The Poison of Presenteeism

Source: www.tonystone.com

You'd think we'd learn by now.  But history has a history of repeating itself.

Organizations change their leaders in a desperate attempt to goose their numbers.  Wall Street's impatience fuels the tyranny of the quarter.

Less than a year after firing Mark Hurd and eventually replacing him with Leo Apotheker, the Hewlett-Packard board has now let Apotheker go and hired former eBay chief Meg Whitman as CEO.

While intense scrutiny is expended on the words, actions and first impressions of new leaders -- who are understandably focused on external communications -- not nearly enough consideration is given to what's said and shared within the company, to shore up the impact of the upheavals on employee morale.

Half the employees within HP's PC division must be wondering if they're coming or going.  But there's no doubt where their motivation and productivity is going: down the tubes.

The contagion is universal. I'm reminded of an article in Campaign Asia which caught my eye when it came out half a year ago.  A top-10 advertising agency in Singapore had announced the hire of a new Executive Creative Director.  While I have nothing but respect for the man's creative credentials, I recall his joining remarks giving me some discomfort:

"In Singapore, we have a new CEO, client service director, and now myself as ECD. It really doesn't get any fresher than that, working together as we rip up the plan, start anew and maintain the positive feeling that comes with change."

Ouch.

For all the survivors of that beleagered agency, a new leader had arrived to make his mark, never mind if it unravelled the good work of the past 18 months.

The fact is, change is uncomfortable. Our head tells us it is a necessary part of personal growth and remaining relevant to our organizations, but our heart rebels at being dragged outside our comfort zone.  People often resist change because of one or more of the following reasons:

1. They don’t see a burning platform for change.
2. They’re not convinced that the benefits of change will outweigh the costs.
3. No one has made the effort to paint a clear description of the end-goal for them.
4. They fear change because of perceived loss (loss of control, of credibility and power, of confidence and competence, of physical space, relationships, even jobs).
5. There is inadequate leadership at the top (change leaders don’t walk the talk, or are too pre-occupied with their own future).
6. There is a lack of transparency and proactive communication.

I suspect some of my friends at HP are hurting right now, and oozing the 'poison of presenteeism'.  I sincerely hope Meg Whitman, through the sheer force of her dedication and personality, will be able to render some first aid to staunch the flow.

Because at the end of the day, it's not the people who quit and leave that you should be worried about. 

It's the people who quit and stay.

HP Ditches Its Most Personal Brand Asset

I vividly remember the goosebumps I felt while working late at the office one night almost 10 years ago, when I first read a memo from my then-CEO Carly Fiorina about HP's big, hairy, audiacious goal to acquire Compaq. As we know, HP went on to complete the deal, laying the strategic foundations for subsequent CEO Mark Hurd to execute and drive HP to its market-leading position today.

So you can imagine my surpise and sadness to read, two days ago, of HP's plan to shed its mobile devices and PC businesses.

Now this isn't some rinky-dink wannabe trying to stand toe-to-toe with the PC giants out there. We're talking about a company that sold US$41 billion worth of PCs in 2010, and achieved an 18% market share in the 2nd quarter of this year (which, incidentally, made it the market leader by far -- Dell came in at #2 with a 13% share).

Why would an undisputed market leader surrender its dominance while seemingly at the top of its game?

Industry analysts trot out a justification cribsheet that seems, at first glance, to make sense: Razor-thin margins in a largely commoditized market; abysmal sales of its TouchPad tablet launched in July; a predisposition by current CEO Leo Apotheker to bare his software fangs and move HP to a higher-margin business and (to use that odious euphemism) "unlock shareholder value".

And yet -- I wonder if those who hail this move have fully considered two things:

The first, is what I'd call negative ROM (return on morale).  HP's Personal Systems Group (PSG), who up until this week were internally regarded as rock stars for turning around a struggling division by "making the computer personal again", have had the wind knocked out of their sails. Why, the company has discontinued its much-touted TouchPad, introduced only last month; and pulled it off the shelves in Australia just four days after their national launch.  You don't change tack so abruptly externally without torching the ground internally. A whole bunch of demoralised employees are going to quit and leave -- or even worse, quit and stay.

The second observation, is that HP is jettisioning its most critically vital brand touchpoint. For the past decade, HP has arguably been the only technology company with the breadth of products and services to engage consumers, SMEs and the enterprise segments. But the bulk of its brand-building potential has always resided in the consumer space. This business is transactional in nature (win a prospect over quickly, and repeat millions of time over; as opposed to clinching a BPO contract with one corporation after an 18-month pursuit). But perhaps even more importantly, SME and enterprise decision-makers are also consumers after hours; and they interact with their consumer products far more frequently (how many times have you used your smartphone today?) than with their corporate purchases (how many times have you pulled out your outsourcing contract lately to admire the fine print?)  By ditching its PC business, HP is relinquishing the countless opportunities it would have, each and every day, to delight its customers and exceed their expectations through the most personal of devices in its armoury. (Next to the mobile phone, a PC has the best chance to be at arm's length, more so than a printer or blade server.) 

Banks demonstrate their grasp of this fundamental tenet when they put real effort behind their credit card business. They know that in a world of 360-degree branding, it pays to know which 36 degrees count the most.

Will HP turn around its supertanker, and find traction with this new strategic tack?  To be clear, computing will carry on.  It's just that increasingly, it won't be on a computer.

The hallways of history are filled with portraits of companies which have turned their brands and businesses around (think Apple, Xerox, Target, Gillette, Tesco, Burberry, Samsung, Nissan and Ford, to name a few) and littered with the remains of several that haven't (Digital, Wang, Ericsson, Polaroid, Sunbeam, Saturn, Borders and Blockbuster come to mind). Time will tell if HP's big bet on business strategy is founded on a compelling brand strategy.  I have to admit, I can't seem to find any.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

The Quagmire of Low Price

A tech giant has just made a huge U-turn.

About a week ago, Dell announced plans to spend hundreds of millions of dollars on a new global advertising campaign.  What makes this new push radical -- for Dell -- is its stated intention to move away from price-focused, transactional advertising to a strategy that is more focused on the brand.

I wonder if it's too late.

Dell became the #1 PC company in the world on the back of its 'direct' model: a revolutionary, 'just-in-time' manufacturing process that dramatically lowered inventory costs, cut out the middle man, and served up huge profits in an industry infamous for its razor-thin margins. The pace of obsolescence in the PC industry is unforgiving -- so inventory management is critical. While other players typically struggled with weeks of supply (WoS), Dell counted its inventory in terms of hours. (At its brutal best, it even boasted 'negative' inventory -- it collected your money before it started to configure your purchase; and stretched out rebate payments.) For the longest time, no one could touch its supply chain efficiency.

Then the competition wised up. HP and other contenders got their act together and reduced their WoS -- but they also offered consumers the choice of buying from the retail channel, the sensory experience of physically interacting with the product (and bonding with the brand) before buying it.

Dell's competitive advantage was no longer so.  The only other residual impression it had registered, was low price.

Source: www.tonystone.com

But price is not a strategy.  It is the quicksand of a brand -- drop your price, and you will almost never be able to claw your way back to a firmer footing.  It is indefensible (sooner or later, someone is going to drop prices lower than you can afford to), and the only connotation that keeps it company is the wrong one -- poor quality.

Dell has finally wised up, too.  But it has a mountain to climb.

Paul-Henri Ferrand, its Chief Marketing Officer, has acknowledged that they "need to invigorate the brand".  It's about time.  But when he says that "there's a real space for us to become the most-loved PC company in the industry", my skeptic antenna starts twitching.

The campaign theme says, "You can tell it's a Dell."  With due respect to its creators, I believe it's the worst possible thing Dell can tell.  If all you've got is a much-eroded competitive advantage, and the double-whammy impression of low price / poor quality, don't wave a red flag in front of a bull. Remember the concept of 'credibility snap'. You need to work your butt off to prove you're a different company, then let your audience ascribe to you that compliment. In other words, don't say it. Just earn it.

I hope Mr Ferrand has deep pockets.  He's going to need them.

Is Reputation Meaningless Today?

Mark Hurd's smug face looks out across reams of newsprint and computer screens today. The recently deposed chief executive of HP has just been appointed Co-President of HP's erstwhile partner and soon-to-be competitor, Oracle.

In an inevitable reaction, HP has moved quickly to file a lawsuit against Oracle and Hurd, citing the need to protect itself against the inevitable disclosure of proprietary information about his former company in his new role. Essentially, in the course of doing his job as Co-President at Oracle, Hurd would inevitably draw on information gathered while at the helm of HP. You can enforce limitations on what a man does; but you can't enforce restrictions on what a man thinks.

This is disturbing on several fronts, not the least of which is the topic of reputation.

Well-regarded companies generate reputational capital that gives them a competitive advantage:
Their products and services entice more customers.
Their stock attracts more investors.
Their employees are more productive and loyal.
Their job vacancies attract more applicants.
Their clout with their suppliers is greater.
They survive crises with less financial loss.

An individual's reputation can be equally potent. But -- as Mr Hurd is demonstrating -- just as transient and fragile. As Warren Buffet, chairman & CEO of Berkshire Hathaway, has said: "It takes 20 years to build a reputation, but five minutes to ruin it".

Jeff Bezos, founder & CEO of Amazon.com, puts it just as vividly: "Reputation is what people say about you when you have left the room." Going by some of the comments posted here and here, Mark Hurd doesn't have too rosy a rep, Wall Street notwithstanding. Glassdoor.com gives him the lowest employee approval rating (just 34%) of any major tech CEO.
 
I have to wonder why Mark would make such a move, so soon after his stint at HP. It's not as if he needs the money.  He could have chilled out for six months, or until the proprietary secrets he carries around in his head lose their competitive edge with time. Either Larry Ellison was a persuasive man -- or he must awfully, badly want to stick it to his former company.

HP's Standards of Business Conduct (SOBC) recommend that employees pose themselves a simple question to decide whether an action is appropriate: "Before you make a decision, consider how it would look in a news story."  I served eight years at HP, and once turned down an all-expense paid trip to the Maldives offered by a media owner -- because it was drummed into us to avoid even the slightest hint of obligation in our transactions with suppliers.  After five years with the company, and barely a month after leaving it, Mark Hurd seems to have ditched those very same standards he swore to uphold not so long ago.

He may yet wring a bunch of cost efficiencies out of Oracle; but in my book, he starts in his new role morally bankrupt.

A Great Brand Is Brought Low

The newswires have been humming all day with the revelation that technology giant HP's CEO Mark Hurd has been forced to resign on the back of a sexual harassment probe and his falsifying expense reports to conceal his relationship with a female marketing contractor.

As a shareowner, I'm disgruntled. HP's stock is down almost 10% from its Friday close. While investors blink from the realization that the departing CEO's shenanigans have wiped about US$9 billion in value off the company's books, it looks as though he is still going to make off with a multi-million dollar severance package.

As an ex-employee, I'm devastated.  I used to work for a great company that traded on the strength of a culture reflecting the values of legendary founders Bill Hewlett and Dave Packard -- and the morale of a 150,000-strong workforce that believed in the HP Way. (During my stint with the company, 90% of us once voluntarily agreed to take a pay cut in order to stave off otherwise inevitable layoffs.) Today -- judging by the vitriol obviously written by insiders and which passes for comments at the end of the news stories -- that esprit de crops is long gone from the ranks of a gripeforce gutted by wave after wave of reorganization and the seeming inequity of it all.

Finally, as a student of strong brands, I'm discouraged. A brand is a fragile, porous entity.  It can be punctured by all manner of barbs -- some from within, some from the outside. The result is the same: a leaky bucket oozing goodwill and equity built up over the years. Make too many holes, and soon the brand will be running on empty.

Of the world's top 100 global brands in the year 2000, only eight would have appeared on a similar list, if one had been prepared, in 1900. A great brand can't just have a scintillating decade before fading from the social consciousness; it needs to run the full race, and finish well.

HP is too strong a brand to keel over and die just like that, but it has taken a body blow. Whether it'll recover and finish well, will depend on the people of HP -- all 304,000 of them.  The twin peaks of history and destiny loom over their shoulders.  I pray they'll respond.

It's called Customer Service for a Reason!

You've probably heard about the "three moments of truth" for a brand: When you are first made aware of the product (or service); when you puchase the product; and when you first use it.

It's logical deduction, when you think about it. Yet too many brand marketers ignore the obvious imperative to focus their energies on delivering the goods at these three critical customer touchpoints. The consequences can be significant.

Numerous research studies have been conducted in this arena over the past two decades. While the findings may not be exactly similar from study to study, the correlation is tight enough to draw these conclusions:

20% of your customers deliver 80% of your revenue. (The Pareto principle.) 10% of your customers deliver 90% of your profit.

It costs 6 times more to acquire than to retain a customer.
It costs 12 times more to win back a dissatisfied customer.
98% of dissatisfied customers don't complain. They just leave.

A very satisfied customer, on average, will tell 6 other people.
A dissatisfied customer, on average, will tell 12 other people.
A very dissatisfied customer, on average, will tell 20 other people.

I'm going to prove this last statistic right now. This morning, I made a familiar trek to the Customer Service Centre of a top-tier technology company. My printer had conked out over the weekend, and I needed a functioning machine at home.

The customer service rep informed me that spare part support for this particular model had been discontinued. I could not get my printer repaired; but I was offered a trade-in promotion: $60 off the retail price of a newer model, which would be delivered to my home. Great! Except for one thing: Delivery would take up to 14 working days.

I made the point that as a freelance consultant, I needed a printer at home rather urgently; and asked if there was any way delivery could be expedited. I was told this was the jurisdiction of their Sales department, that I would have to contact them directly, and here was the toll-free number.

I stepped back from the counter, sat down, and made the call. Turns out the number connected me to a call centre rep in Australia, who had no jurisdiction over or interest in helping me further. I was directed to call another number; this connected me to a guy in Manila who, while more empathetic, could give me no real help. I was given a third number, unmistakably a Singapore line. Would you believe it: this connected me to the company's Singapore office receptionist, who directed me to contact their customer service centre. When I pointed out that I was sitting in the middle of said location, after having toured half the Asia-Pacific, I was finally given the number of their Sales department. I dialled the number, negotiated several automated menu options, was finally connected to a sales rep who was away from his/her desk and whose VM box was full. 45 minutes after I initiated the first call, I found I could not leave a message, and was cut off after a cheery "goodbye".

That company lost a customer today. The sad thing was that it was one of my former employers. What's even sadder, is that I'm sure numerous other organizations similarly fall by the wayside. They forget that their brand is porous; that without attention to detail, they can be left holding nothing of value.

How, then, can brand marketers avoid this 'leaky bucket' syndrome?

1. Integrate your brand strategy with the business strategy. Work to build networks of influence across functions and disciplines. You cannot hope to succeed by merely considering your own patch.

2. Don't just focus on the first 'moment of truth'; give due diligence to the second and third. This is especially critical if you're operating in the service industry.

3. Do all you can to build customer loyalty. Not just because of the costs of customer acquisition; but because loyal customers offer you a bigger share of their wallets, and often become your extended sales force.

Gotta go; I need to print something.

Carly for California?

Big brands tell a never-ending story. Earlier this month, a brand from my past resurfaced with a new chapter, when Carly Fiorina announced she was running for the US Senate. Now anyone who's been around IT or lived in Silicon Valley recently will recall the high-profile celebrity CEO of Hewlett-Packard whose tenure from 1999 to 2005 was exhilarating and yes, excruciating at times, for HP employees of that era. I vividly recall her story; I am one of the survivors.

Carly oversaw arguably the most audacious merger in business history to that point in time, when HP acquired Compaq over a long-drawn campaign in 2002. The merger was approved at a watershed EGM by the narrowest of margins (less than a percentage point, if I recall correctly); and the company spent the next 3 years fighting to prove the wisdom of the strategy.

Sadly our progress wasn't quite enough or fast enough for Wall Street; so in 2005 Carly was given the boot. In
the intervening years, Mark Hurd has come in and
delivered what Carly could not -- operational efficiency and subsequent marketplace success. Carly, for her part, has had to contend with an even larger, more personal battle -- with cancer. She has reportedly come through it, and is now ready to represent the people of California.

It isn't going to be smooth sailing. The reception to Carly over the past few weeks has been, well, frosty and skeptical. Some more vocal bloggers & commentators have hauled her over the coals with seeming relish. (By the way, notice how that's the way with many high-profile brands? They are not shy of -- and indeed polarize -- public opinion. You either love them or loathe them: think about Microsoft or Nike of a few years back.) Yes, she made some gaffes when announcing her intentions and in follow-on interviews. And yes, her campaign website, http://www.carlyforcalifornia.com/, gives a little too much credit to herself for HP's current standing and not enough to Mark Hurd. But I wouldn't be too quick to write her off as an unworthy candidate.

This is the CEO who inspired a whole generation of HP employees to believe, to give of their best, and who came along with her on that incredible journey to preserve the best and reinvent the rest of the proud HP legacy. (She made it easy for me to conduct brandjams across the Asia-Pacific by providing an inspiring keynote that rallied our troops around the cause -- first time I've seen an intelligent audience give a videotape a standing ovation.) While history has shown -- through Mark Hurd's success -- that Carly was probably not equipped with enough operational savvy to execute her grand plan ... it is clear to me that Mr Hurd (with due respect) would probably not have been able to get the merger approved in the first place. It needed someone with the personal charisma and communication skills of Carly to seal the deal. In summary, Carly was the right leader for HP then; as Mark Hurd is absolutely right for HP today.

So. What are the chances of Carly bringing some change to California? I'd say, let's give her a bit of room to flex and engage. Good leadership is hard to come by. My only caveat, is this: That government doesn't go out of business -- whereas employees in private companies realize their jobs depend on executing the leader's strategy flawlessly. Civil servants, speaking bluntly, have a more iron-clad ricebowl. They may be unwilling to accept the need for change.

Carly may yet find this hill even harder to climb than HP.