Asking (and answering) the Ultimate Question

In the Ultimate Question, Fred Reichheld tells the story of Intuit, describing a problem that FiveFour regularly helps businesses solve. Co-founder Scott Cook had built a successful company on the mission “To make the customer feel so good about the product they’ll go and tell five friends to buy it.”

When the company was in the start-up phase, the employees learned how to fulfill that mission by observing Cook’s passion for taking care of the customer. “They could all hear him working the service phones himself, talking to customers. They could see him taking part in Intuit’s famous “follow-me-home” program, where employees asked customers if they could watch them set up the software in order to note any problems.”

But growth in the number of employees and locations made learning by following the leader impossible and “Cook was hearing more complaints [from customers] than in the past. Some market-share numbers were slipping. For lack of a good system of measurement and for the lack of the accountability that accurate measurement creates – the company seemed to be losing sight of exactly what had made it great: its relationships with its customers.”

To solve the problem, Cook started measuring customer loyalty through our favorite measurement tool: the Net Promoter Score (NPS), which asks the Ultimate Question: “How likely is it that you would recommend Company X to a friend or colleague?” Respondents score their likelihood on a scale from 1-10, with those answering 9-10 classified as promoters, 7 or 8 passives and 6 or less detractors. Your NPS is calculated by subtracting the percentage of detractors from your percentage of supporters. A positive number means you have more supporters than detractors.

While measurement is an important first step, measurement alone won’t solve the problem that Cook faced at Intuit. The challenge that leaders of growing companies face is how to scale the culture and customer experience that led to the growth to begin with.

That’s what FiveFour calls the battle for better business. We help companies capture that original vision for their culture and how the customer is cared for. But the next step is maybe the most important and what really differentiates FiveFour: we create a customized, ongoing system of learning and development that, over time, transforms the business through increased employee engagement and continuous learning.

Do you resonate with that description of Intuit? Are you noticing more customer complaints and employee disengagement? Take our assessment of your customer experience and we’ll give you some tips you can use to improve your employee and customer experience.

Want to get started measuring your NPS and eNPS (Employee Net Promoter Score)? Just email me and I will give you access to our free, online course showing you how to implement both.

Intuit was profitable and growing at the time they addressed these flaws in their employee and customer experience. But they saw that those flaws were starting to impact their growth. What happened after they addressed them? They now have an NPS of 45 and a market cap of $82 billion, which isn’t bad.

Passing the $10 million plateau

Ready, Fire, Aim started as a retreat serial entrepreneur Michael Masterson led for other entrepreneurs. He wanted to impart the lessons he had learned from a 30-year career starting and running several multi-million-dollar businesses. Later developed and expanded as a book, the subtitle states his objective; teaching the reader to take a business from “Zero to $100 Million in No Time Flat.”

The two biggest ideas in the book are the importance of action (thus, the book title) and that going from zero to $100 million encompasses four distinct stages in the life of a company. Having read the Five Second Rule, 10X, and many other books, I knew the first point well. It’s the second that I will focus on.

According to Masterson, each of the four stages of a business has different problems, challenges, and opportunities and requires different skills from the entrepreneur running the company. The stages are:

  1. Infancy ($0-1 million in revenue)
  2. Childhood ($1-10 million)
  3. Adolescence ($10 million to $50 million)
  4. Adulthood ($50 million to $100 million and beyond)

The stage that was the most interesting to me (because it faces many of the challenges my company, FiveFour, solves for business leaders at this level) is adolescence. Once a company grows to or near $10 million, the growth almost always comes with a new set of challenges.

At this size, there is at least one or two levels of management between the founder/CEO and the front-line workers who engage with the company’s customers. Those employees do not have the benefit that existed in the first two phases of business growth – proximity to the founder/CEO. Companies that reach $10 million in revenue usually do so because the founder/CEO built a culture around taking care of the customer. With multiple levels of management, they no longer talk directly to every employee and are unable to directly impart their culture and expectations of how the customer should be cared for.

The way this usually shows up in a company is through disgruntled customers. Masterson writes: “The most important disconnect has to do with the priority you had established to make sure every customer would be handled with the utmost of care and consideration.” The business is in need of a transformation. A transformation from focusing almost exclusively on customer acquisition to one that now focuses equally on customer retention. Masterson calls it customer service, but were he writing today rather than the mid-2000’s, he would likely recognize that the customer experience is even more important.

The leader accomplishes this transformation by a focus on operations and training, communicating the vision, joint ventures and hiring stars and superstars. He’s dead-on with that list, but a few of his methods are decidedly lacking. For example, to communicate the vision he advocates writing a monthly memo. To solve this communication gap that he has so accurately identified takes much more than a written letter once a month.

And it’s behind that small defect that my larger problem with the book arises. Those memos worked for him and a client of his. That’s 98% of what you get in this book: his personal experience as an entrepreneur. Masterson has no time for theory. The only time I can remember him quoting an organizational theorist was to disagree with him.

That’s not a debilitating problem and it doesn’t erase the good that comes from the book. After all, Masterson wrote it to impart what he learned from his entrepreneurial journey. But it is a limitation that the reader should be aware of. This book is just one source – a good one, but just one – and will need to be supplemented with other resources especially the further we get from the day it was written.

What I read in May

My reading slowed a bit in May as I hired a business coach to help me with some changes in the business. It’s something I hope to write more about at a future time, but it required a lot of my time and attention, so reading decreased a bit. But learning did not. I was learning by reading a lot of their resources, working through video-based training and interacting with my coach on weekly calls.

Still, there was time for reading. Here are the highlights of what I finished in May, 2020:

Who – The A Method for Hiring

Most business leaders and entrepreneurs have run across the famous concept popularized by Jim Collins in his seminal book, Good to Great: “First who, then what.” The idea is that those who build great organizations focus first on getting the right people on the bus and in the right seats before they figure out where they’re driving the bus. But most don’t know how to do this. They follow what Geoff Smart calls some method “of voodoo hiring” like scanning a resume, conducting a short interview, calling a couple of references and going with a gut instinct. Smart instead gives a system for hiring that involves a scorecard rather than job description and a series of interviews designed to determine if the candidate is a fit for the mission, has the competencies to do the job and can achieve the agreed upon objectives. The ultimate goal is to hire A Players – to get the who decisions right. I’ve started implementing some of these concepts in my business and, if you don’t have a hiring system, you should, too.

VC – An American History

One of my businesses is owned by a private equity company, which is not exactly the same as venture capital, but in the same vein. So I was interested in this history of venture capital in America. It started long before California became a state and has been tied to the entrepreneurial story of America since its founding. Wherever there has been the promise of out-sized returns at great risk, financial intermediaries (venture capitalists) have arisen to mitigate that risk. It started with whaling industry and was made famous by the Silicon Valley firms that invested in the tech giants Amazon, Apple, Google, Facebook, Uber, etc. etc. In between those two points in history is a fascinating story where the industry was kept alive first by wealthy families, military investment and universities. I was especially interested in his take on where the industry goes in the future. Nicholas mentions the innovative approach of Andreessen Horowitz to offer its portfolio companies a slate of services (HR, marketing, etc.) in addition to investment. Nicholas sees that as a sign of the industry returning to a long-term focus of building companies for public markets rather than short-term returns. Time will tell if that approach wins out, but what’s not debatable is that venture capital will continue to be part of America’s story.

Free Prize Inside!

The only way to win in business is to become remarkable. That was the message of Purple Cow. But how do you make a purple cow? That’s what this short book is about. In fact, that’s what the subtitle says. According to Seth Godin, he had to write this follow-up because business was all wrong in how they were going about their search for a purple cow. They were seeking the big. Big innovations. Big marketing campaigns. But a Purple Cow is much more likely to be a small, soft innovation that customers love – a Free Prize inside their offering. Writes Godin, “Most free prizes have two essential elements in common. First, they are the thing about your service, your product or your organization that’s worth remarking on. Something worth seeking out and buying…Second, most free prizes are not about what the person needs. Instead, they satisfy our wants. They are fashionable or fun or surprising or delightful or sad. They rarely deliver more of what we were buying in the first place.”

One of the most obvious free prizes is customer experience. It’s not more of the product or service. It’s something unexpected during the delivery of the product or service. Something that’s worth remarking on. And late in the book, Godin gives a fitting example. He tells the story of his interaction with Jose who worked in a taco shop in the Denver airport. What was remarkable about this interaction? Jose chatted with Godin for an extra minute while he ordered, got him a special condiment from the back. Later, he asked Godin how his meal was. In other words, Godin had a great experience with Jose. And as he points out, the cost of that experience was zero, but the value to Godin was “enormous.” Your customer experience can be a free prize for your guests. It can cost you nothing while delivering enormous value.

The Five Dysfunctions of a Team

Great teamwork is the exception and that exception almost always means that a team has overcome five specific things that cause all teams to misfire. Patrick Lencioni has identified those five dysfunctions in this fantastic little book. I’m a huge fan of Lencioni. The first two-thirds of almost all of his books are a fictional account that makes his point followed by a non-fictional explanation of that point. I’d read the non-fictional third of this book many times, but never the fable that comes before it. I think both are his best work. Here’s a quick listing of the five dysfunctions (as I plan to write more about this book later):

  1. Absence of Trust: The fear of vulnerability prevents the building of trust within the team.
  2. Fear of Conflict: The desire to preserve artificial harmony stifles the occurrence of productive conflict.
  3. Lack of Commitment: The lack of clarity or buy-in prevents making decisions the team will stick to.
  4. Avoidance of Accountability: The need to avoid discomfort prevents team members from holding one another accountable.
  5. Inattention to Results: The pursuit of individual goals and personal status erodes the focus on collective success.

I recently listened to Overcoming the Five Dysfunctions of a Team, which Lencioni calls the field guide for implementing this book. I can’t recommend both highly enough to anyone managing a team.

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I read The Vision-Driven Leader by Michael Hyatt, which would be a great book for someone looking to establish an organizational vision for the first time. Also read Visioneering by Andy Stanley, which I blogged about here.

What should I read next? Leave a comment below if you have a recommendation.

What I read in April

Charlie “Tremendous” Jones once said, five years from now, you will be the same person you are today except for two things: “the people you meet and the books you read.” Well, thanks to COVID-19, I didn’t meet too many new people last month. But, also thanks to COVID-19, I had a lot of extra time to read.

And, as promised, I’m sharing the best of what I read last month.

The Invisible Leader

According to author Zach Mercurio, most organizations are not tapping into their most powerful leader. That leader isn’t in the C-suite – in fact, it’s not a person at all. That leader is a compelling, authentic purpose for the organization – an Invisible Leader. The reason that this most powerful leader is untapped is that organizations are primarily focused on results: grades for students, quotas or other KPIs in business, etc. At best, these provide short-term motivational pushes – cramming to get a grade on a test, a flurry of activity at the end of the month to achieve a sales quota – but they don’t last. It’s authentic purpose, which Mercurio defines as “a person or organization’s genuine and unique reason for existence that is useful to others in society,” that acts as the ultimate differentiator and motivator.

Marketing Rebellion

We are in the midst of a third marketing rebellion, where consumers are rebelling (for perhaps the final time) against advertising. The first rebellion – in the early twentieth century – brought an end to the lies of the advertising that sold snake-oil and other dubious products. The second came with the internet, bringing an end to the secrets that advertisers had depended on (think MTV VJ turned podcaster Adam Curry saying, “There are no secrets, only information you don’t yet have”). The third marketing rebellion that we’re in the midst of is bringing an end to control. In this new era, two-thirds of a consumer’s purchasing decision involves “human-driven marketing activities like internet reviews, social media conversations, and word-of-mouth recommendations from friends, family, and online experts.” Author Mark Schaefer points out: two-thirds of your marketing is not your marketing. Then, he asks: So, what do you do? You forge human connections with your customers. Thus the tagline of his book: “the most human company wins.” At FiveFour, we say that your marketing is your customer experience, and most of Schaefer’s examples of human-centered marketing are what we would call customer experience. Consumers can see through lies, there are no secrets and businesses are no longer in control of their marketing. They want a human connection with the companies that want their business. Consumers are demanding remarkable customer experiences. And, as previous rebellions have shown, in the end, the consumer always wins.

Living Life Backward

I can’t remember the first personal development session I sat in that had me write my obituary, but I know I’ve done it several times. The intent of the exercise is to get you – as Stephen Covey has coined it – begin with the end in mind. According to David Gibson, the preacher who wrote the book of Ecclesiastes did that same thing over 2,000 years ago. Life is short – a mere breath. The world is confusing. We have far less control over our circumstances than we would like. The only certainty is our eventual death and the likelihood that none of our accomplishments will survive us. By confronting us with these realities, the Old Testament book asks how we should live in light of them, right now. The answer it provides is to stop trying to escape the limitations of life. Stop treating your life as a problem to be solved. Stop worshiping and depending on stuff. Be content with your circumstances. Be grateful for the rhythms of life, for they are a gift from God. “Gift, not gain, is your new motto.” Be generous with your time and possessions. Pay attention to the world around you rather than the distractions of life. “Eat, drink, and be merry, not because that’s all there is, but because that’s what there is.” What can help us do this? The reality of death. “Preparing to die means thinking about how to live.”

Overcoming the Five Dysfunctions of a Team

Patrick Lencioni has long been one of my favorite business authors and perhaps the best there is on organizational health. His style of writing easily-accessible business fables that teach timeless truths has led to millions of book sales. By far the most famous of those fables is The Five Dysfunctions of a Team: A Leadership Fable and those dysfunctions are worth listing: The first is an absence of trust among team members. Essentially, this stems from their unwillingness to be vulnerable within the group. A failure to build trust sets the tone for the second dysfunction, which is a fear of conflict. Teams that lack trust are incapable of engaging in unfiltered and passionate debate of ideas. That ensures the third dysfunction of a team: lack of commitment. Without having aired their opinions in the course of passionate and open debate, team members rarely, if ever, buy in and commit to decisions, leading an avoidance of accountability, the fourth dysfunction. Without committing to a clear plan of action, people often hesitate to hold their peers accountable, which creates an environment where the fifth dysfunction can thrive: inattention to results. If none of those dysfunctions sound familiar, you’re either not on a team or you are in a state of blissful ignorance. Every team suffers from at least one of these dysfunctions and could benefit from reading both books. While the fable clearly lays out the impact of these dysfunctions, it’s this Field Guide that shows you how to overcome them. And isn’t that the whole point?

the path between us

There is no shortage of personality and behavioral tests: Myers-Briggs, DISC, Motivators, the Five-Factor Model and an endless number of lesser-known models. In The Path Between Us, Suzanne Stabile introduces the Enneagram, an ancient personality typing system that leads to self-discovery. From the Greek words ennéa, meaning “nine” and grámma, meaning something “written” or “drawn” the nine-pointed Enneagram is a typology of nine interconnected personality types, each with distinct strategies for relating to the self, others and the world. It has become commonly used in the Christian community as an aid to spiritual formation. I first heard about it on the podcast of Donald Miller, read The Road Back to You: An Enneagram Journey to Self-Discovery and took the Enneagram test. It was fairly easy to identify myself and it taught me some important lessons about how I engaged with the world. Almost simultaneously, my wife was engaging the Enneagram in a study with her friends, so we decided to listen to The Path Between Us during a weekend getaway and it gave us valuable ways to better interact with each other. In my work, I lead teams through the DISC and the most valuable learning is always through their interactions with each other. The Enneagram is the same. It’s one thing to discover my type and learn more about myself. But the real insight comes from how I interact with others. That’s the insight that comes from The Path Between Us.

What You Do is Who You Are

Ben Horowitz is at pains in this book to explode the myth that you can establish culture simply by writing it down. That’s an important first step. You have to first define what you want. But it’s not enough. It’s not even enough to model the culture you want, even though that’s incredibly important. You must make sure that the values you want in your business are actionable, be crystal clear what those actions are, and constantly reinforce them. Horowitz goes back in history to draw lessons from obscure cultures like Haitian slaves, prison gangs and the samurai to show his main point: “Culturally, what you believe means nearly nothing. What you do is who you are.” A good read for those who need to define the culture of their organizations.

Jack’s Life: The Story of C.S. Lewis

This biography of C.S. Lewis was written by his stepson, Douglas Gresham. The book both benefits and suffers from that fact. The benefit was in the first-person account. The drawback was his tendency to cast Lewis in the best possible light, no matter what the circumstance. For example, the falling out between Lewis and J.R.R. Tolkien doesn’t even register. Ultimately, the book would have been improved had it included more first-person narrative and less defense of Lewis. However, given the relationship between the two and the fact that Gresham is no author, it’s understandable and the book is worth reading by fans of Lewis.

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I also read Nine Lies About Work by Marcus Buckingham. Many of the lies recast familiar learnings from his earlier books, but my favorite of the lies was #3: the best companies cascade goals. Not true, says Buckingham. The best companies cascade meaning. Crushing It! By Gary Vaynerchuck was a good reminder that, no matter how good you or your idea, success requires total commitment. Due to its role in bringing about the fall of the Soviet Union, One Day in the Life of Ivan Denisovich by Alexandr Solzhenitsyn was a compelling read. And I blogged about Finding Flow by Mihaly Csikszentmihalyi here and here. Finally, I read Lancelot by Walker Percy, which had some profound points while being profoundly weird.

What are you reading? What should I read this month?

Finding order in chaos

In his book, Better Under Pressure, Justin Menkes has identified three traits that enable the most successful business leaders to operate in challenging times: realistic optimism, subservience to purpose and finding order in chaos.

The ability to find order in chaos seems most applicable today, so I want to focus on the two elements that make up that trait.

First, is maintaining clarity of thought. In times of stress, the best leaders don’t just tolerate the stress. They use it to motivate themselves and the people they lead to focus on the right priorities.

One of the biggest temptations in the midst of a crisis is to become consumed by it to the point that all you can focus on is what’s right in front of you. As Menkes writes, “You’ve got to be thinking about how it’s going to be when you come out of it, not just six months from now, but six years from now.”

That’s where crises can actually be useful tools – if used correctly. They can help the leader focus the team on the essentials of the business and pursue them relentlessly.

Second is being driven to solve the puzzle. Business today, in a rapidly changing marketplace, is little more than a never-ending series of puzzles to be solved. As Menkes writes, “there is always a critical puzzle to solve.”

Successful leaders get curious in a crisis. How can we get through this and come out stronger on the other side? How have people navigated something like this before? What’s the next step?

I’ve talked to dozens of business leaders over the past few weeks, in various stages of the ability to find order in chaos. And here’s the takeaway: it wasn’t their circumstances that influenced this most directly.

One calm leader I talked to was at the head of a company in a good state – still doing some business, no debt, good cash position, and he was methodically meeting the crisis of COVID-19. Another, had completely shut his doors and furloughed is entire staff. He was also confident that they were in a good spot and was focused on applying for the SBA Paycheck Protection Program.

That’s the message of Menkes’ book. Leaders can’t control their circumstances, but they can always control how they respond to those circumstances. How you respond to a crisis – from a small personnel issue to one as a big as a new coronavirus – determines your ability to lead.

Who am I? Why am I here?

It’s that line, spoken in the 1992 Vice Presidential Debate, that made Admiral James Stockdale, famous. But it’s an obvious question. What am I planning to do here on this site? Why start a blog in 2020. I thought those were so 2002?

Nathan Schock preparing to teach Sunday School
Nathan preparing to teach Sunday School

If you know me, you know that I’m a life-long learner. In fact, that’s an understatement. I’m President & COO of FiveFour, a training company where I’m constantly learning, teaching and creating training content for the development of our many clients.

But learning is more than just my occupation. It’s part of my faith (the picture here is of me preparing to teach Sunday school) and my hobby. I also read novels at night in an (often futile) attempt to settle my brain for sleep.

For the past seven years, I’ve read at least a book a week. Two years ago, I increased that to two books per week and last year it was three. If you want to know what I’m reading, check my out on Goodreads.

Those books, along with the many articles and podcasts I consume on a regular basis, and the things I learn running two companies, will form the cornerstone of the content I post here. If you love to learn, you’ve come to the right place. I hope you’ll hang out for a while. And come back.