Harvard Business Publishing

At a well-known five-star hotel, I asked if I could extend my checkout time by two hours. I was told no; the hotel was full. Unless I paid for a half day; then they'd accommodate me. Huh? If the hotel was full and needed my room, why would it make a difference if I paid them? And if they did have the ability to extend my checkout, why would they charge me? I spoke with the manager. Same answer. That was the last time I stayed at that hotel franchise. Contrast that to my recent experience at the Four Seasons in Dallas, TX, a hotel where I've stayed several times. When I arrived I didn't have to stand in line to check in; the valet simply handed me the key to my room. Which was set-up exactly as I like it: a yoga mat and an exercise schedule on the... Keep Reading »

Trimming customer service costs while boosting customer satisfaction — and hence loyalty — is challenging in the best of times. During a downturn, performing this balancing act becomes both more difficult and more critical to achieve. Many companies don't even try. They respond to straitened economic circumstances by cutting service costs and sacrificing service quality in a quest to hit short-term financial targets. When the economy starts recovering, they beef up investments in customer service to win back customers. And they find it's too late. Look at what happened to a U.S. technology company we'll call ABC-Tek when it became one of the first to move tech support to India. Offshoring this service cut costs, but at the price of customer loyalty. ABC-Tek's offshoring strategy wasn't a bad one. But in executing it, the company focused too much on costs and too little on managing the customer experience. Ramping up... Keep Reading »

Managers are expected to make decisions and are taught models to do so. For instance, in a typical finance class, net present value calculations encourage them to decide what cash flows to move earlier or later. Portfolio theory encourages them to diversify uncorrelated risks, and option theory teaches them to increase alternatives and delay decisions. Strategy models encourage decisions that maximize influence over customers, suppliers, and rivals. In a world turned economically upside down, there is a hitch. Deciding something implies having effective understanding (mental model) of how the world works and having enough data to get the right answer. But how things work is not understood today. How actions lead to outcomes is now unclear. New models have to be discovered to understand what to do. "High velocity organizations" offer lessons about how to get new answers to old questions: What needs do markets have, what products and services... Keep Reading »

Recently, Sprint Nextel announced that in Q4 2008, they lost 1.3 million customers. It's tempting to blame the recession, but then how do you explain AT&T; Wireless gaining 2.1 million subscribers, and Verizon gaining 1.4 million? Forrester's 2008 Customer Experience Index suggests a reason. Sprint Nextel was far and away the worst-ranked of the wireless service providers. Out of all the companies (from a range of industries), Sprint Nextel ranked 108 out of 114. Verizon Wireless ranked 59th, and AT&T; 64th. It's in difficult economic times that customer experience matters most -- you don't want to make it even easier for your customers to walk away because they've been so frustrated working with you. The key to delivering a great experience for is to have empathy for your customers. And the best way to develop that empathy is obvious, yet it requires constant repeating: Go to them. It's shocking how... Keep Reading »

Download video transcript (PDF) In lean times, there's nothing more valuable than a great new product idea. Why not invite your customers to share their creativity with your company -- and turn the best ideas into actual products! That's what legendary shoe designer John Fluevog has done, with a project he calls open-source footwear. ... Keep Reading »

I used to love the television game show "The Price is Right." Beyond the insane level of excitement of the show was the oddly compelling quest to discover the right price of everyday items like refrigerators and bar stools. I always wondered how people could be off by multiples of the actual price--"people" including me, I confess. But guessing prices on television is not the same as paying prices in stores. In real life, shoppers aren't so easily bamboozled. In fact, these days, they're paying especially close attention to prices, and are much more likely to know exactly how much they're paying for that bottle of shampoo or packet of shredded mozzarella. For bigger-ticket purchases such as TVs and car insurance, they're helped with a myriad of comparison tools on the Internet--and by social networks that spread the word about how to get the best deals. And now, with applications... Keep Reading »

When I worked with entrepreneurs and leaders in Europe, I often heard complaints like: "American companies have a habit of coming into Europe full of ambition, searching for big markets, but without fully understanding what it takes to sell a product, build a brand, or forge partnerships in each country." It seems obvious: our assumptions become less valuable the farther our experiences are from our decisions and customers. Yet, these cultural traps always seem to cause frustration and agony and, regularly, steep losses or strategy restarts. Local hiring is just the beginning- we have to make sure we are solving the right problems for customers. Leading companies such as Procter & Gamble and Google have realized that the more clearly you understand your customer or partner, and their context(s), the more likely you will be able to offer the right solutions, build the right business models and win through global... Keep Reading »

Among Chicago politicians, on the heels of the corrupt (albeit amusing) tenure of impeached governor Rod Blagojevich, the talk is all about "pay-to-play" politics. Among frequent flyers, on the heels of a steep economic downturn that continues to put financial pressure on the carriers, the talk may soon turn to "pay-to-pee" airlines. Yes, you read that right. (By the way, I pride myself on having coined the term). The BBC recently conducted an interview with Michael O'Leary, the combative, controversial, and endlessly colorful CEO of Ireland's Ryanair. In the interview, O'Leary said the airline has contemplated installing coin slots in on-board bathroom doors and charging customers one British pound to use the facilities. O'Leary and his colleagues are nothing if not disruptive. They have reshaped air travel in Europe, with a business model that is relentless about cutting costs. Indeed, Ryanair makes Southwest Airlines look downright extravagant. A few years... Keep Reading »

Dick Harrington was most recently the CEO and President of the world's largest information media company Thomson Reuters and is largely recognized for his transformation of the company from a diversified holding company to the information services juggernaut it is today. He currently serves as my Partner and Chairman at our early-stage investment firm, Cue Ball. He and I recently had a conversation about the wisdom of applying big company lessons to small ones. Here are some highlights from that conversation: After spending about a decade running a Fortune 500 - the world's largest information media company - what motivates you to now work with early stage and small businesses? Small businesses employ over half of all American private-sector employees and are responsible for most of the growth within the United States. Over the past decade, they have generated about 75 percent of new jobs annually. Most important, it is... Keep Reading »

A few weeks ago, shopping for my family at the supermarket, I did a double-take in front of the juice display. My standby, Tropicana Orange Juice (with Some Pulp) was no longer there. In fact, I didn't see any Tropicana juices. In disbelief, I looked around for another option, and it was only after this second look that I realized they did have Tropicana, but in newly-designed cartons. The new design wasn't bad, but it lacked the distinctive personality of the orange-with-the-straw image, instead favoring a cool and generic aesthetic. I came away disappointed. It turns out I was not the only one. Earlier this week, PepsiCo, owner of Tropicana, announced that it was responding to a massive public outcry against the new look by scrapping it and returning to their iconic orange. This begs the question -- how did they get here? That they were ready to commit $35... Keep Reading »