davidpoulos.com

Category: Contributor

  • Does More Pay Equal More Value?

    Does More Pay Equal More Value?

    There has been a lot of talk recently regarding and considering CEO compensation, especially in the financial sector, where the numbers compared to the average person’s income are literally astronomical. In my mind, it comes down to contribution.

    Some companies are so well-constructed, that you could put almost anyone in the corner office and they would continue to run things profitably. Some are so inherently dysfunctional, that the most brilliant leader would founder in the effort to right them and run them logically and practically. But the average firm can benefit from strong leadership to set the tone, strategic direction, and operational efficiency that leads to success.

    Typically this is a seasoned individual, with a good education, a strong network of colleagues and contacts, and enough political awareness to work his way into the job. There are some, especially in the tech sector, that don’t seem to fit this mold, but the vast majority of brick and mortar, bread and butter companies have an executive vet at the helm, one who is compensated handsomely for their work. But what do they really contribute on a daily basis?

    Some lead by example, and therefore contribute as a role model and exemplar just by arriving and communicating within the headquarters office or division facility. Some lead through growth strategy implementation, working with M&A attorneys, brokers, bankers and business owners to grow the company through strategic acquisition of other firms, either to help shore up weaknesses within the firm’s core competences or expand into new affiliated or related markets. Some lead through mentoring, employee relations and succession grooming within the ranks, training and educating younger executives to move through the company with the goal of one day paying back that investment by leading the firm to greater profitability.

    Those may seem like intangible approaches or qualities, but they contribute in numerous ways to the success of the company. In the case of some of the more high-profile financial firms, I’m not entirely sure the millions and in some cases billions that the CEO receives in compensation is proportionate to their contributions to the firm. In some cases, reported ad nauseum in the media, the same executives responsible for driving the profitability out of the firm are the ones now reaping even greater rewards, while the stock holders and general public flounder trying to make ends meet.

    There has been a theory advanced that the CEO shouldn’t receive more than ten times what the lowest paid worker receives. For manufacturing companies that outsource production work to third-world countries, that compensation could be very low indeed. While the mechanics of the theory need some fine tuning, the sentiment is borne out of an innate sense of fairness, an internal gauge of “rightness” and correctness that we all possess when assessing such things. If you still go to the same office I do every day, do basically the same work, maybe among a more wealthy group of people, do you really deserve 100 times more than I do in compensation for it? – not likely.

    Someone ought to do a correlative study cross-referencing the national journalists list of the top 100 best companies to work for, against the top 100 highest compensated CEOs, and see if there is a correlation between compensation and how the workers rank the company. My guess is the correlation would be rather low, and here’s why. Companies that are “Great” to work for usually provide a wide range of outstanding personal benefits, ranging from free child care to extra days off, to paid education, to personal loans, to flexible hours or work-at-home options to help better balance personal- and work-lives of the employees. Those benefits sometimes have expenses attached to them. Places where the CEO is extremely highly compensated are driven by profitability and sales volume, rather than work-life balance for the rank and file – different motivators, different cultures, different definitions of the word “Company”.

    Let us know what your definition of the word “Company” is from a cultural standpoint and whether yours is a “great” place to work, and how much your CEO is compensated, and we can compile the results and see if our theory holds water. Can’t wait to hear from you . . .

    If you liked (or disagreed with) this post, and would like to read more, subscribe to this blog and it will be delivered to your inbox for free weekly. Don’t forget to pick up a copy of “The Marketing Doctor’s Survival Notes”

     

  • Publish or Perish – By What Definition?

    Publish or Perish – By What Definition?

    In today’s social media-immersed, blogosphere saturated, media-driven, net savvy world, the nature of publishing has certainly changed. The very definition of publishing has changed as well – but is that a good thing?

    The Internet has provided the everyman a unique opportunity to broadcast their innermost thoughts to the world, no matter how inane or irrelevant, with no editing, correction or restraint. While this may seem freeing, in the end it has lead to a huge, nearly unnavigable mass of questionably valuable information.

    Now when researching a topic, you certainly have more information available and in a more convenient format – but is it valid, accurate, vetted and unbiased? Probably none of the above in most cases.

    This glut of information has given rise to some unique phenomenon as well – the speed with which urban legends develop and spread is breathtaking compared to just a decade ago. Viral information can be more damaging than real viruses, and travels faster, and with greater impact! Cyber-bullying is now an additional concern parent’s have to deal with, and the youth of today have diluted the accuracy, eloquence and power of their native English nearly to the point of unintelligability, in the interest of speed and convenience, holding true to an artificially-imposed brevity limit. Progress . . .?

    Internet publishing has some tremendous advantages, in speeding the exchange and sharing of scientific, philosophical, cultural, economic and ideological information. In the old days, when a book or magazine article was “published” in print, a whole host of scholarly, educated, experienced professionals read, fact-checked, edited, contributed to and proofed a work before it was released to the public. This may have slowed the release of information, but it gave the information a fighting chance to be at least passably accurate and honest.

    Today, most of those professionals have been rendered obsolete, and those skills are rolled up into a single individual – the author, right or wrong.

    What does all this have to do with marketing? Simply this: take care in assessing what you “put out there” to market your company, build your brand, promote your products – one false step not only travels faster than you can catch, but is permanent, residing in servers and living on hard drives around the world!

    Good luck all you nascent publishers out there!

    Be sure to pick up my published efforts, “The Marketing Doctor’s Survival Notes” – Amazon/CreateSpace can have it to you in a just a couple of days!

  • Don’t Assume You Know Your Customers

    Don’t Assume You Know Your Customers

    Note: Adam Richardson provides exquisite validation to Granite Partners’ research based marketing approach, in this well thought out blog post from Harvard Business Review. I couldn’t have said it better, so I bring it to you in it’s original form. Enjoy!

    If the recent U.S. election taught us anything, it’s that you have to be careful assuming that others see the world the way you do. It’s very easy for any organization — political, commercial, not-for-profit — to get caught up in its own echo chamber of like-minded believers. After certain blogs, social media outlets, pundits, and talk shows whipped themselves into a self-reinforcing frenzy, many people were stunned by the election outcome. How could so many “experts” have gotten it so wrong?

    Shared enthusiasm and beliefs are valuable assets when pushing for a goal. In a business context, it’s vital that your employees are emotionally invested in your company’s vision. But there need to be checks and balances to make sure that the vision matches external reality, or you could be enthusiastically charging toward a similar shock. As the science fiction author Philip K. Dick once remarked, “Reality is that which, when you stop believing in it, doesn’t go away.”

    Getting an objective view of who you, as an organization, are trying to serve is critical, but it’s easier said than done.

    Most companies are the centers of their own universes. It’s a natural enough impression; after all, the products and services they offer are on their minds 24/7. The trap is in those companies deluding themselves into thinking that they are as important to their customers as they are to themselves. This is almost never the case. This delusion interferes with understanding customers and their needs, and frequently leads companies to talk to customers in ways that seem foreign or confusing.

    Financial services, the area that I work in now, is an example. It is rampant with confusing jargon and terminology, such as compound interest, ETFs, or the now infamous CDO, or collateralized debt obligation. A 2008 AARP study found that 79% of Americans think prescription drug instructions are easier to understand than materials from financial firms.

    But the financial services industry is not alone. Health care, wireless communications, real estate, information technology, and airlines are all major industries that consistently confuse and turn off their customers, leading to mistrust and disloyalty.

    Jargon in communication is just the surface of the problem. People who work in these industries day-to-day become infused with insider knowledge, techniques, and perspectives. After a while they forget their former lack of expertise and start to assume that everyone must also possess their knowledge — customers included.

    Employees are like hostages suffering from Stockholm syndrome — they take on the worldview of their employer and industry, and forget what it’s like to be a “regular” person without this specialized knowledge. Over time, employees start to talk mostly about tangible product features and become distanced from customer needs and benefits. Value propositions become more abstract and lose the naïve freshness of seeing of who customers really are and how they think, behave, and feel. It becomes increasingly difficult to see your company and industry as nonexpert outsiders do.

    How do we fix this? There are many research methods for better understanding customers, and you may be using them already: ethnographic research, focus groups, surveys, in-store intercepts, and so on. It’s also important to encourage employees to use competitors’ products, so they don’t develop tunnel vision. These are good and necessary, but you can have lots of data and still not see what it’s saying.

    There are two things that can stand in the way getting real insight:

    1. Admitting you may be wrong. If the organization isn’t willing to recognize that it’s not connecting with customers, dismisses indications that customers are confused or uninterested as “irrelevant outliers,” or avoids the message by shooting the messenger, then all the research in the world won’t help. Yes, there are times when an organization needs to be visionary and do things that at first most customers don’t get. Salesforce.com’s pioneering role in the nascent area of cloud computing services is an example of a company that was willing to lose some customers early on in pursuit of the bigger market later. But you have to be very confident in the size of the potential opportunity — and have the organizational fortitude — to pull of that big of a bet. Silicon Valley is littered with companies that made similar bets and failed because ultimately their proposed view of reality never came to align with that of their target customers’.

    2. Garbage in, garbage out. If you’re talking to too narrow of a sample (as was the case with many of the conservative pollsters) or framing research questions in ways that subtly pre-bias the answers, you could be inadvertently creating ever-better products for a shrinking audience. Don’t just meet with your best and current customers; get outside the echo chamber by meeting with ex-customers or people who have never been your customers but love your competitors and the upstart disruptors. (Yes, this often stresses out the sales team.) Years ago, when I was at Sun Microsystems, many at the company initially dismissed the cheap servers then being introduced by Dell and Compaq. Our loyal customers at large companies with massive IT budgets weren’t interested in these low quality machines. Not then, anyway. Sun couldn’t bring itself to lower its standards, and as a result, it ceded a huge part of the market to competitors moving up from the PC space.

    Don’t wait for a catastrophe to show you when you’ve become too caught up in your own hype. Make sure you are continuously seeking a more thorough and objective understanding of your customers, harness the fresh perspectives of new employees, and have the humility to recognize that your customers may have needs and lives beyond your company.

    Adam Richardson
    Adam Richardson helps lead customer experience innovation for Financial Engines. He is the author of Innovation X: Why a Company’s Toughest Problems are its Greatest Advantage. Follow him on Twitter at @richardsona.