly run into lots of investors con­cerned because they haven’t heard from their advi­sors at all.

Of course, just talk­ing to clients isn’t suf­fi­cient — you have to send the right mes­sage in those conversations.

Based on Rob Kaplan’s model, here’s what that mes­sage might sound like:

1. “I’m just check­ing in to chat about what’s been hap­pen­ing in mar­kets lately and to answer any ques­tions you might have. What ques­tions do you have based on what you’re read and heard in the media recently?”

2. “There cer­tainly is no lack of bad news in the short term — this is con­sis­tent with stud­ies that show the media tends to exag­ger­ate things, both on the upside a few years ago and the down­side today. What no one knows is how long it will take us to work through this and also how much of this bad news is already reflected in the price of stocks.”

3. “In light of this uncer­tainty, my focus today is less on the imme­di­ate period ahead — because no one seems to really be able to pre­dict that with any accu­racy — and more on the prospects for the mid term, two or three years out.”

4. “Given the drop in stock prices for strong firms like the Cana­dian banks and some of the very best global com­pa­nies, there are in fact lots of rea­son to be cau­tiously opti­mistic if you look out two or three years. Would you like to take some time to talk about that right now?” (If you’re hav­ing dif­fi­culty find­ing rea­sons for mid term opti­mism, con­sider look at some of the arti­cles under Links to use­ful arti­cles in the Client Com­men­taries sec­tion in the right hand col­umn of this website.)

Finally, once you have a point form mes­sage that works for you, you should run through it a few times until you can deliver it with con­vic­tion and con­fi­dence. Remem­ber, what you say when talk­ing to clients is often less impor­tant than how you say it.

If you’re con­cerned that con­tact­ing clients too often will increase their anx­i­ety, remem­ber that these days, there are few higher pri­or­i­ties than tak­ing the time to frame your mes­sage, devel­op­ing your facil­ity in deliv­er­ing that mes­sage with con­fi­dence — and then get­ting out and telling your story.

For more infor­ma­tion, please visit http://​www​.get​keep​clients​.com.

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Tags: Anxiety Levels, Bad News, Confidence, Conversations, Downside, Economy, Goldman Sachs, Good Advice, Harvard Business School, Human Nature, Investors, Lot, Organization, Rob Kaplan, Tendency, Vice Chair
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Harvard’s Robert Pozen discusses “Too Big To Save”

Wednesday, February 17th, 2010

Har­vard Busi­ness School’s Pro­fes­sor Robert Pozen, dis­cusses his new book Too Big to Save, with Dan Richards of Clientinsights.

Robert Pozen is Chair­man, MFS Invest­ment Man­age­ment, the $184-billion global asset man­age­ment subis­di­ary of Sun Life Finan­cial, and was a for­mer exec­u­tive of Fidelity Invest­ments in the company’s for­ma­tive years.

“The best finance book I’ve read so far this year (and I’ve read a slew of them) is Robert C. Pozen’s Too Big to Save? How to Fix the U.S. Finan­cial Sys­tem. … I can’t think of any­body who has cov­ered such a range of issues so effi­ciently or so well.” (Brad DeLong, ( http://​delong​.type​pad​.com, Novem­ber 2009).

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Tags: Bailout, Banks, Board Structure, Bob Pozen, Brad Delong, Credit Crisis, Fidelity Investments, Finance Book, Finance Industry, Financial Future, Financial Institutions, Global Asset Management, Government Stakes, Harvard Business School, High Priority, Insights, Jurisdiction, Mfs Investment Management, Mutual Fund Industry, Perspective, Priority Problems, Private Sector, Professor Robert, Robert C Pozen, Robert Pozen, Securitization, Social Security, Social Security System, Sun Life Financial, Systemic Risks, Timely Guide, Unprecedented Events, Us Social Security
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