Posts from — May 2008

For a very long time Alan Greenspan, in his role as the top Banner of the US Federal Reserve Bank had enormous influence on the direction of the US economy. Especially in challenging economic times, readers, the media, and listeners to his testimony in congress as well as at many other places were literally craving for every word he said.

The Fed had developed a cryptic language, almost like graduate level academia, which sounds sophisticated but often doesn’t get to the point or allows for multiple interpretations. It became a standard to interpret what the writers of the minutes of the all important Fed meetings actually meant to say. Every so often Alan Greenspan himself stepped in front of the microphones and used basic English language to express his views or the views of the Fed.

One of these mantras was the recurring theme that the wellbeing of the economy, and in turn the country, was dependent on the continuation of productivity gains. Opportunity after opportunity, and speech after speech, it was proclaimed that more gains in productivity were achieved. What this meant in almost all cases was a reduction in cost: less people spending less time for less money achieving similar or greater results for an organization, thereby improving the balance sheet and increasing profits.

The last few days I personally experienced what all these great gains Alan Greenspan encouraged companies to generate lead to, and I am fuming, to say the least….

Here is the deal: In the past the American economy used to manufacture a lot of things and then sold them to the consumer. Since workers expect to make more money over time, this wasn’t really sustainable, especially when competing in a global market place. The solution was either outsourcing of manufacturing to China, India, Eastern Europe, and many other places around the globe – or transforming the economy into a service oriented market place.

Both solutions were applied and more often than we like, we are talking to technical service providers in India when we encounter an issue with our washing machine. That drove down cost, but it still wasn’t enough…

And then my TV stopped working. A few days ago at about 10 PM at night I finally got my butt out of the office and away from the computer and wanted to watch some TV to wind down and relax. I push the buttons on the remote, like always. A few clicks, and I start hearing the music and people speaking. Fully expecting to see a picture on my TV set in a few seconds, I began to pay attention…

To my surprise nothing happened. The TV stayed dark, but I could hear the audio. Afraid my relatively new TV set might be broken, I popped a DVD into the player, and sure enough, everything worked fine. WOW, what a relieve, the TV is OK. But what about the fact that I don’t have a picture when trying to watch TV?

Well, I start playing with all the buttons on the remote hoping I just hit the wrong button before. Naturally that didn’t really make a difference – but it reminded me that I am not a technician. Next I got out the phone number for the satellite provider. Well, was I in for a surprise…

The person on the other end first gave me a friendly hello, followed by: “Sir, no problem, we will help you get your system back to work”. I was feeling better already. That was a very short felt relieve, because the person with the name April immediately followed the reassuring statement with the first insult. She said: “Can you please tell me if you can see the little green light on the satellite receiver, the one that shows that the power is switched on?” It was relatively late at night and I am not very easily  bent out of shape, even if insulted like this.

I told April that the light was on and that I had previously mentioned that I could hear the audio, which would hardly be possible without power to the receiver. Unimpressed with my technical savvy, April next asked: “Ok, sir, can you tell me if the little green light on your TV is on, the one that shows that the power is switched on to your set?” Staying totally calm, I told April that I had previously mentioned that the TV played my DVD’s perfectly, but it didn’t show a picture when switched to TV mode.

For the next 20 minutes I received a quick course in TV and satellite repair steps. I plugged in cables, unhooked power, connected different cables,  rebooted the receiver several times, switches off the DVD player to see if that would make a difference, and followed all instruction step by step.

Finally April told me: “Sir, I have to tell you that your receiver seems to be broken and we will need to send you a new one.” No kidding, just 35 minutes after initially calling, we had come to the same conclusion. I started to get my hopes up that customer service still existed. All it took was being patient, not getting angry for being insulted, and a willingness to participate in a quick course in electrical technician tasks.

Ready to got to bed, knowing that the new box will be on the way, April dropped the bombshell. She said: “Sir, for you to get the new receiver, I need to charge you $16.95 for shipping”. It took me literally a minute to comprehend and regain the ability to speak.

I am a paying customer for three years, paying my monthly fees, which are higher than any new customer the company tries to gain. I see their adds every week on TV but I can’t do anything about it because the great new deals only apply to new customers. Then, when my equipment fails, and although I am fully paid up, I have to pay for the shipping to receive a replacement box. Wow, what a great new world.

I am not easily impressed or moved, but at that exact moment I decided, in a very calm voice, to tell April that my service can be cancelled right away.  She said: “Sir, I am sorry to hear that. I connect you to the cancellation department right away”.

Feeling a little better about myself, I continued with a new person through the process of getting rid of the TV provider I had faithfully paid for the last three years. If you thought excessive productivity in the form of incompetence and cost transfer to the customer had reached it’s crescendo, you are still mistaken.

This company had one more knock with a baseball bat waiting for me on the way out. When I had confirmed my cancellation, I was told that I needed to call back after 72 hours. The reason is this: “You are fully paid up for this month. Our automatic system does not recognize credit when a cancellation occurs. If you want the money back you already paid for the days you won’t have service, you need to call us again and demand a refund, or we will keep your money”.

Someone a long time ago had a slogan he used at the end of his broadcasts that goes like this: “Thank you very much, good luck and good night”.

That’s how I felt. The lesson learned for all of us is this: If you forget that your customer is the one source that keeps your job, keeps your revenues, and keeps your profits, all the cost cutting in the world doesn’t make any difference. It’s not a gain in productivity but the nail in the coffin that will close the company down sooner or later. In case you wonder who it is? It’s the satellite provider with the word ‘network’ in the name.

Don’t worry, I got a much nicer system, now taking full advantage of being the new customer, all the bells and whistles, HD and all, and I am paying $20 less/month than before.

Peter Drucker once said and often wrote: “It takes many many years to develop a stellar reputation, and 5 minutes to loose it.” When we try to push gains in productivity to a point where we make our customers pay for shipping when our equipment brakes, or ask them to call in to get the money we owe them because we feel there is a good chance we can keep what is theirs on the way out, we have driven productivity gains to an unhealthy, excessive level.

Be careful how you try to lower cost. If you do it like my former satellite provider did, you might find that you removed the foundation of your business. Rest assured that a customer with an experience like I had will forever warn anybody he touches about this company. That is much worse in the long run than the $16 it would have cost to ship a new receiver and continue to collect inflated fees from me.

Productivity gains are a good thing until they turn excessive – then they can turn into your worst enemy. Don’t go there if you want to build a successful organization and keep those who pay your bills, salaries, and bonuses happy.

Axel Meierhoefer, AMC LLC

With this Memorial Day Weekend just behind us, I feel it is helpful to reflect on what is going on in the country, especially regarding those members of society who defend what we all enjoy everyday. This past weekend allowed for all of us to sit back and be grateful for the freedoms we enjoy.

Some of the frequent readers may know that AMC LLC and I are supporting the Citizen Soldier Business Recovery Foundation (www.CSBRF.org) in their efforts to raise funds as well as help companies to survive. This foundation has the mission to assist Citizen Soldier business owners in their time of need. It focuses on pre-deployment assistance to Reserve and Guard business owners to avert the damage often caused by extended absence. 

Also, it is ready to aid in the repair and recovery of the other honorable military service members and their businesses, damaged during their deployment. Potential damage such as lost revenues, employee turnover, reduced sales, etc. is identified and avoided with the help of experts. The foundation aims to aids many of the 55,000 Citizen Soldier business owners by providing the education and training to maintain their business, adding to community and economic growth.

This weekend I read an article by Justin Paprocki that pointed out an aspect of the service these soldiers  face that is almost as much neglected and forgotten, as the fact that some of them already did duty, began to build a civilian business and are now back to active duty and combat missions.

Justin wrote:

“The first time Army specialist Brian Morel held his daughter was in the Savannah International Airport. He took the 7-month-old from his wife’s arms and hoisted her above his head - he in the subdued greens and tans of Army fatigues, and she in a pink and white jumper.

“Hi, there,” he said, raising his voice an octave.
She didn’t squirm.

Later, he’d recall that he wasn’t sure what to expect that first time.
He had been searching for feelings about Sophia. He knew what it was like to hold his wife, Sarah. He knew what it was like to hold his 6-year-old son, Aiden. He knew what it was like to love them. But before March 24, Brian only knew photos of the newborn child with bright blue eyes.
When he lifted Sophia as fellow passengers filtered around him, that feeling changed.

“As soon as I held her, I fell in love,” he said.

Brian Morel, 31, is one of the 600,000 active duty military who have children, according to the Military Family Research Institute at Purdue University. More than 40 percent of the total number enlisted have kids. But like the rest of his fellow parent soldiers, Brian has two families. There’s his “military family,” as he calls it: the men and women he serves with in the Fires Squadron, 2nd Stryker Cavalry Regiment in Camp Taji north of Baghdad. And there’s his family back home.

Arriving in Savannah in March, Brian started his 18-day leave. He was in the middle of a 15-month deployment in Iraq. He had not seen his family for the past seven months. During that time, Sophia was born and his family moved from a military station in Germany back to his wife’s home town: Hilton Head Island, S.C.

The point of R&R may be to leave the heat of war and see family. But with it comes a whole new set of challenges. (abbreviated)”
Meeting a new member of your family the first time, holding your loved ones in your arms, and possibly returning to your business for a few days to see if what you started is still standing are aspects of the war, the limited leave for R&R, and the emotional strain the troops face that we don’t often hear about.

The Memorial Day weekend provided pause. AMC LLC and I will support the annual fund drive for the CSBRF foundation starting June 1st. Members of our email database as well as readers of this blog will hear more about what we plan to do. We all hope that we can count on your support. Any small contribution will allow us to support these military families and citizen soldier business owners in their attempts to fight for our freedoms, maintain good relationships with their relatives, and have some hope that their livelihood will still be intact when they return home for good.

Axel Meierhoefer, AMC LLC
420 Dogwood Drive
Buellton, CA 93427

Today I read an article by Paul Krugman of the New York Times about his experience  in Berlin, Germany. Initially I was attracted by the article because it mentioned my home country and one of the cities with lots of history.

Often when anybody writes about Berlin it’s about the past, the nasty things the Nazi’s did, or bad things the Soviet Union did while they had their hands on East Berlin, or something along those lines, all the way to the current presidential election comparisons of speeches held by Ronald Reagan and John F. Kennedy.

You remember – one said “Ich bin ein Berliner” the other demanded “Mr. Gorbatchov, bring down this wall!”

When reading more into the article, Paul Krugman actually referred to the question of living close together in the middle of a metropolis versus working in town and living in suburbia. He writes (abbreviated):

“I have seen the future, and it works.

O.K., I know that these days you’re supposed to see the future in China or India, not in the heart of “old Europe.”

But we’re living in a world in which oil prices keep setting records, in which the idea that global oil production will soon peak is rapidly moving from fringe belief to mainstream assumption. And Europeans who have achieved a high standard of living in spite of very high energy prices — gas in Germany costs more than $8 a gallon — have a lot to teach us about how to deal with that world.

If Europe’s example is any guide, here are the two secrets of coping with expensive oil: own fuel-efficient cars, and don’t drive them too much.

There have been many news stories in recent weeks about Americans who are changing their behavior in response to expensive gasoline — they’re trying to shop locally, they’re canceling vacations that involve a lot of driving, and they’re switching to public transit.

To see what I’m talking about, consider where I am at the moment: in a pleasant, middle-class neighborhood consisting mainly of four- or five-story apartment buildings, with easy access to public transit and plenty of local shopping.

It’s the kind of neighborhood in which people don’t have to drive a lot, but it’s also a kind of neighborhood that barely exists in America, even in big metropolitan areas. Greater Atlanta has roughly the same population as Greater Berlin — but Berlin is a city of trains, buses and bikes, while Atlanta is a city of cars, cars and cars.

And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had the better idea.
And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had the better idea.

Changing the geography of American metropolitan areas will be hard. For one thing, houses last a lot longer than cars. Long after today’s S.U.V.’s have become antique collectors’ items, millions of people will still be living in subdivisions built when gas was $1.50 or less a gallon.

Infrastructure is another problem. Public transit, in particular, faces a chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the advantage of transit access.”

At this point you might ask yourself what this story has to do with the topics of performance, organizational or leadership development, self improvement, or any of the other areas I normally touch on. Well, it gives a certain view about environmental items and issues to consider while we all begin to realize that the government published inflation rate is probably not what we experience everyday. In case you didn’t notice:

For the month of April the government measured that the prices of gas actually dropped. I don’t know which planet or country they went to for their measurement, but that’s what they officially published. In case you don’t believe it, please look it up, but make sure you sit down while you’re at it.

There is more here than an environmental or city planning issue. What we can learn from this article is the importance of environment planning for our corporations. That applies to the organizations we are in, the teams we lead and the decisions we make. For years people unfamiliar with most jobs planned the office spaces with a cubicle structure because it was space saving. Very few people ever liked it or worked particularly efficiently in all the noise and the distractions.

For years companies paid lots’ of money for the manufacturing machines and all kinds of equipment, but very little on the equipment for their workers, resulting in massive lower back pain, spinal mis-formation, carpal-tunnel syndrome, etc.

In the recent past we have seen that these environmental factors of our workplaces have huge impact on the attractiveness of our organizations. It’s not only the pay and the benefits packages, but the overall atmosphere that we create and offer to those we expect to exchange their valuable time for compensation.

If you are in charge of any of these issues, make sure you make a detailed plan about the environment you want to offer and provide for your team. The better the conditions for work and collaboration in your organization are, the better the productivity and the retention of your workforce will be. With an aging work force and ever higher demands on creative, innovative work versus the physical work of the past, the environment planning you do can decide about success or failure of your whole operation.

Axel Meierhoefer, AMC LLC

Last weekend I had the great pleasure to spend a few days with my fellow cohort members from my study group. We all met in Santa Barbara to support one of our own, Lynn Johnson-Langer, in her dissertation defense. Besides spending time talking about our own studies, we also reflected on recent experiences in our professional lives.

My friend Diana told an interesting story about Northwest Airlines. She had heard that airline travel has become a real adventure, that many people have been stranded for hours at times in planes, or busses, or cheap hotels. Last fall, for a vacation in her hometown in Michigan, Diana had booked flights on Northwest Airlines and was wondering what kind of an adventure she would be exposed to.

When the day of the flight came, she was prepared for everything, but all stops occurred on time, all planes flew as requested, and everything worked out much better than anticipated. Unbelievably, the same thing happened on the way home. Diana felt she should acknowledge the airline for this unexpected and pleasant surprise. So she sat down and wrote a letter…

Being happy about her experience and back at work for some time, Diana received a reply letter from Northwest Airlines. Full of expectation what they would say about a customer who was actually happy with the experience, she opened the envelope. And the letter said:

“Dear. Ms. XXX
Thank you for writing to us to voice your opinion about your recent travel flying with us. We are sorry that you didn’t have the experience you expected. We are trying to improve……. blah, blah, blah!”

According to her own words, Diana was still happy that her trip went as planned, but this letter ruined most of the good experience she actually had. It was blatantly clear that nobody at Northwest Airlines reads any of the letters they receive. They just take the name and address and send a standard apology-letter to everybody.

Is that the kind of customer service that allows a company, being it an airline or any other business, to become successful or regain historic success? I don’t think so. It does show that claiming to care about customers and actually doing it are two different things. The airlines, probably with the exception of Southwest among all domestic carriers, have made cost cutting their number one priority.

If you read today’s Market Watch online, you will find an article by AP business writer Dave Carpenter, reporting about the most recent study by Michigan University regarding passenger satisfaction with US domestic airlines. In a nutshell, he shows the results of the study as saying that the satisfaction has dropped again, for a third time in the last three years.

The average is almost as bad as it was in 2001 after the complete shut down of air travel due to 9/11. It also shows that a clear trend among the different carriers is accelerating, leading to lower and lower scores. The only airline still improving is Southwest. They scored 79 out of a maximum of 100, improving from 76 last year. The average is 62 and the next best airline after Southwest has those 62 points and it get’s worse from there. United and US Air are at the end of the scale with 54 and 56.

Anybody in business should learn from these developments. Not only from the fact that customer service is important. Fundamentally we should all know this. What is interesting to realize is that cost cutting can lead to such a bad satisfaction score that people avoid doing business with you, even if it would be cheaper.

When the cost cutting actually happens in the wrong areas, like having bad service and not reading the letters of the few satisfied clients, or getting rid of certain products in hopes of creating a low cost image, the whole company can be in jeopardy.

The latter thing, by the way, is what Target did with eliminating pretty much all food products. Now, as the economy is slowing down and everything is very expensive, people don’t buy all the tings Target is offering, except for the basic necessities, like food – and they go to Wal-Mart for these items.

It is also important to realize that customers develop a relationship with the companies they shop at. That’s why higher priced brands do well even in bad economic times, as long as they maintain or even increase their service.

Our clients and customers are our highest value. They deserve a large amount of attention. They deserve that their letters are read and answered individually. They need to be pampered and nurtured, and respected, and asked for their opinions. Doing that will create the relationship required for success, even when times are not favorable.

Abandoning them or sending them form letters will drive them away and make them angry, even if they had a better than expected experience.

My suggestion: Put your customers on a golden platter, cherish them, and create deep, positive relationships. They will stick with you forever as long as you hold up your end of the relationship. That’s how you turn them into clients and often into your friends.

Axel Meierhoefer, AMC LLC

Today I was honored to witness the completion of a journey by a great friend, Lynn Johnson Langer. About four years ago we both started, together with about 25 other individuals, on the path towards a PhD degree in Leadership from Antioch University.

Today, Lynn, as one of the first in our group, reached the goal line and blazed a trail for those of us following her. Throughout these years she has been and continues to be a great friend and a rock to lean on when the studies didn’t want to progress or the program didn’t seem to fit as well as was originally expected.

What was striking during this morning’s defense was the fact that Lynn had to struggle very hard to actually conduct the research study she had planned, Coming from the field of biotech and biopharmaceuticals, it initially appeared to be a logical fit for her to conduct her study in this area. As her journey has shown, the confidentiality requirements in this industry made it very hard for her to get the ear of any of the decision makers in these organizations.

As mentioned above, Lynn succeeded and completed her study. She also learned a lot of valuable lessons which will serve her and her career very well in the future. I am sure she will become thought after both by the academic community for her enormous expertise, as well as by the executive community, especially in biotech, because of the pointed findings and suggestions for success she was able to develop based on her work.

The individuals who are at the beginning of a path to success by transforming an interesting research finding into a drug will hugely benefit from listening to Lynn and take her measures to improve success seriously.

Without giving anything away that Lynn couldn’t explain much better and more eloquently, I believe there are things to learn for all of us outside of the biotech industry:

1. If you are really driven by a question and want to do the research, you will succeed, even if it takes hundreds of phone calls and request, bordering on begging, to be allowed to interview the leaders and founders of the successful companies in a field. Anybody who feels its time to give up because the first 30 or 50 phone calls didn’t lead to the desired result should learn from Lynn’s tenacity and goal orientation.
2. As I have written before, the one new fundamental learning in leadership and executive positions should be to open up to support and help. That includes coaching so the leaders and executives can use an outside sounding board for ideas, new strategies and changes in direction. It also means that confidentiality should not preclude those in positions of responsibility to help each other through master mind groups and discussion forums.

Putting these two things together wouldn’t only help the leaders Lynn successfully studied for her dissertation, but all leaders in all fields. The main reason, in my opinion, is the need to acknowledge personal attributes as vitally important. The brilliance and success a leader in biotech, business, technology, manufacturing or any other sector of the global economy has achieved isn’t diminished by having a trusted coach and a supporting mastermind group – it is actually enhanced.

Again, congratulations to Lynn. This is not the end of the path, but the beginning. The completion of this degree and the associated study will be the foundation of many amazing things to come. One can only hope that many in industry, especially the biotech industry, find a way to read the dissertation, or a summary article, so they have every chance to work with Lynn and benefit from her findings and suggestions.

Axel Meierhoefer, AMC LLC