Starbucks, Starbucks, Everywhere, Part II

In 2004, I blogged about Starbucks’ implausible Forbidden City location (post includes picture) in the heart of one of China’s most prominent national monuments.

Today, under pressure from the Chinese government, Starbucks announced that they’re closing the location, reflecting “Chinese sensitivity about cultural symbols and unease over an influx of foreign pop culture,” according to a very short blurb about this in today’s Wall Street Journal.

It must be indescribably different to live in a society that’s so tightly controlled.

Post 4 of 4 in the series of Scaling CMO’s- the other posts are, When to Hire your First Chief Customer Officer, What does Great Look like in a Chief Customer Officer and Signs your Chief Customer Officer isn’t Scaling.

You can engage with each person on the executive team one-on-one to understand what their issues and challenges are, but I’ve found that engaging with the CCO offsite with customers is far more productive and leads to a better understanding of the service organization than any other meeting time. I have typically spent the most time with or gotten the most value out of CCOs over the years doing the following.

In person at “Canary in the Coal Mine” customers. They don’t use canaries any more in coal mines, but the principle applies to companies: What are the early warning signs that you’ve got big problems looming? The earlier you discover those problems the better, and the CCO is usually the first person to figure out that something isn’t right with your product or service. I always find that the largest clients, the most demanding ones, the ones who push you around, the ones who are highly critical or you, are the ones who make your company a better company.  At Return Path, we had those types of clients over the years, from eBay, to DoubleClick, to Microsoft, to Groupon, to Facebook, to Bank of America—and that’s just the short list off the top of my mind.  The demanding customer is the one who breaks things and forces you to own up to your lack of scalability.  They also either take you to task or threaten to pull their business if you don’t clean up your act.  As painful as some of those meetings are, they are also ones I always wanted to attend in person with my CCO, both so I could eat whatever form of crow needed to be eaten as the Chief Crow Eater (which sends a very powerful message to the customer), and also because the CCO and I could experience the chirping of the canary in the coal mine and learn from the experience together.

While it’s important to engage with the CCO in the critical meetings with demanding customers, it’s also important to understand the base.  There’s an old saying from the hardware world that goes, “God was able to create the world in only 7 days because God didn’t have an installed base.”  The new world of Internet technologies, SaaS, and agile development is one where your installed base of customers is your biggest asset, not a millstone around your neck.  Some of the most meaningful experiences I had over the years with our CCOs was to be in market, spending time with all kinds of customers together in small groups and large, deeply understanding their needs and use of our product.

The CCO role is one that is easy to ignore or put on the back burner if things are going smoothly at your company, but as CEO I feel that it is best to stay close to the market and engaging with the CCO with demanding customers and with the base is a good way to understand your company and CCO better.

(You can find this post on the Bolster Blog here)

It Never Goes Without Saying

Remember that old adage, "It goes without saying…"?  That saying shouldn’t exist inside a well-run company.  Communication — real communication, not implied communication — is the foundation for a successful business.

We human beings live for "moments."  We mark time by observing regular occasions like birthdays, anniversaries, and holidays.  While religions and cultures differ on the details, we mark the cycle of life with things like baby namings, bar mitzvahs, confirmations, first communions, weddings, and funerals. 

There’s no reason the workplace should be any different.  Think about these few examples where it could "go without saying," but where you’re so much better off creating that "moment" by:

– Publicly acknowledging a member of your team for reaching an employment anniversary (the bigger the number, the heartier the acknowledgment)

– Laying the groundwork for a new initiative by reminding the team in a meeting or email about the company’s mission and how this initiative fits into the big picture

– Marking the end of a project or a transition period with a celebration

– Meeting two weeks after the end of a project or a crisis to do a post-mortem analyzing what went well and defining lessons learned for the next time

– Publicly thanking a colleague for helping out on something — anything

– Giving an employee a quick reprimand or constructive feedback right after an incident (probably privately) instead of letting the issue fester and its details slip from short-term memory

Clear, simple communication is the cheapest and easiest way to create a fun, rewarding, accountable, and focused work environment.

It’s election season, the GOP convention is literally in my backyard, and while this is not a political blog, I can’t help myself. As we as Americans grapple with the question of who we want to be our next leader (or at least those people who live in the 11 annointed swing states do), I have had a lot of thoughts lately about the question of what makes a good leader, and what the differences are between successful leadership in politics and successful leadership in business.

James O’Toole’s article on President Bush on page 31 of the September issue of Fast Company (no link available yet) brings up a really interesting point in comparing Bush to former president Ronald Reagan. He asserts that “what made Reagan effective and respected was that his actions followed consistently from a positive worldview.” (I’d also argue that the positive worldview as a starting point had something to do with it, but that’s beside the point.) He goes on to say that Bush has an “implementation problem” in that he “has vacillated between contradictory approaches to leadership: realism and idealism.” His central thesis is stated very clearly that

“Realists and idealists can both be effective leaders. But one cannot be both at once…The leadership lesson for GW – and for any leader – is simple: Followers don’t much care if leaders are realists or idealists, but they distrust inconsistency.”

This may or may not be true in the political arena, but I know it’s not true in business. Jim Collins’ watershed books Built to Last and Good to Great — both must reads! — describe the ideal CEO as someone who can simultaneously be optimistic and idealistic about the future of the company while simultaneously recognizing and dealing with the realities of the short-term situation. Ironically for this posting, Collins calls this the Stockdale paradox, after retired Admiral James Stockdale, a military leader and erstwhile vice presidential candidate of Ross Perot in the 1992 election.

As CEO, I have to constantly be selling the vision of the company — what we’re trying to become and how we’re going to get there — in broad strokes to my investors, board, management team, employees, and even customers. It’s that vision that keeps the whole machine running and keeps everyone focused and excited and working hard towards our long-term goals. But I have to be equally vigilant about the mundane realities of the current quarter, making our numbers, containing costs, and running the machine. If I did either one without the other, I think the whole system would break down.

Is Bush’s problem, as O’Toole asserts, that he articulated two different types of reasons for the war in Iraq — one rooted in Realism (WMD) and one rooted in Idealism (freedom and democracy)? Same goes for his states reasons for the tax cut — Realism on the one hand (to stimulate the economy) and Idealism on the other hand (shrink government). I agree that the Bush Administration has occasional implementation problems and doesn’t have nearly the “following” that Reagan and other more successful leaders in the past have, but I don’t think they’re caused by combining Realism and Idealism in the President’s leadership style. I think the leader of the free world has to do both well, each at its appropriate time, in order to be effective at his job.

Next up in this series: Admitting Mistakes.

If Only International Relations Were This Easy

Iceland is one of those weird places on earth where two continental plates meet — and you can see it. Here we are, me on the American plate and Mariquita on the Eurasian plate, with the earth seemingly coming apart at the seams in between.

If anyone’s interested in a short travelog to Iceland, here it is.

Retaining good people has always been at the top of my list, even in the dark days.  But hiring and managing in an environment that’s once-stagnant-now-growing presents some real challenges.  Many of these aren’t unique to startups — it’s always tough to find A players — but there are three things I’ve observed that are uniquely tough about hiring in an entrepreneurial environment:

Sometimes It’s Worth Travelling 5,000 Miles for a 5 Minute Meeting

I re-learned this lesson shortly before the holidays.  We’re negotiating a big deal with a company out on the west coast, and we were at a tense and critical spot in the negotiations.  I knew that the only way to move the deal forward to a handshake and a term sheet was to meet face to face with the decision makers on the other side of the table, in person. 

So I got on a plane.  It wasn’t my first choice of activities, and although I was able to work a couple of other meetings into the trip, the trip was a long way to go for a really short meeting.  But it was 100% worthwhile, with a very specific mission accomplished.

As I mentioned in one of my earliest posts, it’s important to be "Present AND Accounted For" in business settings, and with everyone’s busy schedules and increasingly frenzied and multi-tasking office environments, it’s harder than ever to really get someone’s attention.  There’s just no substitute for looking someone in the eye and doing a real handshake, not a virtual one.

Boiling the Frog

We boiled the frog recently at Return Path. 

What the heck does this mean?  There was an old story, I’ve since been told apocryphal, we told a lot back when I was a management consultant trying to work on change management projects.  It was basically that:

If you throw a frog into a pot of boiling water, it will leap right back out.  But if you put a frog in a pot of water on the stove and then heat it up to boiling, you’ll boil the frog because it never quite realized that it’s being cooked until its muscles and brain are slightly too cooked to jump out.

How have we boiled the frog?  Two ways recently.  First, we let a staffing problem sneak up on us.  We were short one person in a critical area (accounting and business operations), and we had decided to try to go without the extra person for a month or two for cost-savings reasons.  Then, another person in that group unexpectedly left.  Then, another person in that group got seriously sick and was out for several weeks.  The result?  We were down three people in an area very quickly, without a proper pipeline of candidates coming in the door for any of the open positions.  So for a period of time, we can’t get the things done out of that group we want to get done, despite the heroic efforts of the remaining people in the group.

Second, we have had an Exchange server problem that has been plaguing one of our three offices for six months now (no, the irony of an email company having internal email problems isn’t lost on us).  In retrospect, the first time we had a big problem with it, we should have dropped everything, brought in an outside consultant, and done a rapid-fire infrastructure upgrade/replacement.  But we were truly boiled here — we kept thinking we’d fixed the problem, the situation kept deteriorating slowly enough to the point where the productivity of this one office was seriously compromised for a few weeks.  Happily, I can report this weekend that our IT team is cuting over to our new environment — "the promised land," as they call it.

How do you stop yourself from getting boiled?  I think you have to:

1. Recognize when you’re in a pot of water.  What areas of your company are so mission critical that they’re always at risk?  Have you done everything you can do to eliminate single points of failure? 

2. Recognize when someone turns on the burner.  Do you know the early-warning signs for all of these areas?  Can you really live without an extra person or two in that department?  Is it ok if that server doesn’t work quite right?

3. Recognize when you care about the frog.  You can’t solve all problems, all of the time.  Figuring out which ones need to be solved urgently vs. eventually vs. never is one of the most important roles a decision-maker in a company can make.

Email Deliverability Data

We just published our 2004 year-end email deliverability report.  Feel free to download the pdf, but I’ll summarize here.  First, this report is very different from the reports you see published by Email Service Providers like Digital Impact and DoubleClick, because (a) it measures deliverability across a broad cross-section of mailers, not just a single ESP’s clients, and (b) it is a true measure of deliverability — what made it to the inbox — as opposed to the way some ESPs measure and report on deliverability, which is usually just the percentage of email that didn’t bounce or get outright blocked as spam.

Headline number one:  the “false positive” problem (non-spam ending up in the junk mailbox) is getting worse, not better.  Here’s the trend:

Full year 2004:  22%
Second half 2003:  18.7%
First half 2003:   17%
Second half 2002:  15%

Headline number two:  mailers who work on the problem can have a huge impact on their deliverability.  Obviously, I’m biased to Return Path’s own solution for mailers, but I think you can extrapolate our data to the broader universe:  companies that work on understanding, measuring, and solving the root causes of weak deliverablility can raise their inbox rate dramatically in a short time — in our study, the average improvement was a decrease in false positives from 22% to about 9% over the first three months.  But we have a number of mailers who are now closer to the 2% false positive level on a regular basis.

How Much Blogging is Too Much Blogging?

After being completely (and blissfully, I might add) offline for 11 days, I have returned to find 247 new postings in my Newsgator folder.  Only a short year ago, I would have come back from vacation to too many emails…now I get to sift through too many emails AND too many blog postings.

On the bright side, I have at least these two images of the Barolo wine country and the Amalfi coast solidly etched in my brain to ease re-entry to work. Anyone interested in a brief travelog of the Italian countryside, click here and follow the top link.

Email and Business Development: Two Great Tastes…

Interestingly, Chris Baggott offers compelling evidence for the opposite view he intended in his recent posting claiming email is not an acquisition tool.  I respect Chris as a thought leader in the email marketing services industry and am a fan of what he and his colleagues have done in building Exact Target, but I think he’s dead wrong on this one.

Email is a phenomenal customer retention tool, no question about it.  I totally agree with the claim that website owners should never let a prospect escape from their website without signing up for an email program.  It’s very true that spending money on website traffic can go to waste if a browser never buys or returns — or worse, if you pay the same search keyword fee time and time again to reach the same browser. 

However, his own post starts to lay out the reasons why email is, in fact, also really good for acquisition marketing:  because we all still love it, we spend a lot of time reading and responding to it, and we value the information it brings to us.  In short , it’s got all the strongest attributes of a great acquisition medium: reach, frequency and, most importantly, trust.  Isn’t that what advertisers look for when they are trying to figure out whether to spend their acquisition dollars in print, radio, TV, outdoor, or direct response vehicles?

In fact, more consumers and B2B professionals spend more time in their inboxes than they do consuming any other form of media — digital or not.  So, if you want to reach your target, you need to be using acquisition email.  And definitely never let a prospect come to your web site without giving you his or her email address for future contact!

Just because email is so extraordinary a retention and customer relationship tool, doesn’t exclude the reality that it also works really well to reach new prospects.  Smart marketers use email for both.